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Item 1. Business

2023-03-09 compared with 2022-03-10 · 865 added, 934 removed, 345 unchanged (84% of the section changed)

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.

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 platform and associated development and manufacturing capabilities.

From this platform, we

design, develop, manufacture, and test specialized human cells with anatomical and physiological functions similar to, or identical

to, cells found naturally in the human body.

Cells which we manufacture are created by specific developmental biological

differentiation protocols that we apply to established, well-characterized, and self-renewing pluripotent cell lines.

are transplanted into patients and are designed to (a) replace or support cells that are absent or dysfunctional due to degenerative

disease, aging, or traumatic injury, and (b) restore or augment functional activity in the affected person.

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 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”).

leverage our technology platform and our development, formulation, delivery, and manufacturing capabilities to advance our programs internally,

or in conjunction with strategic partners, to further enhance their value and probability of success.

As one example, in December 2021

we entered into a Collaboration and License Agreement (the “Roche Agreement”) with F.

Hoffmann-La Roche Ltd and Genentech,

Inc., a member of the Roche Group (collectively or individually, “Roche” or “Genentech”), wherein we granted to

Roche exclusive worldwide rights to develop and commercialize retinal pigment epithelium (“RPE”) cell therapies, including

our proprietary cell therapy program known as OpRegen ® , for the treatment of ocular disorders, including geographic atrophy

(GA) secondary to age-related macular degeneration (AMD).

Under the terms of the Roche Agreement, Lineage received a $50.0 million upfront

payment and is eligible to receive up to $620.0 million in certain developmental, regulatory, and commercialization milestone payments.

Lineage also is eligible to receive tiered double-digit percentage royalties on net sales of OpRegen in the U.S.

and other major markets.

Note 14 (Commitments and Contingencies) to our consolidated financial statements included elsewhere in this Report for discussion on the

Roche Agreement.

of December 31, 2022, we have five allogeneic, or “off-the-shelf,” cell therapy programs in development, of which three have

reached clinical testing:

an allogeneic retinal pigment epithelium cell replacement therapy currently in a Phase 2a multicenter clinical trial, being

conducted by Genentech, for the treatment of geographic atrophy (GA) secondary to age-related macular degeneration (AMD), also known

as atrophic or dry AMD.

A previous Phase 1/2a trial conducted by Lineage enrolled

twenty-four (24) individuals with dry AMD with GA.

In December 2021, this program was partnered with Roche for further clinical

development and commercialization.

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

for cervical spinal cord injuries (“SCI”).

To date, five (5) patients with thoracic spinal cord injuries and twenty-five

(25) patients with cervical spinal cord injuries have been enrolled in clinical trials of OPC1.

The clinical development of OPC1

has been partially funded by $14.3 million received under a grant from the California Institute for Regenerative Medicine (“CIRM”).

Additional clinical trials are being planned.

an allogeneic cancer immunotherapy comprised of antigen-presenting dendritic cells.

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, 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.

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.

Research UK, one of the world’s largest independent cancer research charities.

An additional

VAC-based product candidate is in preclinical development with our partner, Immunomic Therapeutics,

(“ITI”), for the treatment of glioblastoma multiforme (“GBM”).

an allogeneic auditory neuron progenitor cell transplant currently in preclinical development for the treatment of debilitating hearing

loss (“DHL”).

an allogeneic photoreceptor cell transplant currently in preclinical development for the treatment of vision loss due to photoreceptor

dysfunction or damage.

have additional undisclosed product candidates being considered for development, which cover a range of therapeutic areas and unmet medical

Generally, these product candidates are based on the same platform technology and employ a similar guided cell differentiation

and transplant approach as the product candidates detailed above, but in some cases may also include genetic modifications designed

to enhance efficacy and/or safety profiles.

addition to seeking to create value for shareholders by developing product candidates and advancing those candidates through

clinical development, we also may seek to create value from our large patent estate and additional related technologies and capabilities, through

partnering and/or strategic transactions.

Development Highlights

achieved numerous strategic and operational accomplishments during 2022, including advancing our clinical programs and product development

in several key programs.

execution under our collaboration with Roche and Genentech for the development of RG6501 (OpRegen) across multiple functional areas.

expansion of our clinical pipeline to include a new auditory neuronal cell transplant program ( ANP1 ) for the treatment of

hearing loss.

expansion of our clinical pipeline to include a new cell therapy development program, photoreceptor neural cell ( PNC1 ) transplants

for the treatment of vision loss due to photoreceptor dysfunction.

were presented at the Association for Research in Vision and Ophthalmology annual meeting (ARVO), suggesting that OpRegen continues to

be well tolerated with an acceptable safety profile, coupled with visual function and outer retinal structure improvements in patients

with GA and impaired vision.

that our partner, Cancer Research UK, had completed patient enrollment in a Phase 1 clinical study of VAC2 for the treatment of non-small

cell lung cancer.

goal is to address unmet medical needs by developing and advancing allogeneic, or “off-the-shelf,” treatments comprised of

functional cells delivered to the body.

Our biological therapies are derived from the differentiation of pluripotent stem cells from

established and self-renewing cell lines.

We direct these pluripotent cells to become specific cell types, or combinations of cell types,

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

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

support the furtherance of our product candidates, we aim to generate or have generated in vitro and in vivo data to support human testing

where such testing is warranted.

In some cases, we may collaborate with strategic partners, external advisors, or consultants to support

the development of our cell therapy technology.

area of focus is our continued effort to support our partner, Genentech, with the production and testing of our lead product candidate,

OpRegen (RG6501), which currently is being evaluated in a 30-60 patient Phase 2a multicenter, open-label, single arm clinical study,

as well as in the follow-up portion of a 24-patient Phase 1/2a multicenter, open-label, clinical study, in patients with dry age-related

macular degeneration (dry AMD).

also aim to advance our clinical-stage product candidate, OPC1, for the treatment of spinal cord injury, into a clinical study to evaluate

the safety and performance of a novel cell delivery system to deliver oligodendrocyte progenitor cells to the spinal parenchyma.

clinical stage dendritic cell product candidate, VAC2, is the subject of a Phase 1 clinical trial conducted by our partner, Cancer Research

UK, which has completed enrollment of eight (8) patients with advanced non-small cell lung cancer and we anticipate receiving additional

data from that trial during this year.

preclinical product candidates, ANP1 for hearing loss and our photoreceptor program, PNC1, to address various forms of blindness,

will continue to be evaluated in preclinical testing to determine the suitability of each program to advance into initial human

have identified, and we may seek to develop, additional product candidates based on our cell replacement approach.

We may elect to conduct

these activities on our own or through various collaborative arrangements.

Such additional product candidates could include gene edits,

which may provide enhanced functionality or offer more attractive safety or commercial profiles.

We may utilize various types of pluripotent

cell lines as starting material for our product candidates.

Presently, our process development and manufacturing activities, including our cGMP

production of clinical trial material, are predominantly conducted at our facility located in Jerusalem Israel, but such work

may be supplemented or complemented by our additional facility located in Carlsbad, California.

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

potential applications in many areas of medicine with large unmet patient needs, including certain age-related degenerative diseases

and degenerative conditions for which there presently are no cures.

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

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

cell manufacturing capabilities.

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

applications in many areas of medicine with large unmet patient needs, including certain age-related degenerative diseases, degenerative

conditions, or traumatic injury.

We are currently in clinical development

for various pluripotent cell-derived product candidates such as RPE cells, oligodendrocyte progenitor cells, and dendritic cells and

preclinical development for auditory neurons and photoreceptor cells.

In addition, we are considering the differentiation of pluripotent

cells into additional cell types that may have therapeutic benefits in other areas of unmet medical need.

therapies are often aimed at regenerating or replacing affected cells or tissues and therefore may have more durable, broader, or

more suitable applicability than certain traditional pharmaceutical products which seek 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 to a specific anatomical

compartment, systemic side effects are usually well-tolerated.

Lineage’s cell therapy approach resembles transplant medicine,

as it is focused on whether transplanted cells are retained or rejected by the body and whether the transplanted cells function as

key advantage of our approach is that it can provide us the opportunity to rapidly develop new programs without the extensive and

costly steps traditionally required to develop a small molecule agonist or antagonist.

Whereas small molecule product development

typically requires selection and validation of a drug target, followed by screening millions of molecules (e.g., a

“library” of compounds) to identify hits, followed by chemical modification guided by 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 to be “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 challenging

step in developing a new cell therapy is the establishment of a controllable and reproducible differentiation protocol which can

create the quality of cells to support clinical testing and commercial supply, 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

This approach can facilitate pipeline expansion at a lower cost than traditional methods ( Figure

Lineage’s Internal cGMP Facility Capabilities

addition to our corporate headquarters located in Carlsbad, California, we recently opened a new research and development (R&D) facility

also located in Carlsbad, expanding the Company’s R&D capabilities in the U.S.

and supporting the development of current

and future allogeneic cell transplant programs.

We also 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 ( Figure 2 ).

Novel Clinical Cell Therapy Pipeline

is a retinal pigment epithelial cell therapy in Phase 2a development for the treatment of geographic atrophy secondary to age-related

macular degeneration.

Following subretinal delivery, OpRegen has the potential to counteract RPE cell loss in areas of GA lesions by

supporting retinal structure and function.

OpRegen is being developed under a worldwide collaboration between Lineage, Roche and Genentech,

a member of the Roche Group.

See Note 14 (Commitments and Contingencies) to our consolidated financial statements included elsewhere

in this Report for discussion on the Roche Agreement.

has been granted Fast Track Designation from the U.S.

FDA, which includes an expedited regulatory path with the ability for increased

interfacing with the FDA during the clinical development process.

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.

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

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.

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

According to a 2022 report in JAMA Ophthalmology,

18.34 million individuals in the U.S.

40 years and older (11.64%) were living with early-stage AMD and 1.49 million (0.94%) were living

with late-stage AMD in 2019.

As the area of atrophy begins to include the fovea (the center of the macula), patients may lose their central

vision, making facial recognition, reading, and driving difficult or impossible, and may ultimately become legally blind.

The exact cause

of GA secondary to AMD is unknown, but is thought to result from multiple factors, such as genetics, age, smoking history, and environmental

There are two clinical presentations of AMD, the dry form, and the wet, or neovascular form (growth of abnormal new blood vessels).

Dry AMD typically advances slowly toward GA as RPE cells and photoreceptors become dysfunctional and deteriorate over time.

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

health and function.

If the metabolic waste products accumulate, lesions known as drusen may result.

Approximately 85-90% of AMD patients

suffer from the dry form of AMD, for which there is only one FDA approved therapeutic option at this time.

Additionally, 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

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 in Figures 3 and 4

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

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

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

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

healthy, and functional RPE cells manufactured from a well-characterized, allogeneic cell line, transplanted to the subretinal space

around the atrophic area (GA).

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.

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 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 consisted of five cohorts:

# of Patients

2 million OPC1 cells (low dose for safety evaluation)

10 million OPC1 cells

20 million OPC1 cells*

10 million OPC1 cells

20 million OPC1 cells*

One patient from Cohort 3 and one patient from Cohort 5 were administered 10 million cells.

January 2019, top-line 12-month data from the SCiStar trial were announced by Asterias, which included the following key findings:

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.

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.

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.

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.

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 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.

We believe OpRegen could have a lasting benefit from a single administration, or may be administered every

several years.

This approach differs from other investigational agents, as well as for the single approved drug for treatment of GA secondary

to AMD, pegcetacoplan injection (SYFOVRE ® ), and approved agents currently marketed for wet AMD, such as ranibizumab (Lucentis ® )

and aflibercept (Eylea ® ).

All of these approaches require repeated, frequent (monthly or every-other-month) intravitreal

injections into the eye.

In a Phase 1/2a clinical trial,

OpRegen has demonstrated the potential to slow, stop or reverse disease progression in geographic atrophy secondary to AMD.

open-label, single-arm, multi-center, dose-escalation trial evaluating a single administration of OpRegen delivered subretinally in patients

with bilateral GA.

Patient enrollment completed in November 2020, with twenty-four patients recruited into four cohorts.

The first three cohorts

enrolled only legally blind patients with a best corrected visual acuity (BCVA) of 20/200 or worse.

The fourth cohort enrolled 12 patients

with impaired vision (BCVA from 20/65 to 20/250 with smaller mean areas of GA).

Cohort 4 also included patients treated with a new “thaw-and-inject”

formulation of OpRegen, which could be shipped directly to sites and used immediately upon thawing.

The primary objective of the study

was to evaluate the safety and tolerability of OpRegen as assessed by the incidence and frequency of treatment-emergent adverse events.

Secondary objectives evaluated the preliminary activity of OpRegen treatment by assessing the changes in ophthalmological parameters measured

by various methods of primary clinical relevance.

Long-term follow-up of patients in this study is currently ongoing.

Results from the primary endpoint,

the safety and tolerability at one year post-OpRegen transplant, were presented at the 2022 Association for Research in Vision and Ophthalmology

Annual Meeting (ARVO 2022), and suggest that OpRegen RPE cells are generally well-tolerated with an acceptable safety profile.

no unexpected ocular adverse events (AEs) were observed and those events that were observed were considered expected based on the surgical

procedures involved in OpRegen administration, such as vitrectomy.

Most AEs reported (cohorts 1-3, 87%;

cohort 4, 93%) were mild in severity.

Findings on clinical examination

by different imaging modalities have shown positive clinical benefits in some patients as evidenced by retinal structure improvement and

decreases in drusen, 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 note, five subjects

from cohort 4 where the OpRegen suspension was delivered to most or all of the GA area, including the fovea, have shown evidence of outer

retinal structural improvement (tissue restoration).

This was accompanied by a reduction in the overall 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 most cohort 4 treated patients (average gain of 7.6 letters

read), but particularly the five patients with better surgical coverage (average 12.8 letter gain).

Furthermore, differences in visual

acuity between treated and untreated eyes remained statistically significant across Cohort 4 patients at 15 months post-treatment.

unprecedented findings support 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.

December 2021, we entered into the Roche Agreement for the development and commercialization of OpRegen.

See “—Collaborations—Roche

Collaboration Agreement,” below.

November 2022, we announced our partner Genentech, a member of the Roche group has launched a Phase 2a, multicenter, open-label, single

arm clinical study of RG6501 (OpRegen), a retinal pigment epithelial cell therapy.

The study is intended to optimize subretinal surgical

delivery and evaluate the safety and activity of OpRegen in approximately 30, and up to 60 , patients with geographic atrophy (GA) secondary

to age-related macular degeneration.

The primary objectives of the study are to evaluate (i) the proportion of patients with subretinal

surgical delivery of OpRegen to target regions under the retina, and (ii) to evaluate the safety of subretinal surgical delivery of OpRegen

as measured by the incidence and severity of procedure-related adverse events at 3 months following surgery.

A key secondary objective

is to evaluate the proportion of patients with qualitative improvement in retinal structure, as determined by Optical Coherence Tomography

(SD-OCT) imaging, within 3 months following surgery.

RG6501 (OpRegen) is currently being developed under an exclusive worldwide collaboration

between Lineage, Roche and Genentech.

is an oligodendrocyte progenitor cell therapy in Phase 1/2a development for the treatment of acute 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/or loss of bladder and sexual function.

There 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.

to treat this complex injury may include multiple mechanisms of action, such as 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 promising 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 the conduction of electrical impulses throughout the central nervous

system (“CNS”), as shown in Figure 5 .

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

is derived from our pluripotent cell technology under 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.

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 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 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 ( Figure 6 ).

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.

Suppression of spinal cavitation in a rat contusion model

development of OPC1 has been supported by a $14.3 million clinical development grant from CIRM.

to apply for additional grants from CIRM for the program’s continued development.

See “—Grants from Government Entities,”

our acquisition of Asterias Biotherapeutics, Inc.

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

a five-patient

Phase 1 safety trial in acute thoracic SCI and a 25-patient Phase 1/2a dose escalation trial in subacute cervical SCI, called the SCiStar

The SCiStar trial was an open-label, single-arm trial that tested 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.

OPC1 was administered 21 to 42 days

Patients were followed by neurological exams and imaging procedures to assess the safety and activity of the product.

findings for both the thoracic and cervical studies are shown in Figure 7 .

OPC1 Thoracic & Cervical Clinical Trials Overview

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.

development pathway and includes the ability for increased interfacing with the FDA during clinical development.

The FDA has also 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

1 unchanged sentence

Improvements to the manufacturing

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.

process were performed to create enhancements to the production process and scale and to achieve greater 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.

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.

February 2021, we announced an exclusive agreement with Neurgain Technologies, Inc.

(“Neurgain”), to evaluate a novel delivery

system 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 for flexibility with accurate delivery to the injury site.

We continued to evaluate the Neurgain device

throughout 2021 and 2022.

We have submitted an RMAT package to the FDA to support the use of a new delivery device, along with a protocol

synopsis for a small safety study in both subacute and chronic patients.

We intend to submit an IND amendment during 2023 for a human

safety clinical study to validate the device ( DOSED – D elivery of O ligodendrocyte Progenitor Cells for S pinal

E valuation of a Novel D evice) and an additional submission to support the use of the device in a late-stage

clinical study to follow.

are actively working both on expanding our existing and establishing new collaborative partnerships with SCI patient engagement and advocacy

organizations, with the overarching goals of enhancing awareness of SCI and elevating the patient’s voice in the treatment development

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.

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.

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

potentially debilitating side effects.

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

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

provide a more targeted treatment for non-small cell lung cancer (NSCLC), we are currently developing VAC2 as an allogeneic, or non-patient

specific, cancer vaccine designed to stimulate patient immune responses to an antigen, human telomerase reverse transcriptase (hTERT),

which is commonly expressed in cancerous cells but is not usually found 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 via an mRNA construct which is loaded into the dendritic cell via electroporation.

The VAC1 autologous program, which

preceded VAC2 but relied on the same antigen, served as proof of concept behind our approach to utilize dendritic cell vaccines targeting

telomerase to treat cancer.

pluripotent cells as the starting material for VAC production offers certain advantages.

Compared to technologies that rely on the use

of a patient’s own blood, our pluripotent cell technology provides a path to a more scalable system for the production of a large

number of vaccine doses, lower manufacturing costs, greater product consistency, and off-the-shelf availability.

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 a diverse number or type of 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 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.

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 NSCLC.

CRUK was responsible, at its own cost,

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

In April 2022, we announced that CRUK

had completed patient enrollment in the ongoing Phase 1 clinical trial of VAC2 for the treatment of NSCLC.

All eight patients completed

dosing in the initial aspect of the trial and CRUK is currently conducting analyses of various samples collected per protocol.

previously reported, VAC2 demonstrated potent and specific induction of immune response in all patients dosed and analyzed to date, with

high levels of peripheral antigen-specific immunogenicity observed at multiple time points.

Importantly, VAC2 appeared to be well tolerated

with no unexpected adverse events (AEs) and no dose-limiting toxicity, serious adverse events (SAEs) or AEs.

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.

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.

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

See “—Collaborations—ITI

Collaboration Agreement,” below.

2022, we focused on improving the manufacturing process for VAC to provide a reliable supply for potential future clinical studies and

commercial development.

We submitted a pre-IND package to the FDA in the third quarter of 2022 and have received important feedback that

will help guide any future full IND submission(s).

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

The Auditory Neurons program was

established in 2022 with the goal of advancing auditory neuron transplant therapy as a treatment option for hearing loss conditions.

initial focus of this program is on the treatment of auditory neuropathy spectrum disorders (ANSD), a group of conditions characterized

by the loss of auditory neuron function where the sound is not transmitted properly from the cochlea (inner ear) to the brain.

our proprietary technology platform, we have developed a unique differentiation process for generating auditory neurons (ANP1), which

are planned to undergo preclinical testing this year to assess their safety and delivery system.

In February 2023, we reported that preclinical

testing of ANP1 had begun through a collaboration with the University of Michigan and Yehoash Raphael, Ph.D., The R.

Jamison and Betty

Williams Professor of Otolaryngology, Department of Otolaryngology-Head and Neck Surgery and Lab Director at the University of Michigan

Kresge Hearing Research Institute.

Photoreceptors

Photoreceptor program is developing the process of directing the differentiation of human pluripotent cells into clinical-grade

transplantable photoreceptor precursors/cells (PRCs) and to show their further differentiation, integration, and function after

transplantation into the subretinal space of animal models of photoreceptor degeneration.

Photoreceptor degeneration is the hallmark

of a variety of retinal diseases such as retinitis pigmentosa (RP).

Currently, the only approved treatments are gene therapies which

treat specific genetic defects that lead to RP.

Our PNC1 program is aimed to replace damaged photoreceptors regardless of the origin

of degeneration.

We hope to be able to present top-line preclinical data once the appropriate intellectual property submissions have

been made and as data become available.

Collaborations

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.

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

We have entered collaborations with pharmaceutical

and biotechnology companies, government agencies, academic laboratories, and research institutes with resources and expertise in diverse

areas in an effort to advance our discovery and development platforms and will continue to evaluate such collaborations.

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 with the earliest access to our therapies.

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.

December 17, 2021, Lineage entered into the Roche Agreement,

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.

Lineage will be responsible for completing activities related to the ongoing clinical study Phase 1/2a open-label, dose-escalation clinical

safety and efficacy study in patients with advanced dry AMD with GA, for which enrollment is complete, and performing certain manufacturing

and process development activities.

paid Lineage a $50.0 million upfront payment (which was received in January 2022) 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 of OpRegen.

All milestone payments, and royalty payments, due under the Roche Agreement 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.

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

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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.

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

Either party may terminate the Roche Agreement

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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.

is obligated to pay to the IIA (as defined below) approximately 24.3% of the upfront payment and of any future payments Lineage

receives under the Roche Agreement, up to an aggregate cap on all payments to IIA, such cap growing over time via interest accrual

until paid in full, which currently stands at approximately $91.2 million.

In addition, pursuant to the Second Amended and Restated

License Agreement, dated June 15, 2017, between our foreign subsidiary located in Jerusalem, Israel, Cell Cure Neurosciences Ltd.

(“Cell Cure”), and Hadasit Medical Research and Development Ltd.

(“Hadasit”), as amended, and a letter

agreement entered into between Cell Cure and Hadasit on December 17, 2021, Cell Cure is obligated to pay to Hadasit (i) a maximum of

21.5% of the upfront payment (subject to certain reductions) and of any milestone payments Lineage receives from Roche under the

Roche Agreement, and (ii) up to 50% of all royalty payments (subject to a maximum payment of 5% of net sales of products) Lineage

receives from Roche under the Roche Agreement.

In accordance with the foregoing obligations, from the $50.0 million upfront payment

Lineage received from Roche in January 2022, Lineage paid $12.1 million to the IIA and $8.9 million to Hadasit.

“—Grants from Government Entities,” below, and Note 14 (Commitments and Contingencies) to our consolidated

financial statements included in this report for additional information related to our obligations to the IIA and

Collaboration Agreement

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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.

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.

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 December 31, 2021, and the country where their principal business is located.

Field of Business

OncoCyte Corporation (1)

Cancer diagnostics

Hadasit Bio-Holdings Ltd.

Owns a portfolio of R&D based companies

Subsidiaries:

Field of Business

Lineage Ownership

Cell Cure Neurosciences Ltd.

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

OrthoCyte Corporation (4)

Research in orthopedic diseases and injuries

are publicly traded companies.

See Notes to Consolidated Financial Statements:

Marketable Equity Securities.

shares owned by Lineage and ES Cell International Pte.

was acquired by Lineage in March 2019.

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

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

terms of the ITI Agreement, Lineage is entitled to initial fees totaling up to $2.0 million, which we have received $1.0 million ,

and up to an additional $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.

ITI has received a research and development grade of the VAC-CMV product

and is evaluating its next steps.

from Government Entities

from the Israeli Innovation Authority

the Israeli Encouragement of Research, Development and Industrial Initiative Technology Law, 5744-1984, as amended, and related regulations

(collectively, the “Innovation Law”), research and development programs which meet specified criteria and are approved by

the Israel Innovation Authority (the “IIA”) are eligible for grants of up to 50% of the project’s expenditure, as determined

by the research committee, in exchange for the payment of royalties from the revenues generated from the sale of product candidates and

related services developed, in whole or in part pursuant to, or as a result of, a research and development program funded by the IIA.

The royalties are generally at a range of 3.0% to 5.0% of revenues until the entire IIA grant is repaid, together with an annual interest

generally tied to an interest rate index.

the Innovation Law, the manufacture of product candidates developed with government grants is required to be performed in Israel.

transfer of manufacturing activity outside Israel may be subject to the prior approval of the IIA, and if approved, may increase the

royalties payable to the IIA, in certain cases substantially.

The amount of the increase in the royalties payable depends on the percentage

of manufacturing activity that occurs outside Israel.

know-how developed within the framework of the Innovation Law plan may not be transferred to third parties outside Israel without the

prior approval of a governmental committee chartered under the Innovation Law.

The IIA approval to transfer know-how created, in whole

or in part, in connection with an IIA-funded project to a third party outside Israel where the transferring company remains an operating

Israeli entity is subject to payment of a redemption fee to the IIA calculated according to a formula provided under the Innovation Law

that is based, in general, on the ratio between the aggregate IIA grants to the company’s aggregate investments in the project

that was funded by these IIA grants, multiplied by the transaction consideration.

The transfer of such know-how to a party outside Israel

where the transferring company ceases to exist as an Israeli entity is subject to a redemption fee formula that is based, in general,

on the ratio between the aggregate IIA grants to the total financial investments in the company, multiplied by the transaction consideration.

The redemption fee in case of transfer of know-how to a party outside Israel is generally based on the ratio between the aggregate IIA

grants received by the company and the company’s aggregate research and development expenses.

The fee is multiplied by the transaction consideration,

and the maximum amount payable to the IIA in case of transfer of know-how outside Israel will not exceed six times the value of the grants

received plus interest.

In the event that the receiver of the grants ceases to be an Israeli corporation such payment shall not exceed

six times the value of the grants received plus interest, with a possibility to reduce such payment to up to three times the value of

the grants received plus interest if the research and development activity remains in Israel for a period of three years after payment

restrictions under the Innovation Law, including restrictions on the sale, transfer or licensing to a non-Israeli entity of know-how

developed as part of the programs under which the grants were given, continue to apply even after the repayment of royalties in full

by the grant recipient.

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

and when we acquired our holdings in Cell Cure, we undertook in writing, vis-à-vis the IIA, to comply with, and to ensure the

compliance by Cell Cure with, the Innovation Law.

We therefore must comply with the requirements of the Innovation Law and related regulations.

To date, through a series of separate grants beginning in 2007, Cell Cure received a total of $15.4 million from the IIA to support the

OpRegen program.

See Note 14 (Commitments and Contingencies) to our consolidated financial statements included in this report for additional

from the California Institute for Regenerative Medicine

clinical development of OPC1 has been supported by $14.3 million of grants from CIRM, a state agency established to fund stem cell

research and development of new stem cell-based treatments.

The terms of our grant award from CIRM require royalty payments to the

California State General Fund based on net commercial revenue from the sale of any product, drug or service arising from CIRM-funded

research as follows:

0.1% per $1.0 million of funds granted for the earlier of 10 years or nine times the award amount that has been

In addition, a 1% royalty will be owed on net commercial revenue in excess of $500 million per year until the last to expire

patent covering a CIRM-funded invention, if any, contributed towards the commercialization of the product.

may elect to develop additional product candidates currently in the earliest stages of development and which cover a range of therapeutic

Generally, these product candidates are still conceptual but are based on the same pluripotent platform technology and would employ

a similar guided cell differentiation and transplant approach as our current clinical-stage products.

and Trade Secrets

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protection, we may transfer or abandon such patents and patent applications to avoid incurring unnecessary costs.

own or license, directly or through our subsidiaries, several patent families that include hundreds of U.S.

and international

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.

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

own or license, directly or through our subsidiaries, patent families that include several hundreds of U.S.

and international 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 have rights to issued U.S.

and international patents and pending patent applications covering OpRegen.

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

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

from Hadasit, a wholly owned subsidiary of Hadassah Medical Organization.

We also solely own pending U.S.

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).

and international patent applications

relating to a cryopreserved thaw-and-inject formulation.

patent 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 “—Collaborations—Roche

Collaboration Agreement” above).

have numerous U.S.

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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.

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.

The estimated expiration dates of the four patent families with pending

applications owned by us range from 2036 to 2043.

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.

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expiration dates of the pending applications, acquired from Geron or in-licensed to us range from 2022 to 2029.

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.

We also solely own pending

and international patent applications relating to VAC and VAC processes with estimated expiration dates, if issued, from 2041 to

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.

have a pending U.S.

provisional patent application for our ANP1 program.

It is anticipated that this provisional patent application will

be converted to a U.S.

utility patent application and one or more international patent applications in 2023 and, if issued, would have

estimated patent expiration dates of 2043.

Photoreceptors

have pending U.S.

and international patent applications for our PNC1 program.

These pending patent applications include a patent family

licensed from Hadasit and a patent family solely owned by Lineage.

The pending patent applications licensed from Hadasit, if issued,

would have estimated patent expiration dates of 2038.

The pending patent applications owned by Lineage, if issued, would have estimated

patent expiration dates of 2036.

We also have a pending U.S.

provisional patent application jointly owned with Hadasit.

It is anticipated

that this provisional patent application will be converted to a U.S.

utility patent application and one or more international applications

in 2023 and, if issued, would have estimated patent expiration dates of 2043.

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

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.

patent applications are confidential until a patent application is published or 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 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.

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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

of December 31, 2022, we had 78 employees, of which 25 were employed by Lineage and 53 were employed by Cell Cure and work in Israel.

Of the 78 employees, 70 were employed on a full-time basis and eight were employed on a part-time basis.

Eleven employees hold Ph.D.

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

None of our employees are covered by a collective bargaining

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

Manufacturing

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.

Manufacturing

of pluripotent-derived products is complex and requires the use of innovative technologies to handle living cells.

Manufacturing these

products requires facilities specifically designed for and validated for this purpose and specific quality assurance and quality control

procedures are necessary.

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

cell therapy product candidates, are conducted at our facility in Jerusalem, Israel.

The facility, which includes process

development laboratories and a cGMP manufacturing facility, 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.

process development and manufacturing are designed to address the complexity of manufacturing cell-based therapies with a specific focus

on the reproducibility and scale of the manufacturing process.

To this end each of our manufacturing processes contains predefined steps

that are controlled by a specific set of control tests that allow us to follow up the progression of production according to the manufacturing

plan, We implement a variety of 2-dimensional and 3-dimensional culture conditions to address the specific requirements of our pre-defined

differentiation processes of the pluripotent cell into a functional cell product.

obtain key components required for the manufacture of our cell therapy product candidates from third-party manufacturers and suppliers,

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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 use.

has obtained the right to use various technologies that we believe have 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 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.

March 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.

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

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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

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

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 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.

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.

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 be in 2029.

authorities at the federal, state and local level, and in other countries, extensively regulate among other things, the development,

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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.

In the United States, the FDA regulates drugs, biologics and medical devices, among other things, 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 cellular and tissue-based products (“HCT/Ps”) are subject to additional regulations,

including registration and listing requirements and current good tissue practices.

Certain proposed cell therapy products will be reviewed

by the FDA staff in its Center for Biologics Evaluation and Research Office of Therapeutic Products (“OTP”).

domestic human drug and biologic products will be subject to rigorous FDA review and approval procedures.

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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.

1 clinical trials are conducted in a small number of healthy volunteers or volunteers with the target disease or condition to assess

safety and dosage.

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.

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

The clinical trial sponsor is required to report adverse events to the FDA and IRB in accordance with FDA laws and regulations.

Monitoring of all aspects of the trial to minimize risks is a continuing process.

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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.

Before approving an NDA or BLA, the FDA will inspect the facilities at which the product is manufactured or perform an establishment

file review of the site.

The FDA will not approve the product unless it determines that the manufacturing processes and facilities are

in compliance with the requirements of current Good Manufacturing Practices (“cGMP”) and adequate to assure consistent production

of the product within required specifications including good tissue practices (“GTPs”) to the extent applicable.

FDA regulations that detail minimum requirements for the methods, facilities, and controls used in manufacturing, processing, and packing

of a drug product.

GTPs 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

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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.

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 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

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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.

product using such therapies or products, except for those regulated solely under Section 361 of the Public Health Service Act;

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.

the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which

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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.

Orphan drug designation is

a separate process from seeking an NDA or 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.

full NDA or BLA, to market the same drug 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.

the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA or BLA application fee.

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.

products 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.

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.

they be produced in compliance with cGMP and cGTP.

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.

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

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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

and Data Security Laws

the ordinary course of our business, we may collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect,

secure, dispose of, transmit, and share (collectively, processing) personal data and other sensitive information, including data we collect

about trial participants in connection with clinical trials.

Accordingly, we are, or may become, subject to numerous data privacy and

security requirements related to data privacy, security, and protection under federal, state, local, and foreign laws, regulations, guidance,

and industry standards.

Compliance with such requirements increases the cost and complexity of doing business and non-compliance may

result in, among other penalties and sanctions, substantial monetary fines.

The data privacy, security, and protection laws to which

we may be subject include, without limitation, the Federal Trade Commission Act, the California Consumer Privacy Act of 2018 (“CCPA”),

as amended by the California Privacy Rights Act of 2020 (“CPRA”), Israel’s Protection of Privacy Law 5741-1981, 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.

In addition, several states within the United States have enacted or proposed data privacy laws, including Virginia, Colorado, Connecticut

CCPA and EU GDPR are examples of increasingly stringent and evolving regulatory frameworks related to personal data processing, which increase

compliance obligations and exposure for 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.

Also, the CCPA provides for civil penalties and a private right of action for

certain data breaches.

Under the CPRA, effective January 1, 2023, California residents also have 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.

A new California Privacy Protection Agency was also established 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;

The EU GDPR applies to any company established

in the European Economic Area (“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.

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;

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;

requiring data protection impact assessments in certain circumstances;

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.

formalizing a heightened and codified standard of

data subject consents;

requiring the implementation and maintenance of technical and organizational safeguards for personal data;

notice of certain personal data breaches to the relevant supervisory authority(ies) and affected individuals;

and mandating the appointment

of representatives in the UK and/or the EU in certain circumstances.

Moreover, under the EU GDPR, government regulators may impose temporary

or definitive bans on data processing, as well as fines of up to 20 million euros or 4% of a company’s annual global revenue, whichever

Further, individuals may initiate litigation related to processing of their personal data.

In addition, Israel’s Protection

of Privacy Law 5741-1981 and the regulations promulgated thereunder impose certain obligations with respect to the manner personal data

is processed, and government regulators may issue fines or sanctions for non-compliance.

jurisdictions have enacted data localization laws and cross-border personal data transfer laws, which could make it more difficult to

transfer information across jurisdictions (such as transferring or receiving personal data that originates in the EU or in other foreign

jurisdictions).

Existing mechanisms that facilitate cross-border personal data transfers may change or be invalidated.

For example, absent

appropriate safeguards or other circumstances, the EU GDPR generally restricts the transfer of personal data to countries outside of

the EEA, such as the United States, that the European Commission does not consider to provide an adequate level of data privacy and security.

The European Commission released a set of “Standard Contractual Clauses” (“SCCs”), that are designed to be a

valid mechanism to facilitate personal data transfers out of the EEA to these jurisdictions.

Currently, these SCCs are a valid mechanism

to transfer personal data outside of the EEA, but there exists some uncertainty regarding whether the SCCs will remain a valid mechanism.

Additionally, the SCCs impose additional compliance burdens, such as conducting transfer impact assessments to determine whether additional

security measures are necessary to protect the at-issue personal data.

In addition, Switzerland and the UK similarly restrict personal

data transfers outside of those jurisdictions to countries, such as the United States, that do not provide an adequate level of personal

data protection, and certain countries outside Europe (e.g., Israel) have also passed or are considering laws requiring local data residency

or otherwise impeding the transfer of personal data across borders.

and State Fraud and Abuse Laws

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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.

Although payment and business practices that meet the requirements of a safe harbor are not treated as offenses 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

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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.

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

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

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

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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

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

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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.

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.‌

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.

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

healthcare programs.

Since its enactment, there have been judicial, Congressional, and executive branch challenges to certain aspects

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.

On June 17, 2021,

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.

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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.

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 the rule was delayed until 2032 by the Inflation Reduction Act of 2022.

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 in all U.S.

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

Further, in July 2021, the Biden administration released an executive order that included multiple provisions aimed at prescription

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.

August 2022, the Inflation Reduction Act of 2022 was signed into law by President Biden.

The new legislation has implications for Medicare

Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to give them the

option of paying a monthly premium for outpatient prescription drug coverage.

Among other things, the Inflation Reduction Act of 2022

requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated

subject to a cap;

imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first

due in 2023);

and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The Inflation

Reduction Act of 2022 permits the Secretary of the HHS to implement many of these provisions through guidance, as opposed to regulation,

for the initial years.

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.

Customers and Sources of Revenues

6 unchanged sentences

IIA grant income (Cell Cure Neurosciences Ltd, Israel)

NIH grant income

following table shows the geographic sources of revenue that were recognized during the years ended December 31, 2022 and 2021 (dollar

amounts are in thousands):

Year Ended December 31,

2 unchanged sentences

revenues are primarily generated from grants in Israel.

Products and Medical Devices

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.

for Regenerative Medicine

cell therapy industry is characterized by rapidly evolving technology and intense competition.

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.

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.

do not have established marketing, sales or distribution infrastructure or capabilities.

In order to commercialize any of our product

candidates if approved for commercial sale, we must either establish a sales and marketing organization with technical expertise and

supporting distribution capabilities or collaborate with third-parties that have sales and marketing experience.

As we move our product

candidates through development toward regulatory approval, we intend to evaluate options for each product candidate’s commercialization

These options include building our own sales force and other commercial infrastructure, entering into strategic marketing partnerships

with third parties, out-licensing the product to other pharmaceutical or biotechnology companies, and combinations of these strategies.

cell therapy industry is characterized by rapid innovation, intense and dynamic competition with a strong emphasis on proprietary products.

While we believe that our technology, manufacturing capabilities, scientific knowledge, and experience in the field of cell therapy provide

us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical and biotechnology

companies with substantially greater financial and other resources than we have, academic institutions and governmental agencies and

public and private research institutions, as well as standard-of-care treatments, new products undergoing development and combinations

of existing and new therapies.

Any product candidates that we successfully develop and commercialize will compete with existing therapies

and new therapies, including combinations thereof, that may become available in the future.

mentioned above, some of our competitors have substantially greater financial and other resources than we have, such as larger research

and development staff and well-established marketing and salesforces, or may operate in jurisdictions with lower standards of evidence

to bring products to market.

For example, we are aware that some of our competitors, including Bristol-Myers Squibb Company, Novo Nordisk

A/S, Novartis AG, Johnson & Johnson, Merck & Co Inc., Gilead Sciences Inc., Astellas Pharma Inc., Bayer AG, BioNTech SE, Moderna

Inc., Sana Biotechnology Inc., Senti Biosciences Inc., Iveric Bio Inc., Apellis Pharmaceuticals Inc., Century

Therapeutics Inc., and Allogene Therapeutics Inc., may be conducting clinical trials for therapies that could compete with our

cell therapy programs.

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, USA, and our phone number

at that address is (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 SEC.

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