UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2020
OR
☐TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from___________ to __________
Commission
file number 001-12830
Lineage
Cell Therapeutics, Inc.
(Exact
name of registrant as specified in its charter)
2173
Salk Avenue, Suite 200
Carlsbad,
California92008
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (442)287-8990
Securities
registered pursuant to Section 12(b) of the Act
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock LCTX NYSE American
Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
No☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No☒
As
of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate
market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was approximately
$93.9 million.
The
number of common shares outstanding as of March 5, 2021 was 161,637,890.
Lineage
Cell Therapeutics, Inc.
Table
of Contents
Page Number
Part I.
Item 1 Business 3
Item 1A Risk Factors 26
Item 1B Unresolved Staff Comments 53
Item 2 Properties 54
Item 3 Legal Proceedings 54
Item 4 Mine Safety Disclosures 54
Part II.
Item 6 Selected Financial Data 55
Item 7A Quantitative and Qualitative Disclosures about Market Risk 65
Item 8 Financial Statements and Supplementary Data 66
Item 9A Controls and Procedures 109
Item 9B Other Information 109
Part III.
Item 10 Directors, Executive Officers, and Corporate Governance 110
Item 11 Executive Compensation 113
Item 14 Principal Accounting Fees and Services 123
Part IV.
Item 15 Exhibits, Financial Statement Schedules 124
PART
I
FORWARD-LOOKING
STATEMENTS
This
Annual Report on Form 10-K (this “Report”) contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that involve substantial risks and uncertainties. The forward-looking statements are contained principally in Part
I, Item 1. “Business,” Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Report.
In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,”
“could,” “would,” “should,” “expect,” “intend,” “plan,”
“objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,”
“potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable
terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different
from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis
for each forward-looking statement contained in this Report, we caution you that these statements are based on a combination of
facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking
statements include statements about:
● our plans to research, develop and commercialize our product candidates;
● the potential scope and value of our intellectual property rights;
● our ability to recruit and retain key personnel;
● the effects of the COVID-19 pandemic on our operations; and
You
should refer to “Item 1A. Risk Factors” in this Report for a discussion of important factors that may cause our actual
results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors,
we cannot assure you that the forward-looking statements in this Report will prove to be accurate. Furthermore, if our forward-looking
statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking
statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve
our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Report represent our views
as of the date of this Report. We anticipate that subsequent events and developments may cause our views to change. However, while
we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to publicly update
any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the
date of this Report.
You
should read this Report and the documents that we reference in this Report completely and with the understanding that our actual
future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary
statements.
This
Report also contains market data, industry forecasts and other data made by independent parties and by us relating to market size
and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned
not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and
the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.
All
brand names or trademarks appearing in this Report are the property of their respective owners. Solely for convenience, the trademarks
and trade names in this Report are referred to without the symbols ® and TM, but such references should
not be construed as any indication that their respective owners will not assert, to the fullest extent under applicable law, their
rights thereto.
Unless
the context requires otherwise, references in this report to “Lineage,” “we,” “us,” and “our”
refer to Lineage Cell Therapeutics, Inc. and its consolidated subsidiaries.
RISK
FACTOR SUMMARY
Below
is a summary of the material factors that make an investment in our stock speculative or risky. This summary does not address
all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that
we face, can be found below under the heading “Risk Factors” in Item 1A of Part I of this Report and should be carefully
considered, together with other information in this Report and our other filings with the Securities and Exchange Commission before
making investment decisions regarding our common shares.
● Our intellectual property may be insufficient to protect our products.
ITEM 1. BUSINESS
Overview
We
are a clinical-stage biotechnology company developing novel cell therapies for unmet medical needs. Our focus is to develop therapies
for degenerative retinal diseases, neurological conditions associated with demyelination, and aiding the body in detecting and
combating cancer. Specifically, Lineage is testing therapies to treat dry age-related macular degeneration, spinal cord injuries,
and non-small cell lung cancer. Our programs are based on our proprietary cell-based therapy platform and associated development
and manufacturing capabilities. From this platform, we develop and manufacture specialized, terminally or functionally differentiated
human cells from established and well-characterized pluripotent cell lines. These differentiated cells are transplanted into a
patient either to replace or support cells that are dysfunctional or absent due to degenerative disease or traumatic injury, or
are administered as a means of helping the body mount an effective immune response to cancer.
Product
Candidates & Other Programs
We
have three allogeneic, or “off-the-shelf,” cell therapy programs in clinical development:
In
addition to seeking to create value for shareholders by developing product candidates and other technologies through our clinical
development programs, we also seek to create value from our technologies through partnering and strategic transactions. We founded
two companies that later became publicly traded companies: OncoCyte Corporation (“OncoCyte”) and AgeX Therapeutics,
Inc. (“AgeX”).
During
the year ended December 31, 2020, we received approximately $12.6 million in gross proceeds in connection with our sale of shares
of OncoCyte and AgeX. In August 2020, we also received $24.6 million from Juvenescence Limited (“Juvenescence”),
representing principal and accrued interest under a promissory note we received in connection with our sale of AgeX shares to
Juvenescence in August 2018.
We
no longer hold any common stock in AgeX. The value of our OncoCyte holdings as of March 5, 2021, was approximately $4.2
million, based on the closing price of its common stock on that date. In this Report, see Part I, Item 1A, “Risk Factors—Risks
Related to Our Business Operations and Capital Requirements—The value of our investments in public companies fluctuates
based on their respective stock prices and could be negatively affected by poor business performance.”
Though
our principal focus is on advancing our three cell therapy programs currently in clinical development, we may seek to create additional
value through corporate transactions, as we have in the past, or by initiating new programs using our protocols or with new protocols
and cell lines.
Corporate
Information
Lineage
is incorporated in the State of California. Our common shares trade on the NYSE American and the Tel Aviv Stock Exchange under
the symbol “LCTX.” Our principal executive offices are at 2173 Salk Avenue, Suite 200, Carlsbad, CA 92008, and our
phone number at that address is (442) 287-8990. Our website address is www.lineagecell.com. The information on, or that can be
accessed through our website is not part of this Report. Lineage routinely uses its website as a means of disclosing material
non-public information and for complying with its disclosure obligations under Regulation FD. We also make available, free of
charge through our website, our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and any amendments to those reports as soon as reasonably practicable after the reports are electronically filed with or furnished
to the Securities and Exchange Commission.
2020
Highlights
We
achieved numerous strategic accomplishments during 2020, including advancing clinical trials and product development in several
key programs.
Business
Strategy
Our
goal is to become a leading cell therapy company by developing allogeneic, or “off-the-shelf,” treatments that are
comprised of differentiated cells derived from pluripotent cell lines, which have been directed to become specific cell types
and use those cells as treatments to restore diseased or diminished functions, such as impaired vision, loss of movement and sensation,
or to increase immune response to tumors. Significant near-term activities that underlie our business strategy include:
Cell
Therapy Technology
We
believe we are a leader in pluripotent, cell-based asset development based on directed lineage derivation protocols and whole
cell manufacturing capabilities. Pluripotent cells, which are widely published as capable of becoming any human cell type, have
potential applications in many areas of medicine with large unmet patient needs, including certain age-related degenerative diseases
and degenerative conditions for which there presently are no cures. We currently are focused on developing pluripotent cells into
RPE cells, oligodendrocyte progenitor cells and dendritic cells.
Pluripotent
Stem Cells
Unlike
pharmaceuticals that require a narrowly defined molecular target, cellular therapies are often aimed at regenerating or replacing
the entire affected cell or tissue and therefore, may have broader or more suitable applicability than many traditional pharmaceutical
products. Small molecules and biologic therapies that require systemic delivery into the body often have unexpected results, or
side effects, that can limit their usefulness. When cell replacement is locally administered, particularly to anatomical compartments,
systemic side effects are usually not the primary concern. The risk profile of cell therapy more closely resembles that of transplant
medicine, focused more on whether the transplanted cells are rejected by the body and whether the cells function as expected.
We currently are using our pluripotent stem cells as starting material from which we derive three separate and specific cell types,
each of which are product candidates currently in clinical testing.
We
maintain an innovative cell therapy manufacturing facility in the Bio Park on the campus of the Hadassah University Hospital in
Jerusalem, Israel. The facility includes process development laboratories and a state-of-the-art, cGMP manufacturing facility.
It is designed and equipped to enable simultaneous cGMP processes and to produce a range of cell therapy products for human use
in clinical trials as well as developing scale suitable for commercial launch. All cGMP manufacturing processes, including cell
banks and product manufacturing for our cell therapy product candidates, are conducted in this facility.
Cell
Therapy Product Candidates
OpRegen
OpRegen
is our lead ophthalmic product candidate (currently in a Phase 1/2a clinical trial) for the treatment of advanced dry AMD with
GA. AMD is a gradual, progressive, deterioration of the macula, the small sensitive area in the center of the retina that provides
clear, high definition central vision. AMD affects over 30 million people worldwide and approximately 1.6 million people are diagnosed
annually in the United States. It is a leading cause of vision loss in people over the age of 65 in the developed world. As the
area of atrophy begins to include the fovea (the center of the macula), patients lose their central vision, making facial recognition,
reading and driving difficult or impossible, and often resulting in legal blindness. The exact cause of dry AMD is unknown, but
is thought to result from multiple factors, such as genetics, age and environmental effects. There are two clinical presentations
of AMD, the dry form and the wet form, or neovascular form (growth of abnormal new blood vessels). Dry AMD typically advances
slowly toward GA in which RPE cells and photoreceptors deteriorate over time. RPE cells support and nourish the retina by metabolizing
waste by-products and producing a number of components useful for photoreceptor health and function. If the metabolic waste products
accumulate, lesions known as drusen are generated. Approximately 85-90% of AMD patients suffer from dry AMD, for which there is
no FDA-approved medical therapies. Dry AMD may also lead to wet AMD, a condition for which there are several FDA-approved treatments
administered locally to inhibit the growth of new blood vessels, but these treatments are not effective nor approved for the treatment
of dry AMD. Physicians often recommend a healthy diet, exercise and/or nutritional supplements for dry AMD, but nutritional supplements
have shown limited efficacy in delaying the onset of more progressive disease in longer-term studies. The schematics below show
a representation of the process of drusen formation and the goal of cell replacement therapy.
Dry
AMD involves the loss of retina cells, creating an area of geographic atrophy (GA), which causes impaired vision and blindness
We
believe one of the most promising approaches to treat dry AMD is to replace the layer of damaged RPE cells with new, healthy and
functional RPE cells manufactured from a well-characterized cell line. OpRegen is a cell replacement therapy derived from our
pluripotent cell technology in which our proprietary directed-differentiation methods convert pluripotent stem cells into nearly
pure populations of RPE cells. Using this method, OpRegen is grown free of any animal products and consists of human RPE cells
with high yield and purity that can be transplanted directly into the patient’s eye, where the patient’s own RPE cells
are missing or dysfunctional. The OpRegen therapeutic approach is designed to replace damaged or lost RPE cells with the goal
of slowing disease progression to preserve and/or restore visual function.
OpRegen
is an injection of RPE cells delivered to the retina, to replace lost retinal cells and preserve or restore vision
Preclinical
studies in the Royal College of Surgeons (RCS) rat model have shown that following a single subretinal injection, OpRegen
as a suspension of cells rapidly organized into their natural monolayer structure and survived until the end of the study, which
we believe is critical to the potential success of OpRegen in humans. Additionally, rats receiving OpRegen had objective evidence
of improved optomotor tracking, indicating functional visual improvement compared to control animals.
OpRegen
is intended to be an allogeneic, or “off-the-shelf,” product provided to retinal surgeons in an “easy-to-use”
form for transplantation. We believe OpRegen could have a lasting benefit from a single administration, or once every several
years. This approach differs from other investigational drugs for Dry AMD and approved agents currently marketed for wet AMD,
such as Ranibizumab (Lucentis®) and Aflibercept (Eylea®), that require multiple, frequent intravitreal
injections into the eye.
The
patients in our ongoing Phase 1/2a clinical trial are 50 years of age or older, whose dry AMD has advanced to the GA stage, with
absence of additional concomitant ocular disorders. The eye in which the disease has progressed the most is treated, while their
other eye serves as a measure of disease progression. Following injection, the patients are followed for 12 months at specified
intervals to evaluate the safety and tolerability of OpRegen.
Following
the initial 12-month period, patients are evaluated at longer intervals for up to an additional five years following administration.
A secondary objective of the clinical trial is to examine the ability of transplanted OpRegen to engraft, survive, and modulate
disease progression in the patients. In addition to thorough characterization of visual function, several vision tests are used
to quantify stabilization or improvements in visual function. We also perform anatomical evaluation imaging to assess the restoration
of the structure of the retina.
Interim
data from the first 12 subjects in Cohorts 1-3 have been encouraging and suggest that OpRegen RPE cells are generally well-tolerated
when administered by subretinal injection in these legally blind patients with large areas of GA that have encompassed the foveal
area. The surgical procedures were generally well-tolerated, with spectral domain optical coherence tomography (SD-OCT) images
showing absorption of the subretinal fluid in the bleb less than 48 hours after surgery and healing of the site of retinal penetration
by the cannula within a few weeks. Initial findings using a variety of imaging modalities suggest presence of cells in the subretinal
space, an observation consistent with, and supported by, the data from preclinical studies of OpRegen. Findings on clinical examination
by different imaging modalities show potential improvements in retinal structure, which could precede visual functional improvements.
Though it is not definitively known at this time whether these changes represent engraftment and survival of the transplanted
cells, data from the preclinical animal studies suggest this is the most likely scenario.
Importantly,
in this safety-focused aspect of the trial, no unexpected ocular adverse events have been observed and those events expected to
occur based on the procedures involved in OpRegen administration, such as vitrectomy, have been predominately mild in severity.
The majority of these subjects had pre-existing epiretinal membranes (ERMs) at the time of trial enrollment and in most cases,
experienced new or worsening ERMs following the surgical procedure, which is believed to be partially attributable to the route
of administration via pars plana vitrectomy (PPV) and retinotomy. The majority were mild to moderate in severity, though two patients
with severe ERM were successfully treated via a routine surgical procedure. These subjects are being monitored during trial follow-up.
One instance of retinal detachment occurred in a patient who was legally blind prior to treatment. The event was not assigned
as related to treatment, procedure or to the combination. The patient continued for a period of time in the trial following successful
surgical repair but has since withdrawn due to other unrelated health issues. The independent data safety monitoring board approved
moving to Cohort 4 based on the safety data from the Cohorts 1-3. Cohort 4 incorporates an additional variety of objective and
subjective assessments to look for signs of potential efficacy as well as potential anatomical changes indicative of OpRegen cell
function following implantation.
As
described above, many of the adverse events (AEs) observed in subretinal procedures are likely related to the delivery technique
utilized during the surgery. As previously described, in January 2019, we announced an exclusive partnership with Orbit Biomedical
(now Gyroscope Therapeutics, Ltd.) to assess its FDA-cleared Orbit Subretinal Delivery System (SDS), a single-use vitrectomy-free
delivery device designed to deliver products to the subretinal space for the administration of OpRegen within the ongoing clinical
trial. The device allows for access to the subretinal space via a sclerotomy and suprachoroidal approach, which means that there
are no openings created into the vitreous chamber. This could eliminate the possibilities of new or worsening epiretinal membranes
and exacerbation or generation of a cataract, both known issues with the older standard method of delivery. We believe that the
use of this device could significantly decrease the number of adverse events and improve retention and dose control of OpRegen
in our clinical trials.
We
completed enrollment in Cohorts 1-3 (12 patients) in the middle of 2018 and as previously reported, OpRegen was well tolerated
with no unexpected systemic serious adverse events (SAEs) or ocular AEs. Importantly, there were several patients that exhibited
improved retinal structure, reduction in drusen, alterations in the pattern of GA progression and indications of long-term survival
of the OpRegen cells. We began enrollment of Cohort 4 (targeted for an additional 12 patients) shortly thereafter and treated
three patients via the traditional route of administration. In 2019, we amended our clinical protocol to incorporate the Orbit
SDS and our new thaw and inject formulation into our Phase 1/2a clinical trial. In February 2020, we announced that after reviewing
promising preliminary data from the ongoing OpRegen Phase 1/2a clinical trial, our independent data safety monitoring board removed
the protocol-mandated treatment stagger. The COVID pandemic slowed the rate of patient accrual but study enrollment was completed
on November 10, 2020, with the treatment of the twelfth Cohort 4 patient, seven via the Orbit SDS and five via PPV/retinotomy.
Five different surgeons at four centers successfully delivered OpRegen using the Orbit SDS and there were no unexpected AEs. Encouraging
structural and clinical changes in these better vision patients, including better visual acuity and increased reading speed, are
being followed and updates will be provided at major medical meetings or as findings merit.
In
June 2020, we were able to report the first known example of retinal restoration following OpRegen administration in a
Cohort 4 patient who was treated via the PPV/retinotomy route, with the findings confirmed by several independent reviewers. It
is hypothesized that photoreceptor cells in the transition areas at the boundary of the GA are dysfunctional and dying, but not
completely lost. The addition of new RPE cells may restore the microenvironment in surrounding tissue and contribute to the possibility
of restoring function to existing cells that otherwise, if left untreated, would inevitably progress to further expansion of the
atrophic region. Specifically, in this patient, the area of GA assessed at nine months following OpRegen treatment was
approximately 25% smaller than the patient’s pre-treatment baseline. As reported in November at the 2020 American Academy
of Ophthalmology (AAO) Annual Meeting, this patient continues to show signs of a smaller area of GA and improved visual acuity.
This unprecedented finding supports the view that dry AMD is not an irreversible, degenerative condition and that some portion
of diseased retinal tissue may be recoverable in atrophic end-stage disease patients.
With
enrollment complete, patients are being followed for safety and efficacy as per protocol. We plan to present OpRegen data to the
FDA in the third quarter of 2021 for discussion about a subsequent, comparative clinical trial.
OPC1
OPC1
is our lead product candidate for the treatment of acute spinal cord injury (“SCI”). SCI occurs when the spinal cord
is subjected to a severe crush or contusion injury, such as that caused by a car or motorcycle accident and typically results
in severe functional impairment, including limb paralysis, aberrant pain signaling, and loss of bladder and sexual function. There
are approximately 18,000 new spinal cord injuries annually in the U.S. (NSCIC SCI Facts and Figures at a Glance (2019)), and there
are currently no FDA-approved drugs specifically for the treatment of SCI, although methylprednisolone, a corticosteroid generally
used as an anti-inflammatory drug, is sometimes prescribed on an off-label basis to reduce acute inflammation in the injured spinal
cord immediately after injury. It is believed that to effect substantial benefit in treating this complex injury, multiple mechanisms
of action are required, such as introduction of biologics that preserve surviving neurons and stimulate new nerve axon outgrowth,
suppression of lesion formation at the injury site, generation of new blood vessels to repair the ischemic damage from injury,
and myelination of the demyelinated and newly formed nerve axons. A key therapeutic target in SCI is replacement of oligodendrocytes
that are selectively lost at the injury site. As the sole source of the insulating protein myelin in the brain and spinal cord,
oligodendrocytes wrap around nerve axons and allow conduction of electrical impulses throughout the central nervous system (“CNS”).
OPC1
is an oligodendrocyte progenitor cell therapy derived from our pluripotent cell technology under Current Good Manufacturing Practice
(“cGMP”) conditions using a directed differentiation method. These cells are stored frozen until ready for use and
prepared for direct administration into the injured spinal cord. Based on preclinical studies, when OPC1 is transplanted into
the injured spinal cord, the cells undergo further maturation to generate a replacement population of oligodendrocytes at the
injury site that are capable of remyelinating denuded and newly formed nerve axons. Prior to their maturation, the transplanted
oligodendrocyte progenitor cells stimulate additional reparative processes, including promotion of neuron survival and nerve axon
outgrowth, and induction of blood vessel formation in and around the injury site. In addition, OPC1 cells rapidly migrate from
the injection point to the injury site where they generate a supportive tissue matrix and suppress cavitation. Cavitation is a
destructive process that occurs within the spinal cord following SCI, and typically results in permanent loss of motor and sensory
function. A patient with cavitation can develop a condition known as syringomyelia, which results in additional neurological and
functional damage to the patient and can result in chronic pain. Based on the multiple reparative properties associated with OPC1,
we believe this candidate cell therapy product is ideally suited to treat neurological conditions such as SCI and other demyelination
and demyelination disorders of the CNS.
Under
a grant for clinical development, the development of OPC1 has been supported by $14.3 million in funds from the California Institute
for Regenerative Medicine (“CIRM”), from 2014 through the date of this Report. We intend to apply for additional grants
from CIRM for the program’s continued development.
Prior
to its acquisition, Asterias tested OPC1 in two clinical trials: a five patient Phase 1 safety trial and a 25-patient Phase 1/2a
dose escalation trial, which we call the SCiStar trial. The SCiStar trial was an open-label, single-arm trial testing three sequential
escalating doses of OPC1 administered at up to 20 million OPC1 cells with subacute, C-4 to C-7, motor complete (AIS-A or AIS-B)
cervical SCI. These individuals have essentially lost all movement below their injury site and experience severe paralysis of
the upper and lower limbs. AIS-A patients have lost all motor and sensory function below their injury site, while AIS-B patients
have lost all motor function but may retain some minimal sensory function below their injury site. OPC1 was administered 21 to
42 days post-injury. Patients continue to be followed by neurological exams and imaging procedures to assess the safety and activity
of the product. Enrollment was completed in December 2017 and consisted of five cohorts:
Cohort Injury Type; OPC1 Dose # of Patients
Cohort 1 AIS-A; 2 million OPC1 cells (low dose for safety evaluation) 3
Cohort 2 AIS-A; 10 million OPC1 cells 6
Cohort 3 AIS-A; 20 million OPC1 cells* 6
Cohort 4 AIS-B; 10 million OPC1 cells 6
Cohort 5 AIS-B; 20 million OPC1 cells* 4
*
One patient from Cohort 3 and one patient from Cohort 5 were administered 10 million cells.
In
January 2019, top-line 12-month data from the SCiStar trial were announced by Asterias, which included the following key findings:
In
November 2019, we provided an update on the SCiStar trial that highlighted, among other things:
In
November 2020, the formal Clinical Study Report for the SCiStar study with the above supporting data was submitted to the FDA.
The
FDA designated OPC1 as a Regenerative Medicine Advanced Therapy (“RMAT”), for the treatment of acute SCI and granted
it Orphan Drug Designation, which includes the ability for increased interfacing with the FDA during clinical development, and
a pathway to possible market exclusivity.
In
2019, we transferred all cGMP manufacturing processes, including the establishment of cell banks and the OPC1 process development
and manufacturing for clinical studies, to our cell therapy manufacturing facility in Jerusalem, Israel. Improvements to the manufacturing
process were completed in 2020 and include enhancements to the production process to ensure robust, controlled reproducible and
commercially viable scale, and purity of OPC1. We also developed a thaw and inject formulation of OPC1 to facilitate logistics
and handling at the point of care with the elimination of the dose preparation at the clinical site. An information amendment
describing the new process, an improved analytical plan, and a proposed comparability plan has been filed with FDA. A meeting
with the FDA is planned during the second half of 2021 to discuss our manufacturing improvements and the further development
of OPC1 in SCI to best set the program up for success moving forward. Concurrently, we have announced a new partnership for the
introduction of a novel delivery device for OPC1. Preliminary assessment of prototypes revealed promising compatibility with OPC1
product while simplifying the surgical procedure by providing surgeons with an instrument that is small, simple to use and would
not require stopping the patient’s ventilator to perform the injection, allowing far more flexibility for accurate delivery
to the injury site. We intend to complete development activities in the first half of 2021, then discuss with FDA the introduction
of the new delivery device in our IND if supported by the collected data. We continue work to expand our partnerships with SCI
advocacy and support organizations to support their mission to accelerate stem cell treatments to patients with unmet medical
needs and fast-track the development of the most promising stem cell technologies.
VAC2
VAC2
is our lead product candidate for the treatment of cancer. Cancer afflicts millions worldwide and is one of the largest unmet
clinical needs with current treatment options providing limited efficacy and a wide range of debilitating side effects. To provide
a more effective and targeted treatment, we are developing VAC2 as an allogeneic, or non-patient specific, cancer vaccine candidate
designed to stimulate patient immune responses to an antigen hTERT, which is commonly expressed in cancerous cells but not in
normal adult cells. VAC2, is produced by our pluripotent cell technology using a directed differentiation method, and is comprised
of a population of mature dendritic cells to which the hTERT antigen was introduced. As the most potent type of antigen presenting
cell in the body, dendritic cells instruct our body’s immune system to attack and eliminate harmful pathogens and unwanted
cells. To target cancerous cells, VAC2 is engineered to express the tumor-selective antigen telomerase, which is found in over
85% of all cancers. The tumor antigen is loaded exogenously into the dendritic cells. The VAC1 autologous program,
which preceded VAC2, serves as an effective and encouraging proof of concept behind our approach to dendritic cell vaccines
targeting telomerase, which is the backbone of the VAC2 program.
Using
pluripotent cells as the starting material for VAC2 production adds several additional advantages to this therapeutic candidate.
Compared to technologies that rely on the use of a patient’s own blood, our pluripotent cell technology provides a scalable
system for production of a large number of vaccine doses in a single lot, lower manufacturing costs, greater product consistency,
and more notably, off-the-shelf availability to provide broader and immediate access to patients. In addition, we believe that
as an allogeneic therapy, VAC2 has the potential to stimulate a more robust immune response through an adjuvant effect resulting
from the partial immune mismatch between the VAC2 cells and patients receiving the therapy. We believe that VAC2 can be used as
a platform technology that can be modified to carry any antigen, including patient-specific tumor neo-antigens.
In
September 2014, Asterias initiated clinical development of VAC2 by entering into a Clinical Trial and Option Agreement (the “CRUK
Agreement”) with Cancer Research UK (“CRUK”) and Cancer Research Technology Limited (“CRT”), a wholly
owned subsidiary of CRUK, under which CRUK agreed to fund Phase 1 clinical development of VAC2 in non-small cell lung cancer.
CRUK is responsible, at its own cost, for manufacturing clinical grade VAC2 and for carrying out the Phase 1 clinical trial of
VAC2. Patient enrollment began in June 2018 and six patients have now completed dosing in the initial aspect of the trial.
In
May 2020, Lineage and its wholly owned subsidiary Asterias entered into a Second Amendment to Clinical Trial and Option Agreement
(the “CTOA Amendment”) with CRUK and CRT, which amends the Clinical Trial and Option Agreement entered into between
Asterias, CRUK and CRT dated September 8, 2014, as amended September 8, 2014. Pursuant to the CTOA Amendment, Lineage assumed
all obligations of Asterias and exercised early its option to acquire data generated in the Phase 1 clinical trial of VAC2 in
non-small cell lung cancer being conducted by CRUK. CRUK will continue conducting the VAC2 study.
Lineage
and CRT effectuated the option by simultaneously entering into a license agreement (the “License Agreement”) pursuant
to which Lineage agreed to pay the previously agreed signature fee of £1,250,000 (approximately $1.6 million). In consideration
of Lineage’s agreement to exercise the option prior to completion of the study, the parties agreed to defer the signature
fee as follows: £500,000 in September 2020, £500,000 in January 2021 and £250,000 in April 2021. For the primary
licensed product for the first indication, the License Agreement provides for milestone fees of up to £8,000,000 based upon
initiation of a Phase 3 clinical trial and the filing for regulatory approval and up to £22,500,000 in sales-based milestones
payments. Additional milestone fees and sales-based milestone payments would be payable for other products or indications, and
mid-single-digit royalty payments are payable on sales of commercial products.
We
completed the transfer of all cGMP manufacturing processes, including the establishment of cell banks and the VAC2 process development
and manufacturing for clinical studies, to our cell therapy manufacturing facility in Jerusalem, Israel. In 2021, we will focus
on updating and optimizing the manufacturing process for VAC to ensure reliable supply for future clinical studies and possible
commercial development. An improved VAC manufacturing process will be the subject of a key interaction with FDA in the future
to introduce VAC in an IND.
The
allogeneic VAC2 program was preceded by the autologous VAC1 program which isolated dendritic cells from a patient’s own
blood, modified those cells to stimulate immune responses to telomerase and then administered those cells back to the patient
as a therapeutic modality. VAC1 was studied for the treatment of acute myeloid leukemia, the most common form of acute leukemia
in adults. A Phase 2 clinical trial of VAC1 demonstrated that it successfully manufactured and released in 24 out of the 33 patients
enrolled in the trial. Twenty-one patients received VAC1 in the trial, including 19 in clinical remission and two in early relapse.
VAC1 was found to have a favorable safety and tolerability profile. Asterias performed follow-up data collection on the 19 patients
treated while in complete remission to determine the long-term effects of the VAC1 administration on remission duration and disease-free
survival.
VAC1
utilized an autologous approach where the cellular vaccine needs to be created specifically for each patient. This results in
a longer time prior to administration of therapy as compared to the allogeneic approach of the VAC2 program, which is disadvantageous
in advanced cancer patients given the rapidity of disease progression. The VAC1 autologous program which preceded VAC2 serves
as an effective and encouraging proof of concept behind our approach to dendritic cell vaccines targeting telomerase, which is
the backbone of the VAC2 program.
Research
Programs
Vision
restoration
In
2017, we expanded our ophthalmology portfolio by acquiring exclusive global rights to technology that allows the generation of
three-dimensional human retinal tissue derived from human pluripotent cells. This tissue contains all the cell types and layers
of the human retina and has shown evidence of functional integration in proof of concept animal models for advanced retinal degeneration.
The technology is being developed to potentially treat or prevent a variety of retinal degenerative diseases and injuries. In
2017, the National Institutes of Health (“NIH”) awarded us a grant of up to $1.6 million to further develop this innovative,
next generation vision restoration program for retinal diseases and injuries, which severely impact the quality of life for millions
of people who have limited treatment options. In 2019, we received an additional grant of $0.7 million to continue work on this
program. We completed work under this grant in 2020 and submitted final reports to the NIH.
In
2020, the Israeli Innovation Authority approved a budgeted grant of approximately $0.6 million for us to manufacture novel
retinal implants aimed to treat patients with severe retinal impairment such as retinitis pigmentosa. We are eligible for 60%
reimbursement of our costs under this grant. This program allows us to combine our knowledge in manufacturing RPE cells and
photoreceptors with 3D printing technology.
Demyelination
OPC1
exhibits multiple reparative properties that may have broad applicability to neurological injury and disease, particularly as
a treatment for demyelination. Past research efforts investigated the potential development of OPC1 as a candidate treatment for
certain forms of ischemic stroke and multiple sclerosis (“MS”), two severely debilitating conditions for which demyelination
is a central component to their pathology.
To
develop OPC1 as a treatment for MS, initial proof-of-concept efficacy data has been demonstrated in collaboration with Yale University
using a non-human primate model of MS. Results of this study showed OPC1 engraftment that was associated with substantial remyelination
of the lesioned primate spinal cord up to five months post-treatment. Subsequently, we initiated a collaboration with University
of California Irvine to assess OPC1 efficacy in additional mouse models of MS that better recapitulate the autoimmune components
of the disease. Preliminary results indicated that in addition to OPC1’s capacity to remyelinate the lesioned spinal cord,
the cells may also help stimulate proliferation of a distinct class of immune cells known as regulatory T cells that can help
reduce or eliminate autoimmunity.
For
ischemic stroke, initial proof-of-concept efficacy data for OPC1 has been demonstrated in a collaborative study with the University
of California Los Angeles using a mouse model of white matter ischemic stroke. Results of this study demonstrated that within
the stroke injury site, OPC1 cells engrafted, reduced lesion formation and inflammation, and increased myelination, culminating
in improved functional recovery. A second preclinical study was completed in collaboration with the University of South Florida
to test two different doses of OPC1 in a rat model of ischemic subcortical and white matter stroke. Results from this study demonstrated
the ability of OPC1 to impact the restoration of motor function in a rat model of white matter stroke. Further, histological assessments
showed a treatment-associated reduction in stroke lesion size, including in the white matter, as well as reduced inflammation
and sustained OPC1 engraftment in the injured brain.
While
we are not actively pursuing OPC1 for MS and ischemic stroke at this time, we may use the results of these studies to seek additional
funding and guide further preclinical development of OPC1 for these or other conditions of demyelination.
Products
for Other Indications
We
also have rights to intellectual property applicable to other indications such as for producing cardiomyocytes, pancreatic islet
cells, hepatocytes, chondrocytes, osteoblasts and other cell types for which development of new therapies represent significant
commercial opportunities. We may elect to pursue these or other programs at any time.
Other
Products
We
also have rights to HyStem, a patented biomaterial that mimics naturally occurring extracellular matrix, the structural network
of molecules surrounding cells in organs and tissues essential to cellular function and tissue structure. HyStem may be useful
as a scaffold for cell replacement and retention. We sold HyStem-related assets and licensed the applicable technology in late
2019, but retained the rights for other uses, including for Renevia, our facial aesthetics product, which received a Conformité
Européenne (CE) Mark in September 2019.
Investments
and subsidiaries:
The
following tables show the companies in which we have a direct or indirect ownership, their respective principal fields of business,
our percentage ownership as of March 5, 2021, and the country where their principal business is located:
Investments:
Company Field of Business Lineage Ownership Country
OncoCyte Corporation(1) Cancer diagnostics ~1 % USA
Hadasit Bio-Holdings Ltd.(1) Owns a portfolio of R&D based companies <2 % Israel
Significant
subsidiaries:
Company Field of Business Lineage Ownership Country
Patents
and Trade Secrets
We
seek to protect and rely on our proprietary cell-based therapy platform and associated development and manufacturing capabilities
and derived product candidates through a variety of methods, including seeking and maintaining patents intended to cover our products
and compositions, their methods of use and processes for their manufacture, our platform technologies and any other inventions
that are commercially important to the development of our business. We also rely on contractual obligations with employees and
third parties to protect our proprietary rights. For example, in addition to protecting our proprietary rights with patents, we
rely on unpatented trade secrets, improvements, know-how and innovation, and we take steps necessary to protect these rights,
including through confidentiality agreements with our corporate partners, employees, consultants and vendors. We have sought,
and intend to continue to seek, appropriate patent protection for important and strategic components of our proprietary technologies
by filing patent applications in the U.S. and internationally. We may also file additional patent applications, when appropriate,
to cover improvements on our clinical products, clinical product candidates, and related technologies. There are no assurances
that any of our intellectual property rights will guarantee complete or adequate protection or market exclusivity for our products
and product candidates. We also enter into collaborative and other similar arrangements with third parties, such as license agreements,
to in-license and/or out-license intellectual property rights. Our financial success will be dependent, in part, on our ability
to obtain rights to commercially valuable patents, to protect and enforce our intellectual property rights and to operate without
infringing any intellectual property rights of others. From time to time, we assess our patents and pending applications covering
our products and product candidates. If we determine that any patents or patent applications no longer provide adequate or necessary
protection, we may transfer or abandon such patents and patent applications to avoid incurring unnecessary costs.
We
own or license, directly or through our subsidiaries, several patent families that include hundreds of U.S. and international
patents and patent applications. We cannot be certain that issued patents will be enforceable or provide adequate protection or
that pending applications will result in issued patents.
OpRegen
We
and our subsidiary, Cell Cure, have rights to issued U.S. and international patents and pending patent applications covering OpRegen.
The issued patents have expiration dates ranging from 2028 to 2036. The pending applications if issued, will have estimated expiration
dates ranging from 2028 to 2041. These U.S. and international issued patents and pending applications also include those in-licensed
from Hadasit Medical Research Services and Development Ltd. (“Hadasit”), the commercial arm and a wholly owned subsidiary
of Hadassah Medical Organization. We also solely own pending U.S. and Patent Cooperation Treaty (“PCT”) patent applications
relating to cryopreserving the cell population and then shipping it to the clinical trial site so the cells can be immediately