What changed in this filing

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Item 1A. Risk Factors

2021-03-11 compared with 2020-03-12 · 429 added, 306 removed, 1008 unchanged (42% of the section changed)

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and we had an accumulated deficit of $294.1 million as of December 31, 2020.

Since inception, we have incurred significant

operating losses and have funded our operations primarily through sales of our equity securities and the equity securities of

former subsidiaries, receipt of research grants, royalties on product sales, license revenues, sales of research products, and

revenues from subscription fees and advertising revenue from database products of a former subsidiary.

Substantially all of our

losses have resulted from expenses incurred in connection with our research and development programs and from general and administrative

costs associated with our operations.

All of our product candidates will require substantial additional development time and resources

before we would be able to apply for or receive regulatory approvals.

We expect to continue to incur losses for the foreseeable

future, and we anticipate these losses will increase substantially as we continue our development of, seek regulatory approval

for and potentially commercialize any of our product candidates and seek to identify, assess, acquire, in-license or develop additional

Since inception, we have incurred significant operating

losses and have funded our operations primarily through sales of our equity securities and the equity securities of former subsidiaries,

receipt of research grants, royalties on product sales, license revenues, sales of research products, and revenues from subscription

fees and advertising revenue from database products of a former subsidiary.

Substantially all of our losses have resulted from

expenses incurred in connection with our research and development programs and from general and administrative costs associated

with our operations.

All of our product candidates will require substantial additional development time and resources before we

would be able to apply for or receive regulatory approvals.

We expect to continue to incur losses for the foreseeable future,

and we anticipate these losses will increase substantially as we continue our development of, seek regulatory approval for and

potentially commercialize any of our product candidates and seek to identify, assess, acquire, in-license or develop additional

product candidates.

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$12.3 million and $17.9 million during the fiscal years ended December 31, 2020 and 2019, respectively.

If we successfully develop

a new technology or product, refinement of the new technology or product and definition of the practical applications and limitations

of the technology or product may take years and require large sums of money.

Clinical trials of new therapeutic products, particularly

those products that are regulated as biologics, drugs, or devices, are very expensive and take years to complete.

We may not have

the financial resources to fund clinical trials on our own and we may have to enter into licensing or collaborative arrangements

Any such arrangements may be dilutive to our ownership or economic interest in the products we develop, and we might

have to accept royalty payments on product sales rather than receiving the gross revenues from product sales.

In addition, we

may discontinue one or more of the research or product development programs.

Our product and technology development programs may

be delayed or discontinued should adequate funding on acceptable terms not be available.

If we successfully

develop a new technology or product, refinement of the new technology or product and definition of the practical applications

and limitations of the technology or product may take years and require large sums of money.

Clinical trials of new therapeutic

products, particularly those products that are regulated as biologics, drugs, or devices, are very expensive and take years to

We may not have the financial resources to fund clinical trials on our own and we may have to enter into licensing or

collaborative arrangements with others.

Any such arrangements may be dilutive to our ownership or economic interest in the products

we develop, and we might have to accept royalty payments on product sales rather than receiving the gross revenues from product

In addition, we may discontinue one or more of the research or product development programs.

Our product and technology

development programs may be delayed or discontinued should adequate funding on acceptable terms not be available.

amount and pace of research and development work that we can do or sponsor, and our ability to commence and complete clinical

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us to develop and market our products and technology, if and when approved.

Our ability to raise additional funds may be adversely

impacted by deteriorating global economic conditions and the disruptions to and volatility in the credit and financial markets

in the United States and worldwide resulting from the ongoing COVID-19 pandemic.

Unless we are able to generate sufficient revenue

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have been filed and other lawsuits may be filed against Lineage and certain members of the Lineage and Asterias Biotherapeutics,

(“Asterias”) boards of directors relating to our acquisition of Asterias (the “Asterias Merger”).

An adverse ruling in any such lawsuit may result in additional payments and costs.

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Chancery Court.

The defendants are certain former members of Asterias’

board of directors, Lineage, Neal Bradsher, Broadwood

Capital, Inc.

and Broadwood Partners, L.P.

The complaint alleges that the merger process was conflicted, that the consideration

was inadequate, and that the proxy statement filed by Asterias was misleading.

The complaint seeks, among other things, certification

of a class, rescission of the merger or monetary damages, and attorneys’

fees and costs.

As of December 31, 2020, the defendants are certain former members of Asterias’ board of directors and Lineage.

The complaint alleges that the merger process was conflicted, that the consideration was inadequate, and that the proxy statement

filed by Asterias was misleading.

The complaint seeks, among other things, certification of a class, rescission of the merger

or monetary damages, and attorneys’ fees and costs.

defendants specifically deny all allegations in the litigation and intend to defend it vigorously.

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could be interpreted, changed, modified or applied adversely to us.

For example, legislation enacted in 2017, informally known

as the Tax Cuts and Jobs Act (the “2017 Tax Act”), enacted many significant changes to the U.S.

Future guidance

from the Internal Revenue Service and other tax authorities with respect to the 2017 Tax Act may affect us, and certain aspects

of the 2017 Tax Act could be repealed or modified in future legislation.

In addition, it is uncertain if and to what extent various

states will conform to the 2017 Tax Act or any newly enacted federal tax legislation.

For example, the 2017 Tax Act, enacted many significant changes

Future guidance from the Internal Revenue Service and other tax authorities with respect to the 2017 Tax

Act may affect us, and certain aspects of the 2017 Tax Act could be repealed or modified in future legislation.

For example, the

Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and the Consolidated Appropriations Act, 2021

(CA) modified certain provisions of the 2017 Tax Act.

In addition, it is uncertain if and to what extent various states will conform

to the 2017 Tax Act, the CARES Act, or any newly enacted federal tax legislation.

Changes in corporate tax rates, the realization

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in significant one-time charges, and could increase our future U.S.

ability to use net operating losses to offset future taxable income may be subject to limitations.

of December 31, 2019, we had net operating loss (“NOL”) carryforwards for U.S.

ability to use net operating losses and other tax attributes to offset future taxable income or taxes may be subject to limitations.

of December 31, 2020, we had net operating loss (“NOL”) carryforwards for U.S.

federal and state tax purposes of approximately

$169.9 million and $118.6 million, respectively.

A portion of the federal and state NOL carryforwards will begin to expire,

if not utilized, in varying amounts between 2027 and 2039.

NOLs that expire unused will be unavailable to offset future income

tax liabilities.

Under federal income tax law, federal NOLs incurred in 2018 and in future years may be carried forward indefinitely,

but the deductibility of such federal NOLs is limited.

It is uncertain if and to what extent various states will conform to the

federal tax law.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “IRC”),

and corresponding provisions of state law, if a corporation undergoes an “ownership change,”

which is generally defined

as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use

its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.

We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be

outside of our control.

If an ownership change occurs and our ability to use our NOL carryforwards is materially limited, it would

harm our future operating results by effectively increasing our future tax obligations.

In addition, at the state level, there

may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate

or permanently increase state taxes owed.

Included in these amounts are NOLs acquired through the merger with Asterias

A portion of the federal and state NOL carryforwards will begin to expire, if not utilized, in varying amounts between

2027 and 2037.

NOLs that expire unused will be unavailable to offset future income tax liabilities.

Under federal income tax law,

federal NOLs incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility

of such NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income.

It is uncertain if and to what

extent various states that we may operate in will conform to the federal tax law.

In addition, under Sections 382 and 383 of the

Internal Revenue Code of 1986, as amended (the “IRC”), and corresponding provisions of state law, if a corporation

undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity

ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change

tax attributes to offset its post-change income or taxes may be limited.

We may experience ownership changes in the future as

a result of subsequent shifts in our stock ownership, some of which may be outside of our control.

If an ownership change occurs

and our ability to use our NOL carryforwards is materially limited, it would harm our future operating results by effectively

increasing our future tax obligations.

In addition, at the state level, there may be periods during which the use of net operating

loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

in 2020 California enacted A.B.

85 which imposed limits on the usability of California state net operating losses and certain

tax credits in tax years beginning after 2019 and before 2023.

part of the merger with Asterias, we acquired various tax attribute carryforwards including federal and California NOLs of $52.8

million each, as well as California research and development credits of $2.3 million.

As a result of the merger, Asterias incurred

an ownership change under Section 382 of the Internal Revenue Service Code, which places annual limits on the amount of these

million and $41.9 million, respectively, as well as California research and development credits of $2.4 million.

As a result of

the merger, Asterias incurred an ownership change under Section 382 of the IRC, which places annual limits on the amount of these

NOLs that are available to offset income.

Because of the annual limitation, the total amount of these NOLs are not immediately

available to offset future income, and some will expire.

The California research and development credit of $2.3 million has no

Because of the annual limitation, the total amount of these NOLs is not immediately

available to offset future income.

The California research and development credit of $2.4 million has no expiration date.

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

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of each country generally will require that such arrangements be priced the same as those between unrelated companies dealing

at arm’s length and that appropriate documentation is maintained to support the value of such arrangements, or Transfer

Pricing Regulations.

Our transfer pricing policies were formulated with the assistance of third-party experts.

We are in the process

of obtaining a formal transfer pricing report.

However, after we receive such report, we do not intend to amend our returns for

Whether we obtain a formal transfer pricing study with outside experts or not, our transfer pricing procedures will

not be binding on applicable tax authorities.

tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting arm’s length

at arm’s length and that appropriate documentation is maintained to support the value of such arrangements.

pricing policies were formulated with the assistance of third-party experts.

We are in the process of obtaining a formal transfer

pricing report.

However, after we receive such report, we do not intend to amend our returns for prior years.

Whether we obtain

a formal transfer pricing study with outside experts or not, our transfer pricing procedures will not be binding on applicable

tax authorities.

tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting arm’s length

transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer

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development of our product candidates could be delayed.

In addition, our product

candidates are manufactured by starting with cells that are stored in a cryopreserved master cell bank.

While we believe we have

adequate backup should any cell bank be lost in a catastrophic event, we or our third-party suppliers and manufacturers could

lose multiple cell banks, which would severely affect our manufacturing activities.

We cannot assure you that any stability

or other issues relating to the manufacture of any of our product candidates or products will not occur in the future.

or interruption in the supply of clinical trial supplies could delay the completion of planned clinical trials, increase the costs

associated with maintaining clinical trial programs and, depending upon the period of delay, require us to commence new clinical

trials at additional expense or terminate clinical trials completely.

Any adverse developments affecting clinical or commercial

manufacturing of our product candidates or products may result in shipment delays, inventory shortages, lot failures, product

withdrawals or recalls or other interruptions in the supply of our product candidates or products.

Accordingly, failures or difficulties

faced at any level of our supply chain could adversely affect our business and delay or impede the development and commercialization

of any of our product candidates or products and could have an adverse effect on our business, prospects, financial condition

and results of operations.

addition, our product candidates are manufactured by starting with cells that are stored in a cryopreserved master cell bank.

While we believe we have adequate backup should any cell bank be lost in a catastrophic event, we or our third-party suppliers

and manufacturers could lose multiple cell banks, which would severely affect our manufacturing activities.

We cannot assure you

that any stability or other issues relating to the manufacture of any of our product candidates or products will not occur in

Any delay or interruption in the supply of clinical trial supplies could delay the completion of planned clinical

trials, increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require

us to commence new clinical trials at additional expense or terminate clinical trials completely.

Any adverse developments affecting

clinical or commercial manufacturing of our product candidates or products may result in shipment delays, inventory shortages,

lot failures, product withdrawals or recalls or other interruptions in the supply of our product candidates or products.

failures or difficulties faced at any level of our supply chain could adversely affect our business and delay or impede the development

and commercialization of any of our product candidates or products and could have an adverse effect on our business, prospects,

financial condition and results of operations.

disruptions of information technology systems or data security breaches could adversely affect our business.

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and organized groups and individuals with a wide range of motives (including, but not limited to, industrial espionage) and expertise,

including organized criminal groups, “hacktivists,”

nation states and others.

including organized criminal groups, “hacktivists,” nation states and others.

In addition to the extraction of important

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of events of this nature and expect them to continue.

disruptions of our, our third party vendors’

and/or business partners’

information technology systems or security

disruptions of our, our third party vendors’ and/or business partners’ information technology systems or security

breaches could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access,

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by business, regulatory and other risks applicable to them.

have equity investments in two publicly traded companies, OncoCyte and AgeX.

As of December 31, 2019, the value of our investments

in OncoCyte and AgeX was approximately $19.0 million and $1.7 million, respectively, based on their stock prices as of that date.

If these companies were to have delays in clinical trials or commercialization activities or otherwise realize the specific business,

regulatory and other risks applicable to them, the value of their common stock and the valuation of our investment could be negatively

If these companies were to fail and ultimately cease operations, we may lose the entire value of our investments.

of December 31, 2020, we had an equity investment in OncoCyte, a U.S.

publicly traded company.

As of December 31, 2020, the value

of our investment in OncoCyte was approximately $8.7 million based on its closing stock price as of that date.

If OncoCyte were

to have delays in clinical trials or commercialization activities or otherwise realize the specific business, regulatory and other

risks applicable to them, the value of its common stock and the valuation of our investment could be negatively affected.

were to fail and ultimately cease operations, we may lose the entire value of our investment.

In addition, the value of our marketable

equity securities may be significantly and adversely impacted by deteriorating global economic conditions and the disruptions

to and volatility in the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic.

of our internal control over financial reporting could harm our business and financial results.

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In addition, we could become

subject to investigations by the NYSE American, the Securities and Exchange Commission, and other regulatory authorities,

which could require additional financial and management resources.

subject to investigations by the NYSE American, the Securities and Exchange Commission, and other regulatory authorities, which

could require additional financial and management resources.

received a loan under the Paycheck Protection Program of the CARES Act, and all or a portion of the loan may not be forgivable.

April 2020, we received a loan for $523,305 from Axos Bank under the Paycheck Protection Program (“PPP”) contained

within the new CARES Act.

The PPP loan has a term of two years, is unsecured, and is guaranteed by the U.S.

Small Business Administration

The loan carries a fixed interest rate of one percent per annum, with the first six months of interest deferred.

the CARES Act and Paycheck Protection Program Flexibility Act, we are eligible to apply for forgiveness of all loan proceeds used

to pay payroll costs, rent, utilities and other qualifying expenses during the 24-week period following receipt of the loan, provided

that we maintain our number of employees and compensation within certain parameters during such period.

Not more than 40% of the

forgiven amount may be for non-payroll costs.

If the conditions outlined in the PPP loan program are adhered to by us, all or

part of such loan could be forgiven.

However, we cannot provide any assurance that any amount of the PPP loan will ultimately

be forgiven by the SBA.

Any forgiven amounts will not be included in our taxable income.

We applied for full forgiveness of the

PPP loan on September 30, 2020.

Related to Government Regulation

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If we are unable to comply, or have not fully

complied, with such laws, it could face substantial penalties.

complied, with such laws, we could face substantial penalties.

current and future operations may be subject to various federal and state fraud and abuse laws, including, without limitation,

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Medicare, Medicaid, or other third-party payors that are false or fraudulent;

federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal criminal

statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false

statements relating to healthcare matters;

as amended by the Health Information Technology for Economic and Clinical Health Act, (“HITECH”) and their implementing

regulations, which imposes certain requirements on covered entities,”

including certain healthcare providers, health

plans, and healthcare clearinghouses, as well as their respective “business associates”

that create, receive,

maintain or transmit individually identifiable health information for or on behalf of a covered entity, relating to the privacy,

as amended by the Health Information Technology for Economic and Clinical Health Act, (“HITECH”) and their implementing

regulations, which imposes certain requirements on covered entities,” including certain healthcare providers, health

plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive,

maintain or transmit individually identifiable health information for or on behalf of a covered entity, and their subcontractors

that use, disclose, access, or otherwise process individually identifiable protected health information, relating to the privacy,

security, and transmission of individually identifiable health information;

Physician Payments Sunshine Act which requires manufacturers of drugs, devices, biologics, and medical supplies to report

annually to CMS information related to payments and other transfers of value to physicians, as defined by such law, and teaching

hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family

members and applicable group purchasing organizations;

annually to CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists,

optometrists, podiatrists, and chiropractors) and teaching hospitals, and ownership and investment interests held by physicians

and other healthcare providers and their immediate family members and applicable group purchasing organizations, and, beginning

in 2020 will require applicable manufacturers to report information regarding payments and other transfers of value provided

during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists

and anesthesiologist assistants, and certified nurse-midwives;

law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or

services reimbursed by any third-party payors, including commercial insurers, state laws that require pharmaceutical companies

to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated

by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral

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During March 2009, President Obama lifted

certain restrictions on federal funding of research involving the use of hES cells, and in accordance with President Obama’s

Executive Order, the National Institutes of Health (“NIH”) has adopted guidelines for determining the eligibility

certain restrictions on federal funding of research involving the use of hES cells, and in accordance with President Obama’s

Executive Order, the National Institutes of Health (“NIH”) has adopted guidelines for determining the eligibility

of hES cell lines for use in federally funded research.

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California law requires

that stem cell research be conducted under the oversight of a stem cell review oversight committee (“SCRO”).

kinds of stem cell research, including the derivation of new hES cell lines, may only be conducted in California with the prior

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The Patient Protection and Affordable Care Act, as amended by the Health Care and Education

Reconciliation Act (collectively, the “ACA”), enacted in 2010, increased many of the mandatory discounts and

rebates and imposed a new branded prescription pharmaceutical manufacturers and importers fee payable each year by certain manufacturers.

Reconciliation Act (collectively, the “ACA”), enacted in 2010, increased many of the mandatory discounts and rebates

and imposed a new branded prescription pharmaceutical manufacturers and importers fee payable each year by certain manufacturers.

face similar issues outside of the United States.

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products launched in the EU do not follow price structures of the United States and generally tend to be significantly lower.

at the FDA and other government agencies caused by funding shortages or global health concerns could negatively impact our business.

ability of the FDA to review and approve proposed clinical trials or new product candidates can be affected by a variety of factors,

including, but not limited to, government budget and funding levels, ability to hire and retain key personnel and accept the payment

of user fees, statutory, regulatory, and policy changes, and other events that may otherwise affect the FDA’s ability to

perform routine functions.

Average review times at the agency have fluctuated in recent years as a result.

In addition, government

funding of other government agencies that fund research and development activities is subject to the political process, which

is inherently fluid and unpredictable.

at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary

government agencies, which would adversely affect our business.

For example, over the last several years, including for 35 days

beginning on December 22, 2018, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA,

have had to furlough critical FDA employees and stop critical activities.

in response to the global COVID-19 pandemic, in March 2020, the FDA announced its intention to postpone most foreign inspections

of manufacturing facilities and temporarily postponed routine surveillance inspections of domestic manufacturing facilities.

In July 2020 domestic inspections restarted only on a risk-based basis.

Regulatory authorities outside the United States

may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic.

If a prolonged government shutdown

occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular

inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory

authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

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

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in the United States.

Among the ACA’s provisions of importance to our industry are that it:

the branded prescription pharmaceutical manufacturers and importers annual fee;

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and biologics that are inhaled, infused, instilled, implanted or injected;

manufacturers’

Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed

manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed

care organizations;

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individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal

poverty level, thereby potentially increasing manufacturers’

Medicaid rebate liability;

poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability;

the entities eligible for discounts under the Public Health program;

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research, along with funding for such research;

a Centers for Medicare & Medicaid Services to test innovative payment and service delivery models to lower Medicare and

Medicaid spending, potentially including prescription drug spending;

a Center for Medicare & Medicaid Innovation at the Centers for Medicare & Medicaid Services (“CMS”) to

test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription

drug spending;

a licensure framework for follow on biologic products.

remains judicial and Congressional challenges to certain aspects of the ACA, as well as recent efforts by the Trump administration

to repeal or replace certain aspects of the ACA.

Since January 2017, President Trump has signed two Executive Orders and other

directives designed to delay the implementation of certain provisions of the ACA.

Concurrently, Congress has considered legislation

that would repeal or repeal and replace all or part of the ACA.

While Congress has not passed comprehensive repeal legislation,

it has enacted laws that modify certain provisions of the ACA such as removing penalties, starting January 1, 2019, for not complying

with the ACA’s individual mandate to carry health insurance, and delaying the implementation of certain ACA-mandated fees.

remain judicial and Congressional challenges to certain aspects of the ACA, as well as efforts by the Trump administration to

repeal or replace certain aspects of the ACA.

Since January 2017, President Trump signed Executive Orders and other directives

designed to delay the implementation of certain provisions of the ACA.

Concurrently, Congress has considered legislation that

would repeal or repeal and replace all or part of the ACA.

While Congress has not passed comprehensive repeal legislation, it

has enacted laws that modify certain provisions of the ACA such as removing penalties, starting January 1, 2019, for not complying

with the ACA’s individual mandate to carry health insurance, and eliminating the implementation of certain ACA-mandated

On December 14, 2018, a Texas U.S.

District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual

mandate”

was repealed by Congress as part of the 2017 Tax Act.

Additionally, on December 18, 2019, the U.S.

Court of Appeals

for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back

to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

It is unclear how this decision,

future decisions, subsequent appeals, and other efforts to repeal and replace the ACA will impact the ACA and our business.

District Court Judge ruled that the ACA is unconstitutional in its entirety because the

“individual mandate” was repealed by Congress as part of the 2017 Tax Act.

Additionally, on December 18, 2019, the

Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and

remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

Supreme Court is currently reviewing the case, although it is uncertain when or how the Supreme Court will rule.

It is unclear

how such litigation and other efforts to repeal and replace the ACA will impact the ACA and our business.

addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

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Budget Control Act of 2011, includes reductions to Medicare payments to providers of 2% per fiscal year, which went into effect

on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2029 unless additional

Congressional action is taken.

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among

other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period

for the government to recover overpayments to providers from three to five years.

on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception

of a temporary suspension from May 1, 2020 through March 31, 2021, unless additional Congressional action is taken.

2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to

several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments

to providers from three to five years.

there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising

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relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for

At the federal level, the Trump administration’s budget proposal for fiscal year 2020 contains further drug price

control measures that could be enacted during the budget process or in other future legislation, including, for example, measures

to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate

drug prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients.

In addition, the Trump administration

released a “Blueprint”

to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals

to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize

manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers.

HHS has solicited feedback on some of these measures and, at the same, has implemented others under its existing authority.

example, in May 2019, CMS issued a final rule to allow Medicare Advantage plans the option to use step therapy for Part B drugs

beginning January 1, 2020.This final rule codified CMS’s policy change that was effective January 1, 2019.

While some of

these and other measures may require additional authorization to become effective, Congress and the Trump administration have

each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product

pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing

cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk

At the federal level, the Trump administration’s budget proposal for fiscal year 2021 includes a $135 billion

allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs

for patients, and increase patient access to lower-cost generic and biosimilar drugs.

On March 10, 2020, the Trump administration

sent “principles” for drug pricing to Congress, calling for legislation that would, among other things, cap Medicare

Part D beneficiary out-of-pocket pharmacy expenses, provide an option to cap Medicare Part D beneficiary monthly out-of-pocket

expenses, and place limits on pharmaceutical price increases.

In addition, the Trump administration previously released a “Blueprint”

to lower drug prices and reduce out of pocket costs of drugs that contained proposals to increase drug manufacturer competition,

increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their

products, and reduce the out-of-pocket costs of drug products paid by consumers.

HHS has solicited feedback on some of these measures

and has implemented others under its existing authority.

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage

plans the option to use step therapy for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change

that was effective January 1, 2019.

Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection

for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit

managers, unless the price reduction is required by law.

The rule also creates a new safe harbor for price reductions reflected

at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers.

The likelihood of implementation of any of the other Trump administration reform initiatives is uncertain, particularly in light

of the new presidential administration.

On November 20, 2020, CMS issued an interim final rule implementing President Trump’s

Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the

lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 28, 2020, the United States

District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule.

The likelihood of implementation of any of the other Trump administration reform initiatives is uncertain, particularly in light

of the new presidential administration.

At the state level, legislatures have increasingly passed legislation and implemented

regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts,

restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to

encourage importation from other countries and bulk purchasing.

addition, it is possible that additional governmental action is taken to address the COVID-19 pandemic.

we fail to comply with the extensive legal and regulatory requirements affecting the health care industry, we could face increased

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lost market opportunity;

that provide for increased transparency of clinical trial results and quality data, such as the EMA’s clinical transparency

policy, which could impact our ability to protect trade secrets and competitively sensitive information contained in approval

applications or could be misinterpreted leading to reputational damage, misperception or legal action which could harm our

applications or could be misinterpreted leading to reputational damage, misperception or legal action which could harm our business;

in FDA and foreign regulations that may require additional safety monitoring, labeling changes, restrictions on product distribution

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of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under

the Investment Company Act of 1940, as amended (the “1940 Act”).

Based on the securities we hold, including our equity

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the initiation or continuation of clinical studies necessary for product approval;

in securing clinical investigators and agreeing on acceptable terms with contract research organizations (“CROs”)

and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among CROs

and clinical trial sites;

in obtaining required Institutional Review Board (“IRB”) approval at each clinical trial site;

to obtain permission from regulatory authorities to conduct a clinical trial after review of an investigational new drug (“IND”)

in obtaining required Institutional Review Board (“IRB”) approval at each clinical trial site;

to obtain permission from regulatory authorities to conduct a clinical trial after review of an investigational new drug (“IND”)

or equivalent foreign application or amendment;

than anticipated rates of patient recruitment and enrollment (including as a result of actual or threatened public health

emergencies and outbreaks of disease such as the current COVID-19 pandemic), failing to reach the targeted number of

patients due to competition for patients from other trials, or patients dropping out of our clinical studies once enrolled;

emergencies and outbreaks of disease such as the current COVID-19 pandemic), failing to reach the targeted number of patients

due to competition for patients from other trials, or patients dropping out of our clinical studies once enrolled;

by clinical sites or our CROs or other third parties to adhere to clinical trial requirements or report complete findings;

to perform the clinical studies in accordance with the FDA’s good clinical practices requirements or applicable foreign

regulatory guidelines;

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may from time to time disclose results from preclinical testing or preliminary data or interim results from our clinical studies

of our product candidates, and earlier clinical studies, including clinical studies with similar product candidates, are not necessarily

predictive of future results, including clinical trial results.

The historical failure rate for product candidates in our industry

of our product candidates, and earlier clinical studies, including clinical studies with similar product candidates, these are

not necessarily predictive of future results, including clinical trial results.

The historical failure rate for product candidates

in our industry is high.

results of our current and future clinical trials may differ from results achieved in earlier preclinical and clinical studies

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significant setbacks in clinical development even after achieving promising results in earlier studies.

as a result of the COVID-19 pandemic, if patients drop out of our clinical trials, miss scheduled doses or follow-up visits or

otherwise fail to follow clinical trial protocols, or if our clinical trials are otherwise disrupted due to COVID-19 or actions

taken to slow its spread, the integrity of data from our clinical trials may be compromised or not accepted by the FDA or other

regulatory authorities, which would represent a significant setback for the applicable program.

if our current and planned clinical trials are successful, we will need to conduct additional clinical trials, which may include

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data become available and are subject to audit and verification procedures that could result in material changes in the final

time to time, we may publicly disclose preliminary or topline or data from our clinical trials, which is based on a preliminary

analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive

time to time, we may publicly disclose preliminary or topline data from our clinical trials, which is based on a preliminary analysis

of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive

review of the data related to the particular trial.

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Efforts to do so may not result in the actual acquisition or license of a particular product candidate, potentially

resulting in a diversion of our management’s time and the expenditure of our resources with no resulting benefit.

if we are unable to identify programs that ultimately result in approved products, we may spend material amounts of our capital

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prevalence and severity of the disease and any side effects;

clinical indications for which approval is granted, including any limitations or warnings contained in a product’s approved

convenience and ease of administration;

cost of treatment, particular as additive to existing treatments;

cost of treatment, particularly as additive to existing treatments;

willingness of the patients and physicians to accept and use these therapies;

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In addition, certain smaller biotechnology companies have formed strategic collaborations, partnerships, and other types of joint

ventures with larger, well-established industry competitors that afford the smaller companies’

potential research and development

ventures with larger, well-established industry competitors that afford the smaller companies’ potential research and development

as well as commercialization advantages.

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are also conducting and financing research activities, which may produce products directly competitive to those we are developing.

believe that some of our competitors are trying to develop pluripotent cells and human embryonic progenitor cell (“hEPC”)

based technologies and products that may compete with our stem cell products based on efficacy, safety, cost, and intellectual

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Ocata, which was acquired by a subsidiary of Astellas Pharma Inc., and Retinal Patch Technologies Inc.

conducting clinical trials of a hES cell products designed to treat age-related macular degeneration.

conducting clinical trials of hES cell products designed to treat age-related macular degeneration.

If their products are proven

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of advanced manufacturing techniques and process controls.

We do not currently have nor do we plan to acquire the infrastructure

or capability to internally manufacture Renevia or our other HyStem products on a clinical or commercial scale.

Although we have

manufacturing capability through Cell Cure for OpRegen in Israel, we will need greater manufacturing capacity if we are to successfully

commercialize our products.

Unless we can raise the capital required to construct our own commercial scale manufacturing facilities

and can develop the expertise to manage and operate a manufacturing facility of our own, we may need to rely on third-party manufacturers

to manufacture any products we develop.

There is no assurance that we will be able to identify manufacturers on acceptable terms

Regardless of whether we do our own manufacturing or rely on third parties to manufacture products for us, we will

face risks related to the manufacture of our products including these risks:

Although we have manufacturing capability through Cell Cure for OpRegen,

OPC1, and VAC2 in Israel, we will need greater manufacturing capacity if we are to successfully commercialize our products.

we can raise the capital required to construct our own commercial scale manufacturing facilities and can develop the expertise

to manage and operate a manufacturing facility of our own, we may need to rely on third-party manufacturers to manufacture any

products we develop.

There is no assurance that we will be able to identify manufacturers on acceptable terms or at all.

of whether we do our own manufacturing or rely on third parties to manufacture products for us, we will face risks related to

the manufacture of our products including these risks:

or any third-party manufacturers might not timely formulate and manufacture our products or produce the quantity and quality

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or any third-party manufacturers will be subject to ongoing periodic unannounced inspection by the FDA and corresponding state

agencies to ensure strict compliance with current good manufacturing practices (“cGMP”), and other government

regulations and corresponding foreign standards.

We will not have control over third-party manufacturers’

We will not have control over third-party manufacturers’ compliance

with applicable regulations and standards.

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manufacturers could breach or terminate their agreements with us.

We or third-party manufacturers may experience manufacturing difficulties

as a result of resource constraints, labor disputes, unstable political environments, natural disasters, public health crises such

as pandemics and epidemics, political crises such as terrorism, war, political insecurity or other conflict, or other events outside

of our or our third-party manufacturers control (including as a result of actual or threatened public health emergencies and outbreaks

of disease such as the current COVID-19 pandemic).

or third-party manufacturers may experience manufacturing difficulties as a result of resource constraints, labor disputes,

unstable political environments, natural disasters, public health crises such as pandemics and epidemics, political crises

such as terrorism, war, political insecurity or other conflict, or other events outside of our or our third-party manufacturers

control (including as a result of actual or threatened public health emergencies and outbreaks of disease such as the current

COVID-19 pandemic).

This may result in business closures that affect us and our third-party manufacturers.

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The CE Mark provides us, or our authorized agent, the authority to market and distribute

Renevia throughout the European Union (“EU”) and in other countries that recognize the CE Mark.

because we have no commercial infrastructure, we are seeking a commercialization partner in the EU.

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we will secure a commercialization partner for Renevia or otherwise commercialize Renevia.

The spread of COVID-19 may adversely

affect our operations, including the conduct of our clinical trials.

In December 2019,

a novel strain of coronavirus and the resulting illness known as COVID-19 emerged in Wuhan, China.

The outbreak has now spread

to other countries and has been declared a pandemic by the World Health Organization.

If COVID-19 continues to spread in the United

States and Israel, we may experience disruptions that could adversely affect our operations and clinical trials, including:

or difficulties in enrolling, or conducting follow-up visits with, patients in our clinical trials, particularly patients for

our OpRegen Phase 1/2a clinical trial, who are older and who may be at higher risk of complications from COVID-19;

ongoing COVID-19 pandemic may adversely affect our operations, including the conduct of our clinical trials.

December 2019, a novel strain of coronavirus and the resulting illness known as COVID-19 emerged in Wuhan, China.

has now spread to other countries and has been declared a pandemic by the World Health Organization.

COVID-19 pandemic has resulted in travel and other restrictions in order to reduce the spread of the disease, including a California

executive order and several other state and local orders across the country, which, among other things, direct individuals to

shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical

locations, prohibit certain non-essential gatherings, and order cessation of non-essential travel.

In response to these public

health directives and orders, we have implemented work-from-home policies for our employees.

The effects of the executive order,

the shelter-in-place order and our work-from-home policies may negatively impact productivity, disrupt our business and delay

our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions

and other limitations on our ability to conduct our business in the ordinary course.

These and similar, and perhaps more severe,

disruptions in our operations could negatively impact our business, operating results and financial condition.

COVID-19 continues to spread in the United States and Israel, we have experienced and may continue to experience disruptions that

could adversely affect our operations and clinical trials, including:

or difficulties in enrolling, or conducting follow-up visits with, patients in our clinical trials, particularly patients

for our OpRegen Phase 1/2a clinical trial, who are older and who may be at higher risk of complications from COVID-19;

or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and staff;

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difficulties for us and our suppliers of raw materials caused by business closures;

extent to which the COVID-19 pandemic affects our operations will depend on future developments, which are highly uncertain and

cannot be predicted with confidence, including the duration and severity of the pandemic, and the actions that may be required

to contain the COVID-19 pandemic or treat its impact.

withdrawal of the United Kingdom (the “U.K.”) from the EU, commonly referred to as “Brexit,”

may adversely

in clinical sites receiving the supplies and materials needed to conduct our clinical trials, including interruption in global

shipping that may affect the transport of clinical trial materials;

in local regulations as part of a response to the COVID-19 outbreak which may require us to change the ways in which our clinical

trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;

or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;

that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact

the results of the clinical trial, including by increasing the number of observed adverse events;

of the FDA to accept data from clinical trials in affected geographies;

and other disruptions in our operations and the global economy could negatively impact our business, operating results and financial

The extent to which the COVID-19 pandemic affects our operations will depend on future developments, which are highly

uncertain and cannot be predicted with confidence, including the duration and severity of the pandemic, and the actions that may

be required to contain the COVID-19 pandemic or treat its impact.

clinical trials have been, and may in the future be, affected by the COVID-19 pandemic.

For example, the COVID-19 pandemic has

impacted patient enrollment in our OpRegen Phase 1/2a multicenter clinical trial and the VAC2 Phase 1 multicenter clinical trial.

In particular, some sites have paused enrollment to focus on, and direct resources to, the COVID-19 pandemic, while at other sites,

patients are choosing not to enroll or continue participating in the clinical trial as a result of the pandemic.

We are unable

to predict with confidence the duration of such patient enrollment delays and difficulties.

If patient enrollment is delayed for

an extended period of time, such clinical trials could be delayed or otherwise adversely affected.

Our inability to enroll a sufficient

number of patients for any of our current or future clinical trials could result in significant delays or may require us to abandon

one or more clinical trials altogether.

As a result, we may experience new or additional delays and difficulties in enrollment,

which would result in the delay of completion of such trials beyond our expected timelines.

ongoing or planned clinical trials may also be impacted by interruptions or delays in the operations of the FDA and comparable

foreign regulatory agencies.

addition, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other

restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact

personnel at our CROs or third-party manufacturing facilities upon which we rely, or the availability or cost of materials, which

could disrupt the supply chain for our product candidates.

To the extent our suppliers and service providers are unable to comply

with their obligations under our agreements with them or they are otherwise unable to deliver or are delayed in delivering goods

and services to us due to the COVID-19 pandemic, our ability to continue meeting clinical supply demand for our product candidates

or otherwise advancing development of our product candidates may become impaired.

spread of COVID-19 and actions taken to reduce its spread may also materially affect us economically.

While the potential economic

impact brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, there could be a significant

disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our

liquidity and financial position.

In addition, the trading prices for other biotechnology companies have been highly volatile

as a result of the COVID-19 pandemic.

As a result, we may face difficulties raising capital through sales of our common shares

or such sales may be on unfavorable terms.

and actions taken to reduce its spread continue to rapidly evolve.

The extent to which COVID-19 may impede the development of

our product candidates, reduce the productivity of our employees, disrupt our supply chains, delay our clinical trials, reduce

our access to capital or limit our business development activities, will depend on future developments, which are highly uncertain

and cannot be predicted with confidence.

addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have

the effect of heightening many of the other risks and uncertainties described in this ‘‘Risk Factors’’

withdrawal of the United Kingdom (the “U.K.”) from the EU, commonly referred to as “Brexit,” may adversely

impact our ability to obtain regulatory approvals of our product candidates in the EU, result in restrictions or imposition of

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leave the EU.

formally left the EU on January 31, 2020, which is commonly referred to as Brexit.

to a transition period until December 31, 2020 (the “Transition Period”), during which EU rules continue to apply.

Negotiations between the U.K.

and the EU are expected to continue in relation to the customs and trading relationship between

and the EU following the expiry of the Transition Period.

formally left the EU on January 31, 2020, which is commonly referred to as Brexit, with a transition

period that ended December 31, 2020.

a significant proportion of the regulatory framework in the U.K.

applicable to our business and our product candidates is derived

from EU directives and regulations, Brexit, following the Transition Period, could materially impact the regulatory regime with

respect to the development, manufacture, importation, approval and commercialization of our product candidates in the U.K.

For example, as a result of the uncertainty surrounding Brexit, the European Medicines Agency (the “EMA”)

relocated to Amsterdam from London.

Following the Transition Period, the U.K.

will no longer be covered by the centralized procedures

for obtaining EU-wide marketing authorization from the EMA and, unless a specific agreement is entered into, a separate process

for authorization of drug products, including our product candidates, will be required in the U.K., the potential process for

which is currently unclear.

Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit

or otherwise, would prevent us from commercializing our product candidates in the U.K.

or the EU and restrict our ability to generate

revenue and achieve and sustain profitability.

In addition, we may be required to pay taxes or duties or be subjected to other

hurdles in connection with the importation of our product candidates into the EU, or we may incur expenses in establishing a manufacturing

facility in the EU in order to circumvent such hurdles.

If any of these outcomes occur, we may be forced to restrict or delay

efforts to seek regulatory approval in the U.K.

or the EU for our product candidates, or incur significant additional expenses

to operate our business, which could significantly and materially harm or delay our ability to generate revenues or achieve profitability

of our business.

Any further changes in international trade, tariff and import/export regulations as a result of Brexit or otherwise

may impose unexpected duty costs or other non-tariff barriers on us.

These developments, or the perception that any of them could

occur, may significantly reduce global trade and, in particular, trade between the affected nations and the U.K.

also possible that Brexit may negatively affect our ability to attract and retain employees, particularly those from the EU.

from EU directives and regulations, Brexit and the new Trade and Cooperation Agreement between the European Union and the U.K.

that took provisional effect on January 1, 2021 could materially impact the regulatory regime with respect to the development,

manufacture, importation, approval and commercialization of our product candidates in the U.K.

For example, the

is no longer be covered by the centralized procedures for obtaining EU-wide marketing authorization from the European Medicines

Agency and a separate process for authorization of drug products, including our product candidates, will be required in the U.K.

It is currently unclear whether the Medicines & Healthcare products Regulatory Agency

is sufficiently prepared to handle the increased volume of marketing authorization applications that it is likely

Any delay in obtaining, or an inability to obtain, any marketing

approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates in the U.K.

EU and restrict our ability to generate revenue and achieve and sustain profitability.

In addition, we may be required to pay

taxes or duties or be subjected to other hurdles in connection with the importation of our product candidates into the EU, or

we may incur expenses in establishing a manufacturing facility in the EU in order to circumvent such hurdles.

If any of these

outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the U.K.

or the EU for our product

candidates, or incur significant additional expenses to operate our business, which could significantly and materially harm or

delay our ability to generate revenues or achieve profitability of our business.

Any further changes in international trade, tariff

and import/export regulations as a result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers

These developments, or the perception that any of them could occur, may significantly reduce global trade and, in particular,

trade between the affected nations and the U.K.

It is also possible that Brexit may negatively affect our ability to attract and

retain employees, particularly those from the EU.

face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs.

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due to related litigation;

of management’s attention from our primary business;

monetary awards to patients or other claimants;

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for the Encouragement of Research and Development in Industry 5744-1984), and the regulations, guidelines, rules, procedures and

benefit tracks thereunder (collectively, the “Innovation Law”), annual research and development programs that meet

specified criteria and are approved by a committee of the Israel Innovation Authority (“IIA”) are eligible for grants.

The grants awarded are typically up to 50% of the project’s expenditures, as determined by the IIA committee and subject

benefit tracks thereunder (collectively, the “Innovation Law”), annual research and development programs that meet

specified criteria and are approved by a committee of the Israel Innovation Authority (“IIA”) are eligible for grants.

The grants awarded are typically up to 50% of the project’s expenditures, as determined by the IIA committee and subject

to the benefit track under which the grant was awarded.

A company that receives a grant from the IIA ( a “Grant Recipient”),

A company that receives a grant from the IIA (a “Grant Recipient”),

is typically required to pay royalties to the IIA on income generated from products incorporating know-how developed using such

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products resulting from the IIA-funded know-how would not be deemed a transfer or license for the purpose of the Innovation Law.

of Cell Cure’s research and development efforts have been financed, partially, through grants that it has received from

the IIA and when we acquired our holdings in Cell Cure, we undertook in writing, vis-à-vis the IIA, to abide by, and to

of Cell Cure’s research and development efforts have been financed, partially, through grants that it has received from

the IIA and when we acquired our holdings in Cell Cure, we undertook in writing, vis-à-vis the IIA, to abide by, and to

ensure the abidance of Cell Cure to, the Innovation Law.

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and compliance risks that may fall within the purview of the U.S.

Foreign Corrupt Practice Act, UK Bribery Act, anti-boycott

Foreign Corrupt Practices Act, UK Bribery Act, anti-boycott

laws and other anti-corruption laws.

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are licensed or issued to us, design around the patented technologies licensed to or developed by us.

As an example, Astellas’

patent portfolio with respect to the manufacture of its RPE products could adversely impact our rights to manufacture OpRegen.

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The European Patent Convention

prohibits the granting of European patents for inventions that concern “uses of human embryos for industrial or commercial

purposes.”

A recent decision at the Court of Justice of the European Union interpreted parthenogenetically produced hES

prohibits the granting of European patents for inventions that concern “uses of human embryos for industrial or commercial

purposes.” A recent decision at the Court of Justice of the European Union interpreted parthenogenetically produced hES

cells as patentable subject matter.

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do not have the ability to independently conduct clinical trials required to obtain regulatory approvals for our product candidates.

will need to rely on third parties, such as contract research organizations, data management companies, contract clinical research

associates, medical institutions, clinical investigators and contract laboratories to conduct any clinical trials we may undertake

for our product candidates.

We may also rely on third parties to assist with preclinical development of our product candidates.

If we outsource clinical trials, we may not directly control the timing, conduct and expense of our clinical trials.

third parties to conduct clinical trials and they fail to perform their contractual duties or regulatory obligations or fail to

meet expected deadlines, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due

to failing to adhere to our clinical protocols or regulatory requirements or for other reasons, our preclinical development activities

or clinical trials may be extended, delayed, suspended or terminated, and we may not obtain regulatory approval for or successfully

commercialize our product candidates.

will need to rely on third parties, such as CROs, data management companies, contract clinical research associates, medical institutions,

clinical investigators and contract laboratories to conduct any clinical trials we may undertake for our product candidates.

may also rely on third parties to assist with preclinical development of our product candidates.

If we outsource clinical trials,

we may not directly control the timing, conduct and expense of our clinical trials.

If we enlist third parties to conduct clinical

trials and they fail to perform their contractual duties or regulatory obligations or fail to meet expected deadlines, if they

need to be replaced or if the quality or accuracy of the data they obtain is compromised due to failing to adhere to our clinical

protocols or regulatory requirements or for other reasons, our preclinical development activities or clinical trials may be extended,

delayed, suspended or terminated, and we may not obtain regulatory approval for or successfully commercialize our product candidates.

addition, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other

restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact

personnel at these third parties, which could disrupt our clinical timelines, which could have a material adverse impact on our

business, prospects, financial condition and results of operations.

have relied on CIRM to fund past clinical trials of OPC1 and we do not know if they will provide additional funding for future

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received $14.3 million of funding from CIRM to support clinical development of OPC1.

We intend to apply for additional CIRM grants,

if available;

We intend to apply for additional

CIRM grants, if available;

however, we cannot provide any assurance that such grants will be awarded.

If we are unable to obtain another

CIRM grant, we will need to raise funds through other mechanisms to support future clinical studies of OPC1, which may take additional

time and effort.

If capital is not immediately available, this may force us to amend, delay, or discontinue the clinical trial

and development work for OPC1 until funding is secured.

If we are unable to obtain

another CIRM grant, we will need to raise funds through other mechanisms to support future clinical studies of OPC1, which may

take additional time and effort.

If capital is not immediately available, this may force us to amend, delay, or discontinue the

clinical trial and development work for OPC1 until funding is secured.

may need to rely on marketing partners or contract sales companies.

we are able to develop our product candidates and obtain necessary regulatory approvals, we may need to rely on marketing, selling

or distributing partner.

or distributing partners.

If we do not partner for commercial services, we will depend on our ability to build our own marketing,

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There can be no assurance

we will able to negotiate distribution or sales agreements with third parties on favorable terms to justify our investment in

our products or achieve sufficient revenues to support our operations.

we will be able to negotiate distribution or sales agreements with third parties on favorable terms to justify our investment

in our products or achieve sufficient revenues to support our operations.

Pertaining to Our Common Shares

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clinical trials or a delay or failure to obtain FDA approval.

The failure of our earnings to meet analysts’

The failure of our earnings to meet analysts’ expectations

could result in a significant rapid decline in the market price of our common shares.

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including a change of control.

directors, executive officers and their affiliates, in the aggregate, owned approximately 28% of our outstanding common shares

as of December 31, 2019.

As a result, these shareholders, if acting together, will be able to heavily influence or control matters

requiring approval by our shareholders, including the election of directors and the approval of mergers, acquisitions or other

extraordinary transactions.

They may also have interests that differ from yours and may vote in a way with which you disagree,

and which may be averse to your interests.

This concentration of ownership may have the effect of delaying, preventing or deterring

a change of control of our company, could deter certain public investors from purchasing our common shares and might ultimately

affect the market price of our common shares.

directors, executive officers and their affiliates, in the aggregate, owned approximately 27% of our outstanding common

shares as of December 31, 2020.

As a result, these shareholders, if acting together, will be able to heavily influence or control

matters requiring approval by our shareholders, including the election of directors and the approval of mergers, acquisitions

or other extraordinary transactions.

They may also have interests that differ from yours and may vote in a way with which you

disagree, and which may be averse to your interests.

This concentration of ownership may have the effect of delaying, preventing

or deterring a change of control of our company, could deter certain public investors from purchasing our common shares and might

ultimately affect the market price of our common shares.

business could be negatively affected as a result of actions of activist shareholders, and such activism could affect the trading

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are currently authorized to issue an aggregate of 252,000,000 shares of capital stock consisting of 250,000,000 common shares

and 2,000,000 “blank check”

preferred shares, which means we may issue, without stockholder approval, one or more

and 2,000,000 “blank check” preferred shares, which means we may issue, without stockholder approval, one or more

series of preferred stock having such designation, powers, privileges, preferences, including preferences over our common shares

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and settlement of restricted stock units under our equity incentive plan, and 1,089,900 common shares subject to warrants.

addition, in May 2020 we entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”)

with Cantor Fitzgerald & Co., as sales agent (“Cantor Fitzgerald”), pursuant to which we may, but are not obligated

to, raise up to $25.0 million through the sale of common shares from time to time in at-the-market transactions under the Sales

As of December 31, 2020, we made $5.1 million in sales under the Sales Agreement (which excludes $0.3 million

of cash in transit related to 2020 sales that settled in 2021).

operation of some of our subsidiaries has been financed in part through the sale of shares of capital stock and warrants to purchase

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Future sales of such securities by our subsidiaries could reduce our ownership

interest in the applicable subsidiary, and correspondingly dilute our shareholder’s ownership interests in our consolidated

Certain of our subsidiaries also have their own stock option plans and the exercise of stock options or the sale of

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors