Yahoo Finance Lineage Cell Therapeutics, Inc. (AMEX:LCTX) Q1 2024 Earnings Call Transcript
Lineage Cell Therapeutics, Inc. (AMEX:LCTX) Q1 2024 Earnings Call Transcript May 10, 2024
Lineage Cell Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Welcome to the Lineage Cell Therapeutics First Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investors section of Lineage website at www.lineage.com. This call is subject to copyright and is the property of Lineage and recordings for productions or transmissions of this call without the express written consent of Lineage are strictly prohibited. As a reminder, today's call is being recorded. I would now like to introduce you to your host for today's call, Ioana Hone, Head of Investor Relations of Lineage. Ms. Hone, please go ahead.
Ioana Hone: Thank you, John. Good afternoon and thank you for joining us. A press release reporting our first quarter 2024 financial results was issued earlier today, May 9th, 2024, and can be found on the Investors section of our website. Please note that today's remarks and responses to your questions reflect management's views as of today only and will contain forward-looking statements within the meaning of federal securities laws. Statements made during this discussion that are not statements of historical fact should be considered forward-looking statements, which are subject to significant risks and uncertainties. The company's actual results or performance may differ materially from the expectations indicated by such forward-looking statements.
For a discussion of certain factors that could cause the company's results or performance to differ, we refer you to the forward-looking statements section in today's press release and in the company's SEC filings, including its annual report on Form 10-K, for the year ended December 31st, 2023. We caution you not to place undue reliance on any forward-looking statements, which speak only as of today and are qualified by the cautionary statements and risk factors described in our SEC filings. With us today are Brian Culley, our Chief Executive Officer; and Jill Howe, our Chief Financial Officer. I'll now hand the call over to Brian.
Brian Culley: Thank you, Ioana, and good afternoon, everyone. We've had an exciting week, and I appreciate you taking the time to join us on this call. We have many positives to cover today, including the news we just shared a few minutes ago, but I want to begin with the recent data update on OpRegen. Data is a major driver of value and that data was notable for several reasons, and I just want to ensure those points are clear for our new and existing shareholders. Last Friday, on behalf of Roche and Genentech, Dr. David Thelander, presented 24-month results from the Phase 1/2a trial of OpRegen for dry AMD. As you know, dry AMD is a degenerative disease that never resolved spontaneously. Dry AMD also currently has no treatment options that can improve vision or even maintain vision in terms of the number of letters read on an eye chart, which is the standard way to assess visual performance in these patients.
In fact, according to a recent publication in the Lancet reporting on a clinical trial of more than 1,200 dry AMD patients, [indiscernible] treated patients with baseline disease characteristics similar, although not identical to those OpRegen patients reported by Dr. Thelander lost an average of seven letters of visual acuity after 24 months. Patients who received the best available treatment with an FDA-approved complement inhibitor still experienced a mean loss of vision of eight or nine letters over the same 24-month time period. In comparison, among the 24 patients treated in the OpRegen Phase 1/2a study, and we focused on the 12 patients, which we call Cohort 4, and these are patients who were not already legally blind at baseline, 10 of those 12 patients had data available at 24 months, which, therefore, somewhat matches those reported in the Lancet publication.
And those Opergen patients actually gained an average of 5.5 letters. I think it's worth repeating this point. This cohort of OpRegen patients gained back an average of 5.5 letters of visual acuity while comparable patients on anti-complement therapy or no therapy at all lost seven to nine letters. So if you compare these time matched outcomes, our experimental therapy was on average, 14 letters better than the best available therapy. More importantly, these OpRegen patients gained vision while those others lost it. Digging further, if you look only at the five patients who received more thorough coverage of Opregen across their areas of GA, that difference moves even further in our favor with an average gain of 7.4 letters of BCVA at 24 months, coupled with those gains in visual acuity were the anatomical changes, which also were reported by Dr. Telander.
I won't repeat his entire presentation, which is available on our website, but a summary version of it is that some of these OpRegen treated patients who should all be experiencing degradation of their retinal tissue have shown imaging evidence of retaining or even gaining critical layers of their retina two years after receiving a single transplant of OpRegen RPE cells. While this observation did not occur in a large number of patients, it's important to keep in mind that this is a phenomenon which never occurs in the natural course of this disease. And additionally, our pharma partner is reporting these observations independently by accessing and evaluating raw data, collected from our study at multiple sites, from multiple surgeons and even using significantly different delivery techniques.
Now we all know that small data sets from early-stage studies are not as conclusive as large studies, but that does not mean that small data sets aren't valuable. It depends on their context and the consistency of information which they provide. For this reason, I think it's worthwhile to put two things into perspective. First, the data set I'm comparing us to is not small. The complement data -- data I just mentioned includes more than 1,200 patients. So we believe the vision loss experienced by those patients is both relevant and reliable to use as context for our data. Second, while our data reports on a cohort of 10 patients rather than the large number of patients used to determine findings of safety and efficacy for marketing authorization, it's certainly encouraging to us that these 10 patients with dry AMD treated at six different clinical sites in two countries, by eight different surgeons and using two different routes of delivery as a group and also as a majority showed improvement in an unavoidably degenerative condition.
Moreover, the visual acuity improvement over untreated eyes, which also had dry AMD, was present as shown in the presentation last week at six months, 12 months and now demonstrated also at 24 months. OpRegen is a treatment designed and intended to accomplish exactly this kind of replace and restore outcome. So while additional data will be needed to determine the future value of our treatment it seems to us at lineage that the stream of incremental evidence of a beneficial and durable clinical effect is continuing, and this gives us great hope for the future. Taking the future of the segue for the next topic, we had a second significant and positive event this week. We announced just a few minutes ago that we have entered into a new services agreement with Genentech, which will provide additional support to the ongoing development of OpRegen.
To be clear, we did not renegotiate our existing license agreement. This is a new additional agreement under which Lineage will be providing certain clinical, technical training and manufacturing services expanding beyond the scope of the existing license agreement that also further supports the ongoing advancement of the OpRegen program. These additional services will be fully funded by Genentech and include activities to support the ongoing Phase 1/2a and the currently enrolling Phase 2a studies as well as additional technical training and materials related to Lineage's cell therapy technology platform, which can support commercial manufacturing strategies. We believe this additional commitment provides an important signal of our partners support for our approach at a time when they are making difficult decisions about their developmental pipeline.
Specifically, we noted that gross representatives recently stated they are focusing on high impact assets which is supported by recent actions they have taken to prioritize their pipeline toward first-in-class and best-in-class assets. We welcome that as our view is that OpRegen satisfies both of those criteria. For today, I'll summarize my updated view of the OpRegen program with these three points. First, we announced additional validating data this week, which offers implications for both the clinical benefit and durability of our lead product candidate. Second, we've entered into a new services agreement with our partner, which will expand the investigation and understanding of OpRegen and further deepened the valuable relationship we struck on this groundbreaking project.
And third, despite safety concerns with current FDA approved treatment options, the commercial market for a dry AMD therapy continues to grow and is creating a more informed patient population. We believe all of these factors combined to position us well for a promising and potentially revolutionary approach to treating dry AMD. While dry AMD is a compelling opportunity and OpRegen may have applications in additional ocular diseases, we believe our cell transplant approach is not limited to ocular conditions. We believe the fundamental science of cell replacement offers advantages over small molecules and antibodies in certain situation, advantages, which could be applied to many areas of the body. As Genentech's Vice President and Global Head of Ophthalmology Product Development recently said on a podcast, and I'll again quote antibodies can't replace dead cells.
Only cells can replace dead cells. I couldn't agree with them more. Clearly, cell therapy has already revolutionized oncology treatment, and there are many other indications where it could have a positive impact on chronic degenerative diseases. And I think there's abundant evidence from the biotech and pharma world to support that statement. We can not only point to large companies like Bayer, Roche, Astellas or Vertex, who have made major investments in this emerging field, but also look to newer entities, which have raised significant capital from high-caliber investors to explore what is possible using cell transplant technology. While we welcome these new entrants for the validation they bring to our approach, we're also comforted by our experience, which indicates that the learning curve for this form of cell therapy, especially doing affordably scaled and well-controlled manufacturing is extremely steep and long.
For this and other reasons, we believe we can remain a leader in this new branch of medicine by advancing our growing pipeline of opportunities and while pointing to the continued success of OpRegen. Our most advanced example of making investments in our pipeline is, of course, OPC1, our cell transplant program for spinal cord injury. The objective of this program is to replace the cells, which comprise the spinal cord and restore or provide function to people who have been paralyzed by a spinal cord injury. This is an approach of great interest and importance to the SCI field, and there have been a number of attempts to use stem cells in this patient population. However, those efforts all utilized undifferentiated for mesenchymal stem cells.
At Lineage, we don't use undifferentiated stem cells in any of our clinical programs because those aren't the cells which are destroyed or lost to disease. Instead, we are manufacturing and transplanting cells which far more closely match the identity of cells found naturally in the body. And specifically, in this case, those found in the spinal compartment, which by the way, is the same fundamental approach, which has yielded positive results in the ocular compartment with our dry AMD program. We manufacture our spinal cord product candidate at a CGMP facility, which we control. And alongside the advantages of having in-house manufacturing, we're not aware of anyone who has a longer set of safety data in cell therapy for spinal cord injury.
We've collected and published as long as 10 years of safety and efficacy data on our patients and believe the adjustments we've made to increase purity and control of our sales and our manufacturing process will further improve the quality profile, which we've already demonstrated for this program. And in addition to improving the material we transplant, we're simultaneously investigating superior ways to deliver ourselves to patients. To that point, the next clinical trial we plan to run in spinal cord injuries for the safety and performance of a novel delivery system, which we will initiate as soon as we receive final clearance from FDA. We have already submitted the requisite IND amendment information and received comments from the FDA. And typically, those comments only take us a few days to respond to, but FDA has explained to us that their heavy workload is causing delays.
And in fact, their review of our submission has continued past their initial expectation of April 26, but we believe we are approaching the end of this portion of the regulatory process. And so in parallel, we are continuing to perform the necessary start-up activities for the clinical study. If FDA clearance does become likely to our target start date this quarter. We will provide that information around that time. But at present, we believe we remain on track to open our first clinical site for this study in June. There are three important aspects of this trial, which I want to note for you today. First, the delivery system we're testing has been designed to deliver cells without stopping patient ventilation. -Prior trials, including also the two prior trials of OPC1, which have been completed, required the patient's ventilator to be stopped during cell administration.
We consider keeping the patient connected to the ventilator to offer an obvious safety advantage over therapies, which do not have this feature. This new approach is also compatible with our proprietary thaw-and-inject formulation, which has eliminated costly dose preparation steps and the associated counting and handling of cells in favor of a simple five-minute filing procedure followed by a slow manual push of the cells via an off-the-shelf needle. Thirdly, and probably the most exciting point among the three is that this study will be the first time OPC1 is administered to patients with chronic spinal cord injuries. That will be a significant milestone for this program, because most chronic injury patients have reached a plateau in their recovery.
So if we happen to observe any functional recovery in a patient who has plateaued, it can significantly broaden the addressable patient population for this therapy. So in addition to the safety and performance of the new device, we also will be collecting functional assessments on the patients to investigate whether any signals of efficacy are present among chronic injury patients. As our technology and know-how increases as our lead program adds validation to our approach and as our internally developed programs reach clinical testing, we are positioning ourselves to retain a growing share of the economics of our success. For this reason, we plan to continue investing in our pipeline and partnerships, which are aligned with this strategy. For example, our alliance with Eterna to generate a hypo immune cell-line for future cell transplant programs is making good progress, and that could be something we discuss on the next call.
An additional comment I wanted to make today was to provide an update on the second annual SCI Investor Symposium. We created this conference with input and support from the Christopher and Dana Red Foundation and California Institute for Regenerative Medicine as part of our efforts to expand collaborative partnerships and drive greater awareness to the SCI field. To our knowledge, this investor facing conference is the only one of its kind in spinal cord injury and we're delighted by the quality of speakers and companies, which have confirmed to present. In addition to molecular interventions such as these self-transplants and small molecules being developed by Lineage and AbbVie, we have added companies from the electrical stimulation and BCI fields.
Most of the thought leaders who presented last year have already committed to return, and we are continuing to add speakers. The event aims to provide a comprehensive view of issues and opportunities in spinal cord injury. You can expect an update from us on this conference in the coming weeks, and I hope that some of you will consider joining us for it in San Diego on June 26th and 27th. Before handing the call over to Jill to review our financials, I wanted to add a few words about the passing of our long-serving Chairman, Mr. Al Kingsley. Al played a pivotal role in this company's journey. He was incredibly dedicated and creative in his work, and our deepest condolences go out to his family, friends and countless colleagues. Al was a man of great faith and charity in both his personal and professional lives, and we intend to honor his dreams for this company through the inspiration and dedication that his memory provides for us each and every day.
Jill?
Jill Howe: Thanks, Brian, and good afternoon, everyone. Starting with our balance sheet, I am pleased to announce that we remain sufficiently capitalized to carry out the near-term activities in our current operating plan. Our reported cash, cash equivalents and marketable securities of $43.6 million as of March 31, 2024, is expected to support planned operations into Q3 of 2025. Next, I will review our financial operating results -- our first quarter operating results. Our revenue is generated primarily from collaboration revenues and royalties. Total revenues were approximately $1.4 million, a net decrease of $1 million as compared to $2.4 million for the same period in 2023. The decrease was primarily driven by lower collaboration and licensing revenue recognized from deferred revenues under the collaboration and license agreement with Roche.
Our operating expenses are primarily comprised of research and development expenses and general and administrative expenses. Total operating expenses were $8.1 million, a decrease of $0.9 million as compared to $9 million for the same period in 2023. R&D expenses were $3 million, a net decrease of $1.2 million as compared to $4.2 million for the same period in 2023. The net decrease was primarily driven by $0.4 million for our OPC1 program, $0.3 million for our preclinical programs and $0.2 million for our OpRegen program. Another $0.3 million of the decrease is attributable to other research and development expenses, primarily related to reduced manufacturing activities. G&A expenses were $5 million, a net increase of $0.3 million as compared to approximately $4.7 million for the same period in 2023.
The increase was primarily driven by $0.2 million in stock-based compensation expenses and an overall increase in costs incurred for consulting services. Our loss from operations were $6.7 million, an increase of $0.1 million as compared to $6.6 million for the same period in 2023. Other income and expenses were comprised of other income of $0.1 million compared to other income of $0.4 million for the same period in 2023. The net decrease was primarily driven by the employee retention credit recognized in the prior year, partially offset by exchange rate fluctuations related to our international subsidiaries. Our net loss was $6.5 million or $0.04 per share compared to a net loss of $4.4 million or $0.03 per share for the same period in 2023.
Moving ahead, our aim is to uphold our commitment to fiscal discipline. We are confident that this continued approach will support our plans towards achieving pivotal milestones and generating shareholder value through ongoing investments in our programs. Now, I'll hand the call back to Brian.
Brian Culley: Thanks, Jill. To summarize three key points for today. One, we continue to be extremely happy with our now recently expanded alliance with Roche and Genentech, not only for their commitment to advancing OpRegen through the clinic, but also for enhancing awareness of the program at medical and scientific meetings. Two, we're excited to be putting a second cell transplant program into active enrollment this year in a disease with an enormous unmet need and limited competition. And three, we will continue to look for ways to build value from our early-stage pipeline through thoughtful investments in experimental studies and methods as well as from strategic collaborations, which can help advance our programs and validate our approach. I appreciate your attention and time today. And with that, operator, we are ready to take analysts' questions.
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