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Item 1. Business

2022-03-10 compared with 2021-03-11 · 1162 added, 1113 removed, 117 unchanged (95% of the section changed)

are 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 aiding 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.

Our programs are based on our proprietary cell-based therapy 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 an effective immune response to cancer.

Lineage Cell Therapeutics,

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

novel cell therapies to address unmet medical needs.

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

development and manufacturing capabilities.

From this platform, we design, develop, and manufacture specialized human cells

with anatomical and physiological functions which are similar or identical to cells found naturally in the human body.

cells which we manufacture are created by developmental differentiation protocols applied to established and well-characterized,

pluripotent, and self-renewing cell lines.

These functional cells are transplanted into patients to either 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 or infectious diseases.

Our strategy is to efficiently

leverage our technology platform and manufacturing capabilities to develop and advance our programs internally or in conjunction with

strategic partners to further enhance their value.

As one example, on December 17, 2021, we entered into a Collaboration and License

Agreement with F.

Hoffmann-La Roche Ltd and Genentech, Inc., a member of the Roche Group (collectively, “Roche”), wherein

Lineage granted to Roche exclusive worldwide rights to develop and commercialize retinal pigment epithelium

cell therapies, including its proprietary cell therapy known as OpRegen®, for the treatment of ocular disorders, including advanced

dry age-related macular degeneration with geographic atrophy.

Roche has paid Lineage a $50.0 million upfront payment under this alliance

and Lineage is eligible to receive up to an additional $620.0 million in certain developmental, regulatory, and commercialization milestone

Lineage also is eligible for tiered double-digit percentage royalties on net sales of OpRegen.

Currently, Lineage is working

with Roche in support of the dry age-related macular degeneration (OpRegen) program and is clinically testing therapies to treat

spinal cord injuries and non-small cell lung cancer, as well as conducting research and preclinical development activities intended

to advance our pipeline into other therapeutic indications and target tissues or organs.

Candidates & Other Programs

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”).

There 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 the leading cause of blindness in people over the age of 60.

an oligodendrocyte progenitor cell therapy currently in the long-term follow-up portion of a Phase 1/2a multicenter clinical

trial for acute spinal cord injuries (“SCI”).

This clinical trial has been partially funded by the California

Institute for Regenerative Medicine.

an allogeneic cancer immunotherapy of antigen-presenting dendritic cells currently in a Phase 1 clinical trial in non-small

cell lung cancer.

This clinical trial is being funded and conducted by Cancer Research UK, the world’s largest independent

cancer research charity.

addition to seeking to create value for shareholders by developing product candidates and other technologies through our clinical

development programs, we also seek to create value from our technologies through partnering and strategic transactions.

two companies that later became publicly traded companies:

OncoCyte Corporation (“OncoCyte”) and AgeX Therapeutics,

the year ended December 31, 2020, we received approximately $12.6 million in gross proceeds in connection with our sale of shares

of OncoCyte and AgeX.

In August 2020, we also received $24.6 million from Juvenescence Limited (“Juvenescence”),

representing principal and accrued interest under a promissory note we received in connection with our sale of AgeX shares to

Juvenescence in August 2018.

no longer hold any common stock in AgeX.

The value of our OncoCyte holdings as of March 5, 2021, was approximately $4.2

million, based on the closing price of its common stock on that date.

In this Report, see Part I, Item 1A, “Risk Factors—Risks

Related to Our Business Operations and Capital Requirements—The value of our investments in public companies fluctuates

based on their respective stock prices and could be negatively affected by poor business performance.”

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 our protocols or with new protocols

and cell lines.

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

OpRegen ®, 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”) (also known as atrophic AMD).

There are currently no

therapies approved by the U.S.

Food and Drug Administration (“FDA”) for dry AMD.

As of December 17, 2021 this program

has been partnered with Roche for further clinical development and commercialization.

an oligodendrocyte progenitor cell therapy currently in long-term follow-up for a Phase 1/2a multicenter clinical trial for spinal cord

injuries (“SCI”).

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

an allogeneic cancer immunotherapy of antigen-presenting dendritic cells.

One of the VAC product candidates, VAC2, is currently in a

Phase 1 clinical trial in non-small cell lung cancer (“NSCLC”).

This clinical trial is being funded and conducted by Cancer

Research UK (“CRUK”), one of the world’s largest independent cancer research charities.

We also have another VAC-based

product candidate in preclinical development with our partner, Immunomic Therapeutics, Inc.

(“ITI”), for the treatment of

glioblastoma multiforme (“GBM”).

We have other product candidates in

preclinical development covering a range of therapeutic areas and target tissues or organs.

Generally, these candidates are based

on the same pluripotent platform technology and employ a similar guided cell differentiation and transplant approach as our current

clinical-stage products.

addition to seeking to create value for shareholders by developing product candidates and other technologies through our clinical development

programs, we also seek to create value from our technologies through partnering and strategic transactions.

We founded two companies

that later became publicly traded companies:

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

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

the year ended December 31, 2021, we received approximately $10.1 million in gross proceeds in connection with our sale of shares of

In August 2020, we also received $24.6 million from Juvenescence Limited (“Juvenescence”), representing principal

and accrued interest under a promissory note we received in connection with our sale of AgeX shares to Juvenescence in August 2018.

is incorporated in the State of California.

Our common shares trade on the NYSE American and the Tel Aviv Stock Exchange under

the symbol “LCTX.” Our principal executive offices are at 2173 Salk Avenue, Suite 200, Carlsbad, CA 92008, and our

phone number at that address is (442) 287-8990.

Our common shares trade on the NYSE American and the Tel Aviv Stock Exchange under the symbol

“LCTX.” Our principal executive offices are at 2173 Salk Avenue, Suite 200, Carlsbad, CA 92008, USA, and our phone number

at that address is +1- (442) 287-8990.

Our website address is www.lineagecell.com.

The information on, or that can be

accessed through our website is not part of this Report.

Lineage routinely uses its website as a means of disclosing material

non-public information and for complying with its disclosure obligations under Regulation FD.

We also make available, free of

charge through our website, our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form

8-K and any amendments to those reports as soon as reasonably practicable after the reports are electronically filed with or furnished

to the Securities and Exchange Commission.

achieved numerous strategic accomplishments during 2020, including advancing clinical trials and product development in several

key programs.

May 2020, we announced the early exercise of our option with Cancer Research UK to bring the VAC immuno-oncology platform

June 2020, we announced the first known finding of retinal tissue restoration in a patient who received an RPE cell

October 2020, we reported encouraging preliminary Phase 1 clinical study results with VAC2 for the treatment of non-small

cell lung cancer with high levels of antigen-specific immunogenicity observed.

November 2020, we completed enrollment in a 24 patient Phase 1/2a clinical study of OpRegen for the treatment of dry AMD with

GA with encouraging preliminary signs of tolerability and efficacy.

December 2020, we announced that we had been able to make significant manufacturing improvements to our OPC1 acute SCI program,

including better controlled processes, enhanced purity, potency, and scale, and to the development of a “ready-to-inject”

formulation, substantially decreasing logistical burden at the point of care and enabling use at a much larger number of treatment

goal is to become a leading cell therapy company by developing allogeneic, or “off-the-shelf,” treatments that are

comprised of differentiated cells derived from pluripotent cell lines, which have been directed to become specific cell types

and use those cells as treatments to restore diseased or diminished functions, such as impaired vision, loss of movement and sensation,

or to increase immune response to tumors.

Significant near-term activities that underlie our business strategy include:

new and accumulated OpRegen data from the ongoing Phase 1/2a clinical study on two occasions during the first and second quarters

VAC2 patient enrollment in the ongoing Phase 1 clinical study for the treatment of non-small cell lung cancer by the end of

the first half of 2021;

delivery improvements for our OPC1 program, which combined with our “ready-to-inject” formulation, will enable

access to a greater number of clinical sites, currently ongoing and throughout 2021;

with the FDA to discuss further development of the OPC1 program, including a late-stage clinical study, during the second

half of 2021;

opportunities for new VAC product candidates based on manufacturing improvements and product improvements, including newly

discovered tumor antigens/neoantigens, throughout 2021;

partnership opportunities and expansion of existing external collaborations and identification of new collaborations for OpRegen,

OPC1 and VAC2, currently ongoing and throughout 2021.

Therapy Technology

believe we are a leader in pluripotent, cell-based asset development based on directed lineage derivation protocols and whole

cell manufacturing capabilities.

The information on, or that can be accessed through

our website is not part of this Report.

Lineage routinely uses its website as a means of disclosing material non-public information and

for complying with its disclosure obligations under Regulation FD.

We also make available, free of charge through our website, our most

recent annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports as

soon as reasonably practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission.

Chronological Highlights

achieved numerous strategic accomplishments during 2021, including advancing clinical trials and product development in several key programs.

In February 2021, we announced an agreement with Neurgain Technologies to evaluate a novel delivery system for OPC1 to treat spinal cord injury, with the goal of eventually supporting a larger-scale clinical trial.

In March 2021, we announced the achievement of significant

improvements to OPC1 manufacturing, including to process, purity, and scale.

In April 2021, we announced a worldwide license and

development collaboration agreement with ITI, for the development and commercialization of novel cancer immunotherapy agents derived from

the VAC platform utilizing antigens provided by ITI.

In June 2021, we announced the second and third known findings of retinal

tissue restoration in dry-AMD patients who received OpRegen RPE cell transplant therapy.

In November 2021, we announced the fourth known finding of retinal

tissue restoration in a dry-AMD patient who received OpRegen RPE cell transplant therapy.

In December 2021, we announced a collaboration

and license agreement with Roche, pursuant to which we granted Roche exclusive worldwide rights to develop and commercialize RPE

cell therapies, including OpRegen, for the treatment of ocular disorders, including advanced dry AMD with GA.

Our goal is to address unmet

medical needs by developing and advancing allogeneic, or “off-the-shelf,” treatments comprised of functional cells derived

by differentiation of pluripotent cells from established and self-renewing cell lines.

We direct pluripotent cells to become specific

cell types and use those differentiated cells as treatments to restore diseased or diminished functions, such as impaired vision, loss

of movement and sensation, or to increase immune response to tumors or infectious agents.

Significant near-term activities that underlie

our business strategy include:

continuing OpRegen data from the ongoing Phase 1/2a clinical study, which is in the long-term follow-up phase, to our partner Roche;

OpRegen to support our partner, Roche, in initiating a new clinical study for OpRegen;

GMP production of OPC1 through an improved and larger-scale manufacturing process and a new thaw-and-inject formulation;

FDA interactions to discuss further development of the OPC1 program, including manufacturing improvements, the novel Parenchymal

Spinal Delivery (PSD) device, and a late-stage clinical study;

clinical performance and safety testing of the novel PSD device for OPC1, with an anticipated amended Investigational New Drug (IND)

data from the ongoing Phase 1 VAC2 clinical study for the treatment of non-small cell lung

Initiating a clinical study of VAC2, with an anticipated

IND submission;

development of a dendritic cell-based therapeutic for GBM with our strategic partner;

opportunities for new VAC product candidates based on internally identified or partnered tumor antigens/neoantigens;

partnership opportunities and expansion of existing collaborations and identification of new collaborations for OPC1 and the VAC

platform, and

new programs for the implementation of our directed cell differentiation technology and expertise into adjacent or new therapeutic

areas and tissues or organs.

Therapy Technology Platform

believe we are a leader in pluripotent, cell-based asset development based on directed derivation protocols of cellular lineages and

whole cell manufacturing capabilities.

Pluripotent cells, which are widely published as capable of becoming any human cell type, have

1 unchanged sentence

and degenerative conditions for which there presently are no cures.

We currently are focused on developing pluripotent cells into

RPE cells, oligodendrocyte progenitor cells and dendritic cells.

pharmaceuticals that require a narrowly defined molecular target, cellular therapies are often aimed at regenerating or replacing

the entire affected cell or tissue and therefore, may have broader or more suitable applicability than many traditional pharmaceutical

Small molecules and biologic therapies that require systemic delivery into the body often have unexpected results, or

side effects, that can limit their usefulness.

When cell replacement is locally administered, particularly to anatomical compartments,

systemic side effects are usually not the primary concern.

The risk profile of cell therapy more closely resembles that of transplant

medicine, focused more on whether the transplanted cells are rejected by the body and whether the cells function as expected.

We currently are using our pluripotent stem cells as starting material from which we derive three separate and specific cell types,

each of which are product candidates currently in clinical testing.

maintain an innovative cell therapy manufacturing facility in the Bio Park on the campus of the Hadassah University Hospital in

Jerusalem, Israel.

The facility includes process development laboratories and a state-of-the-art, cGMP manufacturing facility.

It is designed and equipped to enable simultaneous cGMP processes and to produce a range of cell therapy products for human use

in clinical trials as well as developing scale suitable for commercial launch.

All cGMP manufacturing processes, including cell

banks and product manufacturing for our cell therapy product candidates, are conducted in this facility.

Therapy Product Candidates

is our lead ophthalmic product candidate (currently in a Phase 1/2a clinical trial) for the treatment of advanced dry AMD with

AMD is a gradual, progressive, deterioration of the macula, the small sensitive area in the center of the retina that provides

clear, high definition central vision.

AMD affects over 30 million people worldwide and approximately 1.6 million people are diagnosed

annually in the United States.

We are currently in clinical development for various pluripotent

cell-derived product candidates such as RPE cells, oligodendrocyte progenitor cells and dendritic cells.

In addition, we are exploring

the differentiation of pluripotent cells into other cell types that may have therapeutic benefit in other areas of unmet medical need.

of Cell Types Which Can Be Derived from Pluripotent

cell types indicate currently active clinical programs of Lineage

Cellular therapies are often

aimed at regenerating or replacing entire affected cells or tissues and therefore, may have more durable, broader, or more suitable applicability

than many traditional pharmaceutical products which are aimed to influence a single molecular target or group of biological pathways.

Small molecules and biologic therapies that require systemic delivery into the body often have unexpected side effects that can limit

their usefulness.

When cell replacement is locally administered, particularly to a specific anatomical compartment, systemic side effects

are usually minimal and well-tolerated.

Cell therapy more closely resembles that of transplant medicine, being focused on whether the

transplanted cells are retained or rejected by the body and whether the cells function as expected, rather than causing intolerable or

dose limiting side effects.

A key advantage of our

approach is that it provides us the opportunity to rapidly develop new programs without the extensive and costly steps

traditionally required to develop a new small molecule.

Whereas small molecule product development typically requires selection or

validation of a drug target, followed by screening millions of molecules to identify a series of hits, followed by chemical

modification known as structure-activity relationship or “SAR” to develop a hit into a more potent lead, the process of

developing a new cell therapy from pluripotent lines can be comparatively faster because the target cell type is already known and

fully “validated”, insofar as it is well-established in the literature as being the cell type which is dysfunctional or

deficient in the patient.

The most critical step in developing a new cell therapy is the establishment of a proprietary and

commercially feasible differentiation protocol which can create the needed cells, a process which avoids mass screening campaigns

and is more readily accomplished via the combination of literature reviews and in-house experience with pluripotent cell

differentiation.

This approach can facilitate our pipeline expansion faster and at a lower cost than traditional methods.

In addition to our corporate

headquarters located in San Diego, CA, we have a modern and innovative manufacturing facility in the Bio Park on the campus of the

Hadassah University Hospital in Jerusalem, Israel.

The facility includes process development laboratories and a state-of-the-art, current

good manufacturing practice (“cGMP”) cell manufacturing facility.

It is designed and equipped to run simultaneous cGMP processes

and to produce a range of cell therapy products for human use in clinical trials as well as improve scalability for potential commercialization.

Currently, all of our cGMP manufacturing processes, including cell banking and product manufacturing for our cell therapy product candidates,

are conducted in this facility.

Clinical Cell Therapy Pipeline

is an ophthalmic product candidate (currently in a Phase 1/2a clinical trial) for the treatment of advanced dry AMD with GA.

is a gradual, progressive, deterioration of the macula, the small sensitive area in the center of the retina that provides clear, high-definition

central vision.

AMD affects over 30 million people worldwide and approximately 1.6 million people are diagnosed annually in the United

It is a leading cause of vision loss in people over the age of 65 in the developed world.

area of atrophy begins to include the fovea (the center of the macula), patients lose their central vision, making facial recognition,

reading and driving difficult or impossible, and often resulting in legal blindness.

The exact cause of dry AMD is unknown, but

is thought to result from multiple factors, such as genetics, age and environmental effects.

There are two clinical presentations

of AMD, the dry form and the wet form, or neovascular form (growth of abnormal new blood vessels).

Dry AMD typically advances

slowly toward GA in which RPE cells and photoreceptors deteriorate over time.

RPE cells support and nourish the retina by metabolizing

waste by-products and producing a number of components useful for photoreceptor health and function.

If the metabolic waste products

accumulate, lesions known as drusen are generated.

Approximately 85-90% of AMD patients suffer from dry AMD, for which there is

no FDA-approved medical therapies.

Dry AMD may also lead to wet AMD, a condition for which there are several FDA-approved treatments

administered locally to inhibit the growth of new blood vessels, but these treatments are not effective nor approved for the treatment

Physicians often recommend a healthy diet, exercise and/or nutritional supplements for dry AMD, but nutritional supplements

have shown limited efficacy in delaying the onset of more progressive disease in longer-term studies.

The schematics below show

a representation of the process of drusen formation and the goal of cell replacement therapy.

As the area of atrophy begins to include

the fovea (the center of the macula), patients lose their central vision, making facial recognition, reading and driving difficult or

impossible, and often resulting in legal blindness.

The exact cause of dry AMD is unknown, but is thought to result from multiple factors,

such as genetics, age, and environmental effects.

There are two clinical presentations of AMD, the dry form and the wet form,

or neovascular form (growth of abnormal new blood vessels).

Dry AMD typically advances slowly toward GA in which RPE cells and photoreceptors

deteriorate over time.

RPE cells support and nourish the retina by metabolizing waste by-products and producing a number of components

useful for photoreceptor health and function.

If the metabolic waste products accumulate, lesions known as drusen are generated.

Approximately

85-90% of AMD patients suffer from dry AMD, for which there is no FDA-approved medical therapies.

Dry AMD may also lead to wet AMD, a

condition for which there are several FDA-approved treatments administered locally to inhibit the growth of new blood vessels, but these

treatments are not effective nor approved for the treatment of dry AMD.

Physicians often recommend a healthy diet, exercise and/or nutritional

supplements for dry AMD, but nutritional supplements have shown limited efficacy in delaying the onset of more progressive disease in

longer-term studies.

The schematics below show a representation of the process of drusen formation and the goal of cell replacement therapy.

AMD involves the loss of retina cells, creating an area of geographic atrophy (GA), which causes impaired vision and blindness

believe one of the most promising approaches to treat dry AMD is to replace the layer of damaged RPE cells with new, healthy and

functional RPE cells manufactured from a well-characterized cell line.

OpRegen is a cell replacement therapy derived from our

pluripotent cell technology in which our proprietary directed-differentiation methods convert pluripotent stem cells into nearly

pure populations of RPE cells.

Using this method, OpRegen is grown free of any animal products and consists of human RPE cells

with high yield and purity that can be transplanted directly into the patient’s eye, where the patient’s own RPE cells

are missing or dysfunctional.

The OpRegen therapeutic approach is designed to replace damaged or lost RPE cells with the goal

of slowing disease progression to preserve and/or restore visual function.

believe one of the most promising approaches to treat dry AMD is to replace the layer of damaged RPE cells with new, healthy and functional

RPE cells manufactured from a well-characterized cell line.

OpRegen is a cell replacement therapy derived from our pluripotent cell technology

in which our proprietary directed-differentiation methods convert pluripotent stem cells into nearly pure populations of RPE cells.

this method, OpRegen is grown free of any animal products and consists of human RPE cells with high yield and purity that can be transplanted

directly into the patient’s eye, where the patient’s own RPE cells are missing or dysfunctional.

The OpRegen therapeutic

approach is designed to replace damaged or lost RPE cells with the goal of slowing disease progression to preserve and/or restore visual

is an injection of RPE cells delivered to the retina, to replace lost retinal cells and preserve or restore vision

studies in the Royal College of Surgeons (RCS) rat model have shown that following a single subretinal injection, OpRegen

as a suspension of cells rapidly organized into their natural monolayer structure and survived until the end of the study, which

we believe is critical to the potential success of OpRegen in humans.

Additionally, rats receiving OpRegen had objective evidence

of improved optomotor tracking, indicating functional visual improvement compared to control animals.

is intended to be an allogeneic, or “off-the-shelf,” product provided to retinal surgeons in an “easy-to-use”

form for transplantation.

We believe OpRegen could have a lasting benefit from a single administration, or once every several

This approach differs from other investigational drugs for Dry AMD and approved agents currently marketed for wet AMD,

such as Ranibizumab (Lucentis ® ) and Aflibercept (Eylea ® ), that require multiple, frequent intravitreal

injections into the eye.

patients in our ongoing Phase 1/2a clinical trial are 50 years of age or older, whose dry AMD has advanced to the GA stage, with

absence of additional concomitant ocular disorders.

The eye in which the disease has progressed the most is treated, while their

other eye serves as a measure of disease progression.

Following injection, the patients are followed for 12 months at specified

intervals to evaluate the safety and tolerability of OpRegen.

the initial 12-month period, patients are evaluated at longer intervals for up to an additional five years following administration.

A secondary objective of the clinical trial is to examine the ability of transplanted OpRegen to engraft, survive, and modulate

disease progression in the patients.

In addition to thorough characterization of visual function, several vision tests are used

to quantify stabilization or improvements in visual function.

We also perform anatomical evaluation imaging to assess the restoration

of the structure of the retina.

data from the first 12 subjects in Cohorts 1-3 have been encouraging and suggest that OpRegen RPE cells are generally well-tolerated

when administered by subretinal injection in these legally blind patients with large areas of GA that have encompassed the foveal

The surgical procedures were generally well-tolerated, with spectral domain optical coherence tomography (SD-OCT) images

showing absorption of the subretinal fluid in the bleb less than 48 hours after surgery and healing of the site of retinal penetration

by the cannula within a few weeks.

Initial findings using a variety of imaging modalities suggest presence of cells in the subretinal

space, an observation consistent with, and supported by, the data from preclinical studies of OpRegen.

Findings on clinical examination

by different imaging modalities show potential improvements in retinal structure, which could precede visual functional improvements.

Though it is not definitively known at this time whether these changes represent engraftment and survival of the transplanted

cells, data from the preclinical animal studies suggest this is the most likely scenario.

in this safety-focused aspect of the trial, no unexpected ocular adverse events have been observed and those events expected to

occur based on the procedures involved in OpRegen administration, such as vitrectomy, have been predominately mild in severity.

The majority of these subjects had pre-existing epiretinal membranes (ERMs) at the time of trial enrollment and in most cases,

experienced new or worsening ERMs following the surgical procedure, which is believed to be partially attributable to the route

of administration via pars plana vitrectomy (PPV) and retinotomy.

The majority were mild to moderate in severity, though two patients

with severe ERM were successfully treated via a routine surgical procedure.

These subjects are being monitored during trial follow-up.

One instance of retinal detachment occurred in a patient who was legally blind prior to treatment.

The event was not assigned

as related to treatment, procedure or to the combination.

The patient continued for a period of time in the trial following successful

surgical repair but has since withdrawn due to other unrelated health issues.

The independent data safety monitoring board approved

moving to Cohort 4 based on the safety data from the Cohorts 1-3.

Cohort 4 incorporates an additional variety of objective and

subjective assessments to look for signs of potential efficacy as well as potential anatomical changes indicative of OpRegen cell

function following implantation.

described above, many of the adverse events (AEs) observed in subretinal procedures are likely related to the delivery technique

utilized during the surgery.

As previously described, in January 2019, we announced an exclusive partnership with Orbit Biomedical

(now Gyroscope Therapeutics, Ltd.) to assess its FDA-cleared Orbit Subretinal Delivery System (SDS), a single-use vitrectomy-free

delivery device designed to deliver products to the subretinal space for the administration of OpRegen within the ongoing clinical

The device allows for access to the subretinal space via a sclerotomy and suprachoroidal approach, which means that there

are no openings created into the vitreous chamber.

This could eliminate the possibilities of new or worsening epiretinal membranes

and exacerbation or generation of a cataract, both known issues with the older standard method of delivery.

We believe that the

use of this device could significantly decrease the number of adverse events and improve retention and dose control of OpRegen

in our clinical trials.

completed enrollment in Cohorts 1-3 (12 patients) in the middle of 2018 and as previously reported, OpRegen was well tolerated

with no unexpected systemic serious adverse events (SAEs) or ocular AEs.

Importantly, there were several patients that exhibited

improved retinal structure, reduction in drusen, alterations in the pattern of GA progression and indications of long-term survival

of the OpRegen cells.

We began enrollment of Cohort 4 (targeted for an additional 12 patients) shortly thereafter and treated

three patients via the traditional route of administration.

In 2019, we amended our clinical protocol to incorporate the Orbit

SDS and our new thaw and inject formulation into our Phase 1/2a clinical trial.

In February 2020, we announced that after reviewing

promising preliminary data from the ongoing OpRegen Phase 1/2a clinical trial, our independent data safety monitoring board removed

the protocol-mandated treatment stagger.

The COVID pandemic slowed the rate of patient accrual but study enrollment was completed

on November 10, 2020, with the treatment of the twelfth Cohort 4 patient, seven via the Orbit SDS and five via PPV/retinotomy.

Five different surgeons at four centers successfully delivered OpRegen using the Orbit SDS and there were no unexpected AEs.

structural and clinical changes in these better vision patients, including better visual acuity and increased reading speed, are

being followed and updates will be provided at major medical meetings or as findings merit.

June 2020, we were able to report the first known example of retinal restoration following OpRegen administration in a

Cohort 4 patient who was treated via the PPV/retinotomy route, with the findings confirmed by several independent reviewers.

is hypothesized that photoreceptor cells in the transition areas at the boundary of the GA are dysfunctional and dying, but not

completely lost.

The addition of new RPE cells may restore the microenvironment in surrounding tissue and contribute to the possibility

of restoring function to existing cells that otherwise, if left untreated, would inevitably progress to further expansion of the

atrophic region.

Specifically, in this patient, the area of GA assessed at nine months following OpRegen treatment was

approximately 25% smaller than the patient’s pre-treatment baseline.

As reported in November at the 2020 American Academy

of Ophthalmology (AAO) Annual Meeting, this patient continues to show signs of a smaller area of GA and improved visual acuity.

This unprecedented finding supports the view that dry AMD is not an irreversible, degenerative condition and that some portion

of diseased retinal tissue may be recoverable in atrophic end-stage disease patients.

enrollment complete, patients are being followed for safety and efficacy as per protocol.

We plan to present OpRegen data to the

FDA in the third quarter of 2021 for discussion about a subsequent, comparative clinical trial.

is our lead product candidate for the treatment of acute spinal cord injury (“SCI”).

SCI occurs when the spinal cord

is subjected to a severe crush or contusion injury, such as that caused by a car or motorcycle accident and typically results

in severe functional impairment, including limb paralysis, aberrant pain signaling, and loss of bladder and sexual function.

are approximately 18,000 new spinal cord injuries annually in the U.S.

(NSCIC SCI Facts and Figures at a Glance (2019)), and there

are currently no FDA-approved drugs specifically for the treatment of SCI, although methylprednisolone, a corticosteroid generally

used as an anti-inflammatory drug, is sometimes prescribed on an off-label basis to reduce acute inflammation in the injured spinal

cord immediately after injury.

It is believed that to effect substantial benefit in treating this complex injury, multiple mechanisms

of action are required, such as introduction of biologics that preserve surviving neurons and stimulate new nerve axon outgrowth,

suppression of lesion formation at the injury site, generation of new blood vessels to repair the ischemic damage from injury,

and myelination of the demyelinated and newly formed nerve axons.

A key therapeutic target in SCI is replacement of oligodendrocytes

that are selectively lost at the injury site.

As the sole source of the insulating protein myelin in the brain and spinal cord,

oligodendrocytes wrap around nerve axons and allow conduction of electrical impulses throughout the central nervous system (“CNS”).

is an oligodendrocyte progenitor cell therapy derived from our pluripotent cell technology under Current Good Manufacturing Practice

(“cGMP”) conditions using a directed differentiation method.

These cells are stored frozen until ready for use and

prepared for direct administration into the injured spinal cord.

Based on preclinical studies, when OPC1 is transplanted into

the injured spinal cord, the cells undergo further maturation to generate a replacement population of oligodendrocytes at the

injury site that are capable of remyelinating denuded and newly formed nerve axons.

Prior to their maturation, the transplanted

oligodendrocyte progenitor cells stimulate additional reparative processes, including promotion of neuron survival and nerve axon

outgrowth, and induction of blood vessel formation in and around the injury site.

In addition, OPC1 cells rapidly migrate from

the injection point to the injury site where they generate a supportive tissue matrix and suppress cavitation.

Cavitation is a

destructive process that occurs within the spinal cord following SCI, and typically results in permanent loss of motor and sensory

A patient with cavitation can develop a condition known as syringomyelia, which results in additional neurological and

functional damage to the patient and can result in chronic pain.

Based on the multiple reparative properties associated with OPC1,

we believe this candidate cell therapy product is ideally suited to treat neurological conditions such as SCI and other demyelination

and demyelination disorders of the CNS.

a grant for clinical development, the development of OPC1 has been supported by $14.3 million in funds from the California Institute

for Regenerative Medicine (“CIRM”), from 2014 through the date of this Report.

We intend to apply for additional grants

from CIRM for the program’s continued development.

to its acquisition, Asterias tested OPC1 in two clinical trials:

a five patient Phase 1 safety trial and a 25-patient Phase 1/2a

dose escalation trial, which we call the SCiStar trial.

The SCiStar trial was an open-label, single-arm trial testing three sequential

escalating doses of OPC1 administered at up to 20 million OPC1 cells with subacute, C-4 to C-7, motor complete (AIS-A or AIS-B)

cervical SCI.

These individuals have essentially lost all movement below their injury site and experience severe paralysis of

the upper and lower limbs.

AIS-A patients have lost all motor and sensory function below their injury site, while AIS-B patients

have lost all motor function but may retain some minimal sensory function below their injury site.

OPC1 was administered 21 to

42 days post-injury.

We believe OpRegen could have a lasting benefit from a single administration, or once every several years.

This approach differs from other investigational drugs for dry AMD and approved agents currently marketed for wet AMD, such as ranibizumab

(Lucentis ® ) and aflibercept (Eylea ® ), that require repeated, frequent intravitreal injections into the

patients in our ongoing Phase 1/2a clinical trial are 50 years of age or older, whose dry AMD has advanced to the GA stage, with absence

of additional concomitant ocular disorders.

The trial includes 24 subjects.

The first 12 subjects (Cohorts 1-3) were legally blind at

the outset of the trial, with significant progression of GA.

Cohort 4 consists of 12 patients with less advanced disease, smaller areas

of GA, and better baseline visual acuity at the outset of the trial.

In all 24 subjects, the eye in which the disease has progressed

the most is treated, while their other, untreated eye serves as a measure of disease progression.

Following injection, the patients are

followed for 12 months at specified intervals to evaluate the safety and tolerability of OpRegen.

the initial 12-month period, patients are evaluated at longer intervals for up to a total of five years following administration.

objective of the clinical trial is to examine the ability of transplanted OpRegen to engraft, survive, and modulate disease progression

in the patients.

In addition to thorough characterization of visual function, several vision tests are used to quantify stabilization

or improvements in visual function.

We also perform anatomical evaluation imaging to assess the restoration of the structure of the retina.

data have been encouraging and suggest that OpRegen RPE cells are generally well-tolerated when administered by subretinal injection

in patients with GA.

Findings on clinical examination by different imaging modalities show improvements in retinal structure and decreases

in drusen, which are collections of waste deposits associated with AMD, as well as durable engraftment of OpRegen cells now extending

to more than five years in the earliest treated patients.

Across the study, a trend toward slower GA progression in treated compared

to untreated eyes continues to be present.

Of particular note, four subjects in Cohort 4 have shown evidence of retinal tissue restoration,

evidenced by a reduction in size or no growth in the area of atrophy at least 12 months post-treatment and the presence of key retinal

cells that were not observable at baseline study entry.

This anatomical effect was accompanied by improvements in visual acuity in all

four subjects.

Furthermore, differences in visual acuity between treated and untreated eyes remains statistically significant across

Cohort 4 patients at 15 months post-treatment.

in the safety-focused aspect of the trial, no unexpected ocular adverse events have been observed and those events expected to occur

based on the procedures involved in OpRegen administration, such as vitrectomy, have been predominately mild in severity.

of these subjects had pre-existing epiretinal membranes (“ERMs”) at the time of trial enrollment and in most cases,

experienced new or worsening ERMs following the surgical procedure, which is believed to be partially attributable to the route of administration

via pars plana vitrectomy (“PPV”) and retinotomy.

The majority were mild to moderate in severity, though three patients

with severe ERM were successfully treated via a routine surgical procedure where the ERM was removed.

These subjects are being monitored

during trial follow-up.

Two instances of retinal detachment were reported among all patients, one of which occurred in a patient who

was legally blind prior to treatment.

The event was not assigned as related to treatment, procedure or to the combination.

continued for a period of time in the trial following successful surgical repair but has since withdrawn due to other unrelated health

The second case, also successfully repaired, took place in an area of the retina away from the site of the OpRegen transplant

and was thought by the investigators and other reviewers to be related to an existing retinal tear in the patient.

The independent data

safety monitoring board (“DSMB”) approved moving to Cohort 4 based on the safety data from the Cohorts 1-3.

4 incorporated an additional variety of objective and subjective assessments to look for signs of potential efficacy as well as potential

anatomical changes indicative of OpRegen cell function following implantation.

completed enrollment in Cohorts 1-3 (12 patients) in the middle of 2018 and as previously reported, OpRegen was well tolerated with no

unexpected systemic serious adverse events (“SAEs”) or ocular adverse events (“AEs”).

Importantly, there were

several patients that exhibited improved retinal structure, reduction in drusen, alterations in the pattern of GA progression and indications

of long-term survival of the OpRegen cells.

We began enrollment of Cohort 4 shortly thereafter and treated three patients via the traditional

route of administration.

In 2019, we amended our clinical protocol to incorporate the Gyroscope Therapeutics, Ltd.

Orbit Subretinal Delivery

System (“Orbit SDS”), a single use vitrectomy-free delivery device designed to deliver products to the subretinal

space through a sclerotomy and suprachoroidal approach, and our new thaw and inject formulation into our Phase1/2a clinical trial.

February 2020, we announced that after reviewing promising preliminary data from the ongoing OpRegen Phase 1/2a clinical trial, our independent

data safety monitoring board removed the protocol-mandated treatment stagger.

The COVID pandemic slowed the rate of patient accrual,

but study enrollment was completed on November 10, 2020, with the treatment of the twelfth Cohort 4 patient, seven via the Orbit SDS

and five via PPV/retinotomy.

Five different surgeons at four centers successfully delivered OpRegen using the Orbit SDS and there were

no unexpected AEs.

Encouraging structural and clinical changes were observed in these better vision patients, including better visual

acuity and increased reading speed.

June 2020, we were able to report the first known example of retinal restoration following OpRegen administration in a Cohort 4 patient

who was treated via the PPV/retinotomy route, with the findings confirmed by several independent reviewers.

It is hypothesized that photoreceptor

cells in the transition areas at the boundary of the GA are dysfunctional and dying, but not completely lost.

The addition of new RPE

cells may restore the microenvironment in surrounding tissue and contribute to the possibility of restoring function to existing cells

that otherwise, if left untreated, would inevitably progress to further expansion of the atrophic region.

Specifically, in this patient,

the area of GA assessed at nine months following OpRegen treatment was approximately 25% smaller than the patient’s pre-treatment

As reported in November at the 2020 American Academy of Ophthalmology (“AAO”) Annual Meeting, this patient

continued to show signs of a smaller area of GA and improved visual acuity.

Further, as reported throughout 2021, this patient continued

to show zero progression of atrophy growth for three full years after treatment.

This unprecedented finding supports the view that

dry AMD is not an irreversible, degenerative condition and that some portion of diseased retinal tissue may be recoverable in atrophic

end-stage disease patients.

May 2021, we reported at the Association for Research in Vision and Ophthalmology Annual Meeting (“ARVO”) that 83%

of all Cohort 4 patients were at or above baseline visual acuity, based on per protocol scheduled visits ranging from 4.5 months to approximately

three years post-transplant.

In contrast, 83% of the patients’ untreated eyes were below baseline entry values at the same time

As well, previously reported structural improvements in the retina, decreases in drusen density, and a trend toward slower GA

progression in treated compared to untreated eyes continued.

June 2021, we reported that retinal restoration was observed in two additional Cohort 4 patients, evidenced by optical coherence tomography

(“OCT”), bringing the total to three observed cases of retinal tissue restoration.

These findings continue to suggest

integration of new RPE cells with functional photoreceptors in areas that previously showed no presence of any of these cells.

to the observed anatomical changes, all three patients’ visual acuity increased above baseline levels.

September 2021, it was reported at the Annual Retina Society Meeting that updated interim results of our Phase 1/2a study showed a statistically

significant difference in visual acuity between treated and untreated eyes across Cohort 4 patients, at month nine as well as months

12 and 15 post-transplant.

These results, when combined with the previous evidence of retinal restoration in areas previously considered

to be atrophic, suggest that both a structural and functional benefit is possible with OpRegen therapy.

Additionally, it was reported

that OpRegen continues to be well tolerated, with no new, unexpected ocular or systemic AEs or SAEs.

November 2021, we reported that evidence of retinal restoration was observed in a fourth patient enrolled in the Phase 1/2a clinical

study of OpRegen.

Importantly, reduction or no progression for at least one-year post-transplant, was observed in the total area

of GA in all four of these better-vision Cohort 4 patients.

In addition, all four retinal restoration patients reported improvements

in their visual acuity, which has been maintained for at least 12 months in all cases.

This new and additive finding continues to support

our view that atrophic AMD is not an irreversible, degenerative condition and that some portion of diseased retinal tissue may be recoverable.

December 2021, we entered into an exclusive worldwide collaboration and license agreement with Roche, for the development and commercialization

Roche paid us a $50.0 million upfront payment and we are eligible to receive up to $620.0 million in additional development,

approval, and sales milestone payments, in addition to tiered double-digit royalties.

See Note 14 to our consolidated financial statements

included elsewhere in this Report for discussion on the Roche collaboration agreement.

is our lead product candidate for the treatment of SCI.

SCI occurs when the spinal cord is subjected to a severe crush or contusion injury,

such as that caused by a car or motorcycle accident and typically results in severe functional impairment, including limb paralysis,

aberrant pain signaling, and loss of bladder and sexual function.

There are approximately 18,000 new spinal cord injuries annually in

(NSCIC SCI Facts and Figures at a Glance (2019)), and there are currently no FDA-approved drugs specifically for the treatment

of SCI, although methylprednisolone, a corticosteroid generally used as an anti-inflammatory drug, is sometimes prescribed on an off-label

basis to reduce acute inflammation in the injured spinal cord immediately after injury.

It is believed that to effect substantial benefit

in treating this complex injury, multiple mechanisms of action are required, such as introduction of biologics that preserve surviving

neurons and stimulate new nerve axon outgrowth, suppression of lesion cavity formation at the injury site, generation of new blood vessels

to repair the ischemic damage from injury, and myelination of the demyelinated and newly formed nerve axons.

A key therapeutic target

in SCI is replacement of oligodendrocytes that are selectively lost at the injury site.

As the sole source of the insulating protein

myelin in the brain and spinal cord, oligodendrocytes wrap around nerve axons and allow conduction of electrical impulses throughout

the central nervous system (“CNS”).

Oligodendrocytes

are the myelinating cells of the CNS and are critical for nerve signal conduction.

is an oligodendrocyte progenitor cell therapy derived from our pluripotent cell technology under cGMP conditions using a directed differentiation

These cells are stored frozen until ready for use and prepared for direct administration into the injured spinal cord.

on preclinical studies, when OPC1 is transplanted into the injured spinal cord, the cells undergo further maturation to generate a replacement

population of oligodendrocytes at the injury site that are capable of remyelinating denuded and newly formed nerve axons.

Based on preclinical

studies, prior to their maturation the transplanted oligodendrocyte progenitor cells are believed to stimulate additional reparative

processes, including promotion of neuron survival and nerve axon outgrowth, and induction of blood vessel formation in and around the

In addition, OPC1 cells rapidly migrate from the injection point to the injury site where they generate a supportive tissue

matrix and suppress cavitation.

Cavitation is a destructive process that occurs within the spinal cord following SCI, and typically results

in permanent loss of motor and sensory function.

A patient with cavitation can develop a condition known as syringomyelia, which results

in additional neurological and functional damage to the patient and can result in chronic pain.

Based on the multiple reparative properties

associated with OPC1, we believe this candidate cell therapy product is ideally suited to treat neurological conditions such as SCI and

other demyelination disorders of the CNS.

of spinal cavitation in a rat contusion model.

a grant for clinical development, the development of OPC1 has been supported by $14.3 million in funds from CIRM, from 2014 through the

date of this Report.

We are eligible for and may seek to apply for additional grants from CIRM for the program’s continued development.

to its acquisition, Asterias Biotherapeutics, Inc.

(“Asterias”) was testing OPC1 in two clinical trials:

a five patient Phase

1 safety trial and a 25-patient Phase 1/2a dose escalation trial, which we call the SCiStar trial.

The SCiStar trial is an open-label,

single-arm trial testing three sequential escalating doses of OPC1 administered at up to 20 million OPC1 cells with subacute, C-4 to

C-7, motor complete (AIS-A or AIS-B) cervical SCI.

These individuals have essentially lost all movement below their injury site and experience

severe paralysis of the upper and lower limbs.

AIS-A patients have lost all motor and sensory function below their injury site, while

AIS-B patients have lost all motor function but may retain some minimal sensory function below their injury site.

OPC1 was administered

21 to 42 days post-injury.

Patients continue to be followed by neurological exams and imaging procedures to assess the safety and activity

of the product.

Enrollment was completed in December 2017 and consisted of five cohorts:

Enrollment consisted of five cohorts:

# of Patients

2 million OPC1 cells (low dose for safety evaluation)

6 unchanged sentences

Safety Profile .

Magnetic resonance imaging (“MRI”) scans at 12 months post-injection of OPC1 showed no evidence

of adverse changes in any of the 25 patients.

Magnetic resonance imaging (“MRI”) scans at 12 months post-injection of OPC1 showed no evidence of

adverse changes in any of the 25 patients.

Engraftment .

All three patients in Cohort 1 and 21 of the 22 patients in Cohorts 2-5 had MRI scans at 12 months consistent

with the formation of a tissue matrix at the injury site, which is encouraging evidence that OPC1 cells had engrafted at the

injury site and helped to prevent cavitation.

All three patients in Cohort 1 and 21 of the 22 patients in Cohorts 2-5 had MRI scans at 12 months consistent with

the formation of a tissue matrix at the injury site, which is encouraging evidence that OPC1 cells had engrafted at the injury site

and helped to prevent cavitation.

Motor Function .

At 12 months, 21 of the 22 patients who were administered either 10 million or 20 million cells of OPC1

(Cohorts 2-5) recovered at least one motor level on at least one side, and seven of the 22 patients recovered two or

more motor levels on at least one side.

Motor level recovery was based on the upper extremity motor score (“UEMS”),

as measured by the International Standards for Neurological Classification of Spinal Cord Injury (“ISNCSCI”).

None of these patients saw decreased motor function following administration of OPC1, and patients consistently retained the

motor function recovery seen through six months or saw further motor function recovery from six to 12 months.

At 12 months, 21 of the 22 patients who were administered either 10 million or 20 million cells of OPC1 (Cohorts

2-5) recovered at least one motor level on at least one side, and seven of the 22 patients recovered two or more motor levels on

at least one side.

Motor level recovery was based on the upper extremity motor score (“UEMS”), as measured by the International

Standards for Neurological Classification of Spinal Cord Injury (“ISNCSCI”).

None of these patients saw decreased motor

function following administration of OPC1, and patients consistently retained the motor function recovery seen through six months

or saw further motor function recovery from six to 12 months.

November 2019, we provided an update on the SCiStar trial that highlighted, among other things:

Safety Profile .

For the 21 SCiStar trial patients who had follow-up visits at 24 months post-injection of OPC1, MRI scans

showed no evidence of adverse changes, and none of the patients had a decline in their motor function from their 12-month

follow-up visit.

For the 21 SCiStar trial patients who had follow-up visits at 24 months post-injection of OPC1, MRI scans showed

no evidence of adverse changes, and none of the patients had a decline in their motor function from their 12-month follow-up visit.

There were no unexpected serious adverse events to date in any of these patients.

Motor Function .

All 3 Cohort 1 patients continued to be stable 2-4 years out post treatment.

At 24 months, five

of the six Cohort 2 patients recovered at least two motor levels on at least one side, and one Cohort 2 patient

recovered three motor levels, which has been maintained through that patient’s 36-month follow-up visit.

recovery was based on the UEMS as measured by the ISNCSCI.

November 2020, the formal Clinical Study Report for the SCiStar study with the above supporting data was submitted to the FDA.

FDA designated OPC1 as a Regenerative Medicine Advanced Therapy (“RMAT”), for the treatment of acute SCI and granted

it Orphan Drug Designation, which includes the ability for increased interfacing with the FDA during clinical development, and

a pathway to possible market exclusivity.

2019, we transferred all cGMP manufacturing processes, including the establishment of cell banks and the OPC1 process development

and manufacturing for clinical studies, to our cell therapy manufacturing facility in Jerusalem, Israel.

All 3 Cohort 1 patients continued to be stable 2-4 years post treatment.

At 24 months, five of the six Cohort

2 patients recovered at least two motor levels on at least one side, and one Cohort 2 patient recovered three motor levels, which

has been maintained through that patient’s 36-month follow-up visit.

Motor level recovery was based on the UEMS as measured

by the ISNCSCI.

November 2020, the formal clinical study report (CSR) for the SCiStar study with the above supporting data was submitted to the FDA.

FDA designated OPC1 as a Regenerative Medicine Advanced Therapy (“RMAT”), for the treatment of subacute SCI.

RMAT is an accelerated

development pathway and includes the ability for increased interfacing with the FDA during clinical development, and granted OPC1 Orphan

Drug Designation, providing a pathway to possible market exclusivity.

2019, we transferred all cGMP manufacturing processes, including the establishment of cell banks and the OPC1 process development and

manufacturing for clinical studies, to our cell therapy manufacturing facility in Jerusalem, Israel.

Improvements to the manufacturing

process were completed in 2020 and include enhancements to the production process to ensure robust, controlled reproducible and

commercially viable scale, and purity of OPC1.

We also developed a thaw and inject formulation of OPC1 to facilitate logistics

and handling at the point of care with the elimination of the dose preparation at the clinical site.

An information amendment

describing the new process, an improved analytical plan, and a proposed comparability plan has been filed with FDA.

with the FDA is planned during the second half of 2021 to discuss our manufacturing improvements and the further development

of OPC1 in SCI to best set the program up for success moving forward.

Concurrently, we have announced a new partnership for the

introduction of a novel delivery device for OPC1.

Preliminary assessment of prototypes revealed promising compatibility with OPC1

product while simplifying the surgical procedure by providing surgeons with an instrument that is small, simple to use and would

not require stopping the patient’s ventilator to perform the injection, allowing far more flexibility for accurate delivery

to the injury site.

We intend to complete development activities in the first half of 2021, then discuss with FDA the introduction

of the new delivery device in our IND if supported by the collected data.

We continue work to expand our partnerships with SCI

advocacy and support organizations to support their mission to accelerate stem cell treatments to patients with unmet medical

needs and fast-track the development of the most promising stem cell technologies.

is our lead product candidate for the treatment of cancer.

Cancer afflicts millions worldwide and is one of the largest unmet

clinical needs with current treatment options providing limited efficacy and a wide range of debilitating side effects.

a more effective and targeted treatment, we are developing VAC2 as an allogeneic, or non-patient specific, cancer vaccine candidate

designed to stimulate patient immune responses to an antigen hTERT, which is commonly expressed in cancerous cells but not in

normal adult cells.

VAC2, is produced by our pluripotent cell technology using a directed differentiation method, and is comprised

of a population of mature dendritic cells to which the hTERT antigen was introduced.

As the most potent type of antigen presenting

cell in the body, dendritic cells instruct our body’s immune system to attack and eliminate harmful pathogens and unwanted

To target cancerous cells, VAC2 is engineered to express the tumor-selective antigen telomerase, which is found in over

85% of all cancers.

The tumor antigen is loaded exogenously into the dendritic cells.

The VAC1 autologous program,

which preceded VAC2, serves as an effective and encouraging proof of concept behind our approach to dendritic cell vaccines

targeting telomerase, which is the backbone of the VAC2 program.

process were completed to include enhancements to the production process to ensure robust, controlled, reproducible and commercially

viable scale, and purity of OPC1.

We also developed a thaw and inject formulation of OPC1 to facilitate logistics and handling at the

point of care with the elimination of the dose preparation at the clinical site.

An information amendment describing the new process,

an improved analytical plan, and a proposed comparability plan was filed with the FDA.

Throughout 2021, we manufactured clinical

batches based on the improved process in a thaw and inject formulation in preparation for a larger-scale, late-stage clinical trial.

In February 2021, we announced

an exclusive agreement with Neurgain Technologies, Inc.

(“Neurgain”) to evaluate a novel delivery system for OPC1.

assessment of prototypes revealed promising compatibility with OPC1 product while simplifying the surgical procedure by providing surgeons

with an instrument that is small, simple to use and would not require stopping the patient’s ventilator to perform the injection,

allowing far more flexibility for accurate delivery to the injury site.

We continued to evaluate the Neurgain device throughout 2021

and intend to submit an IND amendment during the third quarter of 2022 for a human safety clinical study to validate the device

and which is intended to support use of the device in a late-stage clinical study to follow.

continue work to expand our partnerships with SCI advocacy and support organizations to support their mission to accelerate stem cell

treatments to patients with unmet medical needs and fast-track the development of the most promising stem cell technologies.

is our immuno-oncology platform using dendritic cells loaded with antigens for the treatment of cancer.

Cancer afflicts millions worldwide

and is one of the largest unmet clinical needs with current treatment options providing limited efficacy and a wide range of debilitating

side effects.

As the most potent type of antigen-presenting cell in the body, dendritic cells instruct our body’s immune system

to attack and eliminate harmful pathogens and unwanted cells, including cancer cells.

Specifically,

to provide a more effective and targeted treatment of non-small cell lung cancer, we are currently developing VAC2 as an allogeneic,

or non-patient specific, cancer vaccine candidate designed to stimulate patient immune responses to an antigen hTERT, which is commonly

expressed in cancerous cells but not in normal adult cells.

VAC2 is produced by our pluripotent cell technology using a directed differentiation

method and is comprised of a population of mature dendritic cells to which the hTERT antigen was introduced.

To target cancerous cells,

VAC2 is engineered to express the tumor-selective antigen telomerase, which is found in over 85% of all cancers.

The tumor antigen is

loaded exogenously into the dendritic cells.

The VAC1 autologous program, which preceded VAC2, serves as an effective and encouraging

proof of concept behind our approach to dendritic cell vaccines targeting telomerase, which is the backbone of the VAC2 program.

pluripotent cells as the starting material for VAC production adds several additional advantages to this therapeutic candidate.

Compared to technologies that rely on the use of a patient’s own blood, our pluripotent cell technology provides a scalable

system for production of a large number of vaccine doses in a single lot, lower manufacturing costs, greater product consistency,

and more notably, off-the-shelf availability to provide broader and immediate access to patients.

In addition, we believe that

as an allogeneic therapy, VAC2 has the potential to stimulate a more robust immune response through an adjuvant effect resulting

from the partial immune mismatch between the VAC2 cells and patients receiving the therapy.

We believe that VAC2 can be used as

a platform technology that can be modified to carry any antigen, including patient-specific tumor neo-antigens.

to technologies that rely on the use of a patient’s own blood, our pluripotent cell technology provides a scalable system for production

of a large number of vaccine doses in a single lot, lower manufacturing costs, greater product consistency, and more notably, off-the-shelf

availability to provide broader and immediate access to patients.

In addition, we believe that as an allogeneic therapy, VAC has the

potential to stimulate a more robust immune response through an adjuvant effect resulting from the partial immune mismatch between the

VAC cells and patients receiving the therapy.

We believe that VAC can be used as a platform technology that can be modified to carry

any antigen, including patient-specific tumor neo-antigens.

September 2014, Asterias initiated clinical development of VAC2 by entering into a Clinical Trial and Option Agreement (the “CRUK

Agreement”) with Cancer Research UK (“CRUK”) and Cancer Research Technology Limited (“CRT”), a wholly

owned subsidiary of CRUK, under which CRUK agreed to fund Phase 1 clinical development of VAC2 in non-small cell lung cancer.

CRUK is responsible, at its own cost, for manufacturing clinical grade VAC2 and for carrying out the Phase 1 clinical trial of

Patient enrollment began in June 2018 and six patients have now completed dosing in the initial aspect of the trial.

May 2020, Lineage and its wholly owned subsidiary Asterias entered into a Second Amendment to Clinical Trial and Option Agreement

(the “CTOA Amendment”) with CRUK and CRT, which amends the Clinical Trial and Option Agreement entered into between

Asterias, CRUK and CRT dated September 8, 2014, as amended 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.

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 January 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.

Agreement”) with CRUK and Cancer Research Technology Limited (“CRT”), a wholly owned subsidiary of CRUK, under which

CRUK agreed to fund Phase 1 clinical development of VAC2 in NSCLC.

CRUK was responsible, at its own cost, for manufacturing clinical

grade VAC2 and for carrying out the Phase 1 clinical trial of VAC2.

Patient enrollment began in June 2018, and as of December

31, 2021 seven patients have now completed dosing in the initial aspect of the trial.

October 2020, we reported preliminary results of the ongoing Phase 1 clinical study of VAC 2 in non-small cell lung cancer.

VAC2 demonstrated remarkable potent induction of immune response in all patients dosed to date, with high levels of peripheral antigen-specific

immunogenicity observed at multiple time points.

As well, VAC2 appeared to be well tolerated with no unexpected adverse events.

April 2021, Lineage entered into a worldwide license and development collaboration agreement with ITI.

Lineage licensed to ITI

patents and materials for the development and commercialization of a novel cancer immunotherapy agent derived from the VAC platform utilizing

an antigen provided by ITI, for the treatment of GBM.

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.

Lineage will also be eligible to receive royalties of up to 10% on net sales of future products.

completed the transfer of all cGMP manufacturing processes, including the establishment of cell banks and the VAC2 process development

and manufacturing for clinical studies, to our cell therapy manufacturing facility in Jerusalem, Israel.

In 2021, we will focus

on updating and optimizing the manufacturing process for VAC to ensure reliable supply for future clinical studies and possible

commercial development.

An improved VAC manufacturing process will be the subject of a key interaction with FDA in the future

to introduce VAC in an IND.

allogeneic VAC2 program was preceded by the autologous VAC1 program which isolated dendritic cells from a patient’s own

blood, modified those cells to stimulate immune responses to telomerase and then administered those cells back to the patient

as a therapeutic modality.

VAC1 was studied for the treatment of acute myeloid leukemia, the most common form of acute leukemia

A Phase 2 clinical trial of VAC1 demonstrated that it successfully manufactured and released in 24 out of the 33 patients

enrolled in the trial.

Twenty-one patients received VAC1 in the trial, including 19 in clinical remission and two in early relapse.

VAC1 was found to have a favorable safety and tolerability profile.

Asterias performed follow-up data collection on the 19 patients

treated while in complete remission to determine the long-term effects of the VAC1 administration on remission duration and disease-free

utilized an autologous approach where the cellular vaccine needs to be created specifically for each patient.

This results in

a longer time prior to administration of therapy as compared to the allogeneic approach of the VAC2 program, which is disadvantageous

in advanced cancer patients given the rapidity of disease progression.

The VAC1 autologous program which preceded VAC2 serves

as an effective and encouraging proof of concept behind our approach to dendritic cell vaccines targeting telomerase, which is

the backbone of the VAC2 program.

2017, we expanded our ophthalmology portfolio by acquiring exclusive global rights to technology that allows the generation of

three-dimensional human retinal tissue derived from human pluripotent cells.

This tissue contains all the cell types and layers

of the human retina and has shown evidence of functional integration in proof of concept animal models for advanced retinal degeneration.

The technology is being developed to potentially treat or prevent a variety of retinal degenerative diseases and injuries.

2017, the National Institutes of Health (“NIH”) awarded us a grant of up to $1.6 million to further develop this innovative,

next generation vision restoration program for retinal diseases and injuries, which severely impact the quality of life for millions

of people who have limited treatment options.

In 2019, we received an additional grant of $0.7 million to continue work on this

2021 and early into 2022, we focused on updating and optimizing the manufacturing process for VAC to ensure reliable supply for future

clinical studies and possible commercial development.

An improved VAC manufacturing process will be the subject of a key interaction

with FDA in the future to introduce VAC in an IND.

We also continue to evaluate additional opportunities for the introduction of new

VAC candidates based on internally identified or partnered tumor antigens to expand the VAC platform.

Collaboration

accelerate the discovery and advancement of transplanting specific cell types into the body, we have entered into, and intend to seek

other opportunities to form collaborations with a diverse group of strategic partners.

We have forged productive collaborations with

pharmaceutical and biotechnology companies, government agencies, academic laboratories, and research institutes with diverse area expertise

and resources in as effort to advance our discovery and development platforms.

One key principle of our approach

to collaborations is to share rewards and risks of conducting large-scale clinical trials and commercializing a product, but also to

provide the broadest patient population the earliest access to our therapies.

Significant on-going collaboration agreements include the

for the development and commercialization of OpRegen a RPE cell therapy for the treatment

of advanced dry age-related macular degeneration with geographic atrophy, currently in Phase

1/2a, as well as for the use in other ocular disorders;

the development and commercialization of a novel cancer immunotherapy agent based on the

VAC platform for the treatment of glioblastoma multiforme.

Collaboration Agreement

December 17, 2021, Lineage and its subsidiary, Cell Cure Neurosciences Ltd.

(“Cell Cure”) entered into a Collaboration and

License Agreement (the “Roche Agreement”) with Roche, pursuant to which Lineage granted to Roche exclusive worldwide rights

to develop and commercialize retinal pigment epithelium cell therapies, including its proprietary cell therapy known as OpRegen, for

the treatment of ocular disorders, including advanced dry AMD with GA.

the terms of the Roche Agreement, Roche will assume responsibility for further clinical development and commercialization of OpRegen,

which currently is being evaluated in a Phase 1/2a open-label, dose escalation clinical safety and efficacy study in patients with advanced

dry AMD with GA.

Lineage will be responsible for completing activities related to the ongoing clinical study, for which enrollment is

complete, and performing certain manufacturing and process development activities.

paid Lineage a $50.0 million upfront payment and Lineage is eligible to receive up to an additional $620.0 million in certain developmental,

regulatory and commercialization milestone payments.

Lineage is also eligible for tiered double-digit percentage royalties on net sales

All regulatory and commercial milestone payments, and royalty payments, are subject to the existence of certain intellectual

property rights that cover OpRegen at the time such payments would otherwise become due, and the royalties on net sales of OpRegen are

subject to financial offsets based on the existence of competing products.

OpRegen program has been supported in part with contributions made by Hadasit Medical Research Services and Development Ltd.

the technology transfer company of Hadassah Medical Center, and the Israel Innovation Authority (the “IIA”), an independent

agency created to address the needs of global innovation ecosystems.

A significant portion of early development on the OpRegen program

occurred at Cell Cure, which was established by the Hadassah Medical Center, where the intellectual property underlying the differentiation

and manufacture of RPE cells originated.

In addition, significant monetary support for the OpRegen program was provided by the IIA through

a series of separate research grants, beginning in 2007.

Each of these parties’ contributions began when the OpRegen program was

in its earliest stages of development.

As a result, and subject to the terms of contracts among the applicable parties and applicable

law, Lineage is obligated to pay Hadasit and the IIA a portion of the upfront, milestone, and royalty payments which may be received

from Roche under the Agreement.

Lineage is obligated to pay approximately 24.3% of the upfront payment and any future payments it receives

from Roche to the IIA, up to an aggregate cap on all payments to IIA, which currently stands at approximately $102.7 million.

addition, pursuant to that certain Second Amended and Restated License Agreement, dated June 15, 2017, between Cell Cure and Hadasit,

as amended (the “Hadasit License)”, and a certain letter agreement entered into on December 17, 2021, by and between Cell

Cure and Hadasit (the “Hadasit Letter Agreement”), Cell Cure is obligated to pay to Hadasit a maximum of 21.5% of the upfront

payment (subject to certain reductions) and any milestone payments, and up to 50% of all royalty payments (subject to a maximum payment

of 5% of net sales of products), Lineage receives from Roche.

The Hadasit Letter Agreement generally terminates upon the termination

of the Roche Agreement.

earlier terminated by either party, the Roche Agreement will expire on a product-by-product and country-by-country basis upon the expiration

of all of Roche’s payment obligations under the Roche Agreement.

Roche may terminate the Roche Agreement in its entirety, or on

a product-by-product or country-by-country basis, at any time with advance written notice.

Either party may terminate the Roche Agreement

in its entirety with written notice for the other party’s material breach if such party fails to cure the breach.

also may terminate the Roche Agreement in its entirety upon certain insolvency events involving the other party.

January 2022, Lineage received the $50.0 million upfront payment from Roche.

Lineage made a subsequent payment of $12.1 million to the

IIA, pursuant to Lineage’s obligations under the Innovation Law.

Additionally, Lineage made a subsequent payment of $8.9

million to Hadasit, pursuant to Lineage’s obligations under the Hadasit License.

Collaboration Agreement

April 16, 2021, Lineage entered a worldwide license and development collaboration with ITI (the “ITI Agreement”).

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 ITI 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 of

up to 10% on net sales of future products.

2017, we expanded our ophthalmology portfolio by acquiring exclusive global rights to technology that allows the generation of three-dimensional

human retinal tissue derived from human pluripotent cells.

This tissue contains all the cell types and layers of the human retina and

has shown evidence of functional integration in proof of concept animal models for advanced retinal degeneration.

The technology is being

developed to potentially treat or prevent a variety of retinal degenerative diseases and injuries.

In 2017, the National Institutes of

Health (“NIH”) awarded us a grant of up to $1.6 million to further develop this innovative, next generation vision restoration

program for retinal diseases and injuries.

We completed work under this grant in 2020 and submitted final reports to the NIH.

2020, the Israeli Innovation Authority approved a budgeted grant of approximately $0.6 million for us to manufacture novel

retinal implants aimed to treat patients with severe retinal impairment such as retinitis pigmentosa.

We are eligible for 60%

reimbursement of our costs under this grant.

This program allows us to combine our knowledge in manufacturing RPE cells and

photoreceptors with 3D printing technology.

Demyelination

exhibits multiple reparative properties that may have broad applicability to neurological injury and disease, particularly as

a treatment for demyelination.

Past research efforts investigated the potential development of OPC1 as a candidate treatment for

certain forms of ischemic stroke and multiple sclerosis (“MS”), two severely debilitating conditions for which demyelination

is a central component to their pathology.

develop OPC1 as a treatment for MS, initial proof-of-concept efficacy data has been demonstrated in collaboration with Yale University

using a non-human primate model of MS.

Results of this study showed OPC1 engraftment that was associated with substantial remyelination

of the lesioned primate spinal cord up to five months post-treatment.

Subsequently, we initiated a collaboration with University

of California Irvine to assess OPC1 efficacy in additional mouse models of MS that better recapitulate the autoimmune components

of the disease.

Preliminary results indicated that in addition to OPC1’s capacity to remyelinate the lesioned spinal cord,

the cells may also help stimulate proliferation of a distinct class of immune cells known as regulatory T cells that can help

reduce or eliminate autoimmunity.

ischemic stroke, initial proof-of-concept efficacy data for OPC1 has been demonstrated in a collaborative study with the University

of California Los Angeles using a mouse model of white matter ischemic stroke.

Results of this study demonstrated that within

the stroke injury site, OPC1 cells engrafted, reduced lesion formation and inflammation, and increased myelination, culminating

in improved functional recovery.

A second preclinical study was completed in collaboration with the University of South Florida

to test two different doses of OPC1 in a rat model of ischemic subcortical and white matter stroke.

Results from this study demonstrated

the ability of OPC1 to impact the restoration of motor function in a rat model of white matter stroke.

Further, histological assessments

showed a treatment-associated reduction in stroke lesion size, including in the white matter, as well as reduced inflammation

and sustained OPC1 engraftment in the injured brain.

we are not actively pursuing OPC1 for MS and ischemic stroke at this time, we may use the results of these studies to seek additional

funding and guide further preclinical development of OPC1 for these or other conditions of demyelination.

for Other Indications

also have rights to intellectual property applicable to other indications such as for producing cardiomyocytes, pancreatic islet

cells, hepatocytes, chondrocytes, osteoblasts and other cell types for which development of new therapies represent significant

commercial opportunities.

We may elect to pursue these or other programs at any time.

also have rights to HyStem, a patented biomaterial that mimics naturally occurring extracellular matrix, the structural network

of molecules surrounding cells in organs and tissues essential to cellular function and tissue structure.

HyStem may be useful

as a scaffold for cell replacement and retention.

We sold HyStem-related assets and licensed the applicable technology in late

2019, but retained the rights for other uses, including for Renevia, our facial aesthetics product, which received a Conformité

Européenne (CE) Mark in September 2019.

exhibits multiple reparative properties that may have broad applicability to neurological injury and disease, particularly as a treatment

for demyelination.

Past research efforts investigated the potential development of OPC1 as a candidate treatment for certain forms of

ischemic stroke and multiple sclerosis (“MS”), two severely debilitating conditions for which demyelination is a central

component to their pathology.

we are not actively pursuing OPC1 for MS or ischemic stroke at this time, we may use the results of these studies to guide further preclinical

development of OPC1 for these or other conditions of demyelination or wherever there is depletion or disfunction of myelinated neurons.

Other Programs

We have other product candidates

in preclinical development covering a range of therapeutic areas and target tissues or organs.

Generally, these candidates are based

on the same pluripotent platform technology and employ a similar guided cell differentiation and transplant approach as our current clinical-stage

also have rights to HyStem, a patented biomaterial that mimics naturally occurring extracellular matrix, the structural network of molecules

surrounding cells in organs and tissues essential to cellular function and tissue structure.

HyStem may be useful as a scaffold for cell

replacement and retention.

We sold HyStem-related assets and licensed the applicable technology in late 2019, but retained the rights

for other uses, including for Renevia ® , our facial aesthetics product, which received a Conformité Européenne

(CE) Mark in September 2019.

and subsidiaries:

following tables show the companies in which we have a direct or indirect ownership, their respective principal fields of business,

our percentage ownership as of March 5, 2021, and the country where their principal business is located:

following tables show the companies in which we have a direct or indirect ownership, their respective principal fields of business, our

percentage ownership as of December 31, 2021, and the country where their principal business is located.

Field of Business

1 unchanged sentence

Cancer diagnostics

Hadasit Bio-Holdings

Hadasit Bio-Holdings Ltd.

Owns a portfolio of R&D based companies

3 unchanged sentences

Cell Cure Neurosciences Ltd.

Development and manufacturing of Lineage’s cell replacement platform technology

Biotherapeutics, Inc.

Cell based therapeutics to treat neurological conditions

ES Cell International

Manufacturing of Lineage’s cell replacement platform technology

Asterias Biotherapeutics, Inc.

Cell based therapeutics to treat neurological conditions and cancer

ES Cell International Pte.

Research and clinical grade cell lines

3 unchanged sentences

See Notes to Consolidated Financial Statements:

Equity Method of Accounting for Common

Stock of OncoCyte, at Fair Value.

Marketable Equity Securities.

shares owned by Lineage and ES Cell International Pte.

was acquired by Lineage in March 2019.

See Notes to Consolidated Financial Statements:

Asterias Merger.

operating activities and fields of business listed under these subsidiaries are conducted primarily by Lineage as the parent

Corporation (“OrthoCyte”) adopted a stock option plan under which it may issue up to 4,000,000 shares of its common

stock to officers, directors, employees, and consultants of OrthoCyte and Lineage employees, including officers.

As of December

31, 2020, no options to purchase OrthoCyte common stock were outstanding.

operating activities and fields of business listed under these subsidiaries are conducted primarily by Lineage as the parent company.

and Trade Secrets

seek to protect and rely on our proprietary cell-based therapy platform and associated development and manufacturing capabilities

and derived product candidates through a variety of methods, including seeking and maintaining patents intended to cover our products

and compositions, their methods of use and processes for their manufacture, our platform technologies and any other inventions

that are commercially important to the development of our business.

We also rely on contractual obligations with employees and

third parties to protect our proprietary rights.

For example, in addition to protecting our proprietary rights with patents, we

rely on unpatented trade secrets, improvements, know-how and innovation, and we take steps necessary to protect these rights,

including through confidentiality agreements with our corporate partners, employees, consultants and vendors.

We have sought,

and intend to continue to seek, appropriate patent protection for important and strategic components of our proprietary technologies

by filing patent applications in the U.S.

and internationally.

We may also file additional patent applications, when appropriate,

to cover improvements on our clinical products, clinical product candidates, and related technologies.

There are no assurances

that any of our intellectual property rights will guarantee complete or adequate protection or market exclusivity for our products

and product candidates.

We also enter into collaborative and other similar arrangements with third parties, such as license agreements,

to in-license and/or out-license intellectual property rights.

Our financial success will be dependent, in part, on our ability

to obtain rights to commercially valuable patents, to protect and enforce our intellectual property rights and to operate without

infringing any intellectual property rights of others.

From time to time, we assess our patents and pending applications covering

our products and product candidates.

seek to protect and rely on our proprietary cell-based therapy platform and associated development and manufacturing capabilities and

derived product candidates through a variety of methods, including seeking and maintaining patents intended to cover our products and

compositions, their methods of use and processes for their manufacture, our platform technologies and any other inventions that are commercially

important to the development of our business.

We also rely on contractual obligations with employees and third parties to protect our

proprietary rights.

For example, in addition to protecting our proprietary rights with patents, we rely on unpatented trade secrets,

improvements, know-how and innovation, and we take steps necessary to protect these rights, including through confidentiality agreements

with our corporate partners, employees, consultants and vendors.

We have sought, and intend to continue to seek, appropriate patent protection

for important and strategic components of our proprietary technologies by filing patent applications in the United States and internationally.

We may also file additional patent applications, when appropriate, to cover improvements on our clinical products, clinical product candidates,

and related technologies.

There are no assurances that any of our intellectual property rights will guarantee complete or adequate protection

or market exclusivity for our products and product candidates.

We also enter into collaborative and other similar arrangements with third

parties, such as license agreements, to in-license and/or out-license intellectual property rights.

Our financial success will be dependent,

in part, on our ability to obtain rights to commercially valuable patents, to protect and enforce our intellectual property rights and

to operate without infringing any intellectual property rights of others.

From time to time, we assess our patents and pending applications

covering our products and product candidates.

If we determine that any patents or patent applications no longer provide adequate or necessary

3 unchanged sentences

patents and patent applications.

We cannot be certain that issued patents will be enforceable or provide adequate protection or

that pending applications will result in issued patents.

We cannot be certain that issued patents will be enforceable or provide adequate protection or that

pending applications will result in issued patents.

and our subsidiary, Cell Cure, have rights to issued U.S.

4 unchanged sentences

and international issued patents and pending applications also include those in-licensed

from Hadasit Medical Research Services and Development Ltd.

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

of Hadassah Medical Organization.

from Hadasit, the commercial arm and a wholly owned subsidiary of Hadassah Medical Organization.

We also solely own pending U.S.

and Patent Cooperation Treaty (“PCT”) patent applications

relating to cryopreserving the cell population and then shipping it to the clinical trial site so the cells can be immediately

thawed and delivered to the patient without further processing.

patent applications, and any filed international patent

applications based on the PCT applications, if issued, will have estimated expiration dates in 2038.

Cure was a party to two pending opposition proceedings in the European Patent Office (“EPO”) involving EP Patent Numbers

2147094 (issued 08-Oct-2014) and 2554661 (issued 19-Nov-2014), both entitled, “Stem Cell-Derived Retinal Pigment Epithelial

The oral proceedings took place on March 16, 2017 and March 17, 2017, respectively.

Both patents were upheld by

the EPO and the patents issued as amended during the opposition proceedings.

Both patents cover OpRegen until 2028.

Patent Cooperation Treaty (“PCT”) patent applications relating to cryopreserving the cell population and then shipping it

to the clinical trial site so the cells can be immediately thawed and delivered to the patient without further processing.

applications, and any filed international patent applications based on the PCT applications, if issued, will have estimated expiration

dates in 2038.

Pursuant to the Roche Agreement, we have licensed these patent rights to Roche to further develop and commercialize

RPE cell therapies, including OpRegen (see “Roche Collaboration Agreement” description above).

have numerous U.S.

and international issued patents and pending patent applications that are relevant to neural cells, such as

oligodendrocyte progenitor cells, including patent families acquired from Geron Corporation (“Geron”) that are directed

to the differentiation of pluripotent stem cells, including human embryonic stem (“hES”) cells, into various neural

cell types, as well as various culture and purification methods.

and international issued patents and pending patent

applications also include those in-licensed from the Regents of the University of California.

Additionally, there are four patent

families with pending patent applications owned by us directed to improved methods of producing oligodendrocyte progenitor cells,

oligodendrocyte progenitor cell compositions and methods of treatment of spinal cord injury using oligodendrocyte progenitor cells.

There is also a patent family directed to improved methods of producing oligodendrocyte progenitor cells, oligodendrocyte progenitor

cell compositions and methods for the treatment of stroke using oligodendrocyte progenitor cells which is jointly owned with the

Regents of the University of California.

The expiration dates of the patents and pending patent applications acquired from Geron

and in-licensed from the Regents of the University of California range from 2023 to 2036.

The estimated expiration dates of the

four patent families with pending applications owned by us range from 2036 to 2040.

The commercial success of OPC1 depends, in

part, upon our ability to exclude competition for this product with the existing patent portfolio, regulatory exclusivity, undisclosed

know-how and/or trade secrets, or a combination of these barriers to entry.

and international issued patents and pending patent applications that are relevant to neural cells, such as oligodendrocyte

progenitor cells, including patent families acquired from Geron Corporation (“Geron”) that are directed to the differentiation

of pluripotent stem cells, including human embryonic stem (“hES”) cells, into various neural cell types, as well as various

culture and purification methods.

and international issued patents and pending patent applications also include those in-licensed

from the Regents of the University of California.

Additionally, there are four patent families with pending patent applications owned

by us directed to improved methods of producing oligodendrocyte progenitor cells, oligodendrocyte progenitor cell compositions and methods

of treatment of spinal cord injury using oligodendrocyte progenitor cells.

There is also a patent family directed to improved methods

of producing oligodendrocyte progenitor cells, oligodendrocyte progenitor cell compositions and methods for the treatment of stroke using

oligodendrocyte progenitor cells which is jointly owned with the Regents of the University of California.

The expiration dates of the

patents and pending patent applications acquired from Geron and in-licensed from the Regents of the University of California range from

2023 to 2036.

The estimated expiration dates of the four patent families with pending applications owned by us range from 2036 to 2042.

The commercial success of OPC1 depends, in part, upon our ability to exclude competition for this product with the existing patent portfolio,

regulatory exclusivity, undisclosed know-how and/or trade secrets, or a combination of these barriers to entry.

have numerous U.S.

and international issued patents and pending patent applications that are relevant to dendritic cells, including

patent families acquired from Geron or in-licensed from third parties that are directed to the differentiation of pluripotent

stem cells, including hES cells, into hematopoietic progenitor cells and immature and mature dendritic cells.

In addition, these

patent rights include a patent family with claims directed to immunogenic compositions comprising antigen-presenting dendritic

cells and methods of eliciting an anti-telomerase immune response in a subject by administering to the subject such compositions.

The expiration dates of the patents, and the estimated expiration dates of the pending applications, acquired from Geron or in-licensed

to us range from 2022 to 2041.

The commercial success of VAC1 and VAC2 products depends, in part, upon our ability to exclude

competition in these products with this patent portfolio, regulatory exclusivity, undisclosed know-how and/or trade secrets, or

a combination of these barriers to entry.

Patents and Patent Applications

and international issued patents and pending patent applications related to producing cardiomyocytes, pancreatic islet

cells, hepatocytes, chondrocytes and osteoblasts.

The expiration dates of these patents and pending patent applications range

from 2020 to 2032.

In addition, we have U.S.

and international issued patents and pending patent applications related to suspension

cultures and feeder-free cultures for culturing and proliferating pluripotent stem cells.

The expiration dates for these patents

and pending patent applications range from 2021 to 2026.

also have U.S.

and international issued patents and pending applications covering Renevia, include those in-licensed from the

University of Utah Research Foundation (“UURF”) having expiration dates ranging from 2023 to 2027, and a pending patent

application in Europe having an estimated expiration date of 2024.

We also solely own pending U.S.

and European patent applications

filed in 2018 that, if issued, will have estimated expiration dates in 2038.

and international issued patents and pending patent applications that are relevant to dendritic cells, including patent

families acquired from Geron or in-licensed from third parties that are directed to the differentiation of pluripotent stem cells, including

hES cells, into hematopoietic progenitor cells and immature and mature dendritic cells.

In addition, these patent rights include a patent

family with claims directed to immunogenic compositions comprising antigen-presenting dendritic cells and methods of eliciting an anti-telomerase

immune response in a subject by administering to the subject such compositions.

The expiration dates of the patents, and the estimated

expiration dates of the pending applications, acquired from Geron or in-licensed to us range from 2022 to 2041.

The commercial success

of VAC products depends, in part, upon our ability to exclude competition in these products with this patent portfolio, regulatory exclusivity,

undisclosed know-how and/or trade secrets, or a combination of these barriers to entry.

Risks Related to Obtaining and Enforcing Patent Protection

patent applications are confidential until a patent is issued, we may not know if our competitors have filed patent applications

for technology covered by our pending applications or if we were the first to invent or first to file an application directed

toward the technology that is the subject of our patent applications.

Competitors may have filed patent applications or received

patents and may obtain additional patents and proprietary rights that block or compete with our products.

In addition, if competitors

file patent applications covering our technology, we may have to participate in interference/derivation proceedings or litigation

to determine the right to a patent.

Litigation and interference/derivation proceedings are unpredictable and expensive, such that,

even if we are ultimately successful, our results of operations may be adversely affected by such events.

Accordingly, there is

a risk that any patent applications that we file and any patents that we hold or later obtain could be challenged by third parties

and be declared invalid in view of third party patent applications and/or patents.

Litigation, interferences, oppositions, inter

partes reviews or other proceedings are, have been and may in the future be necessary in some instances to determine the validity

and scope of certain of our proprietary rights, and in other instances to determine the validity, scope or non-infringement of

certain patent rights claimed by third parties to be pertinent to the manufacture, use or sale of our products.

We may also face

challenges to our patent and regulatory protections covering our products by third parties, including manufacturers of generics

and biosimilars that may choose to launch or attempt to launch their products before the expiration of our patent or regulatory

Litigation, interference, oppositions, inter partes reviews, administrative challenges or other similar types of

proceedings are unpredictable and may be protracted, expensive and distracting to management.

The outcome of such proceedings

could adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture and

market our products, require us to seek a license for the infringed product or technology or result in the assessment of significant

monetary damages against us that may exceed any amounts that we may accrue on our financial statements as a reserve for contingent

An adverse determination in a judicial or administrative proceeding or a failure to obtain necessary licenses could

prevent us from manufacturing or selling our products.

Furthermore, payments under any licenses that we are able to obtain would

reduce our profits derived from the covered products and services.

patent applications are confidential until a patent is issued, we may not know if our competitors have filed patent applications for

technology covered by our pending applications or if we were the first to invent or first to file an application directed toward the

technology that is the subject of our patent applications.

Competitors may have filed patent applications or received patents and may

obtain additional patents and proprietary rights that block or compete with our products.

In addition, if competitors file patent applications

covering our technology, we may have to participate in interference/derivation proceedings or litigation to determine the right to a

Litigation and interference/derivation proceedings are unpredictable and expensive, such that, even if we are ultimately successful,

our results of operations may be adversely affected by such events.

Accordingly, there is a risk that any patent applications that we

file and any patents that we hold or later obtain could be challenged by third parties and be declared invalid in view of third party

patent applications and/or patents.

Litigation, interferences, oppositions, inter partes reviews or other proceedings are, have been

and may in the future be necessary in some instances to determine the validity and scope of certain of our proprietary rights, and in

other instances to determine the validity, scope or non-infringement of certain patent rights claimed by third parties to be pertinent

to the manufacture, use or sale of our products.

We may also face challenges to our patent and regulatory protections covering our products

by third parties, including manufacturers of generics and biosimilars that may choose to launch or attempt to launch their products before

the expiration of our patent or regulatory exclusivity.

Litigation, interference, oppositions, inter partes reviews, administrative challenges

or other similar types of proceedings are unpredictable and may be protracted, expensive and distracting to management.

The outcome of

such proceedings could adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture

and market our products, require us to seek a license for the infringed product or technology or result in the assessment of significant

monetary damages against us that may exceed any amounts that we may accrue on our financial statements as a reserve for contingent liabilities.

An adverse determination in a judicial or administrative proceeding or a failure to obtain necessary licenses could prevent us from manufacturing

or selling our products.

Furthermore, payments under any licenses that we are able to obtain would reduce our profits derived from the

covered products and services.

enforcement of patent rights often requires litigation against third-party infringers, and such litigation can be costly to pursue.

Even if we succeed in having new patents issued or in defending any challenge to issued patents, there is no assurance that our

patents will be comprehensive enough to provide us with meaningful patent protection against our competitors.

of December 31, 2020, we had 55 employees, of which 20 were Lineage employees and 35 were employees of Cell Cure in Israel and

of which 49 were employed on a full-time basis and six were employed on a part-time basis.

Ten employees hold Ph.D.

degrees in one or more fields of science.

None of our employees are covered by a collective bargaining agreement.

if we succeed in having new patents issued or in defending any challenge to issued patents, there is no assurance that our patents will

be comprehensive enough to provide us with meaningful patent protection against our competitors.

of December 31, 2021, we had 61 employees, of which 18 were Lineage employees and 43 were employees of our subsidiary,

Cell Cure in Israel and of which 57 were employed on a full-time basis and four were employed on a part-time basis.

Eleven employees

degrees in one or more fields of science or doctorates in medicine.

None of our employees are covered by a collective bargaining

Manufacturing

maintain an innovative cell therapy manufacturing facility in the Bio Park on the campus of the Hadassah University Hospital in

Jerusalem, Israel.

maintain an innovative cell therapy manufacturing facility in the Bio Park on the campus of the Hadassah University Hospital in Jerusalem,

The facility includes process development laboratories and a state-of-the-art, cGMP manufacturing facility.

It is designed and equipped to enable simultaneous cGMP processes and to produce a range of cell therapy products for human use

in clinical trials as well as at a scale suitable for commercial launch.

All cGMP manufacturing processes, including cell banks

and product manufacturing for our cell therapy product candidates are conducted in this facility.

It is designed and

equipped to enable simultaneous cGMP processes and to produce a range of cell therapy products for human use in clinical trials as well

as at a scale suitable for commercial launch.

All cGMP manufacturing processes, including cell banks and product manufacturing for our

cell therapy product candidates are conducted in this facility.

obtain key components required for the manufacture of our cell therapy product candidates from third-party manufacturers and suppliers,

which include, in some instances, sole source manufacturers and suppliers.

We do not currently have long-term commitments or supply

agreements in place to obtain certain key components used in the manufacture of our cell therapy product candidates.

We do not currently have long-term commitments or supply agreements

in place to obtain certain key components used in the manufacture of our cell therapy product candidates.

Technology and Product Development Agreements

has obtained the right to use technology that we believe has great potential in our product development efforts, and that may

be useful to other companies that are engaged in the research and development of products for human therapeutic and diagnostic

has obtained the right to use technology that we believe has great potential in our product development efforts, and that may be useful

to other companies that are engaged in the research and development of products for human therapeutic and diagnostic use.

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

May 6, 2020, Lineage and its wholly owned subsidiary Asterias entered into a Second Amendment to Clinical Trial and Option Agreement

(the “CTOA Amendment”) with Cancer Research UK (“CRUK”) and Cancer Research Technology Limited (“CRT”),

which amends the Clinical Trial and Option Agreement entered into between Asterias, CRUK and CRT dated September 8, 2014, as amended

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.

continuing to conduct the VAC2 study.

and CRT effectuated the option by simultaneously entering into a license agreement (the “CRT 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 January 2021 and £250,000 in April 2021.

For the primary

licensed product for the first indication, the CRT 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.

(the “CTOA Amendment”) with CRUK and Cancer Research Technology Limited (“CRT”), which amends the Clinical Trial

and Option Agreement entered into between Asterias, CRUK and CRT dated September 8, 2014, as amended 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.

CRUK is continuing to conduct the VAC2 study.

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

CRT may terminate the CRT License

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

under the CRT License Agreement.

Research and License Agreement

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

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

right to grant sublicenses) in its intellectual property portfolio of U.S.

and international issued patents and pending patent

applications relevant to materials and technology related to human stem cell derived photoreceptor cells and RPE cells, to use,

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

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 RPE cells, solely for use in cell therapy for the diagnosis, amelioration,

prevention and treatment of eye disorders.

This intellectual property licensed includes patents and pending applications having

expiration dates, and estimated expiration dates, respectively, ranging from 2025 to 2028.

Cell Cure and Hadasit also jointly

and international issued patents and patent applications directed to methods of selecting RPE cells, which patents and

patent applications will expire in 2033.

to the Hadasit License Agreement, Cell Cure paid a small one-time lump sum payment for reimbursement of intellectual property

related expenses and will pay a royalty in the mid-single digits of net sales from sales of licensed intellectual property by

any invoicing entity and a royalty of 21.5% on 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 agreed to 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 EU, whichever is the first to occur,

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

Such milestones, in the aggregate,

may be up to $3.5 million.

As of December 31, 2020, Cell Cure had not accrued any of these milestone payments.

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

unless earlier terminated.

In addition, the Hadasit License Agreement may be terminated by (i) Hadasit if, among other reasons,

Cell Cure fails to continue the clinical development of the licensed intellectual property or fails to take actions to commercialize

or sell the licensed intellectual property over any consecutive 12-month period, and (ii) by either party for:

(a) a material

breach which remains uncured following a cure period;

or (b) the granting of a winding-up order in respect of the other party,

or upon an order being granted against the other party for the appointment of a receiver or a liquidator in respect of a substantial

portion of such other party’s assets.

The Hadasit License Agreement also contains customary indemnification obligations

of Cell Cure.

Agreement with University of California

are party to an exclusive license agreement with The Regents of the University of California dated February 20, 2003 (the “UC

License Agreement”) for U.S.

and international issued patents and pending patent applications covering a method for directing

the differentiation of pluripotent cells to glial-restricted progenitor cells that generate pure populations of oligodendrocytes

for remyelination and treatment of spinal cord injury.

Under the UC License Agreement, we have an exclusive worldwide license

under such patents, including the right to grant sublicenses, to create products for biological research, drug screening, and

human therapy using the licensed patents.

These issued patents and pending applications have expiration dates ranging from 2023

the UC License Agreement, we will pay the university a royalty of 1% from sales of products that are covered by the licensed patent

rights, and a minimum annual royalty of $5,000 starting in the year in which the first sale of a product covered by any licensed

patent rights occurs and continuing for the life of the applicable patent right under the agreement.

Under certain conditions,

we will pay the university 7.5% of any proceeds, excluding debt financing and equity investments, and certain reimbursements,

that we receive from sublicensees.

UC License Agreement terminates on the expiration of the last-to-expire of the university’s issued licensed patents.

no further patents covered by the UC License Agreement are issued, it will terminate in 2024.

The university may terminate the

UC License Agreement if we breach it, and we can terminate with 60 days’ notice.

have rights to certain U.S and international issued patents, pending patent applications and stem cell lines with the Wisconsin

Alumni Research Foundation (“WARF”) under a Commercial License and Option Agreement entered into between Lineage and

WARF in January 2008 and a Non-Exclusive License Agreement entered into between Asterias and WARF in October 2013 (collectively,

the “WARF Agreements”).

the WARF Agreements, we have a worldwide non-exclusive license under certain WARF patents and WARF-owned primate (including human)

stem cell lines covered by such patents for use in internal research, and to make, use and sell products that are used as research

tools and products that are discovered or developed through our internal research using such patents and stem cells.

We paid upfront

license fees and have agreed to additional payments upon the attainment of specified clinical development milestones, royalties

on sales of commercialized products, and, subject to certain exclusions, a percentage of any payments that we may receive from

any sublicenses that we may grant to use the licensed patents or stem cell lines.

WARF Agreements will terminate with respect to licensed patents upon the expiration of the last licensed patent to expire and

with respect to licensed cell lines until terminated by a party.

We may terminate the WARF Agreements at any time with prior written

notice, and WARF may terminate the WARF Agreements upon a breach.

We have agreed to indemnify WARF and certain other designated

affiliated entities from liability arising out of or relating to the death or injury of any person or damage to property due to

the sale, marketing, use or manufacture of products that are covered by the licensed patents, licensed stem cell lines or inventions

or materials developed or derived from the licensed patents or stem cell lines.

CRT may terminate the CRT License Agreement

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

have rights to certain U.S and international issued patents, pending patent applications and stem cell lines with the Wisconsin Alumni

Research Foundation (“WARF”) under a Commercial License and Option Agreement entered into between Lineage and WARF in January

2008 and a Non-Exclusive License Agreement entered into between Asterias and WARF in October 2013 (collectively, the “WARF Agreements”).

the WARF Agreements, we have a worldwide non-exclusive license under certain WARF patents and WARF-owned primate (including human) stem

cell lines covered by such patents for use in internal research, and to make, use and sell products that are used as research tools and

products that are discovered or developed through our internal research using such patents and stem cells.

We paid upfront license fees

and have agreed to additional payments upon the attainment of specified clinical development milestones, royalties on sales of commercialized

products, and, subject to certain exclusions, a percentage of any payments that we may receive from any sublicenses that we may grant

to use the licensed patents or stem cell lines.

WARF Agreements will terminate with respect to licensed patents upon the expiration of the last licensed patent to expire and with respect

to licensed cell lines until terminated by a party.

We may terminate the WARF Agreements at any time with prior written notice, and WARF

may terminate the WARF Agreements upon a breach.

We have agreed to indemnify WARF and certain other designated affiliated entities from

liability arising out of or relating to the death or injury of any person or damage to property due to the sale, marketing, use or manufacture

of products that are covered by the licensed patents, licensed stem cell lines or inventions or materials developed or derived from the

licensed patents or stem cell lines.

Agreement with Geron

connection with Asterias’s acquisition of Geron’s stem cell assets, in October 2013, we entered into a royalty agreement

with Geron (the “Royalty Agreement”) pursuant to which we agreed to pay Geron a 4% royalty on net sales (as defined

in the Royalty Agreement) by us or any of our affiliates or sales agents of any products that we develop and commercialize that

are covered by the patents Geron contributed to us.

In the case of sales of such products by a person other than us or one of

our affiliates or sales agents, we will be required to pay Geron 50% of all royalties and cash payments received by us or by our

affiliate in respect of a product sale.

Royalty payments will be subject to proration in the event that a product covered by a

patent acquired from Geron is sold in combination with another product that is not covered by a patent acquired from Geron.

Royalty Agreement will terminate at the expiration or termination date of the last issued patent contributed by Geron under the

Royalty Agreement.

We estimate that the latest patent expiration date will be in 2032.

with Geron (the “Royalty Agreement”) pursuant to which we agreed to pay Geron a 4% royalty on net sales (as defined in the

Royalty Agreement) by us or any of our affiliates or sales agents of any products that we develop and commercialize that are covered

by the patents Geron contributed to us.

In the case of sales of such products by a person other than us or one of our affiliates or sales

agents, we will be required to pay Geron 50% of all royalties and cash payments received by us or by our affiliate in respect of a product

Royalty payments will be subject to proration in the event that a product covered by a patent acquired from Geron is sold in combination

with another product that is not covered by a patent acquired from Geron.

The Royalty Agreement will terminate at the expiration or termination

date of the last issued patent contributed by Geron under the Royalty Agreement.

We estimate that the latest patent expiration date will

authorities at the federal, state and local level, and in other countries, extensively regulate among other things, the development,

testing, manufacture, quality, approval, safety, efficacy, distribution, labeling, packaging, storage, record keeping, marketing,

import/export and promotion of drugs, biologics, and medical devices.

Authorities also heavily regulate many of these activities

for human cells, tissues, and cellular and tissue-based products (“HCT/Ps”).

testing, manufacture, quality, approval, safety, efficacy, distribution, labeling, packaging, storage, record keeping, marketing, import/export

and promotion of drugs, biologics, and medical devices.

Authorities also heavily regulate many of these activities for human cells, tissues,

and cellular and tissue-based products (“HCT/Ps”).

and Foreign Regulation of Therapeutic Products

FDA and foreign regulatory authorities will regulate our proposed products as drugs, biologics or medical devices, depending upon

such factors as the use to which the product will be put, the chemical composition, and the interaction of the product with the

In the United States, the FDA regulates drugs and biologics under the Federal Food, Drug and Cosmetic Act (“FDCA”),

the Public Health Service Act (“PHSA”), and implementing regulations.

In addition, establishments that manufacture

human cells, tissues, and HCT/Ps are subject to additional registration and listing requirements, including current good tissue

practice regulations.

Certain cell therapy proposed products will be reviewed by the FDA staff in its Center for Biologics Evaluation

and Research Office of Cellular, Tissue and Gene Therapies.

FDA and foreign regulatory authorities will regulate our proposed products as drugs, biologics or medical devices, depending upon such

factors as the use to which the product will be put, the chemical composition, and the interaction of the product with the human body.

In the United States, the FDA regulates drugs and biologics under the Federal Food, Drug and Cosmetic Act (“FDCA”), the Public

Health Service Act (“PHSA”), and implementing regulations.

In addition, establishments that manufacture human cells, tissues,

and HCT/Ps are subject to additional registration and listing requirements, including current good tissue practice regulations.

cell therapy proposed products will be reviewed by the FDA staff in its Center for Biologics Evaluation and Research Office of Tissues

and Advanced Therapies.

domestic human drug and biologic products will be subject to rigorous FDA review and approval procedures.

After testing in animals

to evaluate the potential efficacy and safety of the product candidate, an investigational new drug (“IND”) submission

must be made to the FDA to obtain authorization for human testing.

Extensive clinical testing, which is generally done in three

phases, must then be undertaken to demonstrate optimal use, safety, and efficacy of each product in humans.

Each clinical trial

is conducted under the auspices of an independent Institutional Review Board (“IRB”).

The IRB will consider, among

other things, ethical factors, the safety of human subjects, and the possible liability of the institution.

1 clinical trials are conducted in a small number of healthy volunteers or volunteers with the target disease or condition to

assess safety.

Phase 2 clinical trials are conducted with groups of patients afflicted with the target disease or condition in

order to determine preliminary efficacy, optimal dosages and expanded evidence of safety.

In some cases, an initial trial is conducted

in diseased patients to assess both preliminary efficacy and preliminary safety, in which case it is referred to as a Phase 1/2

clinical trial.

Phase 3 clinical trials are large-scale, multi-center, comparative trials and are conducted with patients afflicted

with the target disease or condition in order to provide enough data to demonstrate the efficacy and safety required by the FDA.

The FDA closely monitors the progress of each of the three phases of clinical testing and may, at its discretion, re-evaluate,

alter, suspend or terminate the clinical trial based upon the data which have been accumulated to that point and its assessment

of the risk/benefit ratio to the intended patient population.

All adverse events must be reported to the FDA.

Monitoring of all

aspects of the trial to minimize risks is a continuing process.

After testing in animals to

evaluate the potential efficacy and safety of the product candidate, an IND submission must be made to the FDA to obtain authorization

for human testing.

Extensive clinical testing, which is generally done in three phases, must then be undertaken to demonstrate optimal

use, safety, and efficacy of each product in humans.

Each clinical trial is conducted under the auspices of an independent Institutional

Review Board (“IRB”).

The IRB will consider, among other things, ethical factors, the safety of human subjects, and the possible

liability of the institution.

Phase 1 clinical trials are conducted

in a small number of healthy volunteers or volunteers with the target disease or condition to assess safety.

Phase 2 clinical trials

are conducted with groups of patients afflicted with the target disease or condition in order to determine preliminary efficacy, optimal

dosages and expanded evidence of safety.

In some cases, an initial trial is conducted in diseased patients to assess both preliminary

safety and preliminary efficacy, in which case it is referred to as a Phase 1/2 clinical trial.

Phase 3 clinical trials

are large-scale, multi-center, comparative trials and are conducted with patients afflicted with the target disease or condition in order

to provide enough data to demonstrate the efficacy and safety required by the FDA.

The FDA closely monitors the progress of each of the

three phases of clinical testing and may, at its discretion, re-evaluate, alter, suspend or terminate the clinical trial based upon the

data which have been accumulated to that point and its assessment of the risk/benefit ratio to the intended patient population.

events must be reported to the FDA.

Monitoring of all aspects of the trial to minimize risks is a continuing process.

action can be taken to market any therapeutic product in the U.S.

until an appropriate New Drug Application (“NDA”)

or Biologics License Application (“BLA”) has been approved by the FDA.

Submission of the application is not a guarantee

that the FDA will find it complete and accept it for filing.

If an application is accepted for filing, following the FDA’s

review, the FDA may grant marketing approval, request additional information or deny the application by way of a Complete Response

Letter if it determines that the application does not provide an adequate basis for approval.

FDA regulations also restrict the

export of therapeutic products for clinical use prior to FDA approval.

Before approving a BLA, the FDA will inspect the facilities

at which the product is manufactured.

The FDA will not approve the product unless it determines that the manufacturing processes

and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required

specifications including gene therapy products (“GTPs”) to the extent applicable.

These are FDA regulations and guidance

documents that govern the methods used in, and the facilities and controls used for, the manufacture of HCT/Ps.

The primary intent

of the GTP requirements is to ensure that cell and tissue-based products are manufactured in a manner designed to prevent the

introduction, transmission and spread of communicable disease.

FDA regulations also require HCT/P establishments to register and

list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing.

Additionally, before approving

a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were conducted in compliance

with IND trial requirements and GCP requirements.

To maintain compliance with CGMPs, GTPs, and GCPs, an applicant must incur significant

expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.

date, the FDA has not granted marketing approval to any pluripotent stem-based therapeutic products and it is possible that the

FDA or foreign regulatory agencies may subject our product candidates to additional or more stringent review than drugs or biologics

derived from other technologies.

FDA offers several programs to expedite development of products that treat serious or life-threatening illnesses and that provide

meaningful therapeutic benefits to patients over existing treatments.

until an appropriate New Drug Application (“NDA”) or Biologics

License Application (“BLA”) has been approved by the FDA.

Submission of the application is not a guarantee that the FDA will

find it complete and accept it for filing.

If an application is accepted for filing, following the FDA’s review, the FDA may grant

marketing approval, or deny the application by way of a Complete Response Letter if it determines that the application does not provide

an adequate basis for approval.

FDA regulations also restrict the export of therapeutic products for clinical use prior to FDA approval.

Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured.

The FDA will not approve the product

unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure

consistent production of the product within required specifications including gene therapy products (“GTPs”) to the extent

These are FDA regulations and guidance documents that govern the methods used in, and the facilities and controls used for,

the manufacture of HCT/Ps.

The primary intent of the GTP requirements is to ensure that cell and tissue-based products are manufactured

in a manner designed to prevent the introduction, transmission and spread of communicable disease.

FDA regulations also require HCT/P

establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing.

Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were

conducted in compliance with IND trial requirements and GCP requirements.

To maintain compliance with cGMPs, GTPs, and GCPs, an

applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality

To date, the FDA has not granted

marketing approval to any pluripotent stem cell-based therapeutic products, and it is possible that the FDA or foreign regulatory

agencies may subject our product candidates to additional or more stringent review than drugs or biologics derived from other technologies.

FDA offers several programs to expedite development of products that treat serious or life-threatening illnesses and that provide meaningful

therapeutic benefits to patients over existing treatments.

A drug is eligible for designation as an RMAT if:

is a regenerative medicine therapy, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and

tissue product or any combination product using such therapies or products, except for those regulated solely under certain other

the drug is intended to treat, modify, reverse or cure a serious or life-threatening disease or condition;

and preliminary

clinical evidence indicates that the drug has the potential to address unmet medical needs for such disease or condition.

of our current and future products may be eligible for RMAT designation.

the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition,

which is a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000

individuals in the United States, there is no reasonable expectation that the cost of developing and making available a drug or

biologic for this type of disease or condition will be recovered from sales in the United States for that drug or biologic.

drug designation must be requested before submitting a BLA.

After the FDA grants orphan drug designation, the generic identity

of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

The orphan drug designation does not

convey any advantage in, or shorten the duration of, the regulatory review or approval process.

a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such

designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications,

including a full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such

as a showing of clinical superiority to the product with orphan drug exclusivity.

Orphan drug exclusivity does not prevent FDA

from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease

or condition.

Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA

application fee.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader

than the indication for which it received orphan designation.

In addition, exclusive marketing rights in the United States may

be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable

to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

we develop any products that are used with medical devices, they may be considered combination products, which are defined by

the FDA to include products comprised of two or more regulated components or parts such as a biologic and a device.

our HyStem hydrogel products may be used to administer one or more pluripotent stem cell-based therapy products.

When regulated

independently, biologics and devices each have their own regulatory requirements.

However, the regulatory requirements for a combination

product comprised of a biologic administered with a delivery device can be more complex, because in addition to the individual

regulatory requirements for each component, additional combination product regulatory requirements may apply.

The Office of Combination

Products at the FDA coordinates the review of such products and determines the primary mode of action of a combination product.

The definition and regulatory requirements for combination products may differ significantly among countries in which we may seek

approval of our product candidates.

the drug is a regenerative

medicine therapy, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product or any combination

product using such therapies or products, except for those regulated solely under certain other sections;

the drug is intended to treat,

modify, reverse or cure a serious or life-threatening disease or condition;

and preliminary clinical evidence indicates that the drug

has the potential to address unmet medical needs for such disease or condition.

Some of our current and future products may be eligible

for RMAT designation.

the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which

is a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals

in the United States, there is no reasonable expectation that the cost of developing and making available a drug or biologic for this

type of disease or condition will be recovered from sales in the United States for that drug or biologic.

Orphan drug designation must

be requested before submitting a BLA.

After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and

its potential orphan use are disclosed publicly by the FDA.

The orphan drug designation does not convey any advantage in, or shorten

the duration of, the regulatory review or approval process.

a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation,

the product may be entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including a

full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of

clinical superiority to the product with orphan drug exclusivity.

Orphan drug exclusivity does not prevent FDA from approving a different

drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition.

Among the other

benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application fee.

A designated orphan

drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan

In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for

designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs

of patients with the rare disease or condition.

we develop any products that are used with medical devices, they may be considered combination products, which are defined by the FDA

to include products comprised of two or more regulated components or parts such as a biologic and a device.

When regulated independently,

biologics and devices each have their own regulatory requirements.

However, the regulatory requirements for a combination product comprised

of a biologic administered with a delivery device can be more complex, because in addition to the individual regulatory requirements

for each component, additional combination product regulatory requirements may apply.

The Office of Combination Products at the FDA coordinates

the review of such products and determines the primary mode of action of a combination product.

The definition and regulatory requirements

for combination products may differ significantly among countries in which we may seek approval of our product candidates.

Regulation of Manufacturing

FDA regulates the manufacturing process of pharmaceutical products, human tissue and cell products, and medical devices, requiring

that they be produced in compliance with cGMP.

See “Manufacturing.” The FDA regulates and inspects equipment, facilities,

laboratories and processes used in the manufacturing and testing of products prior to providing approval to market products.

after receiving approval from the FDA, a material change is made to manufacturing equipment or to the location or manufacturing

process, additional regulatory review may be required.

The FDA also conducts regular, periodic visits to re-inspect the equipment,

facilities, laboratories and processes of manufacturers following an initial approval.

If, as a result of those inspections, the

FDA determines that equipment, facilities, laboratories or processes do not comply with applicable FDA regulations and conditions

of product approval, the FDA may seek civil, criminal or administrative sanctions and/or remedies against the manufacturer, including

suspension of manufacturing operations.

Issues pertaining to manufacturing equipment, facilities or processes may also delay the

approval of new products undergoing FDA review.

FDA regulates the manufacturing process of pharmaceutical products, human tissue and cell products, and medical devices, requiring that

they be produced in compliance with cGMP.

See “Manufacturing.” The FDA regulates and inspects equipment, facilities, laboratories

and processes used in the manufacturing and testing of products prior to providing approval to market products.

If after receiving approval

from the FDA, a material change is made to manufacturing equipment or to the location or manufacturing process, additional regulatory

review may be required.

The FDA also conducts regular, periodic visits to re-inspect the equipment, facilities, laboratories and processes

of manufacturers following an initial approval.

If, as a result of those inspections, the FDA determines that equipment, facilities,

laboratories or processes do not comply with applicable FDA regulations and conditions of product approval, the FDA may seek civil, criminal

or administrative sanctions and/or remedies against the manufacturer, including suspension of manufacturing operations.

Issues pertaining

to manufacturing equipment, facilities or processes may also delay the approval of new products undergoing FDA review.

Regulation of Advertising and Product Promotion

FDA also regulates the content of advertisements used to market pharmaceutical and biologic products.

Claims made in advertisements

concerning the safety and efficacy of a product, or any advantages of a product over another product, must be supported by clinical

data filed as part of an NDA, a BLA, or an amendment to an NDA or a BLA, and must be

consistent with the FDA-approved labeling and dosage information for that product.

Claims made in advertisements concerning

the safety and efficacy of a product, or any advantages of a product over another product, must be supported by clinical data filed as

part of an NDA, a BLA, or an amendment to an NDA or a BLA, and must be consistent with the FDA-approved labeling and dosage information

for that product.

Pharmaceutical

and biologic products may be promoted only for the approved indications in accordance with the approved label.

The FDA and other

agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to

have improperly promoted off-label may be subject to significant liability.

However, physicians may, in their independent medical

judgment, prescribe legally available products for off-label uses.

The FDA does not regulate the behavior of physicians in their

choice of treatments but the FDA does restrict manufacturer’s communications on the subject of off-label use of their products.

The FDA and other agencies

actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly

promoted off-label may be subject to significant liability.

However, physicians may, in their independent medical judgment, prescribe

legally available products for off-label uses.

The FDA does not regulate the behavior of physicians in their choice of treatments but

the FDA does restrict manufacturer’s communications on the subject of off-label use of their products.

of pharmaceutical products outside the U.S.

are subject to foreign regulatory requirements that vary widely from country to country.

Even if FDA approval has been obtained, approval of a product by comparable regulatory authorities of foreign countries must be

obtained prior to the commencement of marketing the product in those countries.

The time required to obtain such approval may

be longer or shorter than that required for FDA approval.

Even if FDA approval has been obtained, approval of a product by comparable regulatory authorities of foreign countries must be obtained

prior to the commencement of marketing the product in those countries.

The time required to obtain such approval may be longer or shorter

than that required for FDA approval.

Funding and State Regulations

July 7, 2009, the National Institutes of Health (“NIH”) adopted guidelines on the use of hES cells in federally funded

The central focus of the guidelines is to assure that hES cells used in federally funded research are derived from human

embryos that were created for reproductive purposes, are no longer needed for this purpose, and are voluntarily donated for research

purposes with the informed written consent of the donors.

hES cells that were not derived in compliance with the guidelines, are

not eligible for use in federally funded research.

state of California has adopted legislation and regulations that require institutions that conduct stem cell research to notify,

and in certain cases obtain approval from, a Stem Cell Research Oversight Committee (“SCRO Committee”) before conducting

the research.

July 7, 2009, the NIH adopted guidelines on the use of hES cells in federally funded research.

The central focus of the guidelines is

to assure that hES cells used in federally funded research are derived from human embryos that were created for reproductive purposes,

are no longer needed for this purpose, and are voluntarily donated for research purposes with the informed written consent of the donors.

hES cells that were not derived in compliance with the guidelines, are not eligible for use in federally funded research.

state of California has adopted legislation and regulations that require institutions that conduct stem cell research to notify, and

in certain cases obtain approval from, a Stem Cell Research Oversight Committee (“SCRO Committee”) before conducting the

Under certain California regulations, all hES cell lines used in our research must be acceptably derived.

regulations further require certain records to be maintained with respect to stem cell research and the materials used.

programs that involve the use of stem cells have been reviewed by a SCRO Committee to confirm compliance with federal and state

hES cell lines that we use are all on the NIH registry of lines that have been reviewed and meet standards for federal funding

All of our research programs utilize stem cells from established and well-characterized cell lines and which are capable

of self-renewal and expansion through normal cellular division (mitosis).

Our research programs do not require new tissue or cells

from donors of any kind.

California regulations

further require certain records to be maintained with respect to stem cell research and the materials used.

Lineage programs that involve

the use of stem cells have been reviewed by a SCRO Committee to confirm compliance with federal and state guidelines.

hES cell lines that we use are all on the NIH registry of lines that have been reviewed and meet standards for federal funding grants.

All of our research programs utilize stem cells from established and well-characterized cell lines and which are capable of self-renewal

and expansion through normal cellular division (mitosis).

Our research programs do not require new tissue or cells from donors of any

Insurance Portability and Accountability Act and Other Health Information Privacy and Security Laws

Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the Health Information Technology for

Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations impose obligations on “covered

entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective

“business associates” that create, receive, maintain or transmit individually identifiable health information for

or on behalf of a covered entity, and their subcontractors that use, disclose, access, or otherwise process individually identifiable

protected health information, with respect to protecting the privacy, security, and transmission of protected health information.

HIPAA also regulates standardization of data content, codes and formats used in health care transactions and standardization of

identifiers for covered health plans and providers.

Penalties for violations of HIPAA regulations include civil and criminal penalties.

Additionally, HITECH created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly

applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions

federal courts to enforce HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil actions.

In addition, certain state and foreign laws also govern the privacy and security of health information in some circumstances,

many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the Health Information Technology for Economic

and Clinical Health Act (“HITECH”), and their respective implementing regulations impose obligations on “covered entities,”

including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates”

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

subcontractors that use, disclose, access, or otherwise process individually identifiable protected health information, with respect

to protecting the privacy, security, and transmission of protected health information.

HIPAA also regulates standardization of data content,

codes and formats used in healthcare transactions and standardization of identifiers for covered health plans and providers.

for violations of HIPAA regulations include civil and criminal penalties.

Additionally, HITECH created four new tiers of civil monetary

penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general

new authority to file civil actions for damages or injunctions in U.S.

federal courts to enforce HIPAA and seek attorneys’ fees

and costs associated with pursuing federal civil actions.

In addition, certain state and foreign laws also govern the privacy and security

of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by

HIPAA, thus complicating compliance efforts.

Privacy and Data Security Laws

In the ordinary course of

our business, we may process personal data and other sensitive information.

Accordingly, we are, or may become, subject to numerous data

privacy and security obligations, including federal, state, local, and foreign laws, regulations, guidance, and industry standards related

to data privacy, security, and protection.

Such obligations may include, without limitation, the Federal Trade Commission Act, the California

Consumer Privacy Act of 2018 (“CCPA”), Israel’s Protection of Privacy Law 5741-1981 (“PPL”), the European

Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom (“UK”)

law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”), and the ePrivacy Directive.

several states within the United States have enacted or proposed data privacy laws.

For example, Virginia passed the Consumer Data Protection

Act, and Colorado passed the Colorado Privacy Act.

The CCPA and EU GDPR are

examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing that may increase our compliance

obligations and exposure for any noncompliance.

For example, the CCPA imposes obligations on covered businesses to provide specific disclosures

related to a business’s collection, use, and disclosure of personal data and a requirement to respond to certain requests from

California residents related to their personal data (for example, requests to know of the business’s personal data processing activities,

to delete the individual’s personal data, and to opt out of certain personal data disclosures).

Also, the CCPA provides for civil

penalties and a private right of action for certain data breaches.

In addition, the California Privacy Rights Act of 2020 (“CPRA”),

effective January 1, 2023, will expand the CCPA.

The CPRA will, among other things, give California residents the ability to limit use

of certain sensitive personal data, establish restrictions on personal data retention, expand the types of data breaches that are subject

to the CCPA’s private right of action, and establish a new California Privacy Protection Agency to implement and enforce the new

federal and state consumer protection laws require us to publish statements that accurately and fairly describe how we handle

personal data and choices individuals may have about the way we handle their personal data

Foreign data privacy and

security laws (including but not limited to the EU GDPR and UK GDPR) impose significant and complex compliance obligations on entities

that are subject to those laws.

As one example, the EU GDPR applies to any company established in the EEA and to companies established

outside the EEA that process personal data in connection with the offering of goods or services to data subjects in the EEA or the monitoring

of the behavior of data subjects in the EEA.

These obligations may include limiting personal data processing to only what is necessary

for specified, explicit, and legitimate purposes;

requiring a legal basis for personal data processing;

requiring the appointment of

a data protection officer in certain circumstances;

increasing transparency obligations to data subjects;

requiring data protection impact

assessments in certain circumstances;

limiting the collection and retention of personal data;

increasing rights for data subjects;

a heightened and codified standard of data subject consents;

requiring the implementation and maintenance of technical and organizational

safeguards for personal data;

mandating notice of certain personal data breaches to the relevant supervisory authority(ies) and affected

and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.

and State Fraud and Abuse Laws

variety of federal and state laws prohibit fraud and abuse.

These laws are interpreted broadly and enforced aggressively by various

state and federal agencies, including the Centers for Medicare & Medicaid Services (“CMS”), the Department of

Justice, the Office of Inspector General for HHS, and various state agencies.

In addition, the Medicare and Medicaid programs

increasingly use a variety of contractors to review claims data and to identify improper payments as well as fraud and abuse.

These contractors include Recovery Audit Contractors, Medicaid Integrity Contractors and Zone Program Integrity Contractors.

addition, CMS conducts Comprehensive Error Rate Testing audits, the purpose of which is to detect improper Medicare payments.

These laws are interpreted broadly and enforced aggressively by various state

and federal agencies, including the Centers for Medicare & Medicaid Services (“CMS”), the Department of Justice, the

Office of Inspector General for the U.S.

Department of Health and Human Services (“HHS”), and various state agencies.

addition, the Medicare and Medicaid programs increasingly use a variety of contractors to review claims data and to identify improper

payments as well as fraud and abuse.

These contractors include Recovery Audit Contractors, Medicaid Integrity Contractors and Zone Program

Integrity Contractors.

In addition, CMS conducts Comprehensive Error Rate Testing audits, the purpose of which is to detect improper

Medicare payments.

Any overpayments identified must be repaid unless a favorable decision is obtained on appeal.

In some cases, these overpayments

can be used as the basis for an extrapolation, by which the error rate is applied to a larger universe of claims, and which can

result in even higher repayments.

federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, receiving,

or providing remuneration, directly or indirectly, to induce or in return for either the referral of an individual, or the furnishing,

recommending, or arranging for the purchase, lease or order of any health care item or service reimbursable, in whole or in part,

under a federal health care program.

The definition of “remuneration” has been broadly interpreted to include anything

of value, including gifts, discounts, credit arrangements, payments of cash, ownership interests and providing anything at less

than its fair market value.

Recognizing that the federal Anti- Kickback Statute is broad and may prohibit certain common activities

within the health care industry, the Office of Inspector General for HHS has issued a series of statutory exceptions and regulatory

“safe harbors.” However, these exceptions and safe harbors are drawn narrowly and require strict compliance in order

to offer protection from prosecution under the federal Anti-Kickback Statute.

Although full compliance with these provisions ensures

against prosecution under the federal Anti-Kickback Statute, the failure of a transaction or arrangement to fit within a specific

safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-Kickback

Statute will be pursued.

However, conduct and business arrangements that do not fully satisfy all requirements of an applicable

safe harbor may result in increased scrutiny by government enforcement authorities and would be evaluated on a case-by-case basis

based on a cumulative review of their facts and circumstances.

Additionally, the Patient Protection and Affordable Care Act, as

amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”) codified case law that a claim

including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent

claim for purposes of the federal False Claims Act.

federal civil and criminal false claims laws, including the federal False Claims Act, which can be enforced by private citizens

on behalf of the government, through civil whistleblower or qui tam actions, and civil monetary penalty laws, which prohibit,

among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare,

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

Pharmaceutical and other health care companies have been prosecuted

under these laws for alleged off-label promotion of drugs, purportedly concealing price concessions in the pricing information

submitted to the government for government price reporting purposes, and allegedly providing free product to customers with the

expectation that the customers would bill federal healthcare programs for the product.

As a result of a modification made by the

Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented

In addition, manufacturers can be held liable under the federal False Claims Act even when they do not

submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims.

also created new federal crimes, including health care fraud and false statements relating to health care matters.

care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including

private third-party payers.

The false statements statute prohibits knowingly and willfully falsifying, concealing or covering

up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment

for health care benefits, items or services.

Similar to the federal Anti-Kickback Statute, a person or entity does not need to

have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

federal Physician Payments Sunshine Act which require certain manufacturers of drugs, devices, biologics and medical supplies

for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions)

to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors,

dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals, as well as ownership and investment interests

held by physicians and their immediate family members.

Beginning in 2022, applicable manufacturers will also be required to report

information regarding payments and other transfers of value provided during the previous year to physician assistants, nurse practitioners,

clinical nurse specialists, certified nurse anesthetists and anesthesiologist assistants, and certified nurse-midwives.

states have laws similar to the federal laws described above and the state laws may be broader in scope and may apply regardless

of payor, such as state anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving

healthcare items or services reimbursed by non-governmental third party payors, including private insurers, or that apply regardless

of payor, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance

guidelines and the relevant compliance guidance promulgated by the federal government, state and local laws that require drug

manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers

or marketing expenditures, state laws that require the reporting of information related to drug pricing, and state and local laws

requiring the registration of pharmaceutical sales representatives.

In some cases, these

overpayments can be used as the basis for an extrapolation, by which the error rate is applied to a larger universe of claims, and which

can result in even higher repayments.

federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, receiving, or providing

remuneration, directly or indirectly, to induce or in return for either the referral of an individual, or the furnishing, recommending,

or arranging for the purchase, lease or order of any healthcare item or service reimbursable, in whole or in part, under a federal healthcare

The definition of “remuneration” has been broadly interpreted to include anything of value, including gifts, discounts,

credit arrangements, payments of cash, ownership interests and providing anything at less than its fair market value.

Recognizing that

the federal Anti- Kickback Statute is broad and may prohibit certain common activities within the healthcare industry, the Office of

Inspector General for HHS has issued a series of statutory exceptions and regulatory “safe harbors.” However, these exceptions

and safe harbors are drawn narrowly and require strict compliance in order to offer protection from prosecution under the federal Anti-Kickback

Although full compliance with these provisions ensures against prosecution under the federal Anti-Kickback Statute, the failure

of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is

illegal or that prosecution under the federal Anti-Kickback Statute will be pursued.

However, conduct and business arrangements that

do not fully satisfy all requirements of an applicable safe harbor may result in increased scrutiny by government enforcement authorities

and would be evaluated on a case-by-case basis based on a cumulative review of their facts and circumstances.

Additionally, the Patient

Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act (collectively, the “ACA”)

codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes

a false or fraudulent claim for purposes of the federal False Claims Act.

federal civil and criminal false claims laws, including the federal False Claims Act, which can be enforced by private citizens on behalf

of the government, through civil whistleblower or qui tam actions, and civil monetary penalty laws, which prohibit, among other things,

individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party

payors that are false or fraudulent.

Pharmaceutical and other healthcare companies have been prosecuted under these laws for alleged

off-label promotion of drugs, purportedly concealing price concessions in the pricing information submitted to the government for government

price reporting purposes, and allegedly providing free product to customers with the expectation that the customers would bill federal

healthcare programs for the product.

As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes

“any request or demand” for money or property presented to the U.S.

In addition, manufacturers can be held liable

under the federal False Claims Act even when they do not submit claims directly to government payors if they are deemed to “cause”

the submission of false or fraudulent claims.

HIPAA also created new federal

crimes, including healthcare fraud and false statements relating to healthcare matters.

The healthcare fraud statute prohibits knowingly

and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payers.

The false statements

statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious

or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the federal

Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order

to have committed a violation.

federal Physician Payments Sunshine Act which require certain manufacturers of drugs, devices, biologics and medical supplies for which

payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually

to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists,

podiatrists, and chiropractors), certain other healthcare professionals (such as physician assistants and nurse practitioners), and teaching

hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

states have laws similar to the federal laws described above and the state laws may be broader in scope and may apply regardless of payor,

such as state anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving healthcare items

or services reimbursed by non-governmental third party payors, including private insurers, or that apply regardless of payor, state laws

that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant

compliance guidance promulgated by the federal government, state and local laws that require drug manufacturers to report information

related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, state laws that

require the reporting of information related to drug pricing, and state and local laws requiring the registration of pharmaceutical sales

representatives.

Additionally,

Foreign Corrupt Practices Act (“FCPA”) prohibits U.S.

corporations and their representatives from offering,

promising, authorizing or making payments to any foreign government official, government staff member, political party or political

candidate in an attempt to obtain or retain business abroad.

The scope of the FCPA includes interactions with certain healthcare

professionals in many countries.

corporations and their representatives from offering, promising,

authorizing or making payments to any foreign government official, government staff member, political party or political candidate in

an attempt to obtain or retain business abroad.

The scope of the FCPA includes interactions with certain healthcare professionals in

many countries.

Other countries have enacted similar anti-corruption laws and/or regulations.

our operations are found to be in violation of any of the laws described above, or any other governmental regulations that apply

to us, we may be subject significant civil, criminal and administrative penalties, including sanctions, damages, disgorgement,

monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, imprisonment,

integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings,

and curtailment or restructuring of our operations.

our operations are found to be in violation of any of the laws described above, or any other governmental regulations that apply to us,

we may be subject to significant civil, criminal and administrative penalties, including sanctions, damages, disgorgement, monetary

fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, imprisonment, integrity oversight

and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring

of our operations.

and Reimbursement

generally rely on third-party payors to reimburse part or all of the costs associated with medical products.

Accordingly, market

acceptance of medical products can depend on the extent to which third-party coverage and reimbursement is available from government

health administration authorities, private healthcare insurers and other healthcare funding organizations.

No uniform policy for

coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to

Decisions regarding whether to cover any of our product candidates, if approved, the extent of coverage and amount of reimbursement

to be provided are made on a plan-by-plan basis.

Third-party payors often rely upon Medicare coverage policy and payment limitations

in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific

and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate

reimbursement will be applied consistently or obtained in the first instance.

Pharmaceutical companies may be required to provide

specified rebates or discounts on the products it sells to certain government funded programs, including Medicare and Medicaid,

and those rebates or discounts have increased over time.

The ACA increased many of these mandatory discounts and rebates required

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

companies and manufacturers.

Accordingly, market acceptance

of medical products can depend on the extent to which third-party coverage and reimbursement is available from government health administration

authorities, private healthcare insurers and other healthcare funding organizations.

No uniform policy for coverage and reimbursement

exists in the United States, and coverage and reimbursement can differ significantly from payor to payor.

Decisions regarding whether

to cover any of our product candidates, if approved, the extent of coverage and amount of reimbursement to be provided are made on a

plan-by-plan basis.

Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement

rates, but also have their own methods and approval process apart from Medicare determinations.

As a result, the coverage determination

process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our

product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently

or obtained in the first instance.

Pharmaceutical companies may be required to provide specified rebates or discounts on the products

it sells to certain government funded programs, including Medicare and Medicaid, and those rebates or discounts have increased over time.

The ACA increased many of these mandatory discounts and rebates required and imposed a new branded prescription pharmaceutical manufacturers

and importers fee payable each year by certain pharmaceutical companies and manufacturers.

of the United States, the proposed pricing for a drug must be approved before it may be lawfully marketed.

1 unchanged sentence

drug pricing vary widely from country to country.

For example, the EU provides options for its member states to restrict the range

of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal

products for human use.

A member state may approve a specific price for the medicinal product, or it may instead adopt a system

of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

Historically,

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

United States and some foreign jurisdictions are considering or have enacted a number of reform proposals to change the healthcare

There is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare

costs, improving quality or expanding access.

In the United States, the pharmaceutical industry has been a particular focus of

these efforts and has been significantly affected by federal and state legislative initiatives, including those designed to limit

the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded

health care programs, and increased governmental control of drug pricing.

March 2010, the ACA was signed into law, which substantially changed the way healthcare is financed by both governmental and private

insurers in the United States, and significantly affected the pharmaceutical industry.

The ACA contains a number of provisions

of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment

in federal healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program

are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on pharmaceutical

companies’ share of sales to federal health care programs.

Since its enactment, there have been judicial, Congressional,

and executive branch challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments

to the ACA in the future.

For example, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the

ACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective

January 1, 2021, also eliminated the health insurer tax.

In addition, legislation enacted in 2017, informally known as the Tax

Cuts and Jobs Act (the “2017 Tax Act”), among other things, removes penalties for not complying with ACA’s

For example, the EU provides options for its member states to restrict the range of

medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products

for human use.

A member state may approve a specific price for the medicinal product, or it may instead adopt a system of direct or indirect

controls on the profitability of the company placing the medicinal product on the market.

Historically, products launched in the EU do

not follow price structures of the United States and generally tend to be significantly lower.

The United States and some foreign

jurisdictions are considering or have enacted a number of reform proposals to change the healthcare system.

There is significant interest

in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access.

In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by

federal and state legislative initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical

and biopharmaceutical products, especially under government-funded healthcare programs, and increased governmental control of drug pricing.

In March 2010, the ACA was signed into law, which substantially changed

the way healthcare is financed by both governmental and private insurers in the United States, and significantly affected the pharmaceutical

The ACA contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including,

but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers

under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual

fees based on pharmaceutical companies’ share of sales to federal healthcare programs.

Since its enactment, there have been judicial,

Congressional, and executive branch challenges to certain aspects of the ACA.

For example, legislation enacted in 2017, informally known

as the Tax Cuts and Jobs Act (the “2017 Tax Act”), among other things, removes penalties for not complying with ACA’s

individual mandate to carry health insurance.

Since the enactment of the 2017 Tax Act, there have been additional amendments to

certain provisions of the ACA.

On December 14, 2018, a U.S.

District Court Judge in the Northern District of Texas, ruled that

the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the

2017 Tax Act, the remaining provisions of the ACA are invalid as well.

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

Court of Appeals

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

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

Supreme Court is

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

Accordingly, it is unclear how this

decision, future decisions, subsequent appeals, if any, and other efforts to repeal and replace the ACA will impact the ACA.

there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed

products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed

to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient

programs, and reform government program reimbursement methodologies for drug products.

At the federal level, the Trump administration’s

budget proposal for fiscal year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug

prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and

biosimilar drugs.

Further, the Trump administration released a “Blueprint”, or plan, to lower drug prices and reduce

out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating

power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce

the out of pocket costs of drug products paid by consumers.

The likelihood of implementation of any of these, or the other Trump

administration reform initiatives is uncertain, particularly in light of the new presidential administration.

At the state level,

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

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

and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

On June 17, 2021, the U.S.

Supreme Court dismissed a challenge on procedural grounds that

argued the ACA is unconstitutional in its entirety because the individual mandate was repealed by Congress.

Thus, the ACA will remain

in effect in its current form.

Moreover, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment

period for purposes of obtaining health insurance coverage through the ACA marketplace, which began on February 15, 2021 and remained

open through August 15, 2021.

The executive order also instructed certain governmental agencies to review and reconsider their existing

policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs

that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through

Medicaid or the ACA.

It is possible that the ACA will be subject to judicial or Congressional challenges in the future.

It is unclear

how any such challenges and other litigation, and the healthcare reform measures of the Biden administration will impact the ACA.‌

addition, other legislative changes have been proposed and adopted since the ACA was enacted.

On August 2, 2011, the Budget Control Act

of 2011 was signed into law, which includes reductions to Medicare payments to providers of 2% per fiscal year, which went into effect

on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2031, except for a temporary

suspension from May 1, 2020 through March 31, 2022 due to the COVID-19 pandemic, unless additional Congressional action is taken.

current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this

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

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

to providers from three to five years.

Further, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law,

which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single

source and innovator multiple source drugs, beginning January 1, 2024.

Congress is considering additional health reform measures.

there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products,

which has resulted in several presidential executive orders, Congressional inquiries and proposed and enacted federal and state legislation

designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer

patient programs, and reform government program reimbursement methodologies for drug products.

For example, on July 24, 2020 and September

13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that attempted to implement

several of the administration’s proposals.

As a result, the FDA concurrently released a final rule and guidance in September 2020

providing pathways for states to build and submit importation plans for drugs from Canada.

Further, on November 20, 2020, the HHS finalized

a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part

D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The implementation of the rule

has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation.

The rule also

creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements

between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed by the Biden administration until

January 1, 2023.

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

order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically

advanced countries.

The Most Favored Nation regulations mandate participation by identified Medicare Part B providers and will apply

states and territories for a seven-year period beginning January 1, 2021, and ending December 31, 2027.

As a result of litigation

challenging the Most Favored Nation model, on December 27, 2021 CMS published a final rule that rescinds the Most Favored Nation model

interim final rule.

Further, in July 2021, the Biden administration released an executive order that included multiple provisions aimed

at prescription drugs.

In response to President Biden’s executive order, on September 9, 2021, the HHS released a Comprehensive

Plan for Addressing High Drug Prices that outlines principles for drug pricing reform.

The plan sets out a variety of potential legislative

policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.

No legislation

or administrative actions have been finalized to implement these principles.

At the state level, legislatures have increasingly passed

legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement

constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some

cases, designed to encourage importation from other countries and bulk purchasing.

Further, it is possible that additional governmental

action is taken in response to the COVID-19 pandemic.

Customers and Sources of Revenues

Sources of Revenues

following table shows our major sources of revenues, as a percentage of total revenues, that were recognized during the years

ended December 31, 2020 and 2019:

following table shows our major sources of revenues, as a percentage of total revenues, that were recognized during the years ended December

31, 2021 and 2020:

Year Ended December 31,

Sources of Revenues

NIH grant income

Collaboration revenues

IIA grant income (Cell Cure Neurosciences Ltd, Israel)

Royalties from product sales and licenses fees

Sale of research products

NIH grant income

Year Ended December 31,

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Total revenues

Foreign revenues are primarily generated from grants in Israel.

revenues are primarily generated from grants in Israel.

Products and Medical Devices

our planned therapeutic products and medical devices are still in the research and development stage, we will not initially need

to have our own marketing personnel.

If we or our subsidiaries are successful in developing marketable therapeutic products and

medical devices, we will need to build our own marketing and distribution capability for those products, which would require the

investment of significant financial and management resources, or we and our subsidiaries will need to find collaborative marketing

partners, independent sales representatives, or wholesale distributors for the commercial sale of those products.

we market products through arrangements with third parties, we may pay sales commissions to sales representatives or we may sell

or consign products to distributors at wholesale prices.

This means that our gross profit from product sales may be less than

would be the case if we were to sell our products directly to end users at retail prices through our own sales force.

hand, selling to distributors or through independent sales representatives would allow us to avoid the cost of hiring and training

our own sales employees.

There can be no assurance we will be able to negotiate distribution or sales agreements with third parties

on favorable terms to justify our investment in our products or achieve sufficient revenues to support our operations.

our therapeutic product candidates and medical devices are still in the research and development stage, we will not initially need to

have our own marketing personnel.

If we or our subsidiaries are successful in developing marketable therapeutic products and medical

devices, we will need to build our own marketing and distribution capability for those products, which would require the investment of

significant financial and management resources, or we and our subsidiaries will need to find collaborative marketing partners, independent

sales representatives, or wholesale distributors for the commercial sale of those products.

we market products through arrangements with third parties, we may pay sales commissions to sales representatives or we may sell or consign

products to distributors at wholesale prices.

This means that our gross profit from product sales may be less than would be the case

if we were to sell our products directly to end users at retail prices through our own sales force.

On the other hand, selling to distributors

or through independent sales representatives would allow us to avoid the cost of hiring and training our own sales employees.

be no assurance we will be able to negotiate distribution or sales agreements with third parties on favorable terms to justify our investment

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

face substantial competition in all fields of business in which we engage.

That competition is likely to intensify as new products

and technologies reach the market.

Superior new products are likely to sell for higher prices and generate higher profit margins

if acceptance by the medical community is achieved.

Those companies that are successful at being the first to introduce new products

and technologies to the market may gain significant economic advantages over their competitors in the establishment of a customer

base and track record for the performance of their products and technologies.

Such companies will also benefit from revenues from

sales that could be used to strengthen their research and development, production, and marketing resources.

Companies engaged

in the medical products industry face the risk of obsolescence of their products and technologies as more advanced or cost-effective

products and technologies are developed by competitors.

As the industry matures, companies will compete based upon the performance

and cost-effectiveness of their products.

Specific efforts in the development of treatments for dry AMD include, but are not limited

to, neuroprotection, reducing by-product accumulation, and suppressing inflammation.

Specific approaches include small molecules,

antibodies, and cell therapies.

Some of these efforts have reached clinical development and at least one approach, complement

inhibition, is currently in a Phase 3 clinical trial.

We believe that replacing the entire cell rather than attempts to fix one

aberrant pathway or signal confer a greater probability of success for individuals suffering with dry AMD.

That competition is likely to intensify as new products and

technologies reach the market.

Superior new products are likely to sell for higher prices and generate higher profit margins if acceptance

by the medical community is achieved.

Those companies that are successful at being the first to introduce new products and technologies

to the market may gain significant economic advantages over their competitors in the establishment of a customer base and track record

for the performance of their products and technologies.

Such companies will also benefit from revenues from sales that could be used

to strengthen their research and development, production, and marketing resources.

Companies engaged in the medical products industry

face the risk of obsolescence of their products and technologies as more advanced or cost-effective products and technologies are developed

by competitors.

As the industry matures, companies will compete based upon the performance and cost-effectiveness of their products.

for Regenerative Medicine

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Our competitors include major multinational

pharmaceutical companies, specialty biotechnology companies, and chemical and medical products companies operating in the fields

of regenerative medicine, cell therapy, tissue engineering, and tissue regeneration.

Many of these companies are well established

and possess technical, research and development, financial, and sales and marketing resources significantly greater than ours.

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

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

as well as commercialization advantages.

Academic institutions, governmental agencies, and other public and private research organizations

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

believe that some of our competitors are trying to develop pluripotent cells and human embryonic progenitor cell-based technologies

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

Ocata Therapeutics, Inc.

(“Ocata”), which was acquired by a subsidiary of Astellas Pharma Inc.

for approximately $379

million in 2016, and Retinal Patch Technologies Inc.

have conducted clinical trials of hES cell products designed to treat dry

If their products are proven to be safe and effective, they may reach the market ahead of OpRegen.

may also face competition from companies that have filed patent applications relating to the propagation and differentiation of

Those companies include Ocata, which in 2015 had certain U.S.

patents issue with claims directed to methods of producing

RPE cells and isolating and purifying such cells.

We may be required to seek licenses from these competitors in order to commercialize

certain products proposed by us, and such licenses may not be granted.

pharmaceutical companies, specialty biotechnology companies, and chemical and medical products companies operating in the fields of regenerative

medicine, cell therapy, tissue engineering, and tissue regeneration.

Many of these companies are well established and possess technical,

research and development, financial, and sales and marketing resources significantly greater than ours.

In addition, certain smaller

biotech companies have formed strategic collaborations, partnerships, and other types of joint ventures with larger, well-established

industry competitors that afford the smaller companies’ potential research and development as well as commercialization advantages.

Academic institutions, governmental agencies, and other public and private research organizations are also conducting and financing research

activities, which may produce products directly competitive to those we are developing.

believe that some of our competitors are trying to develop pluripotent cells and human embryonic progenitor cell-based technologies and

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

We may also face competition

from companies that have filed patent applications relating to the propagation and differentiation of stem cells.

We may be required to

seek licenses from these competitors to commercialize certain products proposed by us, and such licenses may not be granted.

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

What changed 10-K

Item 1. Business