Lineage Cell Therapeutics, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures It is management’s responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (“Exchange Act”). Our management, including our principal executive officer and our principal financial officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of our fourth quarter. Following this review and evaluation , management collectively determined that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act: (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms; and (ii) is accumulated and communicated to management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), is a process designed by, or under the supervision of, our principal executive officer, our principal operations officer, and our principal financial officer, and effected by our Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The scope of management’s assessment of the effectiveness of internal control over financial reporting includes our consolidated subsidiaries. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of that date, our internal control over financial reporting was effective. ITEM 9B. OTHER INFORMATION Not applicable 109 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE Board of Directors Set forth below are the names, ages, board committee assignments, tenure, and certain biographical information of each of the members of our Board of Directors (our “Board”) as of March 11, 2021. Name Age Committees Director Since Alfred D. Kingsley 77 Financial Strategy* July 2009 Deborah Andrews 63 Audit*, Compensation, Nominating & Corporate Governance April 2014 Don M. Bailey 75 Nominating & Corporate Governance*, Financial Strategy March 2019 Neal C. Bradsher, CFA 55 Nominating & Corporate Governance, Financial Strategy July 2009 Brian M. Culley 49 None September 2018 Michael H. Mulroy 54 Compensation*, Audit, Nominating & Corporate Governance, Financial Strategy October 2014 Angus C. Russell 65 Audit, Compensation December 2014 * Committee chairperson Alfred D. Kingsley . Mr. Kingsley has been Chairman of the Board since July 2009. Mr. Kingsley has been general partner of Greenway Partners, L.P., a private investment firm, and President of Greenbelt Corp., a business consulting firm, since 1993. Greenbelt served as our financial advisor from 1998 until 2009. Mr. Kingsley also serves as a director of OncoCyte Corporation (OCX), a clinical-stage diagnostics company focused on novel, non-invasive blood-based tests for the early detection of cancer. From January 2017 to October 2018, Mr. Kingsley served as Executive Chairman of AgeX Therapeutics, Inc. (AGE), a biotechnology company focused on the development and commercialization of novel therapeutics targeting human aging. Mr. Kingsley also served as a director of Asterias Biotherapeutics, Inc. (AST) from 2012 until our acquisition of Asterias in March 2019. Mr. Kingsley was Senior Vice-President of Icahn and Company and its affiliated entities for more than 25 years. Mr. Kingsley holds a B.S. degree in economics from the Wharton School of the University of Pennsylvania and a J.D. degree and LLM in taxation from New York University Law School. Mr. Kingsley’s long career in corporate finance and mergers and acquisitions includes substantial experience in helping companies to improve their management and corporate governance, and to restructure their operations. Mr. Kingsley developed an intimate knowledge of our business in his role as our financial advisor before he joined our Board. Mr. Kingsley has been instrumental in structuring our equity and debt financings, and in the transition of our business focus into the field of stem cell technology, and the business acquisitions that have helped us expand the scope of our business. Deborah Andrews . Ms. Andrews served as Chief Financial Officer of STAAR Surgical Company (STAA), a leader in the development, manufacture, and marketing of minimally invasive ophthalmic products employing proprietary technologies, from September 2017 until June 30, 2020 after serving as Vice President, Chief Accounting Officer since 2013. Ms. Andrews also served as STAAR Surgical’s Vice President, Chief Financial Officer from 2005 to 2013, as its Global Controller from 2001 to 2005, and as its Vice President, International Finance from 1999 to 2001. Ms. Andrews previously worked as a senior accountant for a major public accounting firm. Ms. Andrews holds a B.S. degree in accounting from California State University at San Bernardino. Ms. Andrews brings to our Board significant experience in finance, financial reporting, accounting, and auditing, and in management as a senior financial and accounting executive of a public medical device company during a period of significant growth. 110 Don M. Bailey . Mr. Bailey previously served as a director and Chairman of Asterias Biotherapeutics, Inc. (AST) from February 2016 until our acquisition of Asterias in March 2019. Mr. Bailey served as President and Chief Executive Officer of Questcor Pharmaceuticals, Inc. (QCOR), a biopharmaceutical company focused on the treatment of patients with serious, difficult-to-treat autoimmune and inflammatory disorders, from 2007 until Questcor was acquired by Mallinckrodt plc (MNK) in 2014. He was also a director of Mallinckrodt plc from August 2014 to March 2016, and during this time he was the Chairman of its portfolio committee. He initially joined the Questcor board of directors in 2006 as an independent director and Chairman of its audit committee. From August 2016 to November 2017, Mr. Bailey served as a director of OncoCyte Corporation (OCX). From June 2015 until its acquisition by Acorda Therapeutics, Inc. (ACOR) in May 2016, Mr. Bailey was also an independent director and chairman of the audit committee of Biotie Therapeutics Corp. (BITI), a clinical-stage pharmaceutical company headquartered in Turku, Finland. Mr. Bailey was an independent director and the non-executive chairman of the board of directors of STAAR Surgical Company (STAA), a leader in the development, manufacture, and marketing of minimally invasive ophthalmic products employing proprietary technologies, from 2005 until 2014. Mr. Bailey served on its audit committee and was chair of its nominating and corporate governance committee. Mr. Bailey was the chairman of the board of directors of Comarco, Inc. (CMRO), a defense services company transformed into a wireless communication products company, from 1998 until 2007, where he served as Chief Executive Officer from 1991 until 2000. Mr. Bailey holds a B.S. degree in mechanical engineering from the Drexel Institute of Technology, an M.S. degree in operations research from the University of Southern California and an M.B.A. from Pepperdine University. Mr. Bailey has also served as a board member on several non-profit and academic enterprises. Mr. Bailey is a founding board member of the University of California Irvine’s (UCI) Applied Innovation Institute. Mr. Bailey brings to our Board significant knowledge of the pharmaceuticals industry and extensive experience as an executive and board member of publicly traded pharmaceutical companies . Neal C. Bradsher, CFA . Mr. Bradsher has been President of Broadwood Capital, Inc., a private investment firm, since 2002. Mr. Bradsher holds a B.A. degree in economics from Yale College and is a Chartered Financial Analyst. Mr. Bradsher was a director of Questcor Pharmaceuticals, Inc. (QCOR), from 2004 until Questcor was acquired by Mallinckrodt plc (MNK) in 2014. Mr. Bradsher brings to our Board a wealth of experience in finance, management and corporate governance attained through his investments in other companies, including companies in the pharmaceutical, biotechnology, medical device, medical diagnostics, health care services and health care information systems sectors. He has worked with several health care companies to improve their management and governance. Entities that Mr. Bradsher controls have invested in most of Lineage’s financing transactions over the last several years. Mr. Bradsher is the president of the general partner of Broadwood Partners, L.P., currently our largest shareholder. Brian M. Culley . Mr. Culley joined Lineage as Chief Executive Officer in September 2018 and was appointed as Interim Chief Financial Officer in January 2021. Prior to joining Lineage, Mr. Culley served from August 2017 to September 2018 as interim Chief Executive Officer at Artemis Therapeutics, Inc. (ATMS). Mr. Culley previously served as Chief Executive Officer of Mast Therapeutics, Inc. (MSTX), from 2010, and was also a member of its board of directors from 2011, until Mast’s merger with Savara, Inc. (SVRA) in April 2017. Mr. Culley served from 2007 to 2010 as Mast’s Chief Business Officer and Senior Vice President, from 2006 to 2007 as Mast’s Senior Vice President, Business Development, and from 2004 to 2006 as Mast’s Vice President, Business Development. From 2002 until 2004, Mr. Culley was Director of Business Development and Marketing for Immusol, Inc. From 1999 until 2000, he worked at the University of California, San Diego (UCSD) Department of Technology Transfer & Intellectual Property Services and from 1996 to 1999 he conducted drug development research for Neurocrine Biosciences, Inc. (NBIX). Mr. Culley has also served on the Board of Orphagen Pharmaceuticals, Inc. since May 2017. Mr. Culley has more than 25 years of business and scientific experience in the life sciences industry. He received a B.S. in biology from Boston College, a masters in biochemistry and molecular biology from the University of California, Santa Barbara, and an M.B.A. from The Johnson School of Business at Cornell University. Mr. Culley brings to our Board significant knowledge of the biotechnology industry and extensive experience as an executive and board member of publicly traded pharmaceutical companies . Michael H. Mulroy . Mr. Mulroy served as the Chief Executive Officer and a member of the board of directors of Asterias Biotherapeutics, Inc. (AST) from June 2017 until our acquisition of Asterias in March 2019. In April 2020, Mr. Mulroy joined Magtrol Inc., a leading manufacturer of motor test equipment and hysteresis brakes and clutches, on a part time basis, where he also serves on its board of directors. Prior to joining Asterias, Mr. Mulroy served as a Senior Advisor to CamberView Partners, LLC (now part of PJT Partners Inc.), which assists companies in connection with investor engagement and complex corporate governance issues. Prior to its sale in 2014, Mr. Mulroy served as Executive Vice President, Strategic Affairs and General Counsel and Corporate Secretary of Questcor Pharmaceuticals, Inc. (QCOR). Mr. Mulroy joined Questcor in 2011 as Chief Financial Officer, General Counsel and Corporate Secretary. From 2003 to 2011, Mr. Mulroy was employed by the law firm of Stradling Yocca Carlson & Rauth, where he served as a partner from 2004. From 1997 to 2003, Mr. Mulroy was an investment banker at Citigroup and Merrill Lynch. He is also a member of the Board of Trustees of the Pegasus School, an independent primary school in Orange County, California. From January 2017 to July 2019, Mr. Mulroy served as a member of the board of directors of AgeX Therapeutics, Inc. (AGE), a biotechnology company focused on the development and commercialization of novel therapeutics targeting human aging. Mr. Mulroy earned his J.D. degree from the University of California, Los Angeles and his B.A. degree in economics from the University of Chicago. Mr. Mulroy brings to our Board his experience as the Chief Executive Officer of a publicly traded biotechnology company and member of a senior management team of a larger biopharmaceutical company that experienced a period of rapid growth. Mr. Mulroy also brings to our Board his experience in corporate finance and investor relations. 111 Angus C. Russell . Mr. Russell served as the Chief Executive Officer of Shire plc (SHPG), a biopharmaceutical company, from June 2008 to April 2013. Mr. Russell served as the Chief Financial Officer of Shire from 1999 to 2008 and also served as its Principal Accounting Officer and Executive Vice President of Global Finance. Prior to joining Shire, Mr. Russell served at ICI, Zeneca, and AstraZeneca for 19 years, most recently as Vice President of Corporate Finance at AstraZeneca plc (AZN). Mr. Russell also serves as Chairman of the Board of Directors of Mallinckrodt plc (MNK) and Revance Therapeutics, Inc. (RVNC) and as a director of Therapeutics MD, Inc. (TXMD). Mr. Russell previously served as a director of Shire plc, Questcor Pharmaceuticals, Inc. (QCOR) until it was acquired by Mallinckrodt plc (MNK) in 2014, and InterMune, Inc. (ITMN) prior to its acquisition by Roche Holdings, Inc. (RHHBY) in 2014. Mr. Russell holds an honorary Doctor of Business Administration from Coventry University, U.K. Mr. Russell brings to our Board numerous years of experience as a Chief Executive Officer of an international publicly traded specialty biopharmaceutical company and his substantial experience as an officer and director in the specialty pharmaceutical industry. Executive Officers Set forth below are the names, ages, offices held, tenure and certain biographical information of each of our executive officers as of March 11, 2021. Name Age Office(s) Officer Since Brian M. Culley 49 Chief Executive Officer, Interim Chief Financial Officer, and Director September 2018 Chase C. Leavitt 39 General Counsel and Corporate Secretary May 2019 Gary S. Hogge, D.V.M., Ph.D. 53 Senior Vice President of Clinical & Medical Affairs March 2019 Mr. Culley’s biographical information is included above with those of the other members of our Board. Chase C. Leavitt. Mr. Leavitt joined Lineage as General Counsel and Corporate Secretary in May 2019. Prior to joining Lineage, Mr. Leavitt served as Vice President of Legal Affairs of Tang Capital Management, LLC, a life sciences-focused investment company, and its affiliate Odonate Therapeutics, Inc. (ODT), a publicly traded biotechnology company, from June 2018 to May 2019. From May 2017 to May 2018, Mr. Leavitt served as the Deputy General Counsel of Switch, Inc. (SWCH), a publicly traded technology company, and previously served as its Associate General Counsel from July 2014 to May 2017. From 2007 to 2014, Mr. Leavitt was a corporate attorney at Latham & Watkins LLP, where his practice focused on public company representation, mergers and acquisitions and capital markets, serving life sciences and technology companies. Mr. Leavitt received a B.S. degree in business administration and a J.D. from the University of Southern California and is admitted to practice law by the State Bar of California. Gary Hogge, D.V.M., Ph.D . Dr. Hogge joined Lineage as Senior Vice President of Clinical and Medical Affairs in February 2018. Dr. Hogge has more than 20 years of experience developing and supporting the commercialization of a number of products over a broad range of therapeutic areas. Dr. Hogge has held a variety of roles of increasing responsibility across multiple therapeutic areas in both clinical development and medical affairs. Previously Dr. Hogge was the Vice President of Medical Affairs at Questcor Pharmaceuticals, Inc. (QCOR) and before that held multiple leadership roles in both clinical development and medical affairs at Elan Pharmaceuticals including various responsibilities in the global clinical development of Tysabri® (natalizumab) in Crohn’s disease and multiple sclerosis, and for building and leading the medical affairs function. He served as medical director following the approval and launch of Tysabri. Prior to those accomplishments, he worked in clinical development for Ceplene® (histamine dihydrochloride) at Maxim Pharmaceuticals and in the immunology research and development group at Pfizer. Dr. Hogge obtained his B.S. degree and D.V.M. from Colorado State University, his M.S. and Ph.D. from the University of Wisconsin-Madison and was a visiting scientist at the Queensland Institute of Medical Research (QIMR) in Brisbane, Australia . 112 Family Relationships; Arrangements; Legal Proceedings There are no family relationships among any of our directors and executive officers. There are no arrangements or understandings with another person under which our directors and officers was or is to be selected as a director or executive officer. Additionally, none of our directors or executive officers is involved in any legal proceeding that requires disclosure under Item 401(f) of Regulation S-K. Code of Ethics We have adopted a Code of Business Conduct and Ethics (“Code of Ethics”) that applies to our principal executive officers, our principal financial officer and accounting officer, our other executive officers, and our directors. The purpose of the Code of Ethics is to promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with or submit to the Securities and Exchange Commission (the “SEC”) and in our other public communications; (iii) compliance with applicable governmental rules and regulations; (iv) prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in the Code of Ethics; and (v) accountability for adherence to the Code of Ethics. A copy of our Code of Ethics has been posted on our internet website at www.lineagecell.com. We intend to disclose any future amendments to certain provisions of our Code of Ethics, and any waivers of those provisions granted to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, by posting the information on our website within four business days following the date of the amendment or waiver. Audit Committee and Audit Committee Financial Expert Our Audit Committee is established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our Board has determined that each member of our Audit Committee: (i) is able to read and understand fundamental financial statements, including our balance sheet, income statement and cash flow statement; and (ii) qualifies as an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K; and (iii) meets the independence requirements contemplated by Rule 10-3A under the Exchange Act. Ms. Andrews’ expertise is based on her experience as Chief Financial Officer and other financial roles of STAAR Surgical Company and as a senior accountant at a major accounting firm. Mr. Russell’s expertise is based on his experience as the Chief Executive Officer and Chief Financial Officer of Shire plc, a biopharmaceutical company. Mr. Mulroy’s expertise is based on his experience as Chief Executive Officer of Asterias Biotherapeutics, Inc. Changes in Stockholder Nomination Procedures There have been no material changes to the procedures by which stockholders may recommend nominees to our Board since such procedures were last described in our proxy statement filed with the SEC on August 7, 2020. ITEM 11. EXECUTIVE COMPENSATION We are a “smaller reporting company” under Item 10 of Regulation S-K promulgated under the Exchange Act and the following compensation disclosure is intended to comply with the requirements applicable to smaller reporting companies. Although the rules allow us to provide less detail about our executive compensation program, our Compensation Committee is committed to providing the information necessary to help our shareholders understand its executive compensation-related decisions. Accordingly, this section includes supplemental narratives that describe our executive compensation practices. 113 Our Compensation Committee oversees our compensation and employee benefit plans and practices, including executive compensation arrangements and incentive plans and awards of stock options and other equity-based awards under the Lineage Cell Therapeutics, Inc. 2012 Equity Incentive Plan (the “2012 Plan”). Our Compensation Committee recommends to our Board the terms and amount of executive compensation and grants of equity-based awards to executives, key employees, consultants, and independent contractors. The Chief Executive Officer may make recommendations to our Compensation Committee concerning executive compensation and performance, but our Compensation Committee makes its own determination or recommendation to our Board with respect to the amount and components of compensation, including salary, bonus, and equity awards to executive officers, generally considering factors such as company performance, individual performance, and compensation paid by peer group companies. During 2020, our Compensation Committee engaged Marsh & McLennan (“Marsh”) to provide compensation consulting services and advice to our Compensation Committee, which included market survey information and competitive market trends in employee, executive, and director compensation programs. Marsh also made recommendations to our Compensation Committee with respect to pay mix components such as salary, bonus, and equity awards, and the target market pay percentiles in which executive compensation should fall so Lineage can be competitive in executive hiring and retention. In reviewing each executive’s overall compensation, our Compensation Committee considers an aggregate view of base salary and bonus opportunities, equity incentive grants, and the dollar value of benefits and perquisites. These factors have been balanced against our financial position and capital resources. In making 2020 compensation decisions, our Compensation Committee reviewed market data for each named executive officer’s position, compiled from Marsh, from the following peer group companies for 2020: Abeona Therapeutics, Inc. Concert Pharmaceuticals, Inc. Inovio Pharmaceuticals, Inc. Aeglea Biotherapeutics, Inc. Curis, Inc. Mersana Therapeutics, Inc. Aravive, Inc. Fate Therapeutics, Inc. Neon Therapeutics, Inc. Athersys, Inc. Genocea Biosciences, Inc. NewLink Genetics Corporation Bellicum Pharmaceuticals, Inc. Geron Corporation Proteostasis Therapeutics, Inc. Calithera Biosciences, Inc. Harpoon Therapeutics, Inc. Syndax Pharmaceuticals, Inc. Celldex Therapeutics, Inc. Idera Pharmaceuticals, Inc. Synlogic, Inc. Chimerix, Inc. Infinity Pharmaceuticals, Inc. The 2020 peer group was recommended by Marsh and consisted of companies operating in the biopharmaceutical industry, generally with fewer than 150 employees, less than $50 million in revenue, less than $400 million in market capitalization and a lead development program in Phase 1 or 2. A limited number of companies fell outside of these parameters but were included due to their having similar areas of focus. For 2021, our Compensation Committee engaged Anderson Pay Advisors, LLC to provide compensation consulting services and advice to our Compensation Committee. In making 2021 compensation decisions, our Compensation Committee reviewed market data for each named executive officer’s position, compiled from Anderson, from an updated peer group of companies. The following companies were added to the 2021 peer group: Apellis Pharmaceuticals, Inc., Applied Genetic Technologies Corp., Atreca, Inc., G1Therapeutics, Inc., GlycoMimetics, Inc., Spero Therapeutics, Inc., UNITY Biotechnology, Inc., and Ziopharm Oncology, Inc. The following companies were removed from the 2021 peer group: Inovio Pharmaceuticals, Inc., Mersana Therapeutics, Inc., Neon Therapeutics, Inc., NewLink Genetics Corporation, Syndax Pharmaceuticals, Inc. Summary Compensation Table The table below shows the compensation earned by the following, who we refer to as our named executive officers, during the fiscal years indicated: (i) our principal executive officer during the year ended December 31, 2020; and (ii) our two most highly compensated executive officers other than the principal executive officer who were serving as executive officers as of December 31, 2020. 114 Name and Principal Position (1) Fiscal Year Salary ($) Bonus ($) (2) Option Awards ($) (3) All Other Compensation ($) (4) Total ($) Brian M. Culley 2020 $ 551,900 $ 262,200 $ 521,563 $ 14,250 $ 1,349,913 Chief Executive Officer and Interim Chief Financial Officer 2019 535,800 214,300 — 22,642 772,742 Brandi L. Roberts 2020 $ 393,200 $ — $ 260,802 $ 14,250 $ 668,252 Former Chief Financial Officer 2019 376,137 169,900 397,948 3,978 947,963 Chase C. Leavitt 2020 $ 346,300 $ 131,600 $ 260,802 $ 14,250 $ 752,952 General Counsel and Corporate Secretary 2019 210,146 102,100 277,310 9,542 599,098 (1) Mr. Culley was appointed as our Chief Executive Officer on September 17, 2018, Ms. Roberts was appointed as our Chief Financial Officer on January 7, 2019, and Mr. Leavitt was appointed as our General Counsel and Corporate Secretary on May 20, 2019. Ms. Roberts resigned from the company, and Mr. Culley was appointed as Interim Chief Financial Officer, effective January 20, 2021. The amounts reported in the table for each named executive officer represent the portion of earned compensation during the period of time such officer was in service with us. (2) The 2020 amounts represent discretionary annual bonuses as described below under “Elements of Compensation.” (3) The amounts in this column represent the grant date fair value of stock options granted to the applicable individual during the applicable year. The grant date fair value and incremental fair value of the stock options were determined in accordance with ASC Topic 718, Compensation – Stock Compensation (ASC Topic 718). See Note 12, Stock-Based Awards to our consolidated financial statements included in this Report for details as to the assumptions used to determine grant date fair value of the awards. (4) The 2020 amounts in this column represent 401(k) plan company-matching contributions. Narrative to Summary Compensation Table Employment Agreements and Termination of Employment & Change in Control Arrangements Below are descriptions of the material terms of the employment arrangements entered into with our current named executive officers. Brian M. Culley, Chief Executive Officer and Interim Chief Financial Officer In September 2018, we entered into an employment agreement with Mr. Culley (the “ Culley Agreement ”). The Culley Agreement initially provided Mr. Culley with a base salary of $530,000 annually. Mr. Culley’s salary was $551,900 in 2020 and has been increased to $580,000 for 2021. Mr. Culley is also eligible to receive an annual performance bonus of up to 50% of his base salary based upon the attainment of certain corporate and individual objectives as determined by our Board or Compensation Committee. The Culley Agreement provided Mr. Culley with reimbursement for certain travel costs to our former headquarters in Alameda, California and a monthly stipend not to exceed $3,900 for housing costs near our former headquarters, each of which ceased in August 2019. The Culley Agreement provides that if Mr. Culley’s employment is terminated without cause or he resigns for good reason, he may be eligible for certain severance payments, including the payment of an amount equal to 12 months of his base salary, his full annual bonus amount and the payment of 6 months of health insurance premiums pursuant to our group health insurance plans as provided pursuant to COBRA. If Mr. Culley’s employment is terminated without cause or he resigns for good reason within 12 months following a change of control, then he is entitled to the acceleration of all outstanding equity awards. 115 Chase C. Leavitt, General Counsel and Corporate Secretary In May 2019, we entered into an employment agreement with Mr. Leavitt (the “ Leavitt Agreement ”). The Leavitt Agreement initially provided Mr. Leavitt with a base salary of $340,000 annually and a one-time sign-on bonus of $35,000. Mr. Leavitt’s salary was $346,300 for 2020 and has been increased to $356,700 for 2021. Mr. Leavitt is also eligible to receive an annual performance bonus of up to 40% of his base salary based upon the attainment of certain corporate and individual objectives as determined by our Board or Compensation Committee. The Leavitt Agreement provides that if Mr. Leavitt’s employment is terminated without cause or he resigns for good reason, he may be eligible for certain severance payments, including the payment of an amount equal to three months of his base salary (if terminated on or before May 20, 2020) or nine months base salary (if terminated after May 20, 2020), his prorated annual bonus amount and the payment of 6 months of health insurance premiums pursuant to our group health insurance plans as provided pursuant to COBRA. If Mr. Leavitt’s employment is terminated without cause or he resigns for good reason within 12 months following a change of control, then he is entitled to the acceleration of 50% of all outstanding equity awards (if terminated on or before May 20, 2020) or all outstanding equity awards (if terminated after May 20, 2020). Brandi L. Roberts, Former Chief Financial Officer In January 2019, we entered into an employment agreement with Ms. Roberts (the “Roberts Agreement”). The Roberts Agreement initially provided Ms. Roberts with a base salary of $381,924 annually, which was raised by 3% to $393,200 for 2020. Ms. Roberts was also eligible to receive an annual performance bonus of up to 40% of her base salary based upon the attainment of certain corporate and individual objectives as determined by our Board or Compensation Committee. The Roberts Agreement provides that if Ms. Roberts’ employment is terminated without cause or she resigns for good reason, she may be eligible for certain severance payments, including the payment of an amount equal to three months of her base salary (if terminated on or before January 7, 2020) or nine months base salary (if terminated after January 7, 2020), her prorated annual bonus amount, and the payment of 6 months of health insurance premiums pursuant to our group health insurance plans as provided pursuant to COBRA. If Ms. Robert’s employment is terminated without cause or she resigns for good reason within 12 months following a change of control, then she is entitled to the acceleration of 50% of all outstanding equity awards (if terminated on or before January 7, 2020) or all outstanding equity awards (if terminated after January 7, 2020). In connection with her resignation on January 20, 2021, we entered into a Separation and Consulting Agreement with Ms. Roberts (the “Roberts Consulting Agreement”) pursuant to which Ms. Roberts agreed to assist us with finance and accounting matters and such other matters as we and Ms. Roberts may agree to from time to time. Ms. Roberts will be compensated at the rate of $250 per hour for her services under the Roberts Consulting Agreement, which fees shall not exceed $50,000 without our approval. As additional compensation for her services under the Roberts Consulting Agreement, the equity awards held by Ms. Roberts as of January 20, 2021 will continue to vest during the term of the Roberts Consulting Agreement. Elements of Compensation Base Salary Our Compensation Committee or Board reviews the base salaries of our executive officers, including our named executive officers, from time to time and makes adjustments as it determines to be reasonable and necessary to reflect the scope of an executive officer’s performance, contributions, responsibilities, experience, prior salary level, position (in the case of a promotion), and market conditions. Annual Performance Bonuses Each of our named executive officers are eligible to receive an annual performance bonus based on a specific target bonus amount, expressed as a percentage of base salary, and our overall achievement of specific corporate goals and objectives set by our Board and Compensation Committee each year. After the end of the year, our Board and Compensation Committee conducts an annual performance review process that evaluates achievement of overall corporate goals and achievement of specific goals and objectives by each individual executive. 116 Any final bonus payments to our named executive officers are recommended by our Compensation Committee and approved by our Board (excluding Mr. Culley), which retains full discretion to adjust individual target bonus awards. The actual bonuses, if any, awarded each year may vary from target, depending on individual performance and the achievement of corporate objectives and may also vary based on other factors at the discretion of our Compensation Committee. For 2020, the corporate performance objective categories and respective weightings toward overall corporate bonus achievement were as follows: (1) advancement of product candidates (50% weighting); (2) Investor engagement activities and total shareholder return (“TSR”) (30% weighting); (3) business development and licensing activities (10% weighting); and (4) capital raising activities and efficient capital deployment (10% weighting). In February 2021, our Board and Compensation Committee assessed each of the corporate performance objectives and determined that the company had an overall corporate achievement level of 95% for 2020. Specifically, our Board and Compensation committee considered in its assessment that the company: (1) completed enrollment in its Phase 1/2a clinical study of OpRegen with encouraging preliminary signs of tolerability and efficacy; (2) made manufacturing improvements to its OPC1 program; (3) negotiated and executed the early exercise of its option with Cancer Research UK to bring the VAC immune-oncology program in house; (4) outperformed its peers and the broad indices in total shareholder return during the year ended December 31, 2020, with the strong shareholder return being sustained in early 2021; and (5) efficiently raised capital and achieved significant budget reductions. Our Board and Compensation Committee determined that it was appropriate to pay each of Mr. Culley and Mr. Leavitt performance bonuses for 2020 equivalent to their target amounts multiplied by the 95% corporate achievement level. Accordingly, our Board and Compensation Committee approved cash bonuses for Mr. Culley and Mr. Leavitt in the amount of $262,200 and $131,600, respectively, which will be payable in March 2021. Ms. Roberts did not receive a performance cash bonus for 2020 because she ceased serving as an executive officer. Other Benefits We maintain a 401(k) defined contribution employee retirement plan for all of our employees. Employee contributions are voluntary and are determined on an individual basis, limited to the maximum amounts allowable under U.S. federal tax regulations. We provide a safe harbor contribution of up to 5.0% of the employee’s compensation, not to exceed eligible limits, and subject to employee participation. We do not have any annuity, pension or deferred compensation plan or other arrangements for our executive officers or any employees. 117 Outstanding Equity Awards at Fiscal Year-End The following table sets forth information concerning equity awards held by our named executive officers that were outstanding as of December 31, 2020: Option Awards Stock Awards Name Grant Date Number of securities underlying unexercised options exercisable (#) Number of securities underlying unexercised options unexercisable (#) (1) Option exercise price ($) Option expiration date Number of shares or units of stock that have not vested (#) Market value of shares of units of stock that have not vested ($) (2) Brian M. Culley 9/17/2018 1,042,875 811,125 1.87 9/16/2028 — — 9/17/2018 — — — — 92,700 163,152 3/17/2020 — 1,233,300 (3) 0.6919 3/17/2030 — — Brandi L. Roberts 1/7/2019 239,586 260,414 1.08 1/6/2029 — — 6/30/2019 71,875 78,125 (4) 1.10 6/29/2029 — — 3/17/2020 — 616,700 0.6919 3/17/2030 — — Chase C. Leavitt 5/20/2019 118,750 181,250 1.13 5/19/2029 — — 7/31/2019 49,479 75,521 (5) 1.10 7/31/2029 — — 3/17/2020 — 616,700 0.6919 3/17/2030 — — (1) Except as otherwise provided, 25% of the options vest on the first anniversary of the grant date, and the balance vest in equal monthly installments over the three years thereafter, subject to the executive’s continued services. (2) The dollar amounts shown in this column are calculated by multiplying the number of shares shown in the adjacent column by the closing market price of our common shares as reported on NYSE American on December 31, 2020 ($1.76), the last trading day of our fiscal year. (3) This grant was approved by the independent members of our Board in reliance on the employment inducement exemption to shareholder approval provided under the NYSE American Company Guide. (4) 25% of the options vested on January 7, 2020, and the balance vest in equal monthly installments over the three years thereafter, subject to Ms. Roberts’ continued services. (5) 25% of the options vested on May 20, 2020, and the balance vest in equal monthly installments over the three years thereafter, subject to Mr. Leavitt’s continued services. Consideration of Shareholder Advisory Vote on Executive Compensation The results of the advisory vote of our shareholders on the compensation of our named executive officers (commonly called the “say-on-pay” vote) at our 2020 Annual Meeting of Shareholders showed that more than 94% of our shareholders that voted approved the compensation of our named executive officers during 2019. Our Compensation Committee carefully evaluated and considered the results of this advisory vote. Aligned with the voting feedback of more than two-thirds of the shares voted, our Compensation Committee concluded that our shareholders generally supported our executive pay program and we did not make significant changes to our program for 2020. Our Compensation Committee expects to continue to consider the outcome of our “say on pay” votes and our stockholders’ views when making future compensation decisions for our named executive officers. Director Compensation We compensate our non-employee directors for their service on our Board and on its committees with the compensation provided below. In addition, all of our non-employee directors are entitled to reimbursements for their out-of-pocket expenses incurred in attending our Board and committee meetings. The following table shows the annual cash fees paid to the Chairman of our Board, our directors other than the Chairman, and to the directors who served on the standing committees of our Board during 2020. Fees Paid Chairman of the Board $ 75,000 Director other than Chair $ 40,000 Audit Committee Chair $ 20,000 Audit Committee Member other than Chair $ 10,000 Compensation Committee Chair $ 15,000 Compensation Committee Member other than Chair $ 7,500 Nominating and Corporate Governance Committee Chair $ 12,000 Nominating and Corporate Governance Committee Member other than Chair $ 6,000 Financial Strategy Committee Chair $ 160,000 Financial Strategy Committee Member other than Chair $ - 118 In connection with the increase of the size of our Nominating and Corporate Governance Committee from three to four members on August 4, 2020, annual cash fees for the Chair and members other than the Chair were reduced from $15,000 and $7,500, respectively to keep overall fees for such Committee consistent. The annual cash fees are paid in four equal quarterly installments, based on the director’s continued service through the last day of the applicable quarter, other than the annual cash fees paid to the Financial Strategy Committee Chair, which are paid monthly in arrears. In addition to cash fees, our Chairman receives an annual stock option grant to purchase 70,000 common shares and all other non-employee directors receive an annual stock option grant to purchase 40,000 common shares. All grants are made under the 2012 Plan. The options vest and become exercisable one year after the grant date. 2020 Director Compensation The following table summarizes certain information concerning the compensation paid during our fiscal year ended December 31, 2020 to each person who served as a director during that time and who was not our employee on the date the compensation was earned. Name Fees Earned or Paid in Cash Option Award (1) Total Deborah Andrews $ 69,946 $ 19,932 $ 89,878 Don M. Bailey $ 59,855 $ 19,932 $ 79,787 Neal C. Bradsher $ 50,185 $ 19,932 $ 70,117 Stephen C. Farrell (2) $ 38,906 $ 19,932 $ 58,838 Alfred D. Kingsley $ 235,000 $ 34,881 $ 269,881 Michael H. Mulroy $ 58,071 $ 19,932 $ 78,003 Angus C. Russell $ 52,058 $ 19,932 $ 71,990 (1) The dollar amounts in this column represent the aggregate fair market value of such awards determined based on the price of our common shares on the grant date in accordance with ASC Topic 718, Compensation-Stock Compensation (ASC Topic 718) . See Note 12 Stock-Based Awards to our consolidated financial statements included in our Form 10-K for details as to the assumptions used to determine the fair value of the awards. As of December 31, 2020, the aggregate number of option awards outstanding for Ms. Andrews and Messrs. Bailey, Bradsher, Farrell, Kingsley, Mulroy, and Russell was 178,880, 140,000, 178,880, 0, 350,120, 178,880 and 178,880, respectively. (2) Mr. Farrell did not stand for re-election and was no longer a director as of September 22, 2020. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS The tables below sets forth certain information, as of March 5, 2021, regarding the beneficial ownership of our common shares for: (i) each person known by us to be the beneficial owner of more than 5% of our common stock; (ii) each of our directors; (iii) each of our named executive officers; and (iv) all of our current directors and executive officers as a group. 119 We have determined beneficial ownership in accordance with applicable SEC rules, and the information reflected in the table below is not necessarily indicative of beneficial ownership for any other purpose. Under applicable SEC rules, beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within 60 days after the date set forth in the paragraph above through the exercise of any option, warrant or right or through the conversion of any convertible security. Unless otherwise indicated in the footnotes to the table below and subject to community property laws where applicable, we believe, based on the information furnished to us and on SEC filings, that each of the persons named in table below has sole voting and investment power with respect to the shares indicated as beneficially owned. The information set forth in the tables below is based on 161,637,890 common shares issued and outstanding on March 5, 2021. In computing the number of common shares beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all common shares subject to options, warrants, rights or other convertible securities held by that person that are currently exercisable or will be exercisable within 60 days after such date. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Except as otherwise noted, the address for each person listed in the table below is c/o Lineage Cell Therapeutics, Inc., 2173 Salk Avenue, Suite 200, Carlsbad, CA 92008. Name and Address of Beneficial Owner Number of Shares Beneficially Owned Percentage of Shares Beneficially Owned Greater than 5% Holders Broadwood Partners, L.P. (1) 34,207,167 21.1 % Named Executive Officers and Directors Neal C. Bradsher (1) 34,207,167 21.1 % Alfred D. Kingsley (2) 7,107,262 4.4 % Brian M. Culley (3) 1,732,445 1.1 % Brandi L. Roberts (4) 537,651 * Chase C. Leavitt (5) 375,667 * Michael H. Mulroy (6) 365,715 * Angus C. Russell (7) 206,380 * Don M. Bailey (8) 193,970 * Deborah Andrews (9) 148,880 * All executive officers and directors as a group (10 persons) (10) 45,280,465 27.4 % * Less than 1% (1) Includes: (i) 34,005,379 shares owned by Broadwood Partners, L.P.; (ii) 62,908 shares owned by Neal C. Bradsher; and (iii) 138,880 shares that may be acquired by Mr. Bradsher upon the exercise of options that are presently exercisable or may become exercisable within 60 days of March 5, 2021. Broadwood Capital, Inc. is the general partner of Broadwood Partners, L.P., and Mr. Bradsher is the President of Broadwood Capital, Inc. Mr. Bradsher and Broadwood Capital, Inc. may be deemed to beneficially own the shares that Broadwood Partners, L.P. owns. Mr. Bradsher disclaims beneficial ownership of the shares held by Broadwood Partners, L.P. except to the extent of his pecuniary interest therein. The Address of the foregoing entities and Mr. Bradsher is c/o Broadwood Capital, Inc., 142 West 57 th Street, 11 th Floor, New York, New York 10019. (2) Includes: (i) 1,043,346 shares owned by Greenbelt Corporation; (ii) 375,351 shares owned by Greenway Partners, L.P.; (iii) 5,408,445 shares owned solely by Alfred D. Kingsley; and (iv) 280,120 shares that may be acquired by Mr. Kingsley upon the exercise of options that are presently exercisable or may become exercisable within 60 days of March 5, 2021. Mr. Kingsley controls Greenbelt Corp. and Greenway Partners, L.P. and may be deemed to beneficially own the shares that Greenbelt Corp. and Greenway Partners, L.P. own. (3) Includes: (i) 185,602 shares held directly by Mr. Culley; (ii) 1,531,393 shares that may be acquired upon the exercise of options that are presently exercisable or that may become exercisable within 60 days of March 5, 2021; and (iii) 15,450 shares underlying RSU awards that are scheduled to vest on March 31, 2021. Does not include 77,250 shares underlying RSU awards that are subject to vesting more than 60 days after March 5, 2021. (4) Includes: (i) 5,000 shares held directly by Ms. Roberts; and (ii) 532,651 shares that may be acquired upon the exercise of options that are presently exercisable or that may become exercisable within 60 days of March 5, 2021. 120 (5) Includes: (i) 5,000 shares held directly by Mr. Leavitt; and (ii) 370,667 shares that may be acquired upon the exercise of options that are presently exercisable or that may become exercisable within 60 days of March 5, 2021. (6) Includes: (i) 226,835 shares held directly by Mr. Mulroy; and (ii) 138,880 shares that may be acquired upon the exercise of options that are presently exercisable or that may become exercisable within 60 days of March 5, 2021. (7) Includes: (i) 67,500 shares held directly by Mr. Russell; and (ii) 138,880 shares that may be acquired upon the exercise of options that are presently exercisable or that may become exercisable within 60 days of March 5, 2021. (8) Includes: (i) 62,647 shares held directly by Mr. Bailey; (ii) 100,000 shares that may be acquired upon the exercise of options that are presently exercisable or that may become exercisable within 60 days of March 5, 2021; and (iii) 31,323 shares that may be acquired upon the exercise of warrants that are presently exercisable. (9) Includes: (i) 10,000 shares held directly by Ms. Andrews; and (ii) 138,880 shares that may be acquired upon the exercise of options that are presently exercisable or that may become exercisable within 60 days of March 5, 2021. (10) Includes: (i) 41,486,458 shares held directly by such executive officers and directors; (ii) 3,747,234 shares that may be acquired upon the exercise of options that are presently exercisable or that may become exercisable within 60 days of March 5, 2021; (iii) 31,323 shares that may be acquired upon the exercise of warrants that are presently exercisable; and (iv) 15,450 shares underlying RSU awards that are subject to vest on March 31, 2021. Does not include 77,250 shares underlying RSU awards that are subject to vesting more than 60 days after March 5, 2021. Equity Compensation Plan Information The following table shows certain information concerning the options outstanding and available for issuance under all of our compensation plans and agreements as of December 31, 2020 (in thousands, except weighted average exercise prices): Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Stock Units, and Rights Weighted Average Exercise Price of the Outstanding Options, and Rights Number of Shares Remaining Available for Future Issuance under Equity Compensation Plans Equity Compensation Plans Approved by Shareholders 14,011 $ 1.53 8,002 Equity Compensation Plans Not Approved by Shareholders (1) 1,854 $ 1.87 — Total 15,865 $ 1.57 8,002 (1) Reflects an option grant approved by the independent members of our Board in reliance on the employment inducement exemption to shareholder approval provided under the NYSE American Company Guide. The following table shows certain information concerning the options outstanding and available for issuance under all of our compensation plans and agreements for our consolidated subsidiary companies as of December 31, 2020 (in thousands, except weighted average exercise prices): Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Stock Units, and Rights Weighted Average Exercise Price of the Outstanding Options, and Rights Number of Shares Remaining Available for Future Issuance under Equity Compensation Plans Asterias Equity Compensation Plans Approved by Shareholders (1) 350 $ 1.57 4,840 (1) Lineage is the sole shareholder. In connection with its acquisition of Asterias, Lineage assumed sponsorship of the Asterias 2013 Equity Incentive Plan, with references to Asterias and Asterias common stock therein to be deemed references to Lineage and Lineage common shares, respectively. 121 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Related Person Transactions Since July 1, 2009, Alfred D. Kingsley has made available to us the use of approximately 900 square feet of office space in New York City. We pay the office building owner $5,050 per month for the use of the space. These monthly payments are expected to cease in March 2021 when the office space lease expires. In April 2019, Lineage issued 251,835 common shares of Lineage to Broadwood Partners, L.P., a shareholder of Lineage and Asterias Biotherapeutics, Inc. (“Asterias”), in exchange for the settlement of warrants to purchase shares of Asterias common stock in connection with our acquisition of Asterias (the “Asterias Merger”). In connection with the putative shareholder class action lawsuits filed in February 2019 and October 2019 challenging the Asterias Merger, Lineage has agreed to pay for the legal defense of Neal Bradsher, director, and Broadwood Partners, L.P., a shareholder of Lineage, and Broadwood Capital, Inc., which manages Broadwood Partners, L.P., all of which were named in the lawsuits. During the year ending December 31, 2020, Lineage has incurred a total of $359,000 in legal expenses on behalf of the director, shareholder and the manager of the shareholder. As part of a financing transactions in which there were multiple other purchasers, Broadwood Partners, L.P. purchased 1,000,000, 2,000,000, and 623,090 shares of common stock of OncoCyte Corporation (“OncoCyte”) from Lineage in July 2019, September 2019, and January 2020, respectively. During 2019, we invoiced OncoCyte $1.2 million for certain “Use Fees” and other charges under the terms of a Shared Facilities and Services Agreement (the “ Shared Facilities Agreement ”) between Lineage and OncoCyte. Under the Shared Facilities Agreement, Lineage allowed OncoCyte to use Lineage’s premises and equipment located at Alameda, California for the sole purpose of conducting business. Lineage also provided accounting, billing, bookkeeping, payroll, treasury, payment of accounts payable, and other similar administrative services to OncoCyte. The Shared Facilities Agreements also allowed Lineage to provide the services of attorneys, accountants, and other professionals who may provide professional services to Lineage. Lineage also provided OncoCyte with the services of laboratory and research personnel, including Lineage employees and contractors, for the performance of research and development work for OncoCyte at the premises. Shared services with OncoCyte were terminated with respect to the use of Lineage’s office and laboratory facilities on September 30, 2019, and December 31, 2019 with respect to all other remaining shared services. We entered into a similar Shared Facilities Agreement with AgeX in 2018. During 2019, we invoiced AgeX $0.9 million for certain “Use Fee” and other charges and expenses for that period. Shared services with AgeX were terminated on July 31, 2019 with respect to the use of Lineage’s office and laboratory facilities and September 30, 2019 with respect to all other remaining shared services. At the time of our acquisition of Asterias, two of our directors, Alfred D. Kingsley, and Michael H. Mulroy, and an officer of Broadwood, were directors of Asterias. Immediately following the acquisition, Don M. Bailey joined our Board, and Edward D. Wirth, III, M.D., Ph.D. joined as our Chief Medical Officer. Mr. Bailey was a director of Asterias, and Dr. Wirth was an executive officer of Asterias. All of our directors and executive officers (including Mr. Bailey and Dr. Wirth) and 5% Shareholders as reported in this report, in the aggregate beneficially owned approximately 12% of the outstanding shares of Asterias common stock as of December 31, 2018, and approximately 12% of the outstanding shares of Asterias common stock immediately prior to the acquisition on March 8, 2019. 122 Mr. Kingsley is a director of OncoCyte. Broadwood Partners, L.P., a shareholder of Lineage (“Broadwood”) beneficially owns more than 20% of the outstanding common stock of OncoCyte, and all of our directors and executive officers and 5% Shareholders as reported in this report, including Neal C. Bradsher who may be deemed to beneficially own the shares owned by Broadwood, in the aggregate beneficially own more than 20% of the outstanding shares of OncoCyte common stock. The fact that certain of our executive officers and directors own shares of OncoCyte common stock should not be considered to mean that they constitute or are acting in concert as a “group” with respect to those shares or that they otherwise share power or authority to vote or dispose of the shares that each of them own. All decisions of Lineage regarding transactions in shares of OncoCyte are made by an independent committee of our Board in which Messrs. Kingsley and Bradsher do not participate. Related Person Transaction Policy We have adopted a Related Person Transaction Policy that applies to transactions exceeding $120,000 in which any of our officers, directors, 5% Shareholders, or any member of their immediate family, has a direct or indirect material interest, determined in accordance with the policy (a “Related Person Transaction”). A Related Person Transaction must be reported to our Chief Financial Officer and General Counsel or outside legal counsel and will be subject to review and approval by our Audit Committee prior to effectiveness or consummation, to the extent practical. In addition, any Related Person Transaction that is ongoing in nature will be reviewed by our Audit Committee annually to ensure that the transaction has been conducted in accordance with any previous approval and that all required disclosures regarding the transaction are made. As appropriate for the circumstances, our Audit Committee will review and consider: ● the interest of the officer, director, beneficial owner of more than 5% of our common shares, or any member of their immediate family (“Related Person”) in the Related Person Transaction; ● the approximate dollar value of the amount involved in the Related Person Transaction; ● the approximate dollar value of the amount of the Related Person’s interest in the transaction without regard to the amount of any profit or loss; ● whether the transaction was undertaken in the ordinary course of our business; ● whether the transaction with the Related Person is proposed to be, or was, entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party; ● the purpose of, and the potential benefits to the transaction to us; and ● any other information regarding the Related Person Transaction or the Related Person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. Our Audit Committee will review all relevant information available to it about a Related Person Transaction. Our Audit Committee may approve or ratify the Related Person Transaction only if our Audit Committee determines that, under all of the circumstances, the transaction is in, or is not in conflict with, our best interests. Our Audit Committee may, in its sole discretion, impose such conditions as it deems appropriate on us or the Related Person in connection with approval of the Related Person Transaction. A copy of our Related Person Transaction Policy can be found on our website at www.lineagecell.com. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The following table shows the fees billed or expected to be billed by OUM & Co. LLP (“OUM”), our principal accountant, for the audit of our annual consolidated financial statements for our last two fiscal years and for other services rendered by OUM during our last two fiscal years. 2020 2019 Audit Fees (1) $ 319,000 $ 503,000 Audit Related Fees (2) 50,000 37,000 Total Fees $ 369,000 $ 540,000 (1) Audit Fees consist of fees billed or expected to be billed for professional services rendered for the audit of the consolidated annual financial statements of Lineage and its several subsidiaries included in our Annual Report on Form 10-K, the reviews of the interim consolidated financial statements included in our Quarterly Reports on Form 10-Q, and services that are normally provided by our independent registered public accountants in connection with statutory and regulatory filings or engagements. (2) Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of Lineage’s consolidated financial statements and are not reported under “Audit Fees.” This category includes fees related to non-routine SEC filings. 123 Pre-Approval of Audit and Permissible Non-Audit Services Our Audit Committee requires pre-approval of all audit and non-audit services. Other than de minimis services incidental to audit services, non-audit services shall generally be limited to tax services such as advice and planning and financial due diligence services. All fees for such non-audit services must be approved by the Audit Committee, except to the extent otherwise permitted by applicable SEC regulations. Our Audit Committee may delegate to one or more designated members of our Audit Committee the authority to grant pre-approvals, provided such approvals are presented to our Audit Committee at a subsequent meeting. Director Independence Our Board has determined that Deborah Andrews, Don M. Bailey, Neal C. Bradsher, Michael H. Mulroy, and Angus C. Russell qualify as “independent” in accordance with Section 803(A) of the NYSE American Company Guide. The members of our Audit Committee meet the additional independence standards under Section 803(B)(2) of the NYSE American Company Guide and Section 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the members of our Compensation Committee meet the additional independence standards under Section 805(c)(1) of the NYSE American Company Guide. Brian M. Culley does not qualify as “independent” under Section 803(A) of the NYSE American Company Guide because he is our Chief Executive Officer and Interim Chief Financial Officer. Alfred D. Kingsley does not qualify as “independent” under Section 803(A) of the NYSE American Company Guide because he was an employee of a subsidiary of ours during the past three years. Specifically, Mr. Kingsley served as Executive Chairman of AgeX Therapeutics, Inc., which was our consolidated subsidiary until August 30, 2018. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a)(1) Financial Statements. The following financial statements of Lineage are filed in this Report: Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Loss Consolidated Statements of Changes in Shareholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (a)(2) Financial Statement Schedules There are no financial statement schedules provided because the information called for is either not required or is shown either in the financial statements or the notes thereto. 124 (a)(3) Exhibits. Incorporation by Reference Exhibit Number Description Exhibit Number Filing Filing Date File No. 2.1^ Agreement and Plan of Merger dated November 7, 2018, among Registrant, Patrick Merger Sub, Inc. and Asterias Biotherapeutics, Inc. (“Asterias”) 2.1 8-K November 8, 2018 001-12830 3.1 Restated Articles of Incorporation, as amended 3.1 10-Q May 10, 2018 001-12830 3.2 Certificate of Ownership 3.1 8-K August 12, 2019 001-12830 3.3 Amended and Restated Bylaws 3.2 8-K August 12, 2019 001-12830 4.1 Specimen of Common Share Certificate S-1 December 18, 1991 033-44549 4.2* Description of Capital Stock of the Registrant 10.1+ Employment Agreement dated October 10, 2007, between Registrant and Michael D. West (“West Employment Agreement”) 10.23 10-KSB April 14, 2008 001-12830 10.1(a)+ Amendment to West Employment Agreement dated November 24, 2015 10.1 8-K December 1, 2015 001-12830 10.2+ Transition Agreement dated September 17, 2018, between Registrant and Michael D. West 10.3 8-K September 18, 2018 001-12830 10.3 Commercial License and Option Agreement between Registrant and Wisconsin Alumni Research Foundation (“WARF Agreement”) 10.1 8-K January 9, 2008 001-12830 10.3(a) First Amendment of WARF Agreement dated March 11, 2009 10.38 10-K March 23, 2009 001-12830 10.4+ Lineage Cell Therapeutics 2012 Equity Incentive Plan, as amended July 2015 (“2012 Plan”) 4.1 S-8 July 15, 2015 333-205661 10.4(a)+ Amendment to 2012 Plan effective June 2017 4.2 S-8 July 7, 2017 333-219204 10.4(b)+ Amendment to 2012 Plan effective July 2019 99.3 S-8 August 8, 2019 333-233132 10.4(c)+ Amendment to 2012 Plan effective August 2019 10.1 10-Q November 12, 2019 001-12830 10.4(d)+ 2012 Plan Form of Employee Incentive Stock Option Agreement 10.7 10-Q November 12, 2013 001-12830 10.4(e)+ 2012 Plan Form of Non-employee Director Stock Option Agreement 10.8 10-Q November 12, 2013 001-12830 10.4(f)+ 2012 Plan Stock Option Grant Agreement 10.2 10-Q November 12, 2019 000-12830 10.4(g)+ 2012 Plan Form of Restricted Stock Unit 10.6 10-K March 12, 2020 001-12830 10.5+ Cell Cure Neurosciences Ltd. Share Option Plan 10.38 10-K March 16, 2017 001-12830 10.5(a)+ Form of Cell Cure Neurosciences Ltd. Share Option Plan Option Agreement 10.39 10-K March 16, 2017 001-12830 10.6+ Inducement Stock Option Agreement between Registrant and Brian Culley 10.38 10-K March 14, 2019 001-12830 10.7+ Employment Agreement dated December 29, 2014, between Registrant and Aditya Mohanty (“Mohanty Employment Agreement”) 10.64 10-K March 11, 2015 001-12830 10.7(a)+ Amendment of Mohanty Employment Agreement dated November 24, 2015 10.2 8-K December 1, 2015 001-12830 10.8+ Transition Agreement dated September 17, 2018, between Registrant and Aditya P. Mohanty 10.2 8-K September 18, 2018 001-12830 10.10† Second Amended and Restated License Agreement dated June 15, 2017, between Cell Cure Neurosciences, Ltd. and Hadasit Medical Research Services and Development Ltd. (“Hadasit License”) 10.2 10-Q August 9, 2017 001-12830 125 10.10(a) Amendment to Hadasit License dated January 8, 2018 10.38 10-K March 15, 2018 001-12830 10.11† Debt and Note Purchase Agreement dated June 16, 2017, as amended June 29, 2017, between Registrant and HBL-Hadasit Bio-Holdings Ltd. 10.3 10-Q August 9, 2017 001-12830 10.12† Share Purchase and Transfer Agreement dated June 16, 2017, by and among Registrant and HBL-Hadasit Bio-Holdings Ltd. and Cell Cure Neurosciences Ltd . 10.4 10-Q August 9, 2017 001-12830 10.13+ Employment Agreement effective September 17, 2018, between Registrant and Brian Culley 10.1 8-K September 18, 2018 001-12830 10.14+ Employment Agreement effective January 7, 2019, between Registrant and Brandi Roberts 10.38 10-K March 14, 2019 001-12830 10.15*+ Separation and Consulting Agreement dated January 20, 2021 between Registrant and Brandi Roberts 10.16+ Employment Agreement effective May 20, 2019, between Registrant and Chase Leavitt 10.25 10-K March 12, 2020 001-12830 10.17 Royalty Agreement dated October 1, 2013, between Asterias and Geron Corporation 10.6 Asterias S-1/A August 13, 2013 333-187706 10.18 Exclusive Sublicense Agreement between Geron Corporation and Asterias 10.7 Asterias S-1/A August 13, 2013 333-187706 10.19 Exclusive License Agreement dated February 20, 2003, and First Amendment thereto dated September 7, 2004, between The Regents of the University of California and Geron Corporation 10.4 Asterias 10-Q November 12, 2013 000-55046 10.20† Non-exclusive License Agreement dated October 7, 2013, between WARF and Asterias 10.5 Asterias 10-Q November 12, 2013 000-55046 10.21† Clinical Trial and Option Agreement dated September 8, 2014, between Asterias and Cancer Research UK and Cancer Research Technology Limited 10.1 Asterias 10-Q/A January 13, 2015 001-36646 10.22(a) †† Second Amendment to Clinical Trial and Option Agreement dated May 6, 2020 between Cancer Research UK, Cancer Research Technology Limited, Asterias Biotherapeutics, Inc. and Registrant 10.1 10-Q August 6, 2020 001-12830 10.23 †† Agreement dated May 6, 2020 between CRT and Registrant 10.2 10-Q August 6, 2020 001-12830 21.1* List of Subsidiaries 23.1* Consent of OUM & Co. LLP 31.1* Certification of Chief Executive Officer and Interim Chief Financial Officer pursuant to Form of Rule 13a-14(a), as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 32.1# Certification of Chief Executive Officer and Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101* Interactive Data File 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema 101.CAL* XBRL Taxonomy Extension Calculation Linkbase 101.DEF* XBRL Taxonomy Extension Definition Document 101.LAB* XBRL Taxonomy Extension Label Linkbase 101.PRE* XBRL Taxonomy Extension Presentation Linkbase ^ The schedules and exhibits to the merger agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request. * Filed herewith # Furnished herewith + Indicates management contract or compensatory plan † Portions of this exhibit have been omitted pursuant to a request for confidential treatment †† Portions of this exhibit have been omitted because the omitted information is: (i) not material; and (ii) would likely cause competitive harm to the registrant if publicly disclosed. ITEM 16. FORM 10-K SUMMARY None 126 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on the 11 th day of March 2021. LINEAGE CELL THERAPEUTICS, INC. By: /s/ Brian M. Culley Brian M. Culley Chief Executive Officer Signature Title Date /s/ Brian M. Culley Chief Executive Officer and Director March 11, 2021 BRIAN M. CULLEY (Principal Executive and Financial Officer) /s/ Alexandra Hernandez Senior Director, Finance March 11, 2021 ALEXANDRA HERNANDEZ (Principal Accounting Officer) /s/ Deborah Andrews Director March 11, 2021 DEBORAH ANDREWS /s/ Don M. Bailey Director March 11, 2021 DON M. BAILEY /s/ Neal C. Bradsher Director March 11, 2021 NEAL C. BRADSHER /s/ Alfred D. Kingsley Director March 11, 2021 ALFRED D. KINGSLEY /s/ Michael H. Mulroy Director March 11, 2021 MICHAEL H. MULROY /s/ Angus C. Russell Director March 11, 2021 ANGUS C. RUSSELL 127