What changed in this filing

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Item 1. Financial Statements

2021-08-12 compared with 2021-05-13 · 569 added, 487 removed, 634 unchanged (62% of the section changed)

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CONSOLIDATED BALANCE SHEETS

March 31, 2021

December 31, 2020

June 30, 2021

CURRENT ASSETS

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Accounts payable and accrued liabilities

Financing lease and right of use lease liabilities, current portion (Note 15)

Lease liabilities, current portion (Note 14)

Financing lease, current portion (Note 14)

Deferred revenues

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Deferred tax liability

Right-of-use lease liability, net of current portion (Note 15)

Financing lease, net of current portion

Lease liability, net of current portion (Note 14)

Financing lease, net of current portion (Note 14)

Liability classified warrants, net of current portion

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SHAREHOLDERS’ EQUITY

Preferred shares, no par value, authorized 2,000 shares;

none issued and outstanding as of March 31, 2021 and December 31, 2020

Preferred shares, no par value, 2,000 shares authorized;

none issued and outstanding as of June 30, 2021 and December 31, 2020

Common shares, no par value, 250,000 shares authorized;

162,067 and 153,096 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

167,037 and 153,096 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Accumulated other comprehensive loss

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shareholders’ equity

Noncontrolling interest (deficit)

Noncontrolling deficit

Total shareholders’ equity

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Three Months Ended

Six Months Ended

Grant revenue

Royalties from product sales and license fees

Collaboration revenues

Total revenues

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OTHER INCOME/(EXPENSES):

Interest income, net

Interest income (expense), net

Gain on sale of marketable securities

Unrealized gain (loss) on marketable equity securities

Unrealized gain on warrant liability

Other expenses, net

Total other income (expenses), net

Gain on extinguishment of debt

Unrealized gain (loss) on warrant liability

Other income (expense), net

Total other income/(expense), net

LOSS BEFORE INCOME TAXES

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

Other comprehensive income, net of tax:

Six Months Ended

Other comprehensive loss, net of tax:

Foreign currency translation adjustment, net of tax

COMPREHENSIVE (LOSS)/INCOME

COMPREHENSIVE LOSS

Comprehensive loss attributable to noncontrolling interest

COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO LINEAGE CELL THERAPEUTICS, INC.

COMPREHENSIVE LOSS ATTRIBUTABLE TO LINEAGE CELL THERAPEUTICS, INC.

COMMON SHAREHOLDERS

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Unrealized (gain)/loss on marketable equity securities

Gain on extinguishment of debt

Depreciation expense, including amortization of leasehold improvements

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Change in unrealized gain on warrant liability

Write-off of security deposit

Deferred tax benefit

Foreign currency remeasurement and other gain

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Accrued interest receivable

Receivables from OncoCyte and AgeX, net of payables

Prepaid expenses and other current assets

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Purchase of equipment and other assets

Proceeds from the sale of equipment and other assets

Other deposits

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Repayment of financing lease liabilities

Proceeds from Paycheck Protection Program (“PPP”) Loan (Note 7)

Proceeds from sale of common shares

Payments for offering costs

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

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Cell Therapeutics, Inc.

(“Lineage,” “we,” “us,” or “our”) is a clinical-stage

biotechnology company developing novel cell therapies for unmet medical needs.

Our focus is to develop therapies for degenerative

retinal diseases, neurological conditions associated with demyelination, and that aid the body in detecting and combating

Specifically, Lineage is testing therapies to treat dry age-related macular degeneration, spinal cord injuries, and non-small

cell lung cancer.

Our programs are based on our proprietary cell-based technology platform and associated development and manufacturing

capabilities.

From this platform, we develop and manufacture specialized, terminally or functionally differentiated human cells

from established and well-characterized pluripotent cell lines.

These differentiated cells are transplanted into a patient either

to replace or support cells that are dysfunctional or absent due to degenerative disease or traumatic injury, or are administered

as a means of helping the body mount a more robust and effective immune response to cancer.

(“Lineage,” “we,” “us,” or “our”) is a clinical-stage biotechnology

company developing novel cell therapies for unmet medical needs.

Our focus is to develop therapies for degenerative retinal diseases,

neurological conditions associated with demyelination, and that aid the body in detecting and combating cancer.

Specifically, Lineage

is testing therapies to treat dry age-related macular degeneration, spinal cord injuries, and non-small cell lung cancer.

are based on our proprietary cell-based technology platform and associated development and manufacturing capabilities.

From this platform,

we develop and manufacture specialized, terminally or functionally differentiated human cells from established and well-characterized

pluripotent cell lines.

These differentiated cells are transplanted into a patient either to replace or support cells that are dysfunctional

or absent due to degenerative disease or traumatic injury, or are administered as a means of helping the body mount a more robust and

effective immune response to cancer.

have three allogeneic, or “off-the-shelf,” cell therapy programs in clinical development:

a retinal pigment epithelium (“RPE”) cell replacement therapy currently in a Phase 1/2a multicenter clinical trial for

the treatment of advanced dry age-related macular degeneration (“AMD”) with geographic atrophy (“GA”).

currently are no therapies approved by the U.S.

Food and Drug Administration (“FDA”) for dry AMD, which accounts for

approximately 85-90% of all AMD cases and is one of the leading causes of blindness in people over the age of 60.

an oligodendrocyte progenitor cell therapy currently in a Phase 1/2a multicenter clinical trial for acute spinal cord injuries (“SCI”).

the treatment of advanced dry age-related macular degeneration (“AMD”) with geographic atrophy (“GA”) (also

known as, atrophic AMD).

There are currently no therapies approved by the U.S.

Food and Drug Administration (“FDA”) for

dry AMD, which accounts for approximately 85-90% of all AMD cases and is one of the leading causes of blindness in people over the

age of 60 in the developed world.

an oligodendrocyte progenitor cell therapy currently in a Phase 1/2a multicenter clinical trial for subacute spinal cord injuries

This clinical trial has been partially funded by the California Institute for Regenerative Medicine (“CIRM”).

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OncoCyte Corporation (“OncoCyte”) and AgeX Therapeutics, Inc.

We continue to hold common stock in OncoCyte as of March 31, 2021.

We continue to hold common stock in OncoCyte as of June 30, 2021.

our principal focus is on advancing our three cell therapy programs currently in clinical development, we may seek to create additional

value through corporate transactions, as we have in the past, or by initiating new programs using existing protocols or new protocols

and cell lines.

value by initiating new programs using existing protocols or new protocols and cell lines, or through corporate transactions, as we have

November 7, 2018, Lineage, Asterias Biotherapeutics, Inc.

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fair values as of the acquisition date.

Note 3 for a discussion of the Asterias Merger.

has an equity position in OncoCyte, a publicly traded molecular diagnostic company (NYSE American:

OCX), which Lineage

founded and, in the past, was a majority-owned consolidated subsidiary until February 17, 2017, when Lineage deconsolidated OncoCyte’s

financial statements.

OncoCyte is focused on developing and commercializing laboratory-developed tests to serve unmet medical needs across

the cancer care continuum.

As of March 31, 2021, Lineage owned approximately 1.1

has an equity position in OncoCyte, a publicly traded molecular diagnostics company (NYSE American:

OCX), which Lineage founded and,

in the past, was a majority-owned consolidated subsidiary until February 17, 2017, when Lineage deconsolidated OncoCyte’s financial

OncoCyte is focused on developing and commercializing laboratory-developed tests to serve unmet medical needs across the

cancer care continuum.

As of June 30, 2021, Lineage owned approximately 1.1

million shares of OncoCyte common stock, or 1.2 %

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The following table reflects Lineage’s ownership, directly or through one or

more subsidiaries, of the outstanding shares of its operating subsidiaries as of March 31, 2021.

of Lineage's Ownership of Outstanding Shares of its Subsidiaries

BioTherapeutics, Inc.

therapy clinical development programs in spinal cord injury and oncology

Cure Neurosciences Ltd.

more subsidiaries, of the outstanding shares of its operating subsidiaries as of June 30, 2021.

Schedule of Lineage's Ownership of Outstanding Shares of its Subsidiaries

Field of Business

Asterias BioTherapeutics, Inc.

Cell therapy clinical development programs in spinal cord injury and oncology

Cell Cure Neurosciences Ltd.

(“Cell Cure”)

and manufacturing of Lineage’s cell replacement platform technology

Cell International Pte.

cell products for research, including clinical grade cell lines produced under cGMP

Corporation (“OrthoCyte”)

bone grafting products for orthopedic diseases and injuries

Development and manufacturing of Lineage’s cell replacement platform technology

ES Cell International Pte.

Stem cell products for research, including clinical grade cell lines produced under cGMP

OrthoCyte Corporation (“OrthoCyte”)

Developing bone grafting products for orthopedic diseases and injuries

shares owned by Lineage and ESI.

of March 31, 2021, Lineage consolidated its direct and indirect wholly owned or majority-owned subsidiaries because Lineage has the ability

of June 30, 2021, Lineage consolidated its direct and indirect wholly owned or majority-owned subsidiaries because Lineage has the ability

to control their operating and financial decisions and policies through its ownership, and the noncontrolling interest is reflected as

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

As of March 31, 2021, Lineage had issued 11,035,444 common shares at a weighted average price per share of $ 2.27 for gross proceeds of

$ 25.0 million under the Sales Agreement.

On March 5, 2021, Lineage filed a prospectus supplement with the SEC in connection with the

offer and sale of an additional $ 25.0 million of common shares under the Sales Agreement increasing the total offering to $ 50.0 million.

No sales of the additional $25.0 million shares have been conducted as of May 7, 2021.

of March 31, 2021, Lineage had an accumulated deficit of approximately $ 295.5 million, working capital of $ 58.0 million and shareholders’

On March 5, 2021, Lineage filed a prospectus supplement with the SEC in connection with the offer and sale of an additional $ 25.0 million

of common shares under the Sales Agreement increasing the total offering to $ 50.0 million.

As of March 31, 2021, Lineage issued 11,035,444

common shares at a weighted average price per share of $ 2.27 for gross proceeds of $ 25.0 million.

For the three months ended June 30,

2021, Lineage issued an additional 2,824,332 common shares at a weighted average price per share of $ 2.87 for gross proceeds of $ 8.1

As of June 30, 2021, Lineage had issued 13,859,776 common shares at a weighted average price per share of $ 2.39 for gross proceeds

of $ 33.1 million under the Sales Agreement.

of June 30, 2021, Lineage had an accumulated deficit of approximately $ 300.3 million, working capital of $ 64.8 million and shareholders’

equity of $ 123.6 million.

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by Lineage or its subsidiaries and affiliates could result in the dilution of the interests of current shareholders.

accounts for business combinations, such as the Asterias Merger completed in March 2019, in accordance with ASC Topic 805, which requires

the purchase price to be measured at fair value.

When the purchase consideration consists entirely of Lineage common shares, Lineage

calculates the purchase price by determining the fair value, as of the acquisition date, of shares issued in connection with the closing

of the acquisition.

Lineage recognizes estimated fair values of the tangible assets and intangible assets acquired, including in-process

research and development (“IPR&D”), and liabilities assumed as of the acquisition date, and records as goodwill any amount

of the fair value of the tangible and intangible assets acquired and liabilities assumed in excess of the purchase price.

Equity Securities

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to contracts with similar characteristics and in similar circumstances.

largest source of revenue is currently related to government grants.

In applying the provisions of ASU 2014-09, Lineage has determined

that government grants are out of the scope of ASU 2014-09 because the government entities do not meet the definition of a “customer,”

as defined by ASU 2014-09, as there is not considered to be a transfer of control of goods or services to the government entities funding

Lineage has, and will continue to, account for grants received to perform research and development services in accordance

with ASC 730-20, Research and Development Arrangements, which requires an assessment, at the inception of the grant, of whether the grant

is a liability or a contract to perform research and development services for others.

If Lineage or a subsidiary receiving the grant

is obligated to repay the grant funds to the grantor regardless of the outcome of the research and development activities, then Lineage

is required to estimate and recognize that liability.

Alternatively, if Lineage or a subsidiary receiving the grant is not required to

repay, or if it is required to repay the grant funds only if the research and development activities are successful, then the grant agreement

is accounted for as a contract to perform research and development services for others, in which case, grant revenue is recognized when

the related research and development expenses are incurred (see Note 15).

grant revenues represent grant funds received from the governmental funding agencies for which the allowable expenses have not yet been

incurred as of the latest balance sheet date reported.

As of March 31, 2021, deferred grant revenue was $ 101,000 .

and diluted net income (loss) per share attributable to common shareholders

applying the provisions of ASU 2014-09, Lineage has determined that government grants are out of the scope of ASU 2014-09 because the

government entities do not meet the definition of a “customer,” as defined by ASU 2014-09, as there is not considered to

be a transfer of control of goods or services to the government entities funding the grant.

In the absence of applicable guidance

GAAP, the Company’s policy is to recognize grant revenue when the related costs are incurred and the right to payment

Costs incurred are recorded in research and development and general and administrative expenses on the accompanying statements

of operations (see Note 14).

Deferred grant revenues currently

represent grant funds received from the Israel Innovation Authority (“IIA”) for the development of Cell Cure’s OpRegen

and our bio retina program, for which the allowable expenses have not yet been incurred as of the latest balance sheet date reported.

As of June 30, 2021, deferred grant revenue was $ 112,000 ,

primarily comprised of remaining funds most recently received in June 2021 and November 2020, for their respective programs.

Collaboration

April 16, 2021, Lineage entered a worldwide license and development collaboration agreement with Immunomic Therapeutics, Inc.

Lineage is the sole and exclusive owner of the rights to the VAC platform and has licensed to ITI patents and materials for the development

and commercialization of a novel cancer immunotherapy agent derived from this platform utilizing an antigen provided by ITI, for the

treatment of glioblastoma multiforme.

Under the terms of this agreement, Lineage is entitled to up-front licensing fees totaling

million paid over the first year, and up to $ 67.0

million in development and commercial milestones

across multiple indications.

Lineage will also be eligible to receive royalties up to 10 %

on net sales of future products.

review collaborative agreements to determine if the accounting treatment falls under Accounting Standards Codification, Topic 606 ,

Revenue from Contracts with Customers (“ASC 606”) , or Accounting Standards Codification Topic 808, Collaborative

Arrangements (“ASC 808”).

While these agreements are typically within the scope of ASC 808, we may analogize to ASC 606

for some aspects of the agreements.

terms of our collaborative agreements typically include one or more of the following:

(i) up-front fees;

(ii) milestone payments related

to achievement of development or commercial goals;

(iii) royalties on net sales of licensed products;

and (iv) reimbursement of cost-sharing

of R&D expenses.

Each of these payments eventually result in collaboration revenues.

When a portion of non-refundable up-front fees

or other payments received are allocated to continuing performance obligations under the terms of a collaborative arrangement, they are

recorded as deferred revenue and recognized as collaboration revenue when (or as) the underlying performance obligation is satisfied.

part of the accounting treatment for these arrangements, we must develop estimates and assumptions that require judgement to determine

the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among

the performance obligations.

The following items are estimated in the calculation of the stand-alone selling price:

forecasted revenues

and development costs, development timelines, discount rates and probabilities of technical and regulatory success.

We evaluate each

performance obligation to determine if they can be satisfied at a point in time or over time, and we measure the services delivered to

our collaboration partners each reporting period, which is based on the progress of the related program.

If necessary, we adjust the

measure of performance and related revenue recognition.

Any such adjustments are recorded on a cumulative catch-up basis which would

affect revenue and net income (loss) in the period of adjustment.

In addition, variable consideration (e.g., milestone payments) must

be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

If a license to our intellectual property is determined to be distinct from the other performance obligations identified in

the arrangement, we recognize collaboration revenues from the transaction price allocated to the license when the license is transferred

to the licensee, and the licensee is able to use and benefit from the license.

When the license is determined to be non-distinct, we

utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation

is satisfied over time or at a point in time, and, if over time, the appropriate method of measuring progress for purposes of recognizing

collaboration revenue from the allocated transaction price.

For example, when we receive up-front fees for the performance of research

and development services, or when research and development services are not considered to be distinct from a license, we recognize collaboration

revenue for those units of account over time using a measure of progress.

We evaluate the measure of progress at each reporting period

and, if necessary, adjust the measure of performance and related revenue as a change in estimate.

At the inception of each collaboration agreement that includes milestone payments (variable consideration), we evaluate

whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using

the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value

is included in the transaction price.

Milestone payments that are not within our or the collaboration partner’s control, such as

non-operational developmental and regulatory approvals, are generally not considered probable of being achieved until those approvals

are received.

At the end of each reporting period, we re-evaluate the probability of achievement of milestones that are within our or

the collaboration partner’s control, such as operational developmental milestones and any related constraint, and if necessary,

adjust our estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect

collaboration revenues and net income (loss) in the period of adjustment.

Revisions to our estimate of the transaction price may also

result in negative collaboration revenues and net income (loss) in the period of adjustment.

For collaboration agreements that include sales-based royalties, including commercial milestone payments based on the level of sales,

and the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the

related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied

(or partially satisfied).

Reimbursement,

cost-sharing payments:

Under certain collaborative agreements, we will receive reimbursement for a portion of our R&D expenses.

Such reimbursements are reviewed for gross versus net reporting considerations and reflected either as a reduction of R&D expense

or as reimbursement revenue in our condensed consolidated statements of operations.

of June 30, 2021, we have $ 464,000 of deferred revenue on the consolidated balance sheet, and for the three and six months ended June

30, 2021, we recognized $ 213,000 of revenue, all related to the ITI collaboration agreement.

and diluted net loss per share attributable to common shareholders

earnings per share is calculated by dividing net income or loss attributable to Lineage common shareholders by the weighted average number

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method, and treasury stock held by subsidiaries, if any.

the three months ended March 31, 2021 and 2020, respectively, Lineage reported a net loss attributable to common shareholders, and therefore,

all potentially dilutive common shares were considered antidilutive for those periods.

the three and six months ended June 30, 2021 and 2020, respectively, Lineage reported a net loss attributable to common shareholders,

and therefore, all potentially dilutive common shares were considered antidilutive for those periods.

following common share equivalents were excluded from the computation of diluted net loss per common share for the periods presented

because including them would have been antidilutive (in thousands):

of Antidilutive Securities Excluded from Computation of Earnings Per Share

Three Months Ended

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Six Months Ended

Stock options

Lineage Warrants (1) (Note 3)

Lineage Warrants (1)

Restricted stock units

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presented herein (in thousands):

of Reconciliation of Cash, Cash Equivalents, and Restricted Cash

Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents

Restricted cash included in deposits and other long-term assets (see Note 14)

Restricted cash included in prepaid expenses and other current assets (see Note 15)

Restricted cash included in prepaid expenses and other

current assets

(see Note 14)

Total cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows

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of the impact of the new standard on its condensed consolidated financial statements.

Asterias Merger

March 8, 2019, the Asterias Merger closed with Asterias surviving as a wholly owned subsidiary of Lineage.

The former stockholders of

Asterias (other than Lineage) received 0.71 common shares of Lineage for every share of Asterias common stock they owned.

Lineage issued

24,695,898 common shares, including 58,085 shares issued in respect of restricted stock units issued by Asterias that immediately vested

in connection with the closing of the Asterias Merger.

The aggregate dollar value of such shares, based on the closing price of Lineage

common shares on March 8, 2019, was $ 32.4 million.

The total purchase price was $ 52.6 million.

Lineage also assumed warrants to purchase

shares of Asterias common stock.

has two IPR&D intangible assets that were valued at $ 46.5 million as part of the purchase price allocation that was performed in

connection with the Asterias Merger.

The fair value of these assets consists of $ 31.7 million pertaining to the OPC1 program that is

currently in a Phase 1/2a clinical trial for SCI, which has been partially funded by the California Institute for Regenerative Medicine

and $ 14.8 million pertaining to the VAC2 program, which is an allogeneic, or “off-the-shelf,” cancer immunotherapy derived

from pluripotent stem cells for which a clinical trial in non-small cell lung cancer is being funded and sponsored by Cancer Research

also has certain royalty revenues for “research only use” culture media for pre-clinical research applications under certain,

specific patent families under contracts which preclude the customers to sell for commercial use or for clinical trials.

These royalty

cash flows are generated under certain specific patent families that Asterias previously acquired from Geron Corporation (“Geron”).

Asterias pays Geron a royalty for all royalty revenues received from these contracts.

Because these patents are expected to continue

to generate revenues for Asterias and are not to be used in the OPC1 or the VAC2 programs, these patents are considered to be separate

long-lived intangible assets under ASC 805.

connection with the closing of the Asterias Merger, Lineage assumed outstanding warrants to purchase shares of Asterias common stock,

as further discussed below and in Note 11, and assumed sponsorship of the Asterias 2013 Equity Incentive Plan (see Note 12).

options to purchase shares of Asterias common stock outstanding immediately prior to the closing of the Asterias Merger were canceled

at the closing for no consideration.

Merger Related Litigation - See Note 15 Commitments and Contingencies for discussion regarding litigation related to the Asterias Merger.

Accounting for Common Stock of OncoCyte, at Fair Value

of March 31, 2021, Lineage owned approximately 1.1 million shares of OncoCyte common stock.

Accounting for Common Stock

of OncoCyte, at Fair Value

of June 30, 2021, Lineage owned approximately 1.1 million shares of OncoCyte common stock.

These shares had a fair value of approximately

$ 5.8 million, based on the closing price of OncoCyte of $ 5.19 per share on March 31, 2021.

$ 6.4 million, based on the closing price of OncoCyte of $ 5.74 per share on June 30, 2021.

As of December 31, 2020, Lineage owned approximately

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of OncoCyte of $ 2.39 per share on December 31, 2020.

the three months ended March 31, 2021, Lineage recorded a realized gain of $ 6.0 million due to sales of OncoCyte shares in the period.

Lineage also recorded a net unrealized gain on marketable equity securities of $ 1.2 million related to changes in fair market value of

OncoCyte’s common stock price during the quarter.

the three months ended March 31, 2020, Lineage recorded a realized gain of $ 1.1 million due to sales of OncoCyte shares in the period.

Lineage also recorded a net unrealized loss on marketable equity securities of $ 0.3 million related to changes in fair market value of

OncoCyte’s common stock price in the quarter.

the three months ended June 30, 2021, Lineage also recorded a net unrealized gain on marketable equity securities of $ 0.6 million related

to changes in fair market value of OncoCyte’s common stock price during the quarter.

For the three months ended June 30, 2020,

Lineage recorded a realized gain of $ 2.1 million due to sales of OncoCyte shares in the period.

Lineage also recorded a net unrealized

loss on marketable equity securities of $ 4.0 million related to changes in fair market value of OncoCyte’s common stock price in

the six months ended June 30, 2021, Lineage recorded a realized gain of $ 6.0 million due to sales of OncoCyte shares in the period.

also recorded a net unrealized gain on marketable equity securities of $ 1.8 million related to changes in fair market value of OncoCyte’s

common stock price during the period.

For the six months ended June 30, 2020, Lineage recorded a realized gain of $ 3.1 million due to

sales of OncoCyte shares in the period.

Lineage also recorded a net unrealized loss on marketable equity securities of $ 4.2 million related

to changes in fair market value of OncoCyte’s common stock price in the period.

share prices are determined based on the closing price of OncoCyte common stock on the NYSE American on the applicable dates, or the

last day of trading of the applicable quarter, if the last day of a quarter fell on a weekend.

Sale of Significant Ownership Interest in AgeX to Juvenescence Limited

Sale of Significant Ownership

Interest in AgeX to Juvenescence Limited

August 30, 2018, Lineage entered into a Stock Purchase Agreement with Juvenescence Limited (“Juvenescence”) and AgeX, pursuant

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Property and Equipment, Net

March 31, 2021 and December 31, 2020, property and equipment, net was comprised of the following (in thousands):

of Property and Equipment, Net

March 31, 2021

December 31, 2020

June 30, 2021 and December 31, 2020, property and equipment, net was comprised of the following (in thousands):

Schedule of Property and Equipment, Net

Equipment, furniture and fixtures

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Property and equipment, net

and equipment at March 31, 2021 and December 31, 2020 includes $ 79,000 in financing leases.

In September 2020, Lineage terminated its

leases in Alameda and entered into a new lease for a reduced amount of square footage.

This resulted in a reduction to right-of-use assets

of approximately $ 1.4 million.

and equipment at June 30, 2021 and December 31, 2020 includes $ 79,000

in financing leases.

In September 2020, Lineage

terminated its leases in Alameda and entered into a new lease for a reduced amount of square footage.

This resulted in a reduction to

right-of-use assets of approximately $ 1.4

See additional information in Note 14.

and amortization expense amounted to $ 174,000 and $ 212,000 for the three months ended March 31, 2021 and 2020, respectively.

three months ended March 31, 2021 and 2020, Lineage sold non-capitalized assets for a net gain of $ 16,000 and $ 30,000 , respectively,

which was included in research and development expenses on the condensed consolidated statements of operations.

During the three months

ended March 31, 2020, Lineage sold equipment with a net book value of $ 13,000 and recognized a gain of $ 2,000 , which was included in

research and development expenses on the condensed consolidated statement of operations.

Goodwill and Intangible Assets, Net

March 31, 2021, and December 31, 2020, goodwill and intangible assets, net consisted of the following (in thousands):

and amortization expense amounted to $ 165,000 and $ 210,000 for the three months ended June 30, 2021 and 2020, and $ 338,000 and $ 423,000

for the six months ended June 30, 2021 and 2020, respectively.

During the three and six months ended June 30, 2021 Lineage sold equipment

with a net book value of $ 8,000 and recognized a gain of $ 5,000 .

Additionally, Lineage sold non-capitalized assets for a net gain of

$ 13,000 and $ 30,000 , respectively, which was included in research and development expenses on the condensed consolidated statements of

During the three and six months ended June 30, 2020 Lineage sold equipment with a net book value of $ 13,000 and recognized

a loss of $ 2,000 .

Additionally, Lineage sold non-capitalized assets for a net gain of $ 16,000 and $ 46,000 , respectively, which was included

in research and development expenses on the condensed consolidated statements of operations.

Goodwill and Intangible Assets,

June 30, 2021 and December 31, 2020, goodwill and intangible assets, net consisted of the following (in thousands):

Schedule of Goodwill and Intangible Assets, Net

December 31,2020

Intangible assets:

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Acquired patents

Acquired royalty contracts (2)

royalty contracts (3)

Total intangible assets

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liabilities assumed in the Asterias Merger.

Note 3 for information on the Asterias Merger which was consummated on March 8, 2019.

recognized in research and development expenses was $ 0.1 million and $ 0.5 million for the three months ended March 31, 2021 and 2020,

had two IPR&D intangible assets that were valued at $ 46.5 million as part of the purchase price allocation that was performed in

connection with the Asterias Merger.

The fair value of these assets consisted of $ 31.7 million pertaining to the OPC1 program and

$ 14.8 million pertaining to the VAC2 program.

Asterias had royalty cash

flows under certain specific patent families that Asterias previously acquired from Geron Corporation (“Geron”).

Geron patents are expected to continue to generate revenue and are not used in the OPC1 or the VAC2 program, these patents are considered

to be separate long-lived intangible assets under ASC 805.

expenses was $ 33 ,000

and $ 332 ,000

for the three months ended June 30, 2021 and

2020, and $ 145 ,000

and $ 831 ,000

for the six months ended June 30, 2021, and 2020,

respectively.

Accounts Payable and Accrued Liabilities

March 31, 2021 and December 31, 2020, accounts payable and accrued liabilities consisted of the following (in thousands):

Accounts Payable and Accrued

June 30, 2021 and December 31, 2020, accounts payable and accrued liabilities consisted of the following (in thousands):

Schedule of Accounts Payable and Accrued Liabilities

March 31, 2021

Accounts payable

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Other current liabilities

of March 31, 2021, accrued liabilities includes $ 0.3 million related to the signature fee owed to Cancer Research UK, as described in

April 2020, Lineage received a loan for $ 523,000

from Axos Bank under the PPP contained

within the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.

The PPP loan has a term of two years, is unsecured,

and is guaranteed by the U.S.

Small Business Administration (“SBA”).

The loan carries a fixed interest rate of one

percent per annum, with the first six months of interest deferred.

Under the CARES Act and Paycheck Protection Program Flexibility

Act, Lineage will be 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 Lineage maintains its employment and

compensation within certain parameters during such period.

April 2020, Lineage received a loan for $ 523,000 from Axos Bank under the PPP contained within the Coronavirus Aid, Relief and Economic

Security (“CARES”) Act.

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

Small Business

Administration (“SBA”).

The loan carried a fixed interest rate of one percent per annum, of which the first six months of

interest was deferred.

Under the CARES Act and Paycheck Protection Program Flexibility Act, Lineage was 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 Lineage maintains its employment and compensation within certain parameters during such period.

Not more than

of the forgiven amount may be for non-payroll

If the conditions outlined in the PPP loan program are adhered to by Lineage, all or part of such loan could be forgiven.

Lineage believes that all or a substantial portion of the PPP loan is eligible for forgiveness within one year and classifies

the loan as a short-term liability.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA) was signed

into law, retroactively allowing a deduction of the expenses that gave rise to the PPP loan forgiveness, that was previously denied

under the CARES Act.

40 % of the forgiven amount may be for non-payroll costs.

If the conditions outlined in the PPP loan program were adhered to by Lineage,

all or part of such loan could be forgiven.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA) was signed into law,

retroactively allowing a deduction of the expenses that gave rise to the PPP loan forgiveness, that was previously denied under the CARES

California has partially adopted the federal tax treatment.

On February 17, 2021, California issued an Immediate

Action Agreement, allowing companies to deduct up to $ 150,000

in expenses covered by the PPP loan.

Any forgiven amounts will not be included in Lineage’s taxable income

for federal or California purposes.

On February 17, 2021, California issued an Immediate Action Agreement,

allowing companies to deduct up to $ 150,000 in expenses covered by the PPP loan.

Any forgiven amounts will not be included in Lineage’s

taxable income for federal or California purposes.

Lineage applied for forgiveness of the PPP loan on September 30, 2020, and on May

received notice that the PPP loan was forgiven in full.

13, 2021, received notice that the entire PPP loan principal balance and interest charges were forgiven in full, which the Company recorded

as a gain on debt extinguishment in the condensed consolidated statements of operations.

Fair Value Measurements

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measure cash, cash equivalents, marketable equity securities and our liability classified warrants at fair value on a recurring basis.

The fair values of such assets were as follows for March 31, 2021 and December 31, 2020 (in thousands):

The fair values of such assets were as follows for June 30, 2021 and December 31, 2020 (in thousands):

Schedule of Fair Value of Assets and Liabilities Valued on Recurring Basis

Fair Value Measurements Using

Balance at March 31, 2021

Balance at June 30,

Quoted Prices in Active Markets for Identical Assets

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Marketable equity securities

Lineage Warrants

Cell Cure Warrants

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have not transferred any instruments between the three levels of the fair value hierarchy.

determining fair value, Lineage utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable

inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value.

In determining fair value, Lineage

utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible,

and also considers counterparty credit risk in its assessment of fair value.

The significant unobservable inputs used in the fair

value measurement of the Company’s Level 3 Cell Cure warrant liabilities are volatility and share value.

A significant increase

or decrease in these Level 3 inputs could result in a significantly higher or lower fair value measurements.

The following table sets forth

the establishment of the Company’s Level 3 liabilities, as well as a summary of the changes in the fair value and other adjustments:

of Changes in Fair Value and Other Adjustments of Warrants

(Dollars in thousands)

Balance as of December 31, 2020

Change in fair value and other adjustments

Expiration of warrants

Balance as of June 30, 2021

equity securities include our positions in OncoCyte, and HBL.

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Related Party Transactions

incurred costs of $ 5,050 per month for the use of approximately 900 square feet of office space in New York City, which was made available

to Lineage on a month-by-month basis by one of its directors at an amount that approximates his cost (see Note 15).

In March 2021 , Lineage

terminated without penalty its leasing term related to the New York City office lease.

incurred costs of $ 5,050

per month for the use of approximately 900

square feet of office space in New York City,

which was made available to Lineage on a month-by-month basis by one of its directors at an amount that approximates his cost (see Note

2021 , Lineage terminated without penalty its

leasing term related to the New York City office lease.

connection with the putative shareholder class action lawsuits filed in February 2019 and October 2019 challenging the Asterias Merger

(see Note 15), Lineage has agreed to pay for the legal defense of Neal Bradsher, director, 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.

Through March

31, 2021, Lineage has incurred a total of $ 375,000 in legal expenses on behalf of the director, shareholder and the manager of the shareholder.

(see Note 14), Lineage has agreed to pay for the legal defense of Neal Bradsher, director, 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.

30, 2021, Lineage has incurred a total of $ 455,000

in legal expenses on behalf of the director,

shareholder and the manager of the shareholder.

part of financing transactions in which there were multiple other purchasers, Broadwood Partners, L.P.

purchased 1,000,000 shares, 2,000,000

shares and 623,090 shares of OncoCyte common stock from Lineage in July 2019, September 2019 and January 2020, respectively.

purchased 623,090 shares of OncoCyte

common stock from Lineage in January 2020.

Shareholders’ Equity

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There are no preferred shares issued and outstanding.

March 31, 2021, Lineage was authorized to issue 250,000,000 common shares, no par value.

As of March 31, 2021, and December 31, 2020,

Lineage had 162,066,897 and 153,095,883 issued and outstanding common shares, respectively.

June 30, 2021, Lineage was authorized to issue 250,000,000 common shares, no par value.

As of June 30, 2021, and December 31, 2020, Lineage

had 167,036,511 and 153,095,883 issued and outstanding common shares, respectively.

At-The-Market

May 1, 2020, Lineage entered into the Sales Agreement, pursuant to which Lineage may offer and sell, from time to time, through Cantor

Fitzgerald, common shares of Lineage having an aggregate offering price of up to $ 25,000,000 .

Lineage is not obligated to sell any shares

under the Sales Agreement.

Subject to the terms and conditions of the Sales Agreement, Cantor Fitzgerald will use commercially reasonable

efforts, consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations, and the rules

of the NYSE American, to sell the shares from time to time based upon Lineage’s instructions, including any price, time or size

limits specified by Lineage.

Under the Sales Agreement, Cantor Fitzgerald may sell the shares by any method deemed to be an “at-the-market”

offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, or by any other method permitted by law, including

in privately negotiated transactions.

Cantor Fitzgerald’s obligations to sell the shares under the Sales Agreement are subject

to satisfaction of certain conditions, including the continued effectiveness of Lineage’s Registration Statement on Form S-3 (File

Fitzgerald, common shares of Lineage having an aggregate offering price of up to $ 25.0 million.

Lineage is not obligated to sell any

shares under the Sales Agreement.

Subject to the terms and conditions of the Sales Agreement, Cantor Fitzgerald will use commercially

reasonable efforts, consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations,

and the rules of the NYSE American, to sell the shares from time to time based upon Lineage’s instructions, including any price,

time or size limits specified by Lineage.

Under the Sales Agreement, Cantor Fitzgerald may sell the shares by any method deemed to be

an “at-the-market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, or by any other method

permitted by law, including in privately negotiated transactions.

Cantor Fitzgerald’s obligations to sell the shares under the

Sales Agreement are subject to satisfaction of certain conditions, including the continued effectiveness of Lineage’s Registration

Statement on Form S-3 (File No.

333-237975), which was filed with the Commission on May 1, 2020 and was declared effective on May 8,

The Sales Agreement replaced

the previous sales agreement with Cantor that had been entered into in April 2017.

As of March 31, 2021, Lineage had issued 11,035,444

common shares at a weighted average price per share of $ 2.27 for gross proceeds of $ 25.0 million under the Sales Agreement.

5, 2021, Lineage filed a prospectus supplement with the SEC in connection with the offer and sale of an additional $ 25.0 million of common

shares under the Sales Agreement increasing the total offering to $ 50.0 million.

No sales of the additional $25.0 million shares have been conducted as of May 7, 2021.

The Sales Agreement replaced the previous sales agreement with Cantor that had been entered into in April 2017.

On March 5, 2021,

Lineage filed a prospectus supplement with the SEC in connection with the offer and sale of an additional $ 25.0 million of common shares

under the Sales Agreement increasing the total offering to $ 50.0 million.

As of March 31, 2021, Lineage issued 11,035,444 common shares

at a weighted average price per share of $ 2.27 for gross proceeds of $ 25.0 million.

For the three months ended June 30, 2021, Lineage

issued an additional 2,824,332 common shares at a weighted average price per share of $ 2.87 for gross proceeds of $ 8.1 million.

June 30, 2021, Lineage had issued 13,859,776 common shares at a weighted average price per share of $ 2.39 for gross proceeds of $ 33.1

million under the Sales Agreement.

agreed to pay Cantor Fitzgerald a commission of 3.0 % of the aggregate gross proceeds from each sale of shares, reimburse legal fees and

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of Changes in Shareholders’ Equity

following tables document the changes in shareholders’ equity for the three months ended March 31, 2021 and 2020 (unaudited and

in thousands):

following tables document the changes in shareholders’ equity for the three and six months ended June 30, 2021 and 2020 (unaudited

and in thousands):

Schedule of Shareholders' Equity

Preferred Shares

Common Shares

Income/(Loss)

Noncontrolling

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Shares issued for services

Shares issued upon vesting of restricted stock units, net of shares retired to pay employees’ taxes

Shares issued upon vesting of restricted stock units, net of shares retired

to pay employees’ taxes

Shares issued upon exercise of stock options

Shares issues for retirement of stock warrants

Shares issues for retirement of stock warrants, shares

Financing related fees

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$ ( 295,494 )

Preferred Shares

Common Shares

Beginning balance

$ ( 295,494 )

Shares issued through ATM

Shares issued upon vesting of restricted stock units, net of shares retired

to pay employees’ taxes

Shares issued upon exercise of stock options

Financing related fees

Stock-based compensation

Shares issues for retirement of stock warrants

Foreign currency translation loss

BALANCE AT JUNE 30, 2021

$ ( 300,282 )

Ending balance

$ ( 300,282 )

Noncontrolling

Accumulated Other

Comprehensive

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$ ( 273,422 )

Shares issued upon vesting of restricted stock units, net of shares retired to pay employees’ taxes

Shares issued upon vesting of restricted stock units, net of shares retired

to pay employees’ taxes

Stock-based compensation

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$ ( 281,821 )

Beginning balance

$ ( 281,821 )

Shares issued upon vesting of restricted stock units, net of shares retired

to pay employees’ taxes

Stock-based compensation

Financing related fees

Foreign currency translation loss

BALANCE AT JUNE 30, 2020

$ ( 288,343 )

Ending balance

$ ( 288,343 )

(previously Asterias) Warrants - Liability Classified

March 2019, in connection with the closing of the Asterias Merger, Lineage assumed outstanding Asterias Warrants (the “Lineage

As of March 31, 2021, the total number of common shares of Lineage subject to warrants that were assumed by Lineage

in connection with the Asterias Merger was 1,089,900 , which were converted to Lineage Warrants 30 days after the closing of the Asterias

Merger, with similar terms and conditions retained under the Lineage Warrants as per the original Warrant Agreements.

The Lineage Warrants

have an exercise price of $ 6.15 per share and expire on May 13, 2021 .

The total number of common shares of Lineage subject to warrants that were assumed by Lineage in connection with the

Asterias Merger was 1,089,900 , which were converted to Lineage Warrants 30 days after the closing of the Asterias Merger, with similar

terms and conditions retained under the Lineage Warrants as per the original Warrant Agreements.

The Lineage Warrants had an exercise

price of $ 6.15 per share and expired on May 13, 2021 .

Cure Warrants - Liability Classified

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stock, restricted stock units (“RSUs”) and stock appreciation rights.

As of March 31, 2021, a maximum of 24,000,000 common

shares were available for grant under the 2012 Plan.

Recipients of stock options are eligible to purchase common shares at an exercise

price equal to the fair market value of such shares on the date of grant.

The maximum term of options granted under the 2012 Plan is

Stock options generally vest over a four-year period based on continuous service;

however, the 2012 Plan allows for other vesting

Upon the expiration of the restrictions applicable to an RSU, Lineage will either issue to the recipient, without charge, one

common share per RSU or cash in an amount equal to the fair market value of one common share.

RSUs granted from the 2012 Plan reduce

the shares available for grant by two shares for each RSU granted.

Recipients of stock options are eligible to purchase

common shares at an exercise price equal to the fair market value of such shares on the date of grant.

The maximum term of options granted

under the 2012 Plan is 10

Stock options generally vest over a four-year

period based on continuous service;

however, the 2012 Plan allows for other vesting periods.

Upon the expiration of the restrictions

applicable to an RSU, Lineage will either issue to the recipient, without charge, one common share per RSU or cash in an amount equal

to the fair market value of one common share.

RSUs granted from the 2012 Plan reduce the shares available for grant by two shares for

each RSU granted.

summary of Lineage’s 2012 Plan activity and other stock option awards granted outside of the 2012 Plan related information is as

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Options expired/forfeited/cancelled

March 31, 2021

Options exercisable at March 31, 2021

June 30, 2021

Options exercisable at June 30, 2021

the effective time of the Asterias Merger, Lineage assumed sponsorship of the Asterias 2013 Equity Incentive Plan (the “Asterias

Equity Plan”), with references to Asterias and Asterias common stock therein to be deemed references to Lineage and Lineage common

There were 7,309,184 shares available under the Asterias Equity Plan immediately before the closing of the Asterias Merger, which

became 5,189,520 shares immediately following the Asterias Merger.

The shares available under the Asterias Equity Plan will be for awards

granted to those former Asterias employees who continued as Lineage employees upon consummation of the Asterias Merger.

summary of activity under the Asterias Equity Plan is as follows (in thousands, except per share amounts):

of Share-based Compensation, Employee Stock Purchase Plan, Activity

Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity

Exercise Price

3 unchanged sentences

Options forfeited

March 31, 2021

Options exercisable at March 31, 2021

June 30, 2021

Options exercisable at June 30, 2021

compensation expense

2 unchanged sentences

Schedule of Weighted Average Assumptions to Calculate Fair Value of Stock Options

Three Months Ended

March 31, (unaudited)

Six Months Ended

June 30, (unaudited)

Expected life (in years)

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Three Months Ended

March 31, (unaudited)

June 30, (unaudited)

Six Months Ended

June 30, (unaudited)

Research and development

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The deferred tax liability generated by the OncoCyte shares that Lineage

holds as of March 31, 2021, is a source of future taxable income to Lineage, as prescribed by ASC 740-10-30-17, that will more likely

holds as of June 30, 2021, is a source of future taxable income to Lineage, as prescribed by ASC 740-10-30-17, that will more likely

than not result in the realization of its deferred tax assets to the extent of the deferred tax liability.

This deferred tax liability

is determined based on the closing prices of the OncoCyte shares as of March 31, 2021.

is determined based on the closing prices of the OncoCyte shares as of June 30, 2021.

Due to the inherent unpredictability of future

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in the accounting period in which they occur.

to the Asterias Merger discussed in Note 3, the Asterias shares Lineage held generated similar deferred tax liabilities to Lineage as

the OncoCyte shares discussed above.

As of the Asterias Merger date and due to Asterias becoming a wholly owned subsidiary of Lineage,

the Asterias deferred tax liabilities were eliminated with a corresponding adjustment to Lineage’s valuation allowance, resulting

in no tax provision or benefit from this adjustment.

connection with the Asterias Merger, a deferred tax liability of $ 10.8 million was recorded as part of the acquisition accounting.

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barring any new developments.

the three months ended March 31, 2021, and 2020, Lineage did not record any provision or benefit for income taxes, as Lineage had taxable

income related to a gain on the sale of OncoCyte common stock in the periods.

This taxable income was offset by net operating loss carryforwards.

the three and six months ended June 30, 2021, Lineage recorded a $ 169 ,000 deferred tax benefit that was primarily related to federal

net operating losses generated for the three and six months ended June 30, 2021, which was available and indefinite in nature.

the three and six months ended June 30, 2020, Lineage did not record any provision or benefit for income taxes, as Lineage had taxable

income related to a gain on the sale of OncoCyte common stock in the applicable periods.

This taxable income was offset by net operating

loss carryforwards.

Supplemental Cash Flow Information

disclosure of cash flow information for the three months ended March 31, 2021 and 2020 is as follows (in thousands):

disclosure of cash flow information for the six months ended June 30, 2021 and 2020 is as follows (in thousands):

Schedule of Supplemental Cash Flow Information

Three Months Ended

March 31, (unaudited)

Six Months Ended

June 30, (unaudited)

Cash paid during period for interest

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under the Alameda Sublease;

this amount is considered restricted cash and is included in deposits and other long-term assets as of March

this amount is considered restricted cash and is included in deposits and other long-term assets as of June

30, 2021 (see Note 2).

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The lease was not in the scope of ASC 842 because it is a month-to-month lease.

Cure leases 728.5 square meters (approximately 7,842 square feet) of office and laboratory space in Jerusalem, Israel under a

lease that expires December 31, 2025 , with an option to extend the lease for five years each (the “Original Cell Cure Lease”).

Base monthly rent is NIS 39,776 (approximately US $ 12,200 per month using the December 7, 2020 exchange rate).

In addition to

base rent, Cell Cure pays a pro-rata share of real property taxes and certain costs related to the operation and maintenance of

the building in which the leased premises are located.

January 28, 2018, Cell Cure entered into another lease agreement for an additional 934 square meters (approximately 10,054 square

feet) of office space in the same facility in Jerusalem, Israel under a lease that expires on December 31, 2025 , with two options

to extend the lease for five years each (the “January 2018 Lease”).

The January 2018 Lease commenced on April 1, 2018

and included a leasehold improvement construction allowance of up to NIS 4,000,000 (approximately up to US $ 1.1 million using

the December 31, 2018 exchange rate) from the landlord.

The leasehold improvements were completed in December 2018 and the entire

allowance was used.

Beginning on January 1, 2019, combined base rent and construction allowance payments for the January 2018

Lease are NIS 93,827 per month (approximately $ 26,000 per month).

December 2018, Cell Cure made a $ 420,000 deposit required under the January 2018 Lease, which amount is included in deposits and

other long-term assets on the consolidated balance sheet as of March 31, 2021, to be held as restricted cash during the term of

the January 2018 Lease.

Cure leases 728.5 square meters (approximately 7,842 square feet) of office and laboratory space in Jerusalem, Israel under a lease that

expires December 31, 2025 , with an option to extend the lease for five years each (the “Original Cell Cure Lease”).

monthly rent is NIS 39,776 (approximately US $ 12,200 per month using the December 7, 2020 exchange rate).

In addition to base rent, Cell

Cure pays a pro-rata share of real property taxes and certain costs related to the operation and maintenance of the building in which

the leased premises are located.

January 28, 2018, Cell Cure entered into another lease agreement for an additional 934 square meters (approximately 10,054 square feet)

of office space in the same facility in Jerusalem, Israel under a lease that expires on December 31, 2025 , with two options to extend

the lease for five years each (the “January 2018 Lease”).

The January 2018 Lease commenced on April 1, 2018 and included

a leasehold improvement construction allowance of up to NIS 4,000,000 (approximately up to US $ 1.1 million using the December 31, 2018

exchange rate) from the landlord.

The leasehold improvements were completed in December 2018 and the entire allowance was used.

on January 1, 2019, combined base rent and construction allowance payments for the January 2018 Lease are NIS 93,827 per month (approximately

$ 26,000 per month).

December 2018, Cell Cure made a $ 420,000 deposit required under the January 2018 Lease, which amount is included in deposits and other

long-term assets on the consolidated balance sheet as of June 30, 2021, to be held as restricted cash during the term of the January

below table provides supplemental cash flow information related to leases as follows (in thousands):

of Supplemental Cash Flow Information Related to Leases

Three Months Ended

Schedule of Supplemental Cash Flow Information Related to Leases

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

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Schedule of Supplemental Balance Sheet Information Related to Leases

March 31, 2021

December 31, 2020

Operating leases

Right-of-use assets, net

Right-of-use lease liabilities, current

Right-of-use lease liabilities, noncurrent

Lease liabilities, current

Lease liabilities, noncurrent

Total operating lease liabilities

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Finance leases

minimum lease commitments are as follows as of March 31, 2021 (in thousands):

of Future Minimum Lease Commitments

minimum lease commitments are as follows as of June 30, 2021 (in thousands):

Schedule of Future Minimum Lease Commitments

Ending December 31,

lease payments

imputed interest

and Option Agreement

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Pursuant to the terms of the Gyroscope Agreement,

Lineage paid access fees totaling $ 2.5

million in January 2019 upon execution of the

Gyroscope Agreement;

and (ii) $ 1.25

million in August 2019 upon completion of certain

collaborative research activities using the Gyroscope technology for the OpRegen Phase 1/2a clinical trial.

These access fees of $ 2.5

million were amortized on a straight-line basis

throughout 2019 and included in research and development expenses.

Lineage also agreed to reimburse Gyroscope for costs of consumables,

training services, travel costs and other out of pocket expenses incurred by Gyroscope for performing services under the Gyroscope Agreement.

In January 2020, Lineage agreed to pay an additional $ 0.5

million to extend the Access Period to July 5,

million of which was paid in January 2020 and

million of which was paid in November 2020.

Access Period was subsequently extended two additional times at no cost and ended in accordance with the terms of the Gyroscope Agreement

in November 2020.

In February 2021, Lineage exercised its right to extend the initial Option Period for $ 0.5

During the extended Option Period, Lineage

determined not to pursue a definitive agreement to distribute and sell the Orbit Device, and the Gyroscope Agreement terminated on May

11, 2021 upon expiration of the Option Period.

is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation,

business transactions, employee-related matters, and others.

When Lineage is aware of a claim or potential claim, it assesses

the likelihood of any loss or exposure.

If it is probable that a loss will result and the amount of the loss can be reasonably

estimated, Lineage will record a liability for the loss.

If the loss is not probable or the amount of the loss cannot be reasonably

estimated, Lineage will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount involved

could be material.

Lineage is not aware of any claims likely to have a material adverse effect on its financial condition or results

of operations.

Lineage paid access fees totaling $ 2.5 million:

(i) $ 1.25 million in January 2019 upon execution of the Gyroscope Agreement;

$ 1.25 million in August 2019 upon completion of certain collaborative research activities using the Gyroscope technology for the OpRegen

Phase 1/2a clinical trial.

These access fees of $ 2.5 million were amortized on a straight-line basis throughout 2019 and included in

research and development expenses.

Lineage also agreed to reimburse Gyroscope for costs of consumables, training services, travel costs

and other out of pocket expenses incurred by Gyroscope for performing services under the Gyroscope Agreement.

In January 2020, Lineage

agreed to pay an additional $ 0.5 million to extend the Access Period to July 5, 2020, $ 0.2 million of which was paid in January 2020

and $ 0.3 million of which was paid in November 2020.

The Access Period was subsequently extended two additional times at no cost and

ended in accordance with the terms of the Gyroscope Agreement in November 2020.

In February 2021, Lineage exercised its right to extend

the initial Option Period for $ 0.5 million.

During the extended Option Period, Lineage determined not to pursue a definitive agreement

to distribute and sell the Orbit Device, and the Gyroscope Agreement terminated on May 11, 2021 upon expiration of the Option Period.

is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business

transactions, employee-related matters, and others.

When Lineage is aware of a claim or potential claim, it assesses the likelihood of

any loss or exposure.

If it is probable that a loss will result and the amount of the loss can be reasonably estimated, Lineage will

record a liability for the loss.

If the loss is not probable or the amount of the loss cannot be reasonably estimated, Lineage will disclose

the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material.

Lineage is not aware

of any claims likely to have a material adverse effect on its financial condition or results of operations.

February 19, 2019, a putative shareholder class action lawsuit was filed (captioned Lampe v.

Asterias Biotherapeutics, Inc.

et al ., Case No.

RG19007391) in the Superior Court of the State of California, County of Alameda challenging the Asterias

On March 1, 2019, Asterias made certain amendments and supplements to its public disclosures regarding the Asterias Merger

(the “Supplemental Disclosures”).

On May 3, 2019, an amended class action complaint (the “Amended Complaint”)

The Amended Complaint named Lineage, Patrick Merger Sub, Inc., the Asterias board of directors, one member of Lineage’s

board of directors, and certain stockholders of both Lineage and Asterias.

The action was brought by two purported stockholders

of Asterias, on behalf of a putative class of Asterias stockholders, and asserted breach of fiduciary duty and aiding and abetting

claims under Delaware law.

The Amended Complaint alleged, among other things, that the process leading up to the Asterias Merger

was conflicted and inadequate, and that the proxy statement filed by Asterias with the Commission omitted certain material information,

which allegedly rendered the information disclosed materially misleading.

The Amended Complaint sought, among other things, that

a class be certified, the recovery of monetary damages, and attorneys’ fees and costs.

RG19007391) in the Superior Court of the State of California, County of Alameda challenging the Asterias Merger.

2019, Asterias made certain amendments and supplements to its public disclosures regarding the Asterias Merger (the “Supplemental

Disclosures”).

On May 3, 2019, an amended class action complaint (the “Amended Complaint”) was filed.

The Amended Complaint

named Lineage, Patrick Merger Sub, Inc., the Asterias board of directors, one member of Lineage’s board of directors, and certain

stockholders of both Lineage and Asterias.

The action was brought by two purported stockholders of Asterias, on behalf of a putative

class of Asterias stockholders, and asserted breach of fiduciary duty and aiding and abetting claims under Delaware law.

Complaint alleged, among other things, that the process leading up to the Asterias Merger was conflicted and inadequate, and that the

proxy statement filed by Asterias with the Commission omitted certain material information, which allegedly rendered the information

disclosed materially misleading.

The Amended Complaint sought, among other things, that a class be certified, the recovery of monetary

damages, and attorneys’ fees and costs.

June 3, 2019, defendants filed demurrers to the Amended Complaint.

On August 13, 2019, the parties submitted a stipulation to

the court seeking dismissal of the action with prejudice as to the named Plaintiffs and without prejudice as to the unnamed putative

class members, and disclosed to the court the parties’ agreement to resolve, for $ 200,000 , Plaintiffs’ claim for an

award of attorneys’ fees and expenses in connection with the purported benefit conferred on Asterias stockholders by the

Supplemental Disclosures.

The court granted the stipulation and dismissed the action August 14, 2019.

Lineage continues to believe

that the claims and allegations in the action lack merit, but believed that it was in Lineage’s shareholders’ best

interest for the action to be dismissed and to resolve the fee claim in a timely manner without additional costly litigation expenses.

On August 13, 2019, the parties submitted a stipulation to the court

seeking dismissal of the action with prejudice as to the named Plaintiffs and without prejudice as to the unnamed putative class members,

and disclosed to the court the parties’ agreement to resolve, for $ 200,000 , Plaintiffs’ claim for an award of attorneys’

fees and expenses in connection with the purported benefit conferred on Asterias stockholders by the Supplemental Disclosures.

granted the stipulation and dismissed the action August 14, 2019.

Lineage continues to believe that the claims and allegations in the

action lack merit, but believed that it was in Lineage’s shareholders’ best interest for the action to be dismissed and to

resolve the fee claim in a timely manner without additional costly litigation expenses.

October 14, 2019, another putative class action lawsuit was filed challenging the Asterias Merger.

This action (captioned Ross

This action (captioned Ross v.

Lineage Cell Therapeutics, Inc., et al.

2019-0822) was filed in Delaware Chancery Court and names Lineage, the

Asterias board of directors, one member of Lineage’s board of directors, and certain stockholders of both Lineage and Asterias

as defendants.

The action was brought by a purported stockholder of Asterias, on behalf of a putative class of Asterias stockholders,

and asserts breach of fiduciary duty and aiding and abetting claims under Delaware law.

The complaint alleges, among other things,

that the process leading up to the Asterias Merger was conflicted, that the Asterias Merger consideration was inadequate, and

that the proxy statement filed by Asterias with the Commission omitted certain material information, which allegedly rendered

the information disclosed materially misleading.

The complaint seeks, among other things, that a class be certified, the recovery

of monetary damages, and attorneys’ fees and costs.

2019-0822) was filed in Delaware Chancery Court and names Lineage, the Asterias

board of directors, one member of Lineage’s board of directors, and certain stockholders of both Lineage and Asterias as defendants.

The action was brought by a purported stockholder of Asterias, on behalf of a putative class of Asterias stockholders, and asserts breach

of fiduciary duty and aiding and abetting claims under Delaware law.

The complaint alleges, among other things, that the process leading

up to the Asterias Merger was conflicted, that the Asterias Merger consideration was inadequate, and that the proxy statement filed by

Asterias with the Commission omitted certain material information, which allegedly rendered the information disclosed materially misleading.

The complaint seeks, among other things, that a class be certified, the recovery of monetary damages, and attorneys’ fees and costs.

On December 20, 2019, the defendants moved to dismiss the complaint.

On February 10, 2020, the plaintiff filed an opposition.

Defendants filed their replies on March 13, 2020.

On June 23, 2020, a

hearing on the motions to dismiss occurred.

On September 21, 2020, the Chancery Court denied the motion to dismiss as to Lineage

and certain members of the Asterias board of directors, and it granted the motion to dismiss as to all other defendants.

30, 2020, the remaining defendants filed an answer to the complaint.

filed their replies on March 13, 2020.

On June 23, 2020, a hearing on the motions to dismiss occurred.

On September 21, 2020, the Chancery

Court denied the motion to dismiss as to Lineage and certain members of the Asterias board of directors, and it granted the motion to

dismiss as to all other defendants.

On October 30, 2020, the remaining defendants filed an answer to the complaint.

believes the allegations in the action lack merit and intends to vigorously defend the claims asserted.

It is impossible at this

time to assess whether the outcome of this proceeding will have a material adverse effect on Lineage’s consolidated results

of operations, cash flows or financial position.

Therefore, in accordance with ASC 450, Contingencies, Lineage has not

recorded any accrual for a contingent liability associated with this legal proceeding based on its belief that a liability, while

possible, is not probable nor estimable, and any range of potential contingent liability amounts cannot be reasonably estimated

at this time.

Lineage records legal expenses as incurred.

It is impossible at this time

to assess whether the outcome of this proceeding will have a material adverse effect on Lineage’s consolidated results of operations,

cash flows or financial position.

Therefore, in accordance with ASC 450, Contingencies, Lineage has not recorded any accrual for

a contingent liability associated with this legal proceeding based on its belief that a liability, while possible, is not probable nor

estimable, and any range of potential contingent liability amounts cannot be reasonably estimated at this time.

Lineage records legal

expenses as incurred.

has entered into employment agreements with certain executive officers.

Under the provisions of the agreements, Lineage may be

required to incur severance obligations for matters relating to changes in control, as defined in the agreements, and involuntary

terminations.

Under the provisions of the agreements, Lineage may be required

to incur severance obligations for matters relating to changes in control, as defined in the agreements, and involuntary terminations.

Indemnification

the normal course of business, Lineage may provide indemnifications of varying scope under Lineage’s agreements with other

companies or consultants, typically Lineage’s clinical research organizations, investigators, clinical sites, suppliers

Pursuant to these agreements, Lineage will generally agree to indemnify, hold harmless, and reimburse the indemnified

parties for losses and expenses suffered or incurred by the indemnified parties arising from claims of third parties in connection

with the use or testing of Lineage’s products and services.

Indemnification provisions could also cover third party infringement

claims with respect to patent rights, copyrights, or other intellectual property pertaining to Lineage products and services.

The term of these indemnification agreements will generally continue in effect after the termination or expiration of the particular

research, development, services, or license agreement to which they relate.

The potential future payments Lineage could be required

to make under these indemnification agreements will generally not be subject to any specified maximum amount.

Historically, Lineage

has not been subject to any claims or demands for indemnification.

Lineage also maintains various liability insurance policies

that provide Lineage with insurance against claims or demands for indemnification in specified circumstances.

As a result, Lineage

believes the fair value of these indemnification agreements is minimal.

Accordingly, Lineage has not recorded any liabilities

for these agreements as of March 31, 2021 and December 31, 2020.

the normal course of business, Lineage may provide indemnifications of varying scope under Lineage’s agreements with other companies

or consultants, typically Lineage’s clinical research organizations, investigators, clinical sites, suppliers and others.

to these agreements, Lineage will generally agree to indemnify, hold harmless, and reimburse the indemnified parties for losses and expenses

suffered or incurred by the indemnified parties arising from claims of third parties in connection with the use or testing of Lineage’s

products and services.

Indemnification provisions could also cover third party infringement claims with respect to patent rights, copyrights,

or other intellectual property pertaining to Lineage products and services.

The term of these indemnification agreements will generally

continue in effect after the termination or expiration of the particular research, development, services, or license agreement to which

The potential future payments Lineage could be required to make under these indemnification agreements will generally not

be subject to any specified maximum amount.

Historically, Lineage has not been subject to any claims or demands for indemnification.

Lineage also maintains various liability insurance policies that provide Lineage with insurance against claims or demands for indemnification

in specified circumstances.

As a result, Lineage believes the fair value of these indemnification agreements is minimal.

Lineage has not recorded any liabilities for these agreements as of June 30, 2021 and December 31, 2020.

Amendment to Clinical Trial and Option Agreement and License Agreement with Cancer Research UK

3 unchanged sentences

September 8, 2014.

Pursuant to the CTOA Amendment, Lineage assumed all obligations of Asterias and exercised early its option

to acquire data generated in the Phase 1 clinical trial of VAC2 in non-small cell lung cancer being conducted by CRUK.

continue conducting the VAC2 study.

and CRT effectuated the option by simultaneously entering into a license agreement (the “License Agreement”) pursuant

to which Lineage agreed to pay the previously agreed signature fee of £ 1,250,000 (approximately $ 1.6 million).

In consideration

of Lineage’s agreement to exercise the option prior to completion of the study, the parties agreed to defer the signature

fee as follows:

Pursuant to the CTOA Amendment, Lineage assumed all obligations of Asterias and exercised early its option to acquire

data generated in the Phase 1 clinical trial of VAC2 in non-small cell lung cancer being conducted by CRUK.

CRUK will continue conducting

the VAC2 study.

and CRT effectuated the option by simultaneously entering into a license agreement (the “License Agreement”) pursuant to

which Lineage agreed to pay the previously agreed signature fee of £ 1,250,000 (approximately $1.6 million).

In consideration of

Lineage’s agreement to exercise the option prior to completion of the study, the parties agreed to defer the signature fee as follows:

£ 500,000 in September 2020, £ 500,000 in February 2021 and £ 250,000 in April 2021.

For the primary

licensed product for the first indication, the License Agreement provides for milestone fees of up to £ 8,000,000 based upon

initiation of a Phase 3 clinical trial and the filing for regulatory approval and up to £ 22,500,000 in sales-based milestones

Additional milestone fees and sales-based milestone payments would be payable for other products or indications, and

mid-single-digit royalty payments are payable on sales of commercial products.

For the primary licensed product

for the first indication, the License Agreement provides for milestone fees of up to £ 8,000,000 based upon initiation of a Phase

3 clinical trial and the filing for regulatory approval and up to £ 22,500,000 in sales-based milestones payments.

Additional milestone

fees and sales-based milestone payments would be payable for other products or indications, and mid-single-digit royalty payments are

payable on sales of commercial products.

party may terminate the License Agreement for the uncured material breach of the other party.

CRT may terminate the License Agreement

in the case of Lineage’s insolvency or if Lineage ceases all development and commercialization of all products under the

License Agreement.

in the case of Lineage’s insolvency or if Lineage ceases all development and commercialization of all products under the License

Amended and Restated License Agreement

June 15, 2017, Cell Cure entered into a Second Amended and Restated License Agreement (the “License Agreement”) with

Hadasit Medical Research Services and Development Ltd.

(“Hadasit”), the commercial arm and a wholly owned subsidiary

of Hadassah Medical Organization.

Pursuant to the License Agreement, Hadasit granted Cell Cure an exclusive, worldwide, royalty

bearing license (with the right to grant sublicenses) in its intellectual property portfolio of materials and technology related

to human stem cell derived photoreceptor cells and retinal pigment epithelial cells (the “Licensed IP”), to use, commercialize

and exploit any part thereof, in any manner whatsoever in the fields of the development and exploitation of:

(i) human stem cell

derived photoreceptor cells, solely for use in cell therapy for the diagnosis, amelioration, prevention and treatment of eye disorders;

and (ii) human stem cell derived retinal pigment epithelial cells, solely for use in cell therapy for the diagnosis, amelioration,

prevention and treatment of eye disorders.

consideration for the Licensed IP, Cell Cure will pay a small one-time lump sum payment, a royalty in the mid-single digits of

net sales from sales of Licensed IP by any invoicing entity, and a royalty of 21.5 % of sublicensing receipts.

In addition, Cell

Cure will pay Hadasit an annual minimal non-refundable royalty, which will become due and payable the first January 1 following

the completion of services to Cell Cure by a research laboratory.

Cure will pay Hadasit non-refundable milestone payments upon the recruitment of the first patient for the first Phase 2b clinical

trial, upon the enrollment of the first patient in the first Phase 3 clinical trials, upon delivery of the report for the first

Phase 3 clinical trials, upon the receipt of an NDA or marketing approval in the European Union, whichever is the first to occur,

and upon the first commercial sale in the United States or European Union, whichever is the first to occur.

Such milestones, in

the aggregate, may be up to $ 3.5 million.

As of March 31, 2021, Cell Cure had not accrued any milestone payments under the License

License Agreement terminates upon the expiration of Cell Cure’s obligation to pay royalties for all licensed products, unless

earlier terminated.

In addition to customary termination rights of both parties, Hadasit may terminate the License Agreement if

Cell Cure fails to continue the clinical development of the Licensed IP or fails to take actions to commercialize or sell the

Licensed IP over any consecutive 12 month period.

The License Agreement also contains mutual confidentiality obligations of Cell

Cure and Hadasit, and indemnification obligations of Cell Cure.

June 15, 2017, Cell Cure entered into a Second Amended and Restated License Agreement (the “License Agreement”) with Hadasit

Medical Research Services and Development Ltd.

(“Hadasit”), the commercial arm and a wholly owned subsidiary of Hadassah

Medical Organization.

Pursuant to the License Agreement, Hadasit granted Cell Cure an exclusive, worldwide, royalty bearing license (with

the right to grant sublicenses) in its intellectual property portfolio of materials and technology related to human stem cell derived

photoreceptor cells and retinal pigment epithelial cells (the “Licensed IP”), to use, commercialize and exploit any part

thereof, in any manner whatsoever in the fields of the development and exploitation of:

(i) human stem cell derived photoreceptor cells,

solely for use in cell therapy for the diagnosis, amelioration, prevention and treatment of eye disorders;

and (ii) human stem cell derived

retinal pigment epithelial cells, solely for use in cell therapy for the diagnosis, amelioration, prevention and treatment of eye disorders.

consideration for the Licensed IP, Cell Cure will pay a small one-time lump sum payment, a royalty in the mid-single digits of net sales

from sales of Licensed IP by any invoicing entity, and a royalty of 21.5 % of sublicensing receipts.

In addition, Cell Cure will pay Hadasit

an annual minimal non-refundable royalty, which will become due and payable the first January 1 following the completion of services

to Cell Cure by a research laboratory.

Cure will pay Hadasit non-refundable milestone payments upon the recruitment of the first patient for the first Phase 2b clinical trial,

upon the enrollment of the first patient in the first Phase 3 clinical trials, upon delivery of the report for the first Phase 3 clinical

trials, upon the receipt of an NDA or marketing approval in the European Union, whichever is the first to occur, and upon the first commercial

sale in the United States or European Union, whichever is the first to occur.

Such milestones, in the aggregate, may be up to $ 3.5 million.

As of June 30, 2021, Cell Cure had not accrued any milestone payments under the License Agreement.

License Agreement terminates upon the expiration of Cell Cure’s obligation to pay royalties for all licensed products, unless earlier

In addition to customary termination rights of both parties, Hadasit may terminate the License Agreement if Cell Cure fails

to continue the clinical development of the Licensed IP or fails to take actions to commercialize or sell the Licensed IP over any consecutive

12 month period.

The License Agreement also contains mutual confidentiality obligations of Cell Cure and Hadasit, and indemnification

obligations of Cell Cure.

obligations and license fees

and its subsidiaries or affiliates are parties to certain licensing agreements with research institutions, universities and other

parties for the rights to use those licenses and other intellectual property in conducting research and development activities.

These licensing agreements provide for the payment of royalties by Lineage or the applicable party to the agreement on future

product sales, if any.

In addition, in order to maintain these licenses and other rights during the product development, Lineage

or the applicable party to the contract must comply with various conditions including the payment of patent related costs and

annual minimum maintenance fees.

Annual minimum maintenance fees are expected to be approximately $ 30,000 to $ 60,000 per year.

the terms of the grant agreement between Cell Cure and Israel Innovation Authority (“IIA”) (formerly the Office of

the Chief Scientist of Israel) of the Ministry of Economy and Industry, for the development of OpRegen, Cell Cure will be required

to pay royalties on future product sales, if any, up to the amounts received from the IIA, plus interest indexed to LIBOR.

Cure’s research and product development activities under the grant are subject to substantial risks and uncertainties and

performed on a best efforts basis.

As a result, Cell Cure is not required to make any payments under the grant agreement unless

it successfully commercializes OpRegen.

Accordingly, pursuant to ASC 730-20, the grant is considered a contract to perform research

and development services for others and grant revenue is recognized as the related research and development expenses are incurred

(see Note 2).

and its subsidiaries or affiliates are parties to certain licensing agreements with research institutions, universities and other parties

for the rights to use those licenses and other intellectual property in conducting research and development activities.

These licensing

agreements provide for the payment of royalties by Lineage or the applicable party to the agreement on future product sales, if any.

In addition, in order to maintain these licenses and other rights during the product development, Lineage or the applicable party to

the contract must comply with various conditions including the payment of patent related costs and annual minimum maintenance fees.

minimum maintenance fees are expected to be approximately $ 30,000 to $ 60,000 per year.

As part of the Asterias Merger,

Lineage acquired certain royalty revenues for cash flows that were generated under certain specific patent families that Asterias previously

acquired from Geron Corporation.

Asterias paid Geron a royalty for all royalty revenues received from these contracts.

Lineage continues

to make royalty payments to Geron for royalties generated from these patents.

the terms of the grant agreement between Cell Cure and Israel Innovation Authority (“IIA”) (formerly the Office of the Chief

Scientist of Israel) of the Ministry of Economy and Industry, for the development of OpRegen, Cell Cure will be required to pay royalties

on future product sales, if any, up to the amounts received from the IIA, plus interest indexed to LIBOR.

Cell Cure’s research

and product development activities under the grant are subject to substantial risks and uncertainties and performed on a best-efforts

As a result, Cell Cure is not required to make any payments under the grant agreement unless it successfully commercializes OpRegen.

Accordingly, the grant is considered a contract to perform research and development services for others and grant

revenue is recognized as the related research and development expenses are incurred (see Note 2).

law pertaining to such government grants contain various conditions, including substantial penalties and restrictions on the transfer

of intellectual property, or the manufacture, or both, of products developed under the grant outside of Israel, as defined by

Subsequent Events

Therapeutics Inc.

License Agreement

April 16, 2021, Lineage entered a worldwide license and development collaboration with Immunomic Therapeutics, Inc (ITI).

is the sole and exclusive owner of the rights to the VAC platform and has licensed to ITI patents and materials for the development

and commercialization of novel cancer immunotherapy agent derived from this platform utilizing an antigen provided by ITI.

terms of the Agreement, Lineage is entitled to upfront licensing fees totaling $ 2.0 million paid over the first year, and up to

$ 67.0 million in development and commercial milestones across multiple indications.

Lineage will also be eligible to receive royalties

up to 10 % on net sales of future products.

May 13, 2021, Lineage received notice that its PPP loan was forgiven in full.

See Note 8 for additional information.

of intellectual property, or the manufacture, or both, of products developed under the grant outside of Israel, as defined by the IIA.

Collaboration

our collaborative agreement with ITI we agreed to perform certain research, development, manufacturing, and oversight activities related

to a VAC-CMV product up to a budgeted amount of approximately $ 2.5 million.

ITI will be reimbursing the Company for material costs and

full-time employee costs with no markup related to the manufacturing of the VAC-CMV product.

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-Q

Item 1. Financial Statements