What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-12 · 397 added, 314 removed, 889 unchanged (44% of the section changed)

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CONSOLIDATED BALANCE SHEETS

June 30, 2021

September 30, 2021

December 31, 2020

CURRENT ASSETS

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Marketable equity securities

Trade accounts and grants receivable, net

Trade accounts receivable, net

Prepaid expenses and other current assets

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

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

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

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

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

168,465 and 153,096 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Accumulated other comprehensive loss

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Three Months Ended

Six Months Ended

Grant revenue

Royalties from product sales and license fees

September 30,

Nine Months Ended

September 30,

Grant revenues

Collaboration revenues

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Gain on sale of marketable securities

Unrealized gain (loss) on marketable equity securities

Unrealized loss on marketable equity securities

Gain on extinguishment of debt

Unrealized gain (loss) on warrant liability

Unrealized gain on warrant liability

Other income (expense), net

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Other comprehensive loss, net of tax:

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Gain on sale of marketable securities

Unrealized (gain)/loss on marketable equity securities

Unrealized loss on marketable equity securities

Gain on extinguishment of debt

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Foreign currency remeasurement and other gain

Gain on write-off and sales of assets

Amortization of deferred license fee

Changes in operating assets and liabilities:

Accounts and grants receivable, net

Accounts and grants receivable

Accrued interest receivable

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Proceeds from the sale of AgeX common shares

Proceeds from the sale of Hadasit common shares

Purchase of equipment and other assets

Proceeds from the sale of equipment and other assets

Proceeds from the sale of HBL common shares

Purchase of equipment

Proceeds from the sale of equipment

Other deposits

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Repayment of financing lease liabilities

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

Proceeds from Paycheck Protection Program (“PPP”) Loan

Proceeds from sale of common shares

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

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

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

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

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Asterias Merger was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”)

Topic 805, Business Combinations, which requires, among other things, that the assets and liabilities assumed be recognized at their

fair values as of the acquisition date.

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 %

of its outstanding shares (see Note 3).

Topic 805, Business Combinations , which requires, among other things, that the assets and liabilities assumed be recognized at

their fair values as of the acquisition date.

Basis of Presentation, Liquidity and Summary of Significant Accounting Policies

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The condensed consolidated

balance sheet as of December 31, 2020 was derived from the audited consolidated financial statements at that date, but does not include

all the information and footnotes required by GAAP.

These condensed consolidated interim financial statements should be read in conjunction

with the audited consolidated financial statements and notes thereto included in Lineage’s Annual Report on Form 10-K for the year

ended December 31, 2020, as filed with the Securities and Exchange Commission (the “Commission”) on March 11, 2021.

balance sheet as of December 31, 2020 was derived from the audited consolidated financial statements at that date.

These condensed consolidated

interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included

in Lineage’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission

(the “Commission”) on March 11, 2021.

accompanying condensed consolidated interim financial statements, in the opinion of management, include all adjustments, consisting only

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The condensed consolidated results of operations are not necessarily indicative of the results to be expected for any other interim period

or for the entire year.

or for any year.

of consolidation

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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 June 30, 2021.

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

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

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shares owned by Lineage and ESI.

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

a separate element of shareholders’ equity on Lineage’s consolidated balance sheets.

of September 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 a separate element of shareholders’ equity on Lineage’s consolidated balance sheets.

has incurred significant operating losses and in recent years has funded its operations primarily through sale of common stock of AgeX

and OncoCyte, both former subsidiaries, sale of common stock of Hadasit Bio-Holdings (“HBL”), receipt of research grants,

and OncoCyte, both former subsidiaries, sale of common stock of Hadasit Bio-Holdings Ltd (“HBL”), receipt of research grants,

royalties from product sales, license revenues, sales of research products and issuance of equity securities.

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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

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.

For the three months ended June 30,

For the three months ended September

30, 2021, Lineage issued an additional 1,048,959 common shares at a weighted average price per share of $ 2.62 for gross proceeds of $ 2.7

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’

As of September 30, 2021, Lineage had issued 14,908,735 common shares at a weighted average price per share of $ 2.41 for gross

proceeds of $ 35.9 million under the Sales Agreement.

of September 30, 2021, Lineage had an accumulated deficit of approximately $ 308.1 million, working capital of $ 59.6 million and shareholders’

equity of $ 119.6 million.

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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.

In the absence of applicable guidance under

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

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

(see Note 15).

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 September 30, 2021, deferred grant revenue was $ 82,200 , primarily comprised of remaining funds most

recently received in July 2021, June 2021 and November 2020, for their respective programs.

from product sales and license fees:

For 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, Lineage recognizes 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).

estimates and recognizes royalty revenues based on all available information, including estimates provided by the customer or licensee

from which Lineage obtains such estimates directly for each reporting period.

Actual revenues ultimately received may differ from those

estimates recorded and are adjusted in the period when information to actuals is available to Lineage.

For the three and nine months

ended September 30, 2021, Lineage recorded additional royalty revenues of approximately $ 1.8 million from a certain customer, based on

the customer’s updated communication to Lineage regarding royalties due.

Consequently, Lineage also recorded a corresponding 50%

of these additional royalties in cost of sales, as an accrued royalty payable to a separate royalty party.

As of September 30, 2021,

the $ 1.8 million is included as a receivable within prepaid expenses and other current assets.

The customer paid these royalties to Lineage

in October 2021.

The additional royalty revenue for certain amounts relating to prior periods was not material to Lineage’s consolidated

financial statements, taken as a whole, for any period presented.

Collaboration

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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.

Under the terms of this 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.

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 ,

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

(i) up-front fees;

(i) upfront fees;

(ii) milestone payments related

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and (iv) reimbursement of cost-sharing

of R&D expenses.

of research and development (“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.

a portion of non-refundable upfront 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

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collaboration revenue from the allocated transaction price.

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

For example, when we receive upfront 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

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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.

of September 30, 2021 we had $ 856,000 of deferred revenue on the consolidated balance sheet related to the ITI collaboration agreement,

and for the three and nine months ended September 30, 2021, we recognized $ 293,000 and $ 506,000 of revenue, respectively, related to

the ITI collaboration agreement.

and diluted net loss per share attributable to common shareholders

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

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

the three and nine months ended September 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.

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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Six Months Ended

Nine Months Ended

September 30, (unaudited)

Stock options

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accordance with ASU 2016-18, Statement of Cash Flows (Topic 230):

Restricted Cash, Lineage explains the change during the period in the

total of cash, cash equivalents and restricted cash, and includes restricted cash with cash and cash equivalents when reconciling the

beginning-of-period and end-of-period total amounts shown on the condensed consolidated statements of cash flows.

Restricted Cash , Lineage explains the change during the period

in the total of cash, cash equivalents and restricted cash, and includes restricted cash with cash and cash equivalents when reconciling

the beginning-of-period and end-of-period total amounts shown on the condensed consolidated statements of cash flows.

following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance

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

September 30,

Cash and cash equivalents

Restricted cash included in deposits and other long-term assets (see Note 15)

Restricted cash included in prepaid expenses and other

current assets

(see Note 14)

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

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

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2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Lineage adopted this

standard on January 1, 2020 and it did not have a significant impact on its condensed consolidated financial statements.

Lineage adopted

this standard on January 1, 2020 and it did not have a significant impact on its condensed consolidated financial statements.

December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

The ASU enhances and simplifies various aspects

of the income tax accounting guidance in ASC 740 and removes certain exceptions for recognizing deferred taxes for investments, performing

intraperiod allocation and calculating income taxes in interim periods.

The ASU also adds guidance to reduce complexity in certain areas,

including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

This ASU is effective

for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years with early adoption permitted.

adopted this standard as of January 1, 2021 and it is not expected to have a material impact on its condensed consolidated financial

Issued Accounting Pronouncements Not Yet Adopted - The recently issued accounting pronouncements applicable to Lineage that are not yet

effective should be read in conjunction with the recently issued accounting pronouncements, as applicable and disclosed in Lineage’s

Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Commission on March 11, 2021.

The ASU enhances and simplifies various

aspects of the income tax accounting guidance in ASC 740 and removes certain exceptions for recognizing deferred taxes for investments,

performing intraperiod allocation and calculating income taxes in interim periods.

The ASU also adds guidance to reduce complexity in

certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years with early adoption permitted.

Lineage adopted this standard as of January 1, 2021 and did not have a material impact on its condensed consolidated financial statements.

Issued Accounting Pronouncements Not Yet Adopted

recently issued accounting pronouncements applicable to Lineage that are not yet effective should be read in conjunction with the recently

issued accounting pronouncements, as applicable and disclosed in Lineage’s Annual Report on Form 10-K for the year ended December

31, 2020, as filed with the Commission on March 11, 2021.

June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

ASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected credit

losses on financial instruments and other commitments and requires consideration of a broader range of reasonable and supportable information

to inform credit loss estimates.

Instruments .

ASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected

credit losses on financial instruments and other commitments and requires consideration of a broader range of reasonable and supportable

information to inform credit loss estimates.

ASU 2016-13 is effective for Lineage beginning January 1, 2023.

Lineage has not yet completed its assessment

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

Accounting for Common Stock

of OncoCyte, at Fair Value

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

Lineage has not yet completed

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

disaggregated revenues were as follows (in thousands):

Disaggregation

Three Months Ended

September 30,

Nine Months Ended

September 30,

Grant revenues

Israel Innovation Authority (“IIA”)

National Institutes of Health (“NIH”)

Total grant revenues

Revenues under collaborative agreements

Upfront license fees

Event-based development milestones

Reimbursements, cost-sharing payments

Total revenues under collaborative agreements

Total revenue

the three months ended September 30, 2021 we recognized $ 2.3 million in total revenue.

There was no revenue related to new license agreements

granted during the period.

Revenues recognized during the current period which had been included in deferred revenues at December 31,

2020 were not material.

the nine months ended September 30, 2021 we recognized $ 3.2 million in total revenue.

We recognized $ 0.5 million in revenues from new

license agreements granted in the period, which were recorded as revenues under collaboration agreements.

We recognized revenue of $ 0.1

million during the period which had been included in deferred revenues at December 31, 2020.

receivable and other receivable, net, and deferred revenues (contract liabilities) from contracts with customers, including collaboration

partners, consisted of the following:

of Contract with Customer Contract Liability and Receivable

September 30,

Accounts receivable and other receivable, net (1)

Deferred revenues (1)

government grants as Lineage has determined government grants are outside the scope of ASU

2014-09 - Revenue from Contracts with Customers (Topic 606).

of September 30, 2021, the amounts in the transaction price of our contracts with customers, including collaboration partners, and allocated

good and services not yet provided were $ 3.0 million, of which $ 2.1 million relates to unfulfilled commitments and $ 0.9 million has been

collected and is reported as deferred revenues.

The unfulfilled commitments are estimated to be delivered by the end of the second quarter

Of the total deferred revenues of $ 0.9 million, substantially all is expected to be recognized within the next 12 months.

Marketable Equity Securities

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

These shares had a fair value of approximately

$ 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

3.6 million shares of OncoCyte common stock.

These shares had a fair value of approximately $ 8.7 million, based on the closing price

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

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

$ 4.0 million, based on the closing price of OncoCyte of $ 3.56 per share on September 30, 2021.

As of December 31, 2020, Lineage owned

approximately 3.6 million shares of OncoCyte common stock.

These shares had a fair value of approximately $ 8.7 million, based on the

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

the three months ended September 30, 2021, Lineage recorded a net unrealized loss on marketable equity securities of $ 2.5 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.

For the three months ended September 30, 2020,

Lineage recorded an unrealized loss of $ 1.9 million related to changes in the fair market value of OncoCyte’s common stock price

during the quarter.

the nine months ended September 30, 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 loss on marketable equity securities of $ 0.6 million related to changes in fair market value of

OncoCyte’s common stock price during the period.

For the nine months ended September 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 $ 6.1 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

account for the shares we hold in HBL as marketable equity securities as of September 30, 2021.

These securities were carried at fair

market value on our consolidated balance sheets, and the accounting transactions for the three and nine months ended were not material.

the three and nine months ended September 30, 2021, we did not hold any marketable securities related to AgeX.

For the three and nine

months ended September 30, 2020, Lineage recorded realized gains of $ 0.1 million and $ 0.7 million, respectively, due to sales of AgeX

shares in the period.

For the three and nine months ended September 30, 2020, we recorded unrealized losses of $ 0.1 million and $ 1.4

million, respectively, due to changes in fair market value of AgeX’s common stock price during the period.

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

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

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

Schedule of Property and Equipment, Net

September 30,

Equipment, furniture and fixtures

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Property and equipment, net

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

and equipment at September 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 million.

See additional information in Note 15.

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):

and amortization expense amounted to $ 165,000 and $ 200,000 for the three months ended September 30, 2021 and 2020, and $ 504,000 and $ 623,000

for the nine months ended September 30, 2021 and 2020, respectively.

During the nine months ended September 30, 2021, Lineage sold non-capitalized

assets for a net gain of $ 30,000 , which was included in research and development expenses on the condensed consolidated statements of

During the nine months ended September 30, 2021, Lineage sold equipment with a net book value of $ 9,000 and recognized a

gain of $ 5,000 .

the three and nine months ended September 30, 2020, Lineage sold equipment with a net book value of $ 39,000 and $ 52,000 , respectively,

and recognized losses of $ 32,000 and $ 34,000 , respectively.

During the nine months ended September 30, 2020, Lineage sold non-capitalized

assets for a net gain of $ 67,000 , which was included in research and development expenses on the condensed consolidated statements of

Goodwill and Intangible Assets, Net

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

Schedule of Goodwill and Intangible Assets, Net

September 30,

Intangible assets:

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Acquired patents

royalty contracts (3)

Acquired royalty contracts (3)

Total intangible assets

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liabilities assumed in the Asterias Merger.

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

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

had two in-process research and development (“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.

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

The 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.

of September 30, 2021 the acquired patents were fully amortized and the acquired royalty contracts had a remaining unamortized balance

of $ 314,000 .

expenses was $ 33,000 and $ 250,000 for the three months ended September 30, 2021 and 2020, and $ 178,000 and $ 1,080,000 for the nine months

ended September 30, 2021, and 2020, respectively.

aggregate approximate amortization expense for the Company’s intangible assets are as follows (in thousands):

of Intangible Assets Future Amortization Expense

Year Ending December 31,

Accounts Payable and Accrued Liabilities

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

Schedule of Accounts Payable and Accrued Liabilities

September 30,

Accounts payable

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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.

Lineage applied for forgiveness of the PPP loan on September 30, 2020, and on May 13, 2021,

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.

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.

The PPP loan forgiveness amount was excluded from

Lineage’s taxable income for federal and California purposes.

However, for California income taxes, public companies cannot deduct

expenses from loan proceeds which were forgiven.

Fair Value Measurements

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market participants would make and significant to the fair value.

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 June 30, 2021 and December 31, 2020 (in thousands):

measure cash and 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 September 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 June 30,

September 30,

Quoted Prices in Active Markets for Identical Assets

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

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

determining fair value, Lineage utilizes a Black-Scholes pricing model that maximizes 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

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

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:

Schedule of Changes in Fair Value and Other Adjustments of Warrants

(Dollars in thousands)

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Expiration of warrants

Balance as of June 30, 2021

Balance as of September 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

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 15).

In March 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 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.

(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 September

30, 2021, Lineage has incurred a total of $ 657,000 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.

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There are no preferred shares issued and outstanding.

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.

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

As of September 30, 2021, and December 31,

2020, Lineage had 168,465,000 and 153,095,883 issued and outstanding common shares, respectively.

At-The-Market

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

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

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.

For the three months ended June 30, 2021, Lineage

For the three months ended September 30, 2021, Lineage

issued an additional 1,048,959 common shares at a weighted average price per share of $ 2.62 for gross proceeds of $ 2.7 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

September 30, 2021, Lineage had issued 14,908,735 common shares at a weighted average price per share of $ 2.41 for gross proceeds of

$ 35.9 million under the Sales Agreement.

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of Changes in Shareholders’ Equity

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

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

and in thousands):

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Income/(Loss)

Preferred Shares

Common Shares

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

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Shares issues for retirement of stock warrants, shares

Dissolution of BioTime Asia

Financing related fees

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$ ( 295,494 )

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

Shares issued upon exercise of stock options

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$ ( 300,282 )

Ending balance

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

Foreign currency translation loss

BALANCE AT SEPTEMBER 30, 2021

$ ( 308,105 )

Preferred Shares

Common Shares

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 )

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 )

Beginning balance

$ ( 288,343 )

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 for services

Dissolution of BioTime Asia

Stock-based compensation

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Foreign currency translation loss

BALANCE AT JUNE 30, 2020

Foreign currency translation gain (loss)

BALANCE AT SEPTEMBER 30, 2020

$ ( 296,103 )

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Incentive Plan Awards

November 8, 2019, Lineage adopted an amendment changing the name of the BioTime, Inc.

2012 Equity Incentive Plan to the Lineage Cell

Therapeutics, Inc.

2012 Equity Incentive Plan (the “2012 Plan”).

The 2012 Plan provides for the grant of stock options, restricted

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

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

follows (in thousands, except per share amounts):

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

September 13, 2021, the shareholders of Lineage approved the 2021 Equity Incentive Plan (the “2021 Plan”), and the plan became

The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted

stock awards, restricted stock units awards (“RSUs”), and other stock awards.

All of our employees (including our affiliates’),

non-employee directors and consultants are eligible to participate in the 2021 Plan.

to adjustment for certain changes in our capitalization, the aggregate number of our common shares that may be issued under the 2021

Plan will not exceed the sum of (i) 15,000,000 shares and (ii) the Prior Plan Returning Shares (“Prior Plan Returning Shares”).

The Prior Plan Returning Shares are defined as an award granted under the Lineage Cell Therapeutics Inc.

2012 Equity Incentive Plan (the

“2012 Plan”), which were outstanding when the 2021 Plan became effective, and are not issued because such Prior Plan Award

or any option thereof expires or otherwise terminates without all of the shares covered by such Prior Plan Award having been issued.

Given the approval of the 2021 Plan, no additional awards will be granted from the 2012 Plan or the Asterias 2013 Equity Incentive Award

(the “Asterias Equity Plan”).

As of September 30, 2021, there were no outstanding equity awards issued under the 2021 Plan.

summary of Lineage’s 2012 Equity Incentive Plan activity and other stock option awards granted outside of the 2012 Plan related

information is as follows (in thousands, except per share amounts):

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

Exercise Price

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Options expired/forfeited/cancelled

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

September 30, 2021

Options exercisable at September 30, 2021

the effective time of the Asterias Merger, Lineage assumed sponsorship of the Asterias 2013 Equity Incentive Plan, with references to

Asterias and Asterias common stock therein to be deemed references to Lineage and Lineage common shares.

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

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

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

Exercise Price

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Options forfeited

June 30, 2021

Options exercisable at June 30, 2021

September 30, 2021

Options exercisable at September 30, 2021

compensation expense

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assumptions noted in the following table:

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

Six Months Ended

June 30, (unaudited)

of Weighted Average Assumptions to Calculate Fair Value of Stock Options

Nine Months Ended

September 30, (unaudited)

Expected life (in years)

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expenses include stock-based compensation expense as follows (in thousands):

Schedule of Stock Based Compensation Expense

of Stock Based Compensation Expense

Three Months Ended

June 30, (unaudited)

Six Months Ended

June 30, (unaudited)

September 30, (unaudited)

Nine Months Ended

September 30, (unaudited)

Research and development

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The deferred tax liability generated by the OncoCyte shares that Lineage

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

holds as of September 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 June 30, 2021.

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

Due to the inherent unpredictability of future

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barring any new developments.

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.

the three and nine months ended September 30, 2021, Lineage recorded a $ 1.0 million and $ 1.2 million deferred tax benefit, respectively,

that was primarily related to federal net operating losses generated for the three and nine months ended September 30, 2021, which was

available and indefinite in nature.

the three and nine months ended September 30, 2020, Lineage recorded a $ 0.2 million deferred tax benefit for income taxes.

Supplemental Cash Flow Information

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

Six Months Ended

June 30, (unaudited)

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

of Supplemental Cash Flow Information

Nine Months Ended

September 30, (unaudited)

Cash paid during period for interest

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The term of the Carlsbad Lease commenced on August 1, 2019 and expires on October 31, 2022 .

rent under the Carlsbad Lease beginning on August 1, 2020 is $ 18,386 per month and increases by 3 % annually on every August 1 thereafter

during the lease term.

Base rent for the first twenty-four months of the lease is based upon a deemed rentable area of 7,000 square feet.

Base rent was abated for months two through five of the lease.

rent under the Carlsbad Lease, beginning on August 1, 2021, is $ 23,959 per month and increases by 3 % on August 1, 2022.

Base rent for

the first twenty-four months of the lease was based upon a deemed rentable area of 7,000 square feet.

Base rent was abated for months

two through five of the lease.

addition to base rent, Lineage pays a pro rata portion of increases in certain expenses, including real property taxes, utilities (to

4 unchanged sentences

Leases and Alameda Sublease

December 2015, Lineage entered into leases of office and laboratory space located in two buildings in Alameda, California (the “Alameda

Leases”) comprised of 22,303 square feet (the “1010 Atlantic Premises”) and 8,492 square feet (the “1020 Atlantic

Base rent under the Alameda Leases beginning on February 1, 2020 was $ 72,636 per month with annual increases of approximately

In addition to base rent, Lineage paid a pro rata portion of increases in certain expenses,

including real property taxes, utilities (to the extent not separately metered to the leased space) and the landlord’s operating

expenses, over the amounts of those expenses incurred by the landlord.

As security for its obligations, Lineage provided the landlord

with a security deposit of approximately $ 424,000 , which was reduced to $ 78,000 on January 24, 2019 in accordance with the terms of the

December 2015, Lineage entered into leases of office and laboratory space located in two

buildings in Alameda, California (the “Alameda

Leases”) comprised of 22,303

square feet (the “1010 Atlantic Premises”)

square feet (the “1020 Atlantic Premises”).

Base rent under the Alameda Leases beginning on February 1, 2020 was $ 72,676

per month with annual increases of approximately

In addition to base rent, Lineage paid a pro rata portion of increases in certain expenses, including

real property taxes, utilities (to the extent not separately metered to the leased space) and the landlord’s operating expenses,

over the amounts of those expenses incurred by the landlord.

As security for its obligations, Lineage provided the landlord with

a security deposit of approximately $ 424,000 ,

which was reduced to $ 78,000

on January 24, 2019 in accordance with the terms

of the lease.

The security deposit was returned to Lineage in March 2021.

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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 June

this amount is included in deposits and other long-term assets as of September

30, 2021 (see Note 2).

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$ 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

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

assets on the consolidated balance sheet as of September 30, 2021, to be held as restricted cash during the term of the January 2018

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

Schedule of Supplemental Cash Flow Information Related to Leases

Six Months Ended

of Supplemental Cash Flow Information Related to Leases

Nine Months Ended

September 30,

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

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Operating leases

Financing leases

balance sheet information related to leases is as follows (in thousands, except lease term and discount rate):

Schedule of Supplemental Balance Sheet Information Related to Leases

of Supplemental Balance Sheet Information Related to Leases

September 30,

Operating leases

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Finance leases

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

Schedule of Future Minimum Lease Commitments

Ending December 31,

lease payments

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

of Future Minimum Lease Commitments

Operating Leases

Finance Leases

Year Ending December 31,

Total lease payments

Less 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:

(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.

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 February

2020 and $ 0.3

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

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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.

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.

Lineage believed that the claims and allegations in the action lacked 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.

The court granted the stipulation and dismissed the action on August

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

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

The parties are

currently engaged in discovery.

A five-day trial before the Chancery Court is currently scheduled for October 17-21, 2022.

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

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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.

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

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

44 unchanged sentences

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.

As of September 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

12 unchanged sentences

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.

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.

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.

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

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

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 the IIA.

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 additional payment obligations in the event

of any transfer outside of Israel of intellectual property related to, or the manufacture, or both, of products developed under the grant,

as defined by the IIA.

Collaboration

1 unchanged sentence

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.

ITI will reimburse 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