On March 10, 2022 Lineage Cell Therapeutics, Inc. (NYSE American and TASE: LCTX), a clinical-stage biotechnology company developing allogeneic cell therapies for unmet medical needs, reported financial and operating results for the fourth quarter and full year 2021 (Press release, Lineage Cell Therapeutics, MAR 10, 2022, View Source [SID1234609885]). Lineage management will host a conference call and webcast today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time to discuss its fourth quarter and full year 2021 financial and operating results and to provide a business update.
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"2021 was a transformative year for Lineage, in part because we entered into a worldwide corporate partnership with Roche and Genentech for our OpRegen program for the treatment of ocular disorders," stated Brian M. Culley, Lineage CEO. "We have continued to execute on our strategic plan to position Lineage as a leader in the allogeneic cell transplant revolution, supported by our regenerative medicine technology; manufacturing and differentiation of specific cell types. These cells are transplanted into the body to restore or improve function lost due to aging, injury, or disease. We believe the collaboration of our lead asset with a world-class pharmaceutical partner with extensive ophthalmology capabilities brings significant validation to our technology platform and our approach to product development. As importantly, this transaction adds significant new capital to help support the advancement of our OPC1 program, VAC platform, and the expansion of our regenerative medicine pipeline into new disease settings. Our corporate objectives in 2022 will be focused on the continued advancement of our current clinical programs and making responsible investments in the expansion of our novel approach to cell transplant medicine in disease settings where we believe we can make a meaningful impact. We look forward to announcing our new, internally developed pipeline candidate later this quarter."
Some of the more significant milestones we achieved in 2021 include:
– Established an exclusive worldwide collaboration and license agreement with Roche and Genentech (the "Roche Collaboration"), for the development and commercialization of OpRegen, a retinal pigment epithelium ("RPE") cell therapy, for the treatment of ocular disorders, including advanced dry age-related macular degeneration ("dry AMD") with geographic atrophy ("GA"), in a transaction worth up to $670 million in addition to double digit royalties;
– Reported a fourth case of retinal restoration with OpRegen; notably, four patients with dry AMD were observed to have areas of GA which diminished or remained unchanged relative to baseline for a period of at least 12 months;
– Announced a worldwide license agreement with Immunomic Therapeutics, Inc. for an allogeneic cell-based cancer immunotherapy based on our VAC platform; Lineage received $2 million upfront and may receive up to $67 million in development and commercial milestones plus royalties;
– Entered into an exclusive agreement with Neurgain Technologies to evaluate a novel delivery system for OPC1 to treat Spinal Cord Injury;
– Expanded our management team with the additions of Chief Financial Officer, Kevin L. Cook, as well as General Counsel, George A. Samuel, III; and
– Expanded our Board of Directors with the appointments of Drs. Anula Jayasuriya, M.D., Ph.D., M.B.A. and Dipti Amin, MBBS, FFPM, MRCGP, DCPSA, DCH, DRCOG, DGM.
Some of the events and milestones anticipated by Lineage in 2022 include:
– Announcement of a new pipeline program from our regenerative medicine cell therapy platform anticipated in March;
– Completion of GMP production of OPC1 via an improved and larger-scale manufacturing process and a new thaw-and-inject formulation; anticipated in Q1 2022;
– FDA interaction to discuss recent manufacturing improvements made to OPC1, anticipated in Q3 2022;
– Initiation of clinical performance and safety testing of the novel Parenchymal Spinal Delivery system device for OPC1, with an anticipated Investigational New Drug ("IND") amendment submission in Q3 2022;
– Updates from the ongoing VAC2 Phase 1 non-small cell lung cancer study; anticipated in Q2 2022;
– An anticipated IND submission for VAC2 in 2H 2022;
– Continued development of a cell-based therapeutic for glioblastoma with our strategic partner, Immunomic Therapeutics; ongoing throughout 2022;
– Evaluation of opportunities for new VAC product candidates based on internally identified or partnered tumor antigens; ongoing throughout 2022;
– Evaluation of partnership opportunities and expansion of existing collaborations; ongoing throughout 2022; and
– Continued participation in numerous investor and partnering meetings and medical and industry conferences to broaden the knowledge of our work.
Balance Sheet Highlights
Cash and cash equivalents totaled $55.7 million as of December 31, 2021. In January 2022, we received a $50.0 million upfront payment related to the Roche Collaboration and made subsequent payments pursuant to Lineage’s downstream obligations.
Fourth Quarter Operating Results
Revenues: Lineage’s revenue is generated primarily from research grants, royalties, and licensing fees. Total revenues for the three months ended December 31, 2021 were approximately $1.2 million, an increase of $0.8 million as compared to $0.4 million for the same period in 2020. The increase was related to royalties and licensing fees, which was primarily driven by licensing revenues in connection with collaboration agreements entered into in 2021.
Operating Expenses: Operating expenses are comprised of research and development ("R&D") expenses and general and administrative ("G&A") expenses. Total operating expenses for the three months ended December 31, 2021 were $29.2 million, an increase of $23.1 million as compared to $6.1 million for the same period in 2020. The overall increase was substantially driven by $20.6 million in higher OpRegen-related expenses, mainly due to accruals for future financial obligations payable to the Israel Innovation Authority ("IIA") and Hadasit Medical Research Services and Development Ltd ("Hadasit"), related to the receipt of the $50.0 million upfront payment under the Roche Collaboration.
R&D Expenses: R&D expenses for the three months ended December 31, 2021 were $24.8 million, an increase of $22.2 million as compared to $2.6 million for the same period in 2020. The increase was substantially driven by the $21.0 million accrual for future financial obligations payable to IIA and Hadasit. Other drivers of the increased variance were related to $1.0 million and $0.6 million in higher expenses to support the development of the OPC1 and VAC programs, respectively.
G&A Expenses: G&A expenses for the three months ended December 31, 2021 were $4.4 million, an increase of $0.9 million as compared to $3.5 million for the same period in 2020. The increase was primarily attributable to increases of $0.3 million in legal and litigation expenses, $0.3 million in salaries and related benefits, and $0.3 million in share-based compensation expense.
Loss from Operations: Loss from operations for the three months ended December 31, 2021 was $28.2 million, an increase of $22.3 million as compared to $5.9 million for the same period in 2020, principally owing to collaboration-related expense accruals of $21.0 million which were not deferrable expenses, and as such, do not align with current period revenues due to revenue deferral accounting standards.
Other Income, Net: Other income, net for the three months ended December 31, 2021 was $0.2 million, compared to other income, net of $6.9 million for the same period in 2020. The variance was primarily related to changes in the value of marketable equity securities for the applicable periods.
Net Income/(Loss) Attributable to Lineage: The net loss attributable to Lineage for the three months ended December 31, 2021 was ($29.0) million, or ($0.17) per share (basic and diluted), compared to a net income attributable to Lineage of $2.0 million, or $0.01 per share (basic and diluted), for the same period in 2020. The large year-over-year change was principally due to the collaboration-related expense accruals amounting to ($0.12) per share which were not deferrable expenses, and as such, do not align with current period revenues due to revenue deferral accounting standards.
Full Year Operating Results
Revenues: Lineage’s revenue is generated primarily from research grants, royalties, and licensing fees. Total revenues for the year ended December 31, 2021 were $4.3 million, an increase of $2.5 million as compared to $1.8 million for the same period in 2020. The increase was primarily related to a $2.0 million increase in royalty revenues, and a $1.1 million increase in licensing revenues in connection with collaboration agreements, partially offset by a $0.6 million decrease in grant revenues.
Operating Expenses: Operating expenses are comprised of R&D expenses and G&A expenses. Total operating expenses for the year ended December 31, 2021 were $52.1 million, an increase of $24.2 million as compared to $27.9 million for the same period in 2020. The overall increase was substantially driven by $19.9 million in higher OpRegen-related expenses, mainly due to accruals for future financial obligations payable to IIA and Hadasit, related to the receipt of the $50.0 million upfront payment under the Roche Collaboration.
R&D Expenses: R&D expenses for the year ended December 31, 2021 were $33.9 million, an increase of $21.6 million as compared to $12.3 million for the same period in 2020. The increase was substantially driven by the $21.0 million accrual for future financial obligations payable to the IIA and Hadasit. Other drivers of the net increase variance were $2.2 million in higher manufacturing and device development costs to support the OPC1 program, offset by $0.3 million in lower VAC program expenses.
G&A Expenses: G&A expenses for the year ended December 31, 2021 were $18.2 million, an increase of approximately $2.6 million as compared to $15.6 million for the same period in 2020. The increase was primarily related to increases of $1.3 million in legal, litigation and patent expenses, $0.9 million in share-based compensation expenses, and $0.3 million in payroll and related benefits expense.
Loss from Operations: Loss from operations for the year ended December 31, 2021 was $49.2 million, an increase of $22.8 million as compared to $26.4 million for the same period in 2020, principally owing to collaboration-related expense accruals of $21.0 million which were not deferrable expenses, and as such, do not align with current period revenues due to revenue deferral accounting standards.
Other Income, Net: Other income, net for the year ended December 31, 2021 was $5.9 million, compared to other income, net of $4.5 million for the same period in 2020. The net variance was primarily related to the changes in the value of marketable equity securities for the applicable periods.
Net Loss Attributable to Lineage: The net loss attributable to Lineage for the year ended December 31, 2021 was $43.0 million, or $0.26 per share (basic and diluted), compared to a net loss attributable to Lineage of $20.6 million, or $0.14 per share (basic and diluted), for 2020. The large year-over-year change is principally due to collaboration-related expense accruals amounting to $0.13 per share which were not deferrable expenses, and as such, do not align with current period revenues due to revenue deferral accounting standards.
Conference Call and Webcast
Interested parties may access the conference call by dialing (866) 888-8633 from the U.S. and Canada and (636) 812-6629 from elsewhere outside the U.S. and Canada and should request the "Lineage Cell Therapeutics Call". A live webcast of the conference call will be available online in the Investors section of Lineage’s website. A replay of the webcast will be available on Lineage’s website for 30 days and a telephone replay will be available through March 18, 2022, by dialing (855) 859-2056 from the U.S. and Canada and (404) 537-3406 from elsewhere outside the U.S. and Canada and entering conference ID number 7718167.