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Item 1A. Risk Factors

2023-03-09 compared with 2022-03-10 · 1725 added, 1176 removed, 487 unchanged (86% of the section changed)

investment in our common shares involves a high degree of risk.

You should carefully consider the following risk factors, as well as

the other information in this Report, before deciding whether to purchase, hold or sell our common shares.

The occurrence of any of the

following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results

to differ materially from those contained in forward-looking statements we have made in this Report and those we may make from time to

You should consider all of the risk factors described when evaluating our business.

You should carefully consider all the risk factors described below, as

well as the other information in this report, when evaluating our business and before deciding whether to purchase, hold or sell our

common shares.

Each of these risk factors, as well as additional risks not presently known to us or that we currently consider immaterial,

could harm our business, financial condition, results of operations and/or growth prospects, as well as adversely affect the market price

of our common shares, in which case you may lose all or part of your investment.

Related to Our Business Operations and Capital Requirements

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Since inception, we have incurred significant operating losses

and have funded our operations primarily through sales of our equity securities and the equity securities of former subsidiaries, receipt

of research grants, royalties on product sales, license revenues, sales of research products, and revenues from subscription fees and

advertising revenue from database products of a former subsidiary.

Substantially all of our losses have resulted from expenses incurred

in connection with our research and development programs and from general and administrative costs associated with our operations.

of our product candidates will require substantial additional development time and resources before we would be able to apply for or

receive regulatory approvals.

We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase

substantially as we continue our development of, seek regulatory approval for and potentially commercialize any of our product candidates

and seek to identify, assess, acquire, in-license or develop additional product candidates.

and we expect to continue to incur significant operating losses for the foreseeable future.

Unless and until we or a third-party collaborator

succeed in developing, obtaining regulatory approval for, and generating substantial revenue from sales of one or more of our product

candidates, we do not expect to become profitable.

All of our product candidates will require substantial additional development time

and resources before we or any collaborator would be able to apply for or receive any regulatory approval to market and sell a product,

and the timeline for and outcome of these development efforts is highly uncertain.

We anticipate our operating losses will increase substantially

as we continue our development of, seek regulatory approval for and potentially commercialize our product candidates and seek to identify,

assess, acquire, in-license or develop additional product candidates.

We may never achieve profitability.

become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue.

This will require us to be successful in a range of challenging activities, including completing clinical trials and preclinical trials

of our product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling any products

for which we may obtain regulatory approval.

In addition, we are attempting to develop new medical products and technology.

succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability.

This will require us and our collaborators to be successful in a range of challenging activities, including completing clinical and nonclinical

studies of our product candidates, obtaining regulatory approval for these product candidates, manufacturing, marketing, and selling

any approved products, and satisfying any post-marketing regulatory requirements.

We are attempting to develop new technology and therapeutic

Cell therapy is a nascent field with limited regulatory approval precedent, which makes it difficult to predict the time and

cost of product candidate development and seeking regulatory approval.

The regulatory pathway with the FDA and comparable foreign regulatory

authorities may be more complex, time-consuming, and unpredictable relative to more well-known therapeutic approaches.

We and our collaborators

may never succeed in these activities and, even if we do, may never generate revenues that are significant enough for us to achieve profitability.

If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

Our failure to

become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research

and development efforts, expand our business, or continue our operations.

A decline in the value of our company could also cause you

to lose all or part of your investment.

investigational allogeneic cell therapies represent a novel approach to the treatment of serious medical conditions, which gives rise

to significant challenges.

We or our collaborators may not succeed in developing any of our product candidates.

are developing a pipeline of allogeneic cell therapy product candidates with cells that we create by applying proprietary differentiation

protocols to established pluripotent cell lines and which must be either transplanted into patients to replace or support cells that

are dysfunctional or absent due to degenerative disease or traumatic injury or administered by injection as a means of helping the body

mount a more robust and effective immune response to cancer or infectious diseases.

Allogeneic cell therapy is an area of therapeutic

medical intervention that is still in its infancy, and as such, it is difficult to accurately predict the type and scope of challenges

we and our collaborators may face during the development of our product candidates.

We face significant challenges and uncertainties

associated with the manufacture, preclinical and clinical development, regulatory approval pathway, and third-party payor coverage and

reimbursement of our product candidates required for successful commercialization, including:

manufacturing

our product candidates to our internal standards, as well as to that of applicable regulatory specifications, in a timely manner,

and on the scale necessary to support larger-scale clinical trials, and, if approved, commercialization;

understanding

and addressing variability in our cell manufacturing processes, which could affect our ability to produce clinical trial material

and, if approved, commercial product in a reliable and consistent manner;

and completing clinical trials of our product candidates that will demonstrate their safe and effective use to treat the targeted

disease or other medical condition;

clinical and, if approved, commercial supplies of key components required for the manufacture of our product candidates;

formulations of our cells that reduce or eliminate dose preparation or other complexities of handling and administration of our product

candidates at the point of care;

developing and validating delivery systems and methods for successful surgical transplantation of our cells;

regulatory approval, as the regulatory framework for approval of potential allogeneic cell therapies are evolving;

sales, marketing, and compliance capabilities upon obtaining any regulatory approval to gain acceptance of a novel therapy;

sufficient product coverage and reimbursement from third-party payors such as government healthcare administration authorities and

private healthcare insurers for any approved product to enable the product to compete in the marketplace and become commercially

and maintaining intellectual property protection for our product candidates, the operations used to manufacture them and the methods

for using them in order to prevent third parties from making, using, selling, offering to sell or importing our product candidates

or otherwise exploiting our cell manufacturing processes.

we are not successful in addressing key challenges in development and commercialization of our cell therapy product candidates, or if

our product candidates and technologies do not prove to be safe or effective for the indications for which they are being developed,

our business prospects and revenue opportunities will be materially limited.

will continue to spend a substantial amount of our capital on research and development, but we might not succeed in developing products

and technologies that are useful in medicine.

are attempting to develop new medical products and technology.

These new products and technologies might not prove to be safe and efficacious

in the human medical applications for which they are being developed.

Our research and development activities are costly, time consuming,

and their results are uncertain.

We incurred research and development expenses amounting to approximately $33.9 million and $12.3 million

during the fiscal years ended December 31, 2021 and 2020, respectively.

If we successfully develop a new technology or product, refinement

of the new technology or product and definition of the practical applications and limitations of the technology or product may take years

and require large sums of money.

Clinical trials of new therapeutic products, particularly those products that are regulated as biologics,

drugs, or devices, are very expensive and take years to complete.

We may not have the financial resources to fund clinical trials on

our own and we may have to enter into licensing or collaborative arrangements with others.

Any such arrangements may be dilutive to our

ownership or economic interest in the products we develop, and we might have to accept royalty payments on product sales rather than

receiving the gross revenues from product sales.

In addition, we may discontinue one or more of the research or product development programs.

Our product and technology development programs may be delayed or discontinued should adequate funding on acceptable terms not be available.

amount and pace of research and development work that we can do or sponsor, and our ability to commence and complete clinical trials

required to obtain regulatory approval to market our therapeutic and medical device products, depends upon the amount of funds we have.

December 31, 2021, we had $58.4 million of cash, cash equivalents and marketable equity securities.

There can be no assurance that we

will be able to raise additional funds on favorable terms or at all, or that any funds raised will be sufficient to permit us to develop

and market our products and technology, if and when approved.

Our ability to raise additional funds may be adversely impacted by deteriorating

global economic conditions and the disruptions to and volatility in the credit and financial markets in the United States and worldwide

resulting from the ongoing COVID-19 pandemic.

Unless we are able to generate sufficient revenue or raise additional funds when needed,

it is likely that we will be unable to continue our planned activities, even if we make progress in our research and development projects.

We may have to postpone or limit the pace of our research and development work and planned clinical trials of our product candidates

unless our cash resources increase through a growth in revenues, royalties, license fees, equity financings or borrowings.

that are safe and effective for their target indications or commercially viable.

research and development activities are costly, time consuming, and their results are uncertain.

We incurred research and development

expenses amounting to approximately $14.0 million and $33.9 million during the fiscal years ended December 31, 2022 and 2021, respectively,

and we expect to continue to incur substantial research and development expenses.

If we successfully develop a new technology or product,

refinement of the new technology or product and definition of the practical applications and limitations of the technology or product

may take years and require large sums of money.

Clinical trials of new therapeutic products, particularly those products that are regulated

as biologics, drugs, or devices, such as our product candidates, are very expensive and take years to complete.

Only a small percentage

of therapeutic product candidates that enter the development process ever receive marketing approval.

Even with substantial spending

on research and development of our product candidates, they might not prove to be safe or efficacious in the human medical applications

for which they are being developed, or they may prove too expensive to manufacture or otherwise fail to gain sufficient market acceptance

to be commercially viable.

will need to obtain substantial additional funding to complete the development and seek regulatory approval of our product candidates

and to commercialize products approved for marketing, if any.

If we are unable to obtain adequate capital when needed, we may delay,

reduce, limit the pace of, suspend or discontinue our product and technology development programs or other operations, which could significantly

harm our business and prospects and cause the market price of our common shares to decline.

December 31, 2022, we had $57.9 million of cash, cash equivalents and marketable securities.

We believe that our cash, cash equivalents

and marketable securities as of December 31, 2022 will be sufficient to fund our planned operations for at least the next 12 months after

the issuance of this report;

however, these resources will not be sufficient to fund our product candidates through regulatory approval,

and we will need to raise substantial additional capital to complete the development and seek regulatory approval of our product candidates

and to commercialize products approved for marketing, if any.

In addition, we may seek additional capital due to favorable market conditions

or strategic considerations even if we believe we have sufficient funds for our planned operations.

such time as we are able to generate sufficient revenues from product sales, royalties or license fees, if ever, we expect to fund our

operations through equity offerings, debt financings or other third-party capital sources, including potentially new grants from governmental

entities or strategic alliances, collaborations, licenses or other similar arrangements.

However, additional capital may not be available

to us when needed, on favorable terms, or at all, and any additional capital raised may not be sufficient to enable us to complete development

or obtain regulatory approval of our product candidates or commercialize approved products, if any.

Our past success in raising capital

through equity offerings, strategic collaborations and grants from governmental entities should not provide any assurance that we will

be successful in raising additional capital through any of those means when needed, or at all.

We expect our ability to raise additional

capital will depend not only on progress we and our collaborators make in developing our technologies and product candidates, but also

on factors outside of our control that affect access to capital and conditions in the capital markets.

A low trading volume, share price

and market capitalization together with limited revenue, net losses, and limited amount of unissued authorized common shares may make

it difficult and expensive for us to raise additional capital through equity or debt financings.

Our ability to obtain additional funds

and the amount and type of financing available to us may be adversely impacted by unstable and unfavorable market conditions.

downturn, recession or recessionary concerns, delay or failure of the U.S.

government to raise the federal debt ceiling, increased inflation,

rising interest rates, public health emergencies such as the COVID-19 pandemic, geopolitical conflicts including the war in Ukraine,

terrorist attacks, global supply chain disruptions.

natural or environmental disasters, strained relations between the U.S.

other countries, social and political discord and unrest in the U.S.

and various other countries can be expected to negatively impact

financial markets.

Volatility and deterioration in the financial markets and rising interest rates may make equity or debt financings

more difficult, more costly or more dilutive and may increase competition for, or limit the availability of, funding from other third-party

sources such as from strategic collaborations and grants from governmental and other entities.

Our ability to obtain additional funds

and the amount, type and terms of any potential financing may also be adversely affected by the performance of other companies perceived

as comparable to us.

For example, development setbacks or failures in cell therapies being developed by third parties could have a negative

effect on potential investor or strategic collaborator sentiment for our technologies and product candidates.

we are unable to raise capital when needed or on attractive terms, we may be forced to significantly delay, reduce, limit the pace of,

suspend or discontinue some or all aspects of our product and technology development programs or other operations, fail to meet obligations

under our in-license agreements and relinquish important rights, and forego opportunities to expand our pipeline, in which case, our

ability to achieve our operational goals could be materially and adversely affected.

In addition, if we do not have adequate capital,

we may seek strategic alliances for research and development programs at an earlier stage than we would otherwise desire or on terms

less favorable than might otherwise be available, or relinquish or license on unfavorable terms, our rights to technologies or future

product candidates that we otherwise would seek to develop or commercialize ourselves, which could have a material adverse effect on

our business and prospects.

forecast of the period of time through which our financial resources will support our planned operations is based on a number of assumptions

that may prove to be wrong or require adjustment as a result of business decisions, the risks, uncertainties other factors discussed

elsewhere in this Risk Factors section or factors not presently known or material to us, and we may use our available financial resources

sooner than we currently expect.

Our future funding requirements will depend on many factors, including:

progress and results of our ongoing and planned preclinical studies, clinical trials, and nonclinical activities for our product

unanticipated

serious safety concerns related to the use of our product candidates;

of licensing payments we may be required to make based on the development of our product candidates;

number, and development requirements of product candidates that we may pursue;

timing and outcome of regulatory review of our product candidates;

in laws or regulations applicable to our product candidates, including but not limited to clinical trial and manufacturing requirements

for approval;

decisions to initiate additional clinical trials, not to initiate any clinical trial or to terminate an existing clinical trial;

cost of obtaining and the availability of materials, equipment and devices that are necessary for the production or administration

of our product candidates;

we decide to enter into a new third-party collaborations for development or commercialization of our product candidates and the terms

of any such collaboration;

cost and timing of establishing and validating new manufacturing processes or facilities for our product candidates and any approved

or departures of key management or scientific personnel.

we cannot conduct our planned operations or otherwise capitalize on business opportunities due to a lack of capital, our business, financial

condition, and results of operations could be adversely affected and the market price of our common shares may decline.

additional capital may cause dilution to our existing shareholders, restrict our operations, or require us to relinquish rights to or

dilute our economic interest in our product candidates or technology on terms unfavorable to us.

may seek additional capital through a variety of means, including equity offerings, debt financings or other third-party funding, including

grants or new strategic alliances and licensing or collaborations.

To the extent that we raise additional capital through the sale of

equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences

that adversely affect your rights as a shareholder.

Any debt capital financing may involve covenants that restrict our operations, including

limitations on additional borrowing and on the use of our assets.

If we raise capital through up-front payments or milestone payments

pursuant to strategic collaborations with third parties, we have to relinquish valuable rights to our product candidates and technology

or grant licenses on terms that are not favorable to us.

Any such arrangements may be dilutive to our ownership or economic interest

in the products we develop, and we might have to accept royalty payments on product sales rather than receiving the gross revenues from

product sales.

See, for example, the terms of our agreement with Roche to develop and commercialize OpRegen.

Grants from third parties

may involve covenants that restrict our operations, require us to relinquish valuable rights in our products, technology and other intellectual

property and may be dilutive to our economic interest in products and technologies we develop with such funding.

For example, as discussed

in Note 14 (Commitments and Contingencies) to our consolidated financial statements included in this report, pursuant to the terms of

grants received by Cell Cure from the Israeli government, there are limitations on our ability to manufacture products and transfer or

license technologies outside of Israel and considerable contingent financial obligations to the IIA with respect to products, technologies

and intellectual property developed with the support of IIA grant funding, which includes the OpRegen program, and, as discussed below

in this Risk Factors section, pursuant to the terms of a grant we received from the CIRM in support of clinical development of OPC1,

we have royalty payment obligations to CIRM based on net sales of products developed with the support of the CIRM funding, if any.

ability to raise capital through equity or convertible debt financings may be limited by the amount of our authorized and unissued common

shares and applicable rules of the SEC and NYSE American.

ability to raise capital through the issuance and sale of our common shares or securities exercisable for or convertible into our common

shares is limited by the number of common shares we are authorized to issue that are not issued and outstanding or reserved for future

We are currently authorized to issue up to 250,000,000 common shares and, as of December 31, 2022, 170,093,114 common shares

were issued and outstanding and 19,112,202 shares are reserved for issuance upon exercise of outstanding stock options or upon the vesting

and settlement of outstanding restricted stock units or for future equity awards under our equity incentive plan, which means only 60,794,684

authorized common shares were unreserved and available for issuance.

Our ability to raise capital through the sale of equity securities

may also be limited by various rules and regulations, including rules of the SEC, the NYSE American securities exchange or any other

securities exchange on which our common shares are listed, which place limits on the amount of securities that we may sell in certain

circumstances or require shareholder approval to sell securities in excess of certain amounts.

We may have to forego opportunities to

raise capital on favorable terms if we do not have sufficient authorized and unissued common shares or are otherwise limited by applicable

rules and regulations.

shareholder approval may be a costly and time-consuming process, and seeking shareholder approval could delay our ability to secure otherwise

available capital, or cause us to miss such opportunities entirely, which may harm our business and prospects, and there is no guarantee

our shareholders ultimately would approve a proposed increase in our authorized common shares.

Any increase in the number of our authorized

common shares would require approval of a majority of our outstanding common shares entitled to vote.

We could face difficulties in soliciting

a sufficient number of shareholder proxies and may have to adjourn or postpone a shareholder meeting, which would further increase the

time and expense of obtaining shareholder approval.

If our shareholders do not approve a proposed increase in our authorized common shares

or a proposed offering and sale involving our equity securities, our ability to raise additional capital may be materially and adversely

impacted, as well as our ability to pursue business opportunities where our common shares may be used as consideration, such as strategic

transactions to expand our product pipeline, and to retain and recruit key personnel and other employees.

government to raise the federal debt ceiling could materially and adversely affect our financial condition.

of December 31, 2022, we had $46.1 million in marketable debt securities, all of which were U.S.

Treasury securities.

Treasury securities

historically have been highly liquid and carried relatively low risk.

However, in January 2023, the U.S.

reached its debt ceiling, requiring

Treasury to take extraordinary measures to avoid default.

Treasury expects to exhaust these measures by early June

2023, and if U.S.

lawmakers do not pass legislation to raise the federal debt ceiling by such time, it is possible that the U.S.

default on its debt obligations.

Uncertainty surrounding the trading market for U.S.

government securities or impairment of the U.S.

government’s ability to satisfy its obligations under its treasury securities may negatively impact the liquidity and valuation

of our investments in U.S.

treasury securities.

are dependent on our third-party collaboration with Roche to develop and commercialize OpRegen.

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In addition, Roche is obligated to pay us royalties upon sales

of the Licensed Products.

of the Licensed Products, if any.

All regulatory and commercial milestone payments and royalty payments are subject to the existence

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net sales of OpRegen are subject to financial offsets based on the existence of competing products.

We are relying on Roche to

develop and commercialize the Licensed Products, and if Roche is not able to develop and commercialize the Licensed Products, determines

not to continue to pursue development and commercialization of the Licensed Products, or determines to terminate the collaboration

at any time in its sole discretion, we will not receive any future milestone or royalty payments under the agreement which would

harm our business, business prospects, financial condition and results of operations.

Roche may determine not

to pursue development and commercialization and/or terminate the collaboration for many reasons, including:

delays in development, manufacture

or clinical supply of OpRegen;

Roche may believe that data generated in clinical trials for OpRegen may be negative, inconclusive, or

do not otherwise demonstrate adequate efficacy or clinical benefit to warrant further development or commercialization;

Roche may not

dedicate the resources necessary to carry OpRegen through clinical development;

Roche may conclude that the commercial potential of OpRegen

does not meet its internal thresholds or yield a timely return on its investment in OpRegen;

Roche may choose not to develop and commercialize

OpRegen in certain, or any, markets or for one or more indications, if at all;

Roche may change the focus of its development or commercialization

efforts or prioritize other programs more highly and, accordingly, reduce the efforts and resources allocated to OpRegen;

unable to obtain regulatory clearances or approvals to continue clinical development or commercialization of OpRegen in a timely manner,

the failure to develop a commercially viable formulation and/or manufacturing process for OpRegen;

or the loss or impairment

of intellectual property rights related to OpRegen.

If Roche terminates the collaboration:

we would no longer have the right to receive any milestone payments or royalties thereunder;

further development of OpRegen, if any,

would be significantly delayed or terminated;

we would bear all risks and costs related to any further clinical development, manufacturing,

regulatory approval and commercialization OpRegen, if any;

we might determine that the commercial potential of OpRegen does not warrant

further development of OpRegen;

we would need to raise additional capital if we were to choose to pursue OpRegen development on our own,

or we would need to establish alternative collaborations with third parties, which might not be possible in a timely manner, or at all;

and if we were to choose to pursue OpRegen development independently, we would need to work collaboratively with Roche to transfer the

OpRegen program back to us, and such a transfer might take significant amounts of time, would be resource intensive and costly, and might

are expecting Roche to develop and commercialize the Licensed Products, and if Roche is not able to develop and commercialize the Licensed

Products, determines not to continue to pursue development and commercialization of the Licensed Products, or determines to terminate

the collaboration at any time in its sole discretion, we will not receive any future milestone or royalty payments under the agreement

which would harm our business, business prospects, financial condition and results of operations.

may determine not to pursue development and commercialization and/or to terminate the collaboration, in its sole discretion, for many

reasons, including:

in development, manufacture or clinical supply of OpRegen;

may believe that data generated in clinical trials for OpRegen may be negative, inconclusive, or do not otherwise demonstrate adequate

efficacy or clinical benefit to warrant further development or commercialization;

may conclude that the commercial landscape in GA secondary to AMD has significantly changed with the FDA approval of Apellis Pharmaceuticals,

Inc.’s Syfovre ® (pegcetacoplan injection) and FDA acceptance of Iveric Bio, Inc.’s new drug application

for Zimura ® (avacincaptad pegol);

may not dedicate the resources necessary to carry OpRegen through clinical development, regulatory approval, or commercialization;

may conclude that the commercial potential of OpRegen does not meet its internal thresholds or yield a timely return on its investment

may choose not to develop and commercialize OpRegen in certain, or any, markets or for one or more indications, if at all;

may change the focus of its development or commercialization efforts or prioritize other programs more highly and, accordingly, reduce

the efforts and resources allocated to OpRegen;

may be unable to obtain regulatory clearances or approvals to continue clinical development or commercialization of OpRegen in a

timely manner, or at all;

failure to develop a formulation and/or manufacturing process for OpRegen that Roche believes is commercially viable in a timely

manner, or at all;

loss or impairment of intellectual property rights related to OpRegen.

Roche terminates the collaboration:

would no longer have the right to receive any milestone payments or royalties thereunder;

development of OpRegen, if any, would be significantly delayed or terminated;

would bear all risks and costs related to any further clinical development, manufacturing, regulatory approval and commercialization

OpRegen, if any;

might determine that the commercial potential of OpRegen does not warrant further development of OpRegen;

would need to raise additional capital if we were to choose to pursue OpRegen development on our own, or we would need to establish

alternative collaborations with third parties, which might not be possible in a timely manner, or at all;

we were to choose to pursue OpRegen development independently, we would need to work collaboratively with Roche to transfer the OpRegen

program back to us, and such a transfer might take significant amounts of time, would be resource intensive and costly, and might

not be feasible.

As a result, any loss or termination of rights under the collaboration will cause us to lose a significant source of

potential revenue, which would have a material and adverse effect on our company, financial condition and results of operations.

will need to issue additional equity or debt securities in order to raise additional capital needed to pay our operating expenses.

expect to continue to incur substantial research and product development expenses and will need to raise additional capital to pay operating

expenses until we are able to generate sufficient revenues from product sales, royalties and license fees.

Our ability to raise additional

equity or debt capital will depend, not only on progress made in developing new products and technologies, but also on access to capital

and conditions in the capital markets.

We believe that our cash, cash equivalents and marketable securities as of December 31, 2021 will

be sufficient to fund our planned operations for at least the next 12 months after the issuance of this Report.

We have based these estimates

on assumptions that may prove to be wrong, and we may use our capital resources sooner than we currently expect.

Our operating plans

and other demands on our cash resources may change as a result of many factors currently unknown to us, and we may need to seek additional

funds sooner than planned.

Any equity capital raise could result in the dilution of the interests of shareholders or may otherwise limit

our ability to finance further in the future, which may negatively impact our business and operations.

Any debt capital financing may

involve covenants that restrict our operations, including limitations on additional borrowing and on the use of our assets.

capital through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to us.

There can be no

assurance that we will be able to raise capital on favorable terms, or at all, or at times and in amounts needed to successfully finance

product development, clinical trials, and general operations.

have been filed and other lawsuits may be filed against Lineage and certain members of the Lineage and Asterias boards of directors relating

to our acquisition of Asterias (the “Asterias Merger”).

An adverse ruling in any such lawsuit may result in additional payments

putative class action lawsuit alleging breach of fiduciary duties in connection with the Asterias Merger is pending in the Delaware Chancery

The defendants are certain former members of Asterias’ board of directors and our company’s board of directors.

complaint alleges that the merger process was conflicted, that the consideration was inadequate, and that the proxy statement filed by

Asterias was misleading.

The complaint seeks, among other things, certification of a class, rescission of the merger or monetary damages,

and attorneys’ fees and costs.

The parties are currently engaged in discovery.

A five-day trial before the Delaware Chancery Court

is currently scheduled for October 17-21, 2022.

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

It is impossible at this time

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

or financial position.

Additional lawsuits arising out of or relating to the merger agreement and/or the merger may be filed in the future.

loss or termination of rights under the collaboration will cause us to lose a significant source of potential revenue and could significantly

delay or result in the discontinuation of development of OpRegen or significantly diminish the commercial potential of OpRegen, which

would have a material and adverse effect on our company, financial condition and results of operations and could cause the market price

of our common shares to decline.

may expend our limited resources to pursue particular product candidates and fail to capitalize on other product candidates that may

be more profitable or for which there is a greater likelihood of success.

have multiple cell therapy programs in development and limited resources.

Our resource allocation decisions may cause us to fail to capitalize

on viable commercial products or profitable market opportunities.

Our spending on current and future research and development programs

and product candidates may not yield any commercially viable products.

If we do not accurately evaluate the clinical or commercial potential

or target market for a particular product candidate, we may focus our resources on product candidates that do not demonstrate successful

clinical results or commercial viability at the expense of other programs that may have had greater success, or relinquish valuable rights

to that product candidate through future collaborations, licenses and other similar arrangements in cases in which it would have been

more advantageous for us to retain sole development and commercialization rights to such product candidate.

we fail to meet our obligations under our in-license agreements, we may lose our rights to key technologies on which our business depends.

business depends on several critical technologies that are based in part on technology licensed from third parties.

Those third-party

license agreements impose obligations on us, including payment obligations and obligations to pursue development of commercial products

under the licensed patents or technology.

If a licensor believes that we have failed to meet our obligations under a license agreement,

the licensor could seek to limit or terminate our license rights, which could lead to costly and time-consuming litigation and, potentially,

a loss of the licensed rights.

During the period of any such litigation, our ability to carry out the development and commercialization

of potential products, and our ability to raise any capital that we might then need, could be significantly and negatively affected.

If our license rights were restricted or ultimately lost, we would not be able to continue to use the licensed technology in our business.

Our license agreements are discussed in more detail under “Licensed Technology and Product Development Agreements” in “Part

Business,” above.

may acquire or acquire rights to new technologies, product candidates and other assets or businesses, which could fail to result in a

commercial product or net sales, divert our management’s attention, result in additional dilution to our shareholders or otherwise

disrupt our business and adversely affect our results of operations.

evaluate and consider strategic opportunities on an ongoing basis that we believe could complement or expand our portfolio, enhance our

technical capabilities or otherwise offer growth opportunities.

We may in the future acquire or acquire rights to develop and commercialize

new technologies, product candidates and other assets or businesses or pursue joint ventures or investments in complementary businesses.

However, we may not be able to successfully complete any in-license, acquisition or other strategic transaction we choose to pursue,

and we may not successfully integrate any acquired or licensed technology, development program or business in a cost-effective and non-disruptive

The pursuit of these potential transactions may divert the attention of management and cause us to incur significant costs and

expenses in identifying, investigating and pursuing suitable opportunities and transactions, even if we do not complete the transaction.

We may not be able to identify desirable targets or be successful in entering into an agreement with any particular target.

the anticipated benefits of any strategic transaction may not materialize.

addition, we may not be able to successfully integrate any acquired personnel, operations and technologies, or effectively manage the

combined business following an acquisition.

Acquisitions could also result in dilutive issuances of equity securities, the use of our

available cash, or the incurrence of debt, which could harm our operating results.

We also face risk of shareholder lawsuits in connection

with acquisitions that can divert management’s focus from operating our business and result in significant legal and other expenses,

which could harm our operating results and financial condition.

For example, we recently settled a putative shareholder class action

lawsuit relating to our acquisition of Asterias after more than three years of litigation.

See Note 14 (Commitments and Contingencies)

to our consolidated financial statements included in this report.

In addition, if an acquired technology, product candidate or other

asset or business fails to meet our expectations, our business, financial condition and results of operations may be negatively affected.

Additional risks we may face in connection with acquisitions include:

of management time and focus from operating our business to addressing acquisition and integration challenges;

of cGMP manufacturing operations from an acquired business or company;

of key employees from an acquired business or company;

in relationships with other collaborators as a result of new program or product acquisitions or strategic positioning resulting from

the acquisition;

need to implement or improve controls, procedures, and policies at the acquired business or company;

reporting, revenue recognition or other financial or control deficiencies of an acquired company that we don’t adequately address

and that cause our reported results to be incorrect;

for activities of an acquired company before the acquisition, including intellectual property infringement claims, misappropriation

or other violation, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

unanticipated

write-offs or charges;

or other claims in connection with an acquired company, including claims from terminated employees, vendors, former shareholders

or other third parties.

failure to address these risks or other problems encountered in connection with acquisitions and investments could cause us to fail to

realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business

of our manufacturing operations currently are conducted at our facility in Jerusalem, Israel.

Accordingly, political, economic and

military conditions in Israel could directly affect our business.

Any event or condition that significantly disrupts our ordinary

course of operations at our Jerusalem facility could harm our business and materially and adversely affect our financial condition

and operating results.

or our collaborators, suppliers, CROs, other service providers, or other third parties on which we rely may experience interruptions

to our operations, including the conduct of our research and development programs, clinical trials, and manufacturing operations, due

to natural disasters, public health emergencies, such as the COVID-19 pandemic, geopolitical conflicts, political and economic instability,

acts of terrorism, or hardware, software, telecommunication or electrical failures, which could significantly disrupt or harm our business.

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

are conducted by our subsidiary, Cell Cure, at its facility in Jerusalem, Israel, and more than two-thirds of our employees are Cell

Cure employees who are based in the same facility.

Accordingly, political, economic and military conditions in Israel could directly

affect our business.

In addition, our operations are vulnerable to significant disruption if a natural disaster, public health

emergency, terrorist attack, act of war, power outage or any other sudden, unforeseen and severe event or condition damages,

destroys or otherwise prevents us from using, or disrupts normal operations at, this facility.

For example, a natural disaster,

explosion, fire or prolonged power outage could result in damage to or destruction of materials and equipment that are critical for

our research and manufacturing operations, including our cell banks, or otherwise prevent us from conducting product testing or

manufacturing sufficient clinical supplies, which would delay the advancement of our programs and materially harm our business,

operating results, prospects, or financial condition.

Our cell therapy product candidates are manufactured by starting with cells

which are stored in the form of a master cell bank.

While we have taken precautions to safeguard our cell banks from catastrophic

events and we take precautions when transporting our cell banks, it is possible that we could lose one or more master cell banks and

have our manufacturing severely impacted by the need to replace a cell bank.

The disaster recovery and business continuity plans we

currently have in place are limited and are unlikely to prove adequate in the event of a serious disaster or similar event.

natural or manmade disaster affecting our Cell Cure facility or employees could materially harm our business.

hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a

significant downturn in the economic or financial condition of Israel, could adversely affect our operations.

Ongoing and revived

hostilities or other Israeli political or economic factors could harm our operations, product candidate development and results of

Although Israel has entered into various agreements with Egypt, Jordan, the Palestinian Authority and with various

states in the Persian Gulf, there has been a continuous unrest and terrorist activity with varying levels of severity.

Israel faces threats from more distant neighbors, in particular, Iran.

Our insurance policies do not cover us for the damages

incurred in connection with these conflicts or for any resulting disruption in our operations.

The Israeli government, as a matter

of law, provides coverage for the reinstatement value of direct damages that are caused by terrorist attacks or acts of war;

however, the government may cease providing such coverage or the coverage might not be enough to cover potential damages.

event that hostilities disrupt the ongoing operation of our Jerusalem facility, our operations may be materially adversely

Cure is an Israeli company.

Several countries, principally in the Middle East, still restrict doing business with Israel and Israeli

companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies, whether as a result

of hostilities in the region or otherwise.

In addition, there have been increased efforts by activists to cause companies, research institutions

and consumers to boycott Israeli goods and cooperation with Israeli-related entities based on Israeli government policies.

Such actions,

particularly if they become more widespread, may adversely impact our ability to obtain supplies necessary to our manufacturing operations,

cooperate with research institutions and collaborate with other third parties.

Any hostilities involving Israel, any interruption or

curtailment of trade or scientific cooperation between Israel and its present partners, or a significant downturn in the economic or

financial condition of Israel could adversely affect our business, financial condition and results of operations.

We may also be targeted

by cyber terrorists specifically because Cell Cure is an Israeli-related company.

citizens are obligated to perform several days, and in some cases more, of annual military reserve duty each year until they reach the

age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a military conflict,

may be called to active duty.

In response to increases in terrorist activity, there have been periods of significant call-ups of military

It is possible that there will be military reserve duty call-ups in the future.

Our operations could be disrupted by such

call-ups, which may include the call-up of Cell Cure management and other employees.

Such disruption could materially adversely affect

our business, prospects, financial condition and results of operations.

Cure has received Israeli government grants for certain of its research and development activities.

The terms of these grants may require

us to seek approvals and to satisfy specified conditions to manufacture products and transfer or license grant-supported technologies

outside of Israel.

In the context of such approvals, we will be required to pay penalties in addition to the repayment of the grants.

Such grants are applied for on a yearly basis and may not be available or only partially granted in the future, which would increase

Cure has received Israeli government grants for certain of its research and development activities, including grants under the Innovation

The terms of these grants require prior approval and the satisfaction of specified conditions to manufacture products and transfer

or license technologies outside of Israel.

Business—Grants from Government Entities,” above.

the OpRegen program has been supported in part by the IIA through a series of separate research grants, beginning in 2007.

and subject to the requirements of the Innovation Law, we are obligated to pay to the IIA approximately 24.3% of the upfront, milestone,

and royalty payments we may receive 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 as of December 31, 2022, currently stands at approximately $91.2 million.

restrictions under the Innovation Law may impair our ability to enter into any future agreements which involve IIA-funded products or

know-how without the approval of IIA, or limit the economic benefit that we might derive under such agreements.

We cannot be certain

that any approval of IIA will be obtained on terms that are acceptable to us, or at all.

We may not receive the required approvals should

we wish to transfer or license IIA-funded know-how, manufacturing and/or development outside of Israel in the future.

Furthermore, in

the event that we undertake a transaction involving the transfer to a non-Israeli entity of know-how developed with IIA-funding pursuant

to a merger or similar transaction, the consideration available to our shareholders may be significantly reduced by the amounts we are

required to pay to the IIA.

Any approval, if given, will generally be subject to additional financial obligations.

Failure to comply

with the requirements under the Innovation Law may subject Cell Cure to mandatory repayment of grants received by it (together with interest

and penalties), as well as expose its directors and management to criminal proceedings.

In addition, the IIA may from time-to-time conduct

royalty audits.

Further grants may not be approved or reduced in the future, which would increase our costs.

IIA approval is not required

for the marketing or distribution of products resulting from the IIA-funded research or development in the ordinary course of business.

have relied on grant funding from CIRM to support clinical development of OPC1 and we may not be able to obtain additional CIRM funding,

which could negatively impact our operating results and financial condition.

In addition, our profits from the sale of products resulting

from CIRM-funded development, if any, will be reduced by amounts that we are required to pay CIRM.

clinical development of OPC1 has been supported by $14.3 million of funding as of the date of this report from CIRM, a state agency established

to fund stem cell research and development of new stem cell-based treatments.

We intend to apply for additional CIRM grants;

we cannot provide any assurance that CIRM will have access to additional funds for grants or that any such funding will be awarded to

If we are unable to obtain another CIRM grant or if the grant funding is insufficient, we may need to raise funds through other mechanisms

to continue clinical development of OPC1, which could have a higher cost of capital, cause dilution to our shareholders, restrict our

operations or require us to relinquish rights on unfavorable terms.

Business—Grants from Government Entities,”

addition, the terms of our grant award from CIRM require, and we expect the terms of any future grant from CIRM will require, royalty

payments to CIRM based on sales of products developed with CIRM funding, if any, which will reduce our profits on sales of such products.

international business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing

business outside of the United States.

Cure is our 94% owned subsidiary located in Jerusalem, Israel.

Currently, all of our cGMP manufacturing processes, including cell banking

and product manufacturing for our cell therapy product candidates, are conducted by Cell Cure at its Jerusalem facility.

our OpRegen Phase 1/2a clinical trial has been conducted at sites in Israel.

Conducting operations internationally involves a number

of risks, including:

in staffing and managing foreign operations;

by us to obtain the appropriate regulatory approvals;

and regulations associated with shipping drug product or patient samples, including infrastructure conditions and transportation

risks, such as longer payment cycles and exposure to foreign currency exchange rate fluctuations;

to tax on Global Intangible Low Tax Income earned by foreign subsidiaries;

and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade and

other business restrictions;

conflicting and changing laws and regulations such as tax laws, export and import restrictions, employment laws, data and privacy

laws, regulatory requirements and other governmental approvals, permits and licenses;

and compliance risks that may fall within the purview of the U.S.

Foreign Corrupt Practices Act, UK Bribery Act, anti-boycott laws

and other anti-corruption laws.

of these factors could significantly harm our international operations and, consequently, our results of operations.

In addition, any

failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited

to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export

privileges, seizure of shipments, and restrictions on certain business activities.

Also, the failure to comply with applicable legal

and regulatory obligations could result in the disruption of our clinical trial activities.

international operations could be affected by changes in laws, trade regulations, labor and employment regulations, and procedures and

actions affecting approval, production, pricing, reimbursement and marketing of tests, as well as by inter-governmental disputes.

of these changes could adversely affect our business.

success internationally will depend, in part, on our ability to develop and implement policies and strategies that are effective in anticipating

and managing these and other risks, particularly in Israel.

Failure to manage these and other risks may have a material adverse effect

on our operations in Israel and on our business as a whole.

COVID-19 pandemic negatively affected, and it and any other similar public health crisis may in the future have a material adverse effect

on, our operations, including the conduct of our clinical trials, as well as the operations of third parties on which we rely.

March 2020, the World Health Organization declared COVID-19 a global pandemic and the United States declared a national emergency

with respect to COVID-19.

In response to the COVID-19 pandemic, a number of governmental orders and other public health guidance

measures were implemented across much of the United States and Israel, including in the locations of our office and manufacturing

facility, clinical trial sites and third parties on which we rely, including quarantines, prohibitions on non-essential operations

and gatherings at physical locations, and travel restrictions.

The COVID-19 pandemic and actions taken to reduce its spread

disrupted our normal course of business operations, including with the implementation of an employee work-from-home policy and

travel restrictions, and negatively affected clinical trials of our product candidates.

In particular, patient enrollment was

delayed in our OpRegen Phase 1/2a clinical trial and the VAC2 Phase 1 clinical trial conducted by Cancer Research UK.

Clinical trial

sites paused enrollment to focus on, and direct resources to, the COVID-19 pandemic, to adhere to national or local guidelines

restricting non-essential operations and gatherings, or in the interest of patient safety.

Additionally, some

enrolled patients in those trials decided not to participate in follow-up visits on schedule or at all .

uncertainty remains relating to the potential impact of the COVID-19 pandemic, or possible endemic, on the global economy and on our

business, operating results and financial condition.

As a result of the COVID-19 pandemic, or potentially similar public health crises

in the future, and related governmental orders and other public health guidance measures, we may experience business disruptions that

could materially and adversely impact our product development programs, business prospects, operating results and financial condition.

Potential disruptions might include but are not limited to:

or difficulties in clinical trial site initiation, including difficulties in recruiting clinical site investigators and staff,

or difficulties in enrolling patients or conducting follow-up visits with patients in our clinical trials, particularly patients

who may be at higher risk of complications from COVID-19;

rates of patients withdrawing from our clinical trials following enrollment as a result of contracting COVID-19 or other health conditions

or being forced to quarantine;

of healthcare resources away from the conduct of clinical trials, including at hospitals or other facilities serving as our clinical

of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel;

on employee or other resources that would otherwise be focused on the conduct of our clinical trials and preclinical work, including

because of sickness of employees or their families, the desire of employees to avoid travel or contact with large groups of people,

an increased reliance on working from home, school closures or mass transit disruptions;

manufacturing

delays and difficulties for us and our suppliers of raw materials caused by business closures, operational restrictions or labor

in clinical trial sites receiving the supplies and materials needed to conduct our clinical trials, including interruption in global

shipping that may affect the transport of clinical trial materials;

in local regulations as part of a response to the COVID-19 outbreak which may require us to change the ways in which our clinical

trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;

or delays in the operations of the FDA or other regulatory authorities, including with respect to their manufacturing or clinical

trial site inspections, which may impact their ability to timely review and process any submissions we or our collaborators file;

that participants enrolled in our clinical trials will contract COVID-19 or other health conditions while the clinical trial is ongoing,

which could impact the results of the clinical trial, including by increasing the number of observed adverse events;

of the FDA to accept data from clinical trials in affected geographies.

patient enrollment or follow-up in our clinical trials is delayed for an extended period of time due to the COVID-19 pandemic or another

public health crisis, our clinical trials could be significantly delayed or otherwise adversely affected.

Our inability to enroll or

follow a sufficient number of patients in our clinical trials could require us to suspend or abandon one or more clinical trials altogether.

addition, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions

on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at our CROs

or third-party suppliers upon which we rely, or the availability or cost of materials necessary to produce our product candidates, which

could disrupt the supply chain for our product candidates.

To the extent our suppliers and service providers are unable to comply with

their obligations under our agreements with them or they are otherwise unable to deliver or are delayed in delivering goods and services

to us due to the COVID-19 pandemic, our ability to continue meeting clinical supply demand for our product candidates or otherwise advancing

development of our product candidates may become impaired.

spread of COVID-19 and actions taken to reduce its spread may also materially affect us economically.

While the potential economic impact

brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, there could be a significant disruption

of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial

In addition, the trading prices for other biotechnology companies have been volatile as a result of the COVID-19 pandemic.

As a result, we may face difficulties raising capital through sales of our common shares or such sales may be on unfavorable terms.

many of our office-based employees continue to work remotely at least part of the time, which may negatively impact productivity and

exacerbate certain risks to our business, including cybersecurity attacks and data security incidents due to an increase in the number

of points of potential attack.

extent to which COVID-19 may impede the development of our product candidates, reduce the productivity of our employees, disrupt our

supply chains, delay our clinical trials, reduce our access to capital, limit our business development activities, or otherwise adversely

impact our business, operating results and financial condition or those of third parties on which we rely will depend on future developments,

which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, adverse impacts of new coronavirus

variants, new information that will emerge concerning the severity of COVID-19, and the actions to contain COVID-19 or treat its impact,

among others.

addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have the

effect of heightening many of the other risks and uncertainties described in this ‘‘Risk Factors’’ section.

business could be adversely affected if we lose the services of the key personnel upon whom we depend or if we fail to attract senior

management and key scientific personnel.

believe that our continued success depends to a significant extent upon our efforts and ability to retain highly qualified personnel,

including our Chief Executive Officer.

All of our officers and other employees are at-will employees and may terminate their employment

with us at any time with no advance notice.

The loss of the services of Mr.

Culley or other members of our senior management could have

a material adverse effect on us.

Further, the replacement of any of such individuals would likely involve significant time and costs

and may significantly delay or prevent the achievement of our business and clinical objectives and would harm our business.

addition, we could experience difficulties attracting qualified employees in the future.

For example, competition for qualified personnel

in the biotechnology and medical device field is intense due to the limited number of individuals who possess the skills and experience

required by our industry.

We will need to hire additional personnel as we expand our business, including our clinical development activities.

We may not be able to attract quality personnel on acceptable terms, or at all.

In addition, to the extent we hire personnel from competitors,

we may be subject to allegations that they have been improperly solicited or that they have divulged proprietary or other confidential

information or that their former employers own their research output.

in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash

12 unchanged sentences

ability to use net operating losses and other tax attributes to offset future taxable income or taxes may be subject to limitations .

of December 31, 2021, we had net operating loss (“NOL”) carryforwards for U.S.

federal and state tax purposes of approximately

$155.6 million and $151.8 million, respectively.

In addition, the Company has U.S.

federal and California research and

development (R&D) credit carryforwards of $3.7 million and $5.8 million, respectively.

Included in these amounts are NOLs and R&D

credits acquired through the merger with Asterias (see below).

A portion of the federal and state NOL carryforwards will begin to expire,

if not utilized, in varying amounts between 2032 and 2037.

NOLs that expire unused will be unavailable to offset future income

tax liabilities.

Under federal income tax law, federal NOLs incurred in tax years beginning after December 31, 2017, may be carried forward

indefinitely, but the deductibility of such NOLs in tax years beginning after December 31, 2021, is limited to 80% of taxable income.

The federal R&D credits expire in varying amounts between 2021 and 2041, the California credits have no expiration date.

is uncertain if and to what extent various states that we may operate in will conform to the federal tax law.

In addition, under Sections

382 and 383 of the Internal Revenue Code of 1986, as amended (the “IRC”), and corresponding provisions of state law, if a

corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity

ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax

attributes to offset its post-change income or taxes may be limited.

We may experience ownership changes in the future as a result of

subsequent shifts in our stock ownership, some of which may be outside of our control.

If an ownership change occurs and our ability

to use our NOL carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax

In addition, at the state level, there may be periods during which the use of net operating loss carryforwards is suspended

or otherwise limited, which could accelerate or permanently increase state taxes owed.

of December 31, 2022, we had substantial net operating loss (“NOL”) carryforwards for U.S.

federal and state tax purposes

and other tax attributes to offset future taxable income.

However, our federal NOL carryforwards and other tax attributes may not be

available to offset future taxable income because of restrictions under U.S.

tax law and similar limitations that may apply under state

A portion of our federal and state NOL carryforwards will begin to expire, if not utilized, in varying amounts between 2027

Our federal research and development tax credit carryforwards expire in varying amounts between 2022 and 2042, the California

research and development tax credit carryforwards have no expiration date.

See Note 13 (Income Taxes) to our consolidated financial statements

included in this report for additional information.

NOL carryforwards and research and development and other tax credits that expire

unused will be unavailable to offset future income tax liabilities.

Under federal income tax law, federal NOL carryforwards generated

in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such NOL carryforwards

is limited to 80% of taxable income.

It is uncertain if and to what extent various states that we may operate in will conform to the

federal tax law.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “IRC”), and

corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a

greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change

NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.

We have experienced ownership

changes in the past and we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some

of which may be outside of our control.

As a result, our ability to use our pre-change NOL carryforwards and tax credits to offset post-change

taxable income, if any, could be subject to significant limitations.

Similar provisions of state tax law may also apply.

at the state level, there may be periods during which the use of NOL carryforwards is suspended or otherwise limited, which could accelerate

or permanently increase state taxes owed.

For example, in 2020, California enacted A.B.

which imposed limits on the usability of California state net operating losses and certain tax credits in tax years beginning after 2019

and before 2023.

part of the merger with Asterias, we acquired various tax attribute carryforwards.

As the merger triggered an ownership change, the acquired

net operating loss carryforwards and credit are subject to limitation under Section 382 of the Internal Revenue Service Code.

Lineage will only be able to utilize federal and California NOLs of $52.8 million and $41.9 million, respectively, as well as California

research and development credits of $2.4 million.

Because of the annual limitation, the total amount of these NOLs is not immediately

available to offset future income.

The California research and development credit of $2.4 million has no expiration date.

85 which imposed limits on the usability of California

state NOL carryforwards and certain tax credits in tax years beginning after 2019 and before 2022.

As a result of limitations on our

ability to use our NOL carryforwards and tax credits, we may be unable to gain the benefit of a material portion of our NOL carryforwards

and tax credits, which could harm our future operating results by effectively increasing our future income tax obligations.

authorities could reallocate our taxable income among our subsidiaries, which could increase our overall tax liability.

8 unchanged sentences

formulated with the assistance of third-party experts;

We are in the process of obtaining a formal transfer pricing report.

after we receive such report, we do not intend to amend our returns for prior years.

Whether we obtain a formal transfer pricing study

with outside experts or not, our transfer pricing procedures will not be binding on applicable tax authorities.

tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting arm’s length transactions,

they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which

could result in a higher tax liability to us.

In addition, if the country from which the income is reallocated does not agree with the

reallocation, both countries could tax the same income, resulting in double taxation.

If tax authorities were to allocate income to a

higher tax jurisdiction, subject our income to double taxation or assess interest and penalties, it would increase our tax liability,

which could adversely affect our financial condition, results of operations and cash flows.

business and operations could suffer in the event of system failures.

the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to

damage from computer viruses, unauthorized access, natural disasters including earthquakes and tsunamis, terrorism, war, and telecommunication

and electrical failures.

Such events could cause significant interruption of our operations and development programs.

For example, the

loss of data for our product candidates could result in delays in our regulatory filings and development efforts and significantly increase

To the extent that any disruption or security breach was to result in a loss of or damage to our data, or inappropriate disclosure

of confidential or proprietary information, we could incur liability and the development of our product candidates could be delayed.

addition, our product candidates are manufactured by starting with cells that are stored in a cryopreserved master cell bank.

believe we have adequate backup should any cell bank be lost in a catastrophic event, we or our third-party suppliers and manufacturers

could lose multiple cell banks, which would severely affect our manufacturing activities.

We cannot assure you that any stability or

other issues relating to the manufacture of any of our product candidates or products will not occur in the future.

Any delay or interruption

in the supply of clinical trial supplies could delay the completion of planned clinical trials, increase the costs associated with maintaining

clinical trial programs and, depending upon the period of delay, require us to commence new clinical trials at additional expense or

terminate clinical trials completely.

Any adverse developments affecting clinical or commercial manufacturing of our product candidates

or products may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in

the supply of our product candidates or products.

Accordingly, failures or difficulties faced at any level of our supply chain could

adversely affect our business and delay or impede the development and commercialization of any of our product candidates or products

and could have an adverse effect on our business, prospects, financial condition and results of operations.

business could be adversely affected if we lose the services of the key personnel upon whom we depend or if we fail to attract senior

management and key scientific personnel.

believe that our continued success depends to a significant extent upon our efforts and ability to retain highly qualified personnel,

including our Chief Executive Officer, Brian Culley.

All of our officers and other employees are at-will employees and may terminate

their employment with us at any time with no advance notice.

The loss of the services of Mr.

Culley or other members of our senior management

could have a material adverse effect on us.

Further, the replacement of any of such individuals likely would involve significant time

and costs and may significantly delay or prevent the achievement of our business and clinical objectives and would harm our business.

addition, we could experience difficulties attracting qualified employees in the future.

For example, competition for qualified personnel

in the biotechnology and medical device field is intense due to the limited number of individuals who possess the skills and experience

required by our industry.

We will need to hire additional personnel, including experienced sales representatives, as we expand our clinical

development and commercial activities.

We may not be able to attract quality personnel on acceptable terms, or at all.

In addition, to

the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or that they

have divulged proprietary or other confidential information or that their former employers own their research output.

value of our investments in public companies fluctuates based on their respective stock prices and could be negatively affected by business,

regulatory and other risks applicable to them.

of December 31, 2021, we had an equity investment in OncoCyte, a U.S.

publicly traded company.

As of December 31, 2021, the value of

our investment in OncoCyte was approximately $2.4 million based on its closing stock price as of that date.

If OncoCyte were to have

delays in clinical trials or commercialization activities or otherwise realize the specific business, regulatory and other risks applicable

to them, the value of its common stock and the valuation of our investment could be negatively affected.

If OncoCyte were to fail and

ultimately cease operations, we may lose the entire value of our investment.

In addition, the value of our marketable equity securities

may be significantly and adversely impacted by deteriorating global economic conditions and the disruptions to and volatility in the

credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic.

however, tax authorities in any country may disagree with our transfer pricing

policies and procedures.

If tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting

arm’s length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these

revised transfer prices, which could result in a higher tax liability to us.

In addition, if the country from which the income is reallocated

does not agree with the reallocation, both countries could tax the same income, resulting in double taxation.

If tax authorities were

to allocate income to a higher tax jurisdiction, subject our income to double taxation or assess interest and penalties, it would increase

our tax liability, which could adversely affect our financial condition, results of operations and cash flows.

a portion of our expenses are incurred in currencies other than the U.S.

Dollar, our results of operations may be harmed by currency

fluctuations.

reporting and functional currency is the United States Dollar, but a material portion of our research and development and other operating

expenses are incurred in Israeli New Shekels through our subsidiary Cell Cure.

As a result, we are exposed to some currency fluctuation

Fluctuation in the exchange rate of the foreign currency has an influence on and may adversely affect our comprehensive loss and

Related to Government Regulation

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some of our business activities could be subject to challenge under one or more of such laws.

In addition, recent healthcare reform

legislation has strengthened these laws.

In addition, recent healthcare reform legislation

has strengthened these laws.

our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply, we may

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results of operations.

we do not receive regulatory approvals, we will not be permitted to sell our therapeutic and medical device products.

therapeutic and medical device products that we and our subsidiaries develop cannot be sold until the FDA and corresponding foreign regulatory

authorities approve the products for medical use.

we do not receive regulatory approvals, we will not be permitted to sell our product candidates.

investigational cell therapies cannot be marketed or sold until the FDA and corresponding foreign regulatory authorities approve the

products for the human medical applications for which they are being developed.

In addition, the regulatory approval process for novel

product candidates such as ours can be more complex and consequently more expensive and take longer than for other, better known or extensively

studied pharmaceutical or other product candidates.

The need to obtain regulatory approval to market a new product means that:

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funded research.

California law requires that stem cell research be conducted under the oversight of aSCRO.

Many kinds of stem cell research,

including the derivation of new hES cell lines, may only be conducted in California with the prior written approval of the SCRO.

could prohibit or impose restrictions on the research that we plan to do.

The use of hES cells may give rise to religious, moral, and

ethical issues.

These considerations could lead to more restrictive government regulations or could generally constrain stem cell research,

thereby limiting the market and demand for our products.

expect that the commercial opportunity for some of our products may depend on our ability to obtain and maintain reimbursement and continued

coverage from various payors, including government entities and insurance companies.

California law requires that stem cell research be conducted under the oversight of a SCRO Committee.

Many kinds of

stem cell research, including the derivation of new hES cell lines, may only be conducted in California with the prior written approval

of the SCRO Committee.

A SCRO Committee could prohibit or impose restrictions on the research that we plan to do.

The use of hES cells

may give rise to religious, moral, and ethical issues.

These considerations could lead to more restrictive government regulations or

could generally constrain stem cell research, thereby limiting the market and demand for our products.

of our product candidates, may be considered combination products by the FDA and other regulatory authorities, which could increase the

complexity, cost and timeline for their development and regulatory approval.

the extent our product candidates meet the FDA’s or other regulatory authority’s definition of a combination product, the

regulatory approval requirements can be more complex because in addition to the individual regulatory requirements for each component,

e.g., a biologic and a medical device, additional combination product regulatory requirements may apply.

The cost and timeline for development

of any of our cell therapy product candidates determined to be a combination product may be substantially greater than that of other

product candidates.

expect that the commercial opportunity for some of our products may depend on our ability, or that of a commercial collaborator, to obtain

and maintain reimbursement and continued coverage from various payors, including government agencies and insurance companies.

these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products

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The Patient Protection and Affordable

Care Act, as amended by the Healthcare and Education Reconciliation Act (collectively, the “ACA”), enacted in 2010,

increased many of the mandatory discounts and rebates and imposed a new branded prescription pharmaceutical manufacturers and importers

fee payable each year by certain manufacturers.

Care Act, as amended by the Healthcare and Education Reconciliation Act (collectively, the “ACA”), enacted in 2010, increased

many of the mandatory discounts and rebates and imposed a new branded prescription pharmaceutical manufacturers and importers fee payable

each year by certain manufacturers.

we are unable to establish or sustain coverage and adequate reimbursement for any product candidates from third-party payors, the adoption

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follow price structures of the United States and generally tend to be significantly lower.

at the FDA and other government agencies caused by funding shortages or global health concerns could negatively impact our business.

and legislative and regulatory proposals intended to contain health care costs may adversely affect our business.

has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription

drugs and biologics.

As an example, in August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription

drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the

federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise

tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare

Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part

D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes.

Further, the Biden administration released

an additional executive order on October 14, 2022, the U.S.

Department of Health & Human Services to submit a report within 90 days

on how the Center for Medicare and Medicaid Innovation can be further leveraged to test new models for lowering drug costs for Medicare

and Medicaid beneficiaries.

It is unclear whether this executive order or similar policy initiatives will be implemented in the future.

The impact of these legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented

on the pharmaceutical industry as a whole is unclear.

The implementation of cost containment measures, including the prescription drug

provisions under the Inflation Reduction Act, as well as other healthcare reforms may prevent us from being able to generate revenue,

attain profitability, or commercialize our product candidates if approved.

at the FDA and other government agencies caused by funding shortages or other events or conditions outside of their control could negatively

impact our business.

ability of the FDA to review and approve proposed clinical trials or new product candidates can be affected by a variety of factors,

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government agencies, which would adversely affect our business.

For example, over the last several years, including for 35 days beginning

on December 22, 2018, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough

critical FDA employees and stop critical activities.

in response to the global COVID-19 pandemic, FDA inspections were interrupted and restarted on a risk-based basis.

Regulatory authorities

outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic.

If a prolonged

government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting

their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory

authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

For example, as a result of the COVID-19 pandemic, the FDA’s inspectional

activities were interrupted and restarted on a risk-based basis, which had the effect of delaying review and potential approval of product

candidate marketing applications.

In addition, over the last several years, including for 35 days beginning on December 22, 2018, the

government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees

and stop various activities.

ACA and future changes to that law may adversely affect our business.

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While Congress has not passed comprehensive

repeal legislation, it has enacted laws that modify certain provisions of the ACA such as removing penalties, starting January 1, 2019,

for not complying with the ACA’s individual mandate to carry health insurance, and eliminating the implementation of certain ACA-mandated

For example, on June 17, 2021, the United States 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, prior to the United States Supreme Court ruling, 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 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, other litigation, and the healthcare reform measures of the Biden administration

will impact the ACA.

repeal legislation, it has enacted laws that modify certain provisions of the ACA such as removing penalties for not complying with the

ACA’s individual mandate to carry health insurance, and eliminating the implementation of certain ACA-mandated fees.

In June 2021,

the United States 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, prior

to the United States Supreme Court ruling, in January 2021, President Biden issued an executive order that, among other things, 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, 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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budget proposals, executive orders and policy initiatives.

For example, on July 24, 2020 and September 13, 2020, the Trump administration

announced several executive orders related to prescription drug pricing that attempted to implement several of the administration’s

As a result, the FDA concurrently released a final rule and guidance in September, 2020, providing pathways for states to

build and submit importation plans for drugs from Canada.

Further, on November 20, 2020, the U.S.

Department of Health & Human Services

(“HHS”) finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to

plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by

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 in all U.S.

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

For example, in 2020 the Trump administration announced several executive

orders related to prescription drug pricing that attempted to implement several of the administration’s proposals.

the FDA concurrently released a final rule and guidance in September 2020, providing pathways for states to build and submit importation

plans for drugs from Canada.

Further, in November 2020, the U.S.

Department of Health & Human Services (“HHS”) finalized

a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part

D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The implementation of the rule

has been delayed until 2032 by the Inflation Reduction Act of 2022.

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 has been delayed until 2032 by the Inflation Reduction Act of 2022.

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 in all U.S.

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, in December 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, in September 2021, the HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing

The plan sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative

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we fail to comply with the extensive legal and regulatory requirements affecting the healthcare industry, we could face increased costs,

penalties and a loss of business.

Our activities, and the activities

of our collaborators, distributors and other third-party providers, are subject to extensive government regulation and oversight both

penalties and loss of business.

activities, and the activities of our collaborators, distributors and other third-party providers, are subject to extensive government

regulation and oversight both in the U.S.

and in foreign jurisdictions.

The FDA and comparable agencies in other jurisdictions will directly regulate many of our most

critical business activities, including the conduct of preclinical and clinical studies, product manufacturing, future advertising and

promotion, product distribution, adverse event reporting and product risk management.

Our current and future interactions in the U.S.

or abroad with physicians and other healthcare providers that may prescribe or purchase our products once commercialized are also subject

to government regulation designed to prevent fraud and abuse in the sale and use of the products and place greater restrictions on the

marketing practices of healthcare companies.

The FDA and comparable agencies in other jurisdictions will directly

regulate many of our most critical business activities, including the conduct of preclinical and clinical studies, product manufacturing,

future advertising and promotion, product distribution, adverse event reporting and product risk management.

Our current and future interactions

or abroad with physicians and other healthcare providers that may prescribe or purchase our products once commercialized

are also subject to government regulation designed to prevent fraud and abuse in the sale and use of the products and place greater restrictions

on the marketing practices of healthcare companies.

Healthcare companies are facing heightened scrutiny of their relationships with healthcare

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alleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible off-label

promotion of pharmaceutical products, payments intended to influence the referral of healthcare business, submission of false claims for

government reimbursement, antitrust violations or violations related to environmental matters.

Risks relating to compliance with laws

and regulations may be heightened as we bring products to the market globally.

Regulations governing the healthcare

industry are subject to change, with possibly retroactive effect, including:

new laws, regulations or judicial decisions, or new interpretations of

existing laws, regulations or decisions, related to healthcare availability, pricing or marketing practices, compliance with wage and

hour laws and other employment practices, method of delivery, payment for healthcare products and services, compliance with health information

and data privacy and security laws and regulations, tracking and reporting payments and other transfers of value made to physicians and

teaching hospitals, extensive anti-bribery and anti-corruption prohibitions, product serialization and labeling requirements and used

product take-back requirements;

promotion of pharmaceutical products, payments intended to influence the referral of healthcare business, submission of false claims

for government reimbursement, antitrust violations or violations related to environmental matters.

Risks relating to compliance with

laws and regulations may be heightened as we bring products to the market globally.

governing the healthcare industry are subject to change, with possibly retroactive effect, including:

laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to healthcare

availability, pricing or marketing practices, compliance with wage and hour laws and other employment practices, method of delivery,

payment for healthcare products and services, compliance with health information and data privacy and security laws and regulations,

tracking and reporting payments and other transfers of value made to physicians and teaching hospitals, extensive anti-bribery and

anti-corruption prohibitions, product serialization and labeling requirements and used product take-back requirements;

in the FDA and foreign regulatory approval processes that may delay or prevent the approval of new products and result in lost market

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damage our reputation, divert management time and attention and adversely affect our business.

if we receive approval for our products, we may be subject to extensive regulatory obligations in order to commercialize our products.

if we receive approval to market a product candidate, we may be subject to extensive post-approval regulatory obligations that may have

a significant adverse effect on our business, results of operations, financial condition and reputation.

after initial FDA or foreign regulatory agency approval has been obtained, further studies may be required to provide additional data

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Any of these requirements or actions may negatively impact our business or operations.

we are deemed to be an investment company, we may have to institute burdensome compliance requirements and our activities may be restricted.

entity that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business

of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment

Company Act of 1940, as amended (the “1940 Act”).

Based on the securities we hold, including our equity ownership in publicly

traded companies, we may not meet the requirements for an exemption promulgated under the 1940 Act.

If we are deemed to be an investment

company under the 1940 Act, we would be subject to additional limitations on operating our business, including limitations on the issuance

of securities, which may make it difficult for us to raise capital.

FDA has granted orphan drug designation to OPC1 for the treatment of acute spinal cord injuries, but there is no guarantee we will be

able to maintain orphan drug designation or obtain the benefits associated with orphan drug designation, including marketing exclusivity.

have orphan drug designation from the FDA for OPC1 for the treatment of acute spinal cord injuries.

As discussed in more detail in Item

“Business—Government Regulation—FDA and Foreign Regulation of Therapeutic Products,” above, generally, if

a biologic with orphan drug designation from the FDA subsequently receives the first marketing approval for the indication for which

it has such designation, the product is entitled to seven years of marketing exclusivity in the United States.

Other benefits of an orphan

drug designation may include a waiver of the marketing application fee.

However, the orphan drug designation does not convey any advantage

in, or shorten the duration of, the regulatory review or approval process.

drug designation may not effectively protect OPC1 from competition because different drugs or biologics can be approved for the same

indication and only the first biologic with an orphan drug designation to receive FDA approval for the treatment of acute spinal cord

injuries will receive marketing exclusivity.

OPC1 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 our request for orphan drug designation was materially defective or if we are unable to assure sufficient

quantities of the commercial product to meet the needs of patients with acute spinal cord injuries.

Related to Our Clinical Development and Commercial Operations

studies are costly, time consuming and are subject to risks that could delay or prevent commercialization of our current or future product

cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all.

A failure of one or more

clinical studies can occur at any stage of development.

Events that may prevent successful or timely completion of clinical development

include but are not limited to:

development of new therapeutic products is a lengthy and expensive process with a high level of uncertainty as to timing and ultimate

and nonclinical development of new therapeutic products is expensive and can take many years to complete, and its outcome and timing

are inherently uncertain.

Our clinical trials may not be conducted as planned or completed on schedule, if at all, and failure can occur

at any time during the development process.

There is typically an extremely high rate of attrition from the failure of product candidates

proceeding through clinical trials, and cell therapy is a relatively new field, which may heighten the risk of failure.

Events that may

prevent successful or timely completion of clinical development of our product candidates include, but are not limited to:

to generate satisfactory preclinical, toxicology, or other in vivo or in vitro data or diagnostics to support the initiation

or continuation of clinical studies necessary for product approval;

in identifying, developing or securing rights to use, and testing delivery systems or other methods for administration of our potential

cell therapies;

in securing clinical investigators and agreeing on acceptable terms with contract research organizations (“CROs”) and

clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among CROs and clinical

in obtaining required IRB approval at each clinical trial site;

to obtain permission from regulatory authorities to conduct a clinical trial after review of an IND or equivalent foreign application

in obtaining required institutional review board (“IRB”) or ethics committee (“EC”) approval at each clinical

obtaining permission from regulatory authorities to conduct a clinical trial after review of an IND or equivalent foreign application

or amendment;

than anticipated rates of patient recruitment and enrollment (including as a result of actual or threatened public health emergencies

and outbreaks of disease such as the current COVID-19 pandemic), failing to reach the targeted number of patients due to competition

for patients from other trials, or patients dropping out of our clinical studies once enrolled;

and outbreaks of disease such as the COVID-19 pandemic), or failure to reach the targeted number of study participants due to competition

from other clinical trials or available treatment options (some potentially newly approved and marketed), or patients dropping out

of our clinical studies once enrolled;

by clinical sites or our CROs or other third parties to adhere to clinical trial requirements or report complete findings;

to perform the clinical studies in accordance with the FDA’s good clinical practices requirements or applicable foreign regulatory

of adverse events associated with our product candidates or with product candidates of third parties that may have characteristics

similar to or perceived to be similar to our product candidates;

or inconclusive results from our clinical trials which may result in our deciding, or regulators requiring us, to conduct additional

clinical studies or to curtail or abandon development programs for a product candidate;

side effects, possibly resulting in the FDA or other regulatory authorities denying approval of our product candidates;

of serious adverse events (“SAEs”) or adverse events (“AEs”) associated with our product candidates or with

product candidates of third parties that may have characteristics similar to or perceived to be similar to our product candidates;

or inconclusive results from our clinical trials or clinical trials of others for product candidates similar to ours, which may result

in our deciding, or regulators requiring us, to conduct additional clinical studies or to curtail or abandon development programs

for a product candidate;

effectiveness or unacceptable side effects, possibly resulting in the FDA or other regulatory authorities denying approval of our

product candidates;

and introduction of new therapies or changes in standards of practice or regulatory guidance that render our clinical trial endpoints

or the targeting of our proposed indications obsolete;

to monitor patients adequately during or after treatment or problems with investigator or patient compliance with the trial protocols;

or unwillingness of medical investigators to follow our clinical protocols;

unavailability

of clinical trial supplies;

to monitor patients adequately during or after treatment or problems with patient compliance with the clinical trial protocols;

or unwillingness of medical investigators to follow our clinical trial protocols;

supply or quality of clinical trial materials or other supplies necessary for the conduct of our clinical trials;

or unfavorable FDA or other regulatory agency inspection and review of a clinical trial site or a manufacturing facility;

to use clinical trial results from foreign jurisdictions to support U.S.

regulatory approval;

in regulatory requirements and guidance that require amending or submitting new clinical protocols;

cost of clinical studies of our product candidates;

in agreeing on acceptable terms with third-party manufacturers and the time for manufacture of sufficient quantities of our product

candidates for use in clinical studies.

inability to successfully complete clinical development and obtain regulatory approval could result in additional costs to us or impair

our ability to generate revenue.

Clinical trial delays could also shorten any periods during which our products have patent protection

and may allow competitors to develop and bring products to market before we do and may harm our business and results of operations.

and preclinical drug development involves a lengthy and expensive process with an uncertain outcome.

The results of early preclinical

trials and clinical trials of our product candidates are not necessarily predictive of future results.

Our product candidates may not

have favorable results in later clinical trials, if any, or receive regulatory approval on a timely basis, if at all.

and preclinical drug development is expensive and can take many years to complete, and its outcome is inherently uncertain.

trials may not be conducted as planned or completed on schedule, if at all, and failure can occur at any time during the preclinical

or clinical trial process.

All of our product candidates will require substantial additional development, and no assurances can

be given that the development of any of our product candidates will ultimately be successful.

Although we may from time to time disclose

results from preclinical testing or preliminary data or interim results from our clinical studies of our product candidates, and earlier

clinical studies, including clinical studies with similar product candidates, these are not necessarily predictive of future results,

including clinical trial results.

The historical failure rate for product candidates in our industry is high.

results of our current and future clinical trials may differ from results achieved in earlier preclinical and clinical studies for a

variety of reasons, including:

may not demonstrate the potency and efficacy benefits observed in previous studies;

efforts to improve, standardize and automate the manufacture of our product candidates, including OpRegen ® ,

OPC1 and VAC2, and any resulting deviations in the manufacture of our product candidates, may adversely affect the safety, purity,

potency or efficacy of such product candidates;

in trial design, including differences in size, eligibility criteria, and patient populations;

in the standard of care may affect our ability to demonstrate efficacy or achieve trial endpoints in our current or future clinical

issues or adverse events in patients that enroll in our current or future clinical trials;

in preclinical and clinical tests may not be repeated in subsequent tests or be predictive of future results.

September 2021, we provided updates to the fully enrolled 24 patient Phase 1/2a open-label trial for OpRegen.

Data presented showed that

restoration of retinal tissue previously reported in three patients had been maintained for up to nine months in the two most recent

restoration patients and for up to 33 months in the first case of restoration.

These three patients exhibited optical coherence tomography

(OCT) evidence of newly integrated RPE cells, and layers of retinal tissue (i.e., outer plexiform, outer nuclear layer, ellipsoid

zone) in areas that previously showed no presence of these structures at baseline.

All three of these patient’s visual acuities

increased above baseline levels within 6 months post-transplant.

Overall, the best corrected visual acuity of the better vision Cohort

4 patients has improved or remained stable in 8/12 (67%) OpRegen treated eyes while decreasing in 9/12 (75%) of their respective fellow

All of these patients are being closely monitored for additional evidence of clinical benefit.

Specifically,

additional data presented showed that as patients continued to progress into post-operative follow-up, eyes receiving OpRegen trended

toward improvement in visual acuity, a secondary objective under the study, while their untreated eyes typically lost visual acuity,

as expected with this progressive disease.

As additional patients have reached longer periods post-treatment, differences in visual acuity

between treated and untreated eyes across Cohort 4 patients became statistically significant beginning at month 9 (P = 0.0085), as well

as months 12 (P = 0.0220) and 15 (P = 0.0273) as determined via 2-sided Wilcoxon Signed Rank (using NCSS, LLC statistical software).

These results, when combined with the OCT findings, suggest that both a structural and functional benefit is possible with OpRegen therapy.

The totality of these findings supports the view that atrophic AMD is not an irreversible degenerative condition.

OpRegen has been well

tolerated with no unexpected adverse events, and evidence of durable engraftment of OpRegen RPE cells have extended to more than five

years post-transplant in earliest treated patients.

However, we do not know how OpRegen will perform in future clinical trials.

is not uncommon to observe results in clinical trials that are unexpected based on preclinical trials and early clinical trials, and

many product candidates fail in clinical trials despite very promising early results.

Moreover, preclinical and clinical data may be

susceptible to varying interpretations and analyses.

Several companies in the biotechnology industry have suffered significant setbacks

in clinical development even after achieving promising results in earlier studies.

as a result of the COVID-19 pandemic, if patients drop out of our clinical trials, miss scheduled doses or follow-up visits or otherwise

fail to follow clinical trial protocols, or if our clinical trials are otherwise disrupted due to COVID-19 or actions taken to slow its

spread, the integrity of data from our clinical trials may be compromised or not accepted by the FDA or other regulatory authorities,

which would represent a significant setback for the applicable program.

if our current and planned clinical trials are successful, we will need to conduct additional clinical trials, which may include registrational

trials, trials in additional patient populations or under different treatment conditions, and trials using different manufacturing protocols,

processes, materials or facilities or under different manufacturing conditions, before we are able to seek approvals for our product

candidates from the FDA and regulatory authorities outside the United States to market and sell these product candidates.

to meet the requirements to support marketing approval for our product candidates in our ongoing and future clinical trials would substantially

harm our business and prospects.

For the foregoing reasons, our ongoing and planned clinical trials may not be successful, which could

have a material adverse effect on our business, financial condition and results of operations.

topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become

available and are subject to audit and verification procedures that could result in material changes in the final data.

time to time, we may publicly disclose preliminary or topline data from our clinical trials, which is based on a preliminary analysis

of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review

of the data related to the particular trial.

We also make assumptions, estimations, calculations and conclusions as part of our analyses

of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.

As a result, the topline results

that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results,

once additional data have been received and fully evaluated.

Topline data also remain subject to audit and verification procedures that

may result in the final data being materially different from the preliminary data we previously published.

As a result, topline data

should be viewed with caution until the final data are available.

From time to time, we may also disclose interim data from our clinical

Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may

materially change as patient enrollment continues and more patient data become available.

Adverse differences between preliminary or

interim data and final data could significantly harm our business prospects.

in regulatory requirements and guidance that require amending clinical trial protocols or conducting additional clinical or nonclinical

than anticipated cost of clinical studies of our product candidates.

patients drop out of our clinical trials, miss scheduled doses or follow-up visits or otherwise fail to follow clinical trial protocols,

or if our clinical trials are otherwise disrupted due to unforeseen events, such as previously occurred as a result of the COVID-19 pandemic

as discussed elsewhere in this Risk Factors section, the integrity of data from our clinical trials may be compromised or not accepted

by the FDA or other regulatory authorities, which would represent a significant setback for the applicable program.

or any inability to successfully complete clinical development and obtain regulatory approval could result in additional costs to us,

impair our ability to generate revenue and harm our financial condition.

Clinical trial delays could also shorten any periods during

which our products have patent protection and may allow competitors to develop and bring products to market before we do and may harm

our prospects and results of operations.

results of preclinical studies and early clinical trials of our product candidates are not necessarily predictive of future results.

Our product candidates may not have favorable results in later clinical trials despite positive results in preclinical and early clinical

studies, which may have a material and adverse effect on our business and financial condition.

of our product candidates will require substantial additional development, and no assurances can be given that the development of any

of our product candidates will ultimately be successful.

Results from preclinical testing and clinical studies of our product candidates,

may support continued development and we may spend significant time and resources on development of a potential product based on results

of such early studies, but product candidates in later stages of development may fail to demonstrate safety and efficacy results necessary

for regulatory approval or commercial viability.

Many companies in our industry have suffered significant setbacks in advanced clinical

trials due to lack of efficacy, insufficient durability of efficacy or unacceptable safety issues, notwithstanding promising results

in earlier trials.

Most product candidates that commence clinical trials are never approved as products.

A failure of one or more clinical

studies can occur at any stage of development, including in a post-approval study.

later clinical studies, our product candidates may not demonstrate the efficacy, durability of efficacy, or safety achieved in preclinical

and earlier clinical studies for a variety of reasons, including:

efforts to improve, standardize, and scale up the manufacture of our clinical product candidates, including OpRegen, OPC1, and VAC2,

and any resulting changes to the product candidates, may adversely affect the safety, purity, potency or efficacy of such product

in delivery systems or other methods of transplant or administration of our cell formulations;

in trial design, including number of subjects, controls (type and number), eligibility criteria, patient populations, and endpoints;

in the standard of care, including newly approved and/or marketed products, may affect our ability to demonstrate efficacy or achieve

trial endpoints in our current or future clinical trials;

in interpretation and analysis of study data.

example, based on data analyzed to date, in our Phase 1/2a open-label trial for OpRegen, OpRegen has been well tolerated and demonstrated

an acceptable safety profile, with no unexpected adverse events, while having qualifiable and quantifiable therapeutic potential in patients

with geographic atrophy secondary to age-related macular degeneration.

However, positive data from the Phase 1/2a trial are not necessarily

predictive of results that may be seen from the Phase 2a clinical trial that Roche launched in late 2022.

We do not know how OpRegen

will perform in that Phase 2a trial or future clinical trials.

clinical trials of our product candidates, which may include registrational trials, trials in additional patient populations or under

different treatment conditions, and trials using different manufacturing protocols, processes, materials or facilities or under different

manufacturing conditions, will be necessary before we or our collaborators are able to seek approvals for our product candidates from

the FDA and regulatory authorities outside the United States to market and sell these product candidates.

Our failure, or that of our

collaborators, to meet the requirements to support marketing approval for our product candidates in ongoing and future clinical trials

would substantially harm our business and prospects.

If clinical trials of our product candidates are not successful, our business, financial

condition and results of operations could be materially harmed, and the price of our common shares may decline significantly following

announcement of an unsuccessful clinical trial.

topline and preliminary data from clinical trials of our product candidates that we or our collaborators publicly disclose from time

to time may change as more patient data become available and are subject to audit and verification procedures that could result in material

changes in the final data.

time to time, we or collaborators conducting clinical trials of our product candidates may publicly disclose interim, preliminary or

topline data from those clinical trials, which is based on a preliminary analysis of then-available data, and the results and related

findings and conclusions are subject to change following a more comprehensive review of the data related to the particular trial.

also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had

the opportunity to fully and carefully evaluate all data.

As a result, preliminary and topline results reported for clinical trials of

our product candidates may differ from final results of the same studies, or different conclusions or considerations may qualify such

results, once additional data have been received and fully evaluated.

Such data also remain subject to audit and verification procedures

that may result in the final data being materially different from the preliminary data we previously disclosed.

As a result, preliminary

and topline data should be viewed with reservation until the final data are available.

From time to time, we may also disclose interim

data from our clinical trials.

Interim data from clinical trials that we may complete are subject to the risk that one or more of the

clinical outcomes may materially change as patient enrollment continues and more patient data become available.

Adverse differences between

preliminary, topline or interim data and final data could significantly harm our business prospects.

others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses

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may be harmed, which could harm our business, operating results, prospects or financial condition.

we have multiple cell therapy programs in clinical development, we may expend our limited resources to pursue a particular product candidate

and fail to capitalize on product candidates that may be more profitable or for which there is a greater likelihood of success.

have three cell therapy programs in clinical development.

OpRegen is currently in a Phase 1/2a multicenter clinical trial for the treatment

of dry AMD, OPC-1 is currently in a Phase 1/2a clinical trial for subacute spinal cord injuries, and VAC2 is in a Phase 1 clinical trial

in non-small cell lung cancer.

As a result of these and other future clinical trials for these product candidates or any of our future

product candidates it may make our decision as to which product candidates to focus on more difficult and we may forgo or delay

pursuit of opportunities with other product candidates that could have had greater commercial potential or likelihood of success.

resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

spending on current and future research and development programs and product candidates may not yield any commercially viable products.

If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable

rights to that product candidate through future collaborations, licenses and other similar arrangements in cases in which it would have

been more advantageous for us to retain sole development and commercialization rights to such product candidate.

Additionally,

we may pursue additional in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to us.

selecting and acquiring promising product candidates requires substantial technical, financial and human resources expertise.

to do so may not result in the actual acquisition or license of a particular product candidate, potentially resulting in a diversion

of our management’s time and the expenditure of our resources with no resulting benefit.

For example, if we are unable to identify

programs that ultimately result in approved products, we may spend material amounts of our capital and other resources evaluating, acquiring

and developing products that ultimately do not provide a return on our investment.

The commercial success of any of our current or

future product candidates will depend upon the degree of market acceptance by physicians, patients, third-party payors, other healthcare

providers and others in the medical community.

manufacture of our cell therapy product candidates is complex, highly regulated and subject to a multitude of risks.

We have limited

experience manufacturing our product candidates on a clinical scale and no experience manufacturing on a commercial scale.

by us or any third party on which we may depend to manufacture our product candidates in sufficient quantities in accordance with our

quality standards and regulatory requirements and at acceptable costs, may result in significant clinical development delays or impair

our ability, or that of a strategic collaborator, to obtain approval for or commercialize our product candidates.

manufacture and supply of our cell therapy product candidates involve novel processes that are generally more complex than those

required for small molecule drugs and accordingly present significant challenges and are subject to multiple risks.

These complex

processes involve the expansion and differentiating of the pluripotent cells to obtain the desired cell product candidate.

Manufacturing our product candidates requires significant expertise and capital investment, including in the development and

validation of advanced manufacturing techniques and specific quality assurance and quality control procedures.

As a result of the

complexities involved, the cost to manufacture human cell-based biologics is generally higher than for traditional therapies or

vaccines and the manufacturing process is less reliable and more difficult to reproduce.

In addition, our cost of goods development

is at an early stage.

The actual cost to manufacture and supply our product candidates could be greater than we expect and could

materially and adversely affect the commercial viability of our product candidates.

Excessive manufacturing costs could make our

product candidates too expensive to compete with alternative products or therapies, or might result in third-party payors declining

to cover our products or setting coverage levels too low for us to earn a profit from the commercialization of one or more of our

intend to manufacture all of the clinical supply of our cell therapy product candidates for ongoing and planned clinical trials.

need to scale up our manufacturing operations, as we do not currently have the infrastructure or capability to manufacture sufficient

quantities of each of our product candidates to support commercialization, if approved.

Currently, as described elsewhere in this Risk

Factors section, we are entirely dependent on our subsidiary Cell Cure and its manufacturing facility located in Israel for the manufacture

and supply of our cell therapy product candidates.

While that facility is designed and equipped to enable simultaneous cGMP processes

and to produce a range of human cell therapy products for use in clinical trials, as well as at a scale suitable for commercial launch,

we will need greater manufacturing capacity to support commercial development of all our product candidates.

If we do not have sufficient

capital to increase our internal manufacturing capabilities, we may need to rely on third-parties to manufacture and supply any products

we develop and there is no assurance that we would be able to identify third parties capable of manufacturing our product candidates

on acceptable terms or at all.

are still developing optimized and reproducible manufacturing processes for clinical and commercial-scale manufacturing of our product

To date, we have not scaled the manufacturing processes with respect to any of our product candidates for commercialization.

None of our manufacturing processes have been validated for commercial production of our product candidates.

We may face multiple challenges

as we scale up our manufacturing operations and, ultimately, we may not be successful as to one or more of our product candidates.

challenges include, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability and purity

issues, compliance with cGMP and cGTP, lot consistency and timely availability and quality of acceptable reagents and raw materials.

In addition, we are continuing to optimize our protocols for the supply and transport of our product candidates for distribution to clinical

Although we are working to develop reproducible and commercially viable manufacturing processes for our product candidates,

and effective protocols for the supply and transport of our product candidates, doing so is a difficult and uncertain task.

unable to scale production to the level required for commercialization, we may not be able to meet the requirements for the potential

commercial launch or to meet potential future demand if any product candidates are approved for commercialization, which would have an

adverse effect on our business, financial condition, results of operations and growth prospects.

manufacturing processes for any products that we may develop and the facilities used to manufacture our product candidates are subject

to FDA and foreign regulatory authority approval requirements, and we will need to meet, and any third party manufacturers we may rely

on the future will need to meet, all applicable FDA and foreign regulatory authority requirements on an ongoing basis.

We cannot provide

assurance that the manufacturing processes that we use, or the technologies that we incorporate into these processes, will result in

viable or scalable yields of our cell therapy product candidates that will be safe and effective.

We may be required to identify alternative

protocols, processes, raw materials, or facilities for the manufacture of any of our product candidates in compliance with applicable

regulatory requirements.

In addition, we may be required to increase our safety testing protocols for our product candidates.

Any modifications

to our manufacturing and supply protocols, processes, safety testing, materials or facilities, and any delays in, or inability to, establish

acceptable manufacturing and supply operations for our product candidates could require us to incur substantial additional development

costs or result in significant delays to our clinical development.

If we, or any third-party manufacturer we may rely on in the future,

are unable to reliably produce products to specifications acceptable to the FDA or other regulatory authorities, we may not obtain or

maintain the regulatory approvals we need to commercialize our product candidates.

Even if we obtain regulatory approval for any product

candidates, there is no assurance that either we or any future third-party manufacturer will be able to manufacture the approved product

to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities and on the requisite

timelines to meet the requirements for the potential launch of the product, or to meet potential future demand.

Additionally, changes

in regulatory requirements may require us or our third-party manufacturers to perform additional studies or to modify protocols, processes,

materials or facilities for the manufacture of our product candidates or any components thereof.

Any of these challenges could delay

initiation or completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase

clinical trial costs, delay approval of our product candidates, impair commercialization efforts, increase our cost of goods, and have

an adverse effect on our business, financial condition, results of operations and prospects.

in or disruptions to our manufacturing operations could materially and adversely affect our business.

may have to make changes to our manufacturing operations or processes at various points during development, before or after commercialization,

for various reasons, such as to control costs, achieve scale, decrease processing time, increase manufacturing success rate, or for other

Such changes, even seemingly minor changes, carry the risk that they will not achieve their intended objectives, and any of

these changes could cause our product candidates to perform differently and affect the results of any of our then-ongoing clinical trials

or future clinical trials, or the performance of the product.

In certain circumstances, if we make changes to our manufacturing operations

or process for a product candidate, the FDA or foreign regulatory authorities may require us to perform comparability studies and collect

additional preclinical or clinical data prior to undertaking additional clinical trials or obtaining marketing approval for the product

candidate, or if already on the market, prior to supplying any product produced with such modified process.

For instance, if we make

changes to our manufacturing process for a product candidate during the course of clinical development, regulatory authorities may require

us to show the comparability of the product used in earlier clinical phases or earlier portions of a trial to the product used in later

clinical phases or later portions of the trial.

We may be unable to successfully generate comparability data, and even if we are able

to generate and provide such data, regulatory authorities may determine that the data are insufficient to support a determination of

comparability which would result in additional testing, and could result in manufacturing delays and affect our ability to timely commence

or complete clinical trials of our product candidate, which could delay further development or commercialization of such product candidate

and may increase our development costs substantially.

as described elsewhere in this Risk Factors section, we are entirely dependent on our subsidiary Cell Cure and its manufacturing

facility located in Israel for the manufacture and supply of our cell therapy product candidates, and events or conditions that

disrupt operations at that facility could materially and adversely affect our business.

In 2022, we announced the opening of a new

research and development facility in Carlsbad, California to support the development of current and future allogeneic cell

transplant programs.

Utilization of this new facility for cGMP manufacturing of our product candidates will require significant

additional investment, including hiring and retaining additional experienced scientific, quality control, quality assurance, and

manufacturing personnel, which may be difficult given the intense competition for qualified personnel in our industry as described

elsewhere in this Risk Factors section.

Even if we have sufficient capital to complete the build-out and staffing of the Carlsbad

facility, we will need to conduct significant development work to transfer our manufacturing processes to enable manufacturing of

any product candidate in our Carlsbad facility.

Transferring manufacturing testing and processes and know-how is complex and

involves review and incorporation of both documented and undocumented processes that may have evolved over time.

If, in the future

we were to engage a third-party manufacturer to conduct any of the cGMP manufacturing for our product candidates, or any product, we

would face similar and significant challenges in transferring manufacturing processes and know-how, which may delay the manufacture

of clinical trial or commercial supplies and disrupt or delay clinical development of our product candidates.

transferring production to different facilities may require utilization of new or different processes to meet the specific

requirements of a given facility.

We may be required to demonstrate the comparability of clinical material generated at any new

facility with material previously produced and used in clinical testing.

Any inability to manufacture comparable material by us or

any third-party manufacturer we may engage could delay the development and commercialization of our product candidates and may

increase our development costs substantially.

product candidates are susceptible to product loss or reduced manufacturing success rates at various points during the manufacturing

process, including quality issues due to contamination, equipment damage or failure, including during shipment or storage, failure of

equipment to operate as expected, improper installation or operation of equipment, operator error, damage to, variability of, or improper

use of raw materials or consumables necessary for the manufacturing process, inconsistency in yields, variability in product characteristics,

and difficulties in scaling the production process.

Any of these issues, and even minor deviations from normal manufacturing processes,

could result in reduced production yields, product defects, and other supply disruptions and delays.

If any contaminants are discovered

in our product candidates during its production or clinical testing this could lead to the withdrawal of our products from clinical trials.

Moreover, if the FDA or comparable foreign regulatory authorities determine that we or any third-party manufacture on which we rely are

not in compliance with applicable laws and regulations, including cGMPs and cGTPs, the FDA or comparable foreign regulatory authority

may not approve a marketing application until the deficiencies are corrected or we replace the manufacturer in our application with a

manufacturer that is in compliance, which we may not be able to do on a timely basis at a reasonable cost, or at all.

If we or any third-party

manufacturer on which we rely fail to comply with applicable regulatory requirements, we may ultimately be unable to manufacture our product

Any such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates previously

granted to us, or take other regulatory or legal action, including recall or seizure of supplies of the product candidate, total or partial

suspension of production, suspension of then-ongoing clinical trials, refusal to approve then-pending applications or supplemental applications,

detention of product, refusal to permit the import or export of products, injunction or imposing civil and criminal penalties.

The occurrence

of any of these issues could result in product liability claims, delay or failure to commence or complete clinical development, obtain

regulatory approval of or commercialize our product candidates.

manufacturing operations, and those of any third-party manufacturer on which we may rely, are also susceptible to disruption due to resource

constraints, labor shortages, supply chain failures, public health emergencies such as the COVID-19 pandemic, geopolitical conflict,

acts of terrorism, political or economic instability or crises, natural disasters, and other reasons.

Any adverse developments affecting

manufacturing operations for any of our product candidates may result in shipment delays, inventory shortages, lot failures, product

withdrawals or recalls, or other supply interruptions that could negatively impact the conduct of our clinical trials or our ability

to successfully commercialize any product candidates for which we may obtain regulatory approval.

We may also have to take inventory

write-offs and incur other charges and expenses for products that fail to meet specifications as a result of defects or storage over

an extended period of time, undertake costly remediation efforts, or seek more costly manufacturing alternatives, which may not be available

on a timely basis, or at all.

Medicine Advanced Therapy (“ RMAT ”) designation may not lead to a faster development or regulatory review or

approval process and it does not increase the likelihood that a product candidate will receive marketing approval.

have received RMAT designation from the FDA for OPC1 for the treatment of subacute spinal cord injuries.

There is no assurance that we

will be able to obtain RMAT designation for any other current or future product candidates.

RMAT designation does not change the FDA’s

standards for product approval, and there is no assurance that such designation will result in expedited review or approval or that the

approved indication will not be narrower than the indication covered by the RMAT designation.

Additionally, RMAT designation can be revoked

if the criteria for eligibility cease to be met as clinical data emerges.

commercial success of any of our current or future product candidates will depend upon the degree of market acceptance by physicians,

patients, third-party payors, other healthcare providers and others in the medical community.

if a product candidate obtains regulatory approval, its commercial success will depend in part on physicians, patients, third-party payors,

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efficacy of the product as demonstrated in clinical trials and potential advantages over competing treatments;

prevalence and severity of the disease and any side effects;

prevalence and severity of any side effects;

clinical indications for which approval is granted, including any limitations or warnings contained in a product’s approved

convenience and ease of administration;

cost of treatment, particularly as additive to existing treatments;

convenience and ease of administration, including compared to alternative treatments;

cost of treatment, including in relation to alternative treatments;

willingness of the patients and physicians to accept and use these therapies;

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publicity concerning our products or competing products and treatments;

pricing and availability of coverage and adequate reimbursement by third-party payors and government authorities.

Even if a product displays a favorable

efficacy and safety profile upon approval, market acceptance of the product will be uncertain.

Efforts to educate the medical community

and third-party payors on the benefits of the products may require significant investment and resources and may never succeed.

products fail to achieve an adequate level of acceptance by physicians, patients, third-party payors, other healthcare providers and others

in the medical community, we will not be able to generate sufficient revenue to become or remain profitable.

the market opportunities for our product candidates are smaller than we believe and estimate they are, we may not meet our revenue expectations

and our business may suffer.

projections of the number of potential users in the markets we are attempting to address are based on our beliefs and estimates.

estimates have been derived from a variety of sources, including market research and publications and scientific literature estimating

the total number of potential patients and currently approved or used therapies.

Our estimates are also based on assumptions regarding

the potential size of the market assuming broad regulatory approval or potential usage by physicians beyond the approved label.

our estimates may prove to be incorrect.

The scope of approval and potential use of any product candidate may be significantly narrower,

and the number of patients may turn out to be lower than expected.

Competitive products or approaches may be approved or come into use

and the potentially addressable patient population for each of our product candidates may be limited or may not be amenable to treatment

with our product candidates, and new patients may become increasingly difficult to identify or gain access to, any which could adversely

affect our results of operations and our business.

of the products we may develop will be adversely affected by the availability of competing products.

Our products and product candidates

will face substantial competition, whether through the development of safer and more effective alternatives to our products, lower costs

to administer than our products or other forms of competition such as more favorable distribution, reimbursement and pricing or formulary

and healthcare provider acceptance.

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

biotechnology 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 (“hEPC”)

based technologies and products that may compete with our stem cell products based on efficacy, safety, cost, and intellectual property

Ocata, which was acquired by a subsidiary of Astellas Pharma Inc., and Retinal Patch Technologies Inc.

are conducting clinical

trials of hES cell products designed to treat age-related macular degeneration.

If their products are proven to be safe and effective,

they may reach the market ahead of OpRegen.

may also face competition from companies that have filed patent applications relating to the propagation and differentiation of stem

Those companies include Ocata, which in 2015 had certain U.S.

patents issue with claims directed to methods of producing RPE cells

and isolating and purifying such cells.

We may be required to seek licenses from these competitors in order to commercialize certain

products proposed by us, and such licenses may not be granted.

products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing

our product candidates.

If we are unable to compete effectively, our opportunity to generate revenue from the sale of our products we

may develop, if approved, could be adversely affected.

will face risks related to our own manufacturing capabilities and those related to our reliance on third parties to manufacture products,

including those related to product acquisition costs, production delays, and supply shortages that could impair our ability to complete

the development and commercialization of our product candidates.

manufacture of medical products is complex and requires significant expertise and capital investment, including the development of advanced

manufacturing techniques and process controls.

Although we have manufacturing capability through Cell Cure for OpRegen, OPC1, and VAC2

in Israel, we will need greater manufacturing capacity if we are to successfully commercialize our products.

Unless we can raise the

capital required to construct our own commercial scale manufacturing facilities and can develop the expertise to manage and operate a

manufacturing facility of our own, we may need to rely on third-party manufacturers to manufacture any products we develop.

no assurance that we will be able to identify manufacturers on acceptable terms or at all.

Regardless of whether we do our own manufacturing

or rely on third parties to manufacture products for us, we will face risks related to the manufacture of our products including these

or any third-party manufacturers might not timely formulate and manufacture our products or produce the quantity and quality required

to meet our clinical and commercial needs, if any.

or any third-party manufacturers may not execute our manufacturing procedures appropriately.

third-party manufacturers we engage may not perform as agreed or may not remain in the contract manufacturing business for the time

required to supply our clinical trials or to successfully produce, store and distribute our products on a commercial scale.

or any third-party manufacturers will be subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies

to ensure strict compliance with cGMP, and other government regulations and corresponding foreign standards.

We will not have control

over third-party manufacturers’ compliance with applicable regulations and standards.

may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in

the manufacturing process for our product candidates.

may not obtain licenses for third-party intellectual property rights needed by manufacturers to produce our products.

manufacturers could breach or terminate their agreements with us.

or third-party manufacturers may experience manufacturing difficulties as a result of resource constraints, labor disputes, unstable

political environments, natural disasters, public health crises such as pandemics and epidemics, political crises such as terrorism,

war, political insecurity or other conflict, or other events outside of our or our third-party manufacturers control (including as

a result of actual or threatened public health emergencies and outbreaks of disease such as the current COVID-19 pandemic).

may result in business closures that affect us and our third-party manufacturers.

addition, we may rely on third parties to perform release testing on our product candidates prior to delivery to patients.

If these tests

are not appropriately conducted and test data are not reliable, patients could be put at risk of serious harm which could result in product

liability suits.

we or any third-party manufacturers we may engage were to encounter any of these difficulties, our ability to provide our product candidates

to patients in clinical trials or to the medical marketplace would be jeopardized.

Any delay or interruption in the supply of clinical

trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs

and, depending upon the period of delay, could require us to either commence new clinical trials at additional expense or terminate clinical

trials completely.

Each risk could delay our clinical trials, any approval of our product candidates by the FDA, or the commercialization

of our product candidates, and could result in higher costs or deprive us of potential product revenue.

cell-based products that receive regulatory approval may be difficult and expensive to manufacture profitably.

products are among the more expensive biologic products to manufacture in accordance with cGMP.

We do not yet have sufficient information

to reliably estimate the cost of commercially manufacturing any of our product candidates.

Excessive manufacturing costs could make our

product candidates too expensive to compete in the medical marketplace with alternative products manufactured by our competitors or might

result in third party payors such as health insurers and Medicare, declining to cover our products or setting reimbursement levels too

low for us to earn a profit from the commercialization of one or more of our products.

The ongoing COVID-19 pandemic has affected and

may adversely affect our operations, including the conduct of our current or future clinical trials, as well as the operations of

third-party partners on whom we rely.

December 2019, a novel strain of coronavirus and the resulting illness known as COVID-19 emerged in Wuhan, China.

The outbreak has now

spread to other countries and has been declared a pandemic by the World Health Organization.

COVID-19 pandemic has resulted in travel and other restrictions in order to reduce the spread of the disease, including a California

executive order and several other state and local orders across the country, which, among other things, direct individuals to shelter

at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit

certain non-essential gatherings, and order cessation of non-essential travel.

In response to these public health directives and orders,

we have implemented work-from-home policies for our employees.

The effects of the executive order, the shelter-in-place order and our

work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude

of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business

in the ordinary course.

These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business,

operating results and financial condition.

COVID-19 continues to impact the United States and Israel, we have experienced and may continue to experience disruptions that could

adversely affect our operations and clinical trials, including:

or difficulties in conducting follow-up visits with patients in our clinical trials, particularly patients for our

OpRegen Phase 1/2a clinical trial, who are older and who may be at higher risk of complications from COVID-19;

or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and staff;

of healthcare resources away from the conduct of clinical trials;

of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel;

availability of our employees and the staff of our current clinical sites due to sickness or social distancing measures;

manufacturing

difficulties for us and our suppliers of raw materials caused by business closures;

in clinical sites receiving the supplies and materials needed to conduct our clinical trials, including interruption in global shipping

that may affect the transport of clinical trial materials;

in local regulations as part of a response to the COVID-19 outbreak which may require us to change the ways in which our clinical

trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;

or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;

that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the

results of the clinical trial, including by increasing the number of observed adverse events;

of the FDA to accept data from clinical trials in affected geographies.

and other disruptions in our operations and the global economy could negatively impact our business, operating results and financial

The extent to which the COVID-19 pandemic affects our operations will depend on future developments, which are highly uncertain

and cannot be predicted with confidence, including the duration and severity of the pandemic, and the actions that may be required to

contain the COVID-19 pandemic or treat its impact.

clinical trials have been, and may in the future be, affected by the COVID-19 pandemic.

In particular, some sites paused enrollment to focus on, and direct resources to, the COVID-19 pandemic or adhere to

national or local guidelines, while at other sites, patients may decide not to enroll or continue participating in follow-up visits as

part of the ongoing clinical trial, as a result of the pandemic.

We are unable to predict with confidence the duration of such patient

enrollment delays or missed study visits, as the COVID-19 pandemic continues or gets worse.

If patient enrollment or study follow-up

is delayed for an extended period of time, our clinical trials could be delayed or otherwise adversely affected.

Our inability to enroll

or follow a sufficient number of patients for any of our current or future clinical trials could result in significant delays or may

require us to abandon one or more clinical trials altogether.

ongoing or planned clinical trials may also be impacted by interruptions or delays in the operations of the FDA and comparable foreign

regulatory agencies.

addition, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions

on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at our CROs

or third-party manufacturing facilities upon which we rely, or the availability or cost of materials, which could disrupt the supply

chain for our product candidates.

To the extent our suppliers and service providers are unable to comply with their obligations under

our agreements with them or they are otherwise unable to deliver or are delayed in delivering goods and services to us due to the COVID-19

pandemic, our ability to continue meeting clinical supply demand for our product candidates or otherwise advancing development of our

product candidates may become impaired.

spread of COVID-19 and actions taken to reduce its spread may also materially affect us economically.

While the potential economic impact

brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, there could be a significant disruption

of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial

In addition, the trading prices for other biotechnology companies have been volatile as a result of the COVID-19 pandemic.

As a result, we may face difficulties raising capital through sales of our common shares or such sales may be on unfavorable terms.

and actions taken to reduce its spread continue to rapidly evolve.

The extent to which COVID-19 may impede the development of our product

candidates, reduce the productivity of our employees, disrupt our supply chains, delay our clinical trials, reduce our access to capital

or limit our business development activities, will depend on future developments, which are highly uncertain and cannot be predicted

with confidence.

addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have the

effect of heightening many of the other risks and uncertainties described in this ‘‘Risk Factors’’ section.

withdrawal of the United Kingdom (the “U.K.”) from the EU, commonly referred to as “Brexit,” may adversely impact

our ability to obtain regulatory approvals of our product candidates in the EU and the U.K., result in restrictions or imposition of

taxes and duties for importing our product candidates into the EU and the U.K., and may require us to incur additional expenses in order

to develop, manufacture and commercialize our product candidates in the EU and the U.K.

the result of a referendum in 2016, the U.K.

left the EU on January 31, 2020, commonly referred to as Brexit.

Pursuant to the formal

withdrawal arrangements agreed between the U.K.

and the EU, the U.K.

was subject to a transition period until December 31, 2020 (the

“Transition Period”) during which EU rules continued to apply.

A trade and cooperation agreement (the “Trade and Cooperation

Agreement”) that outlines the future trading relationship between the United Kingdom and the European Union provisionally applied

from January 1, 2021, and formally entered into force on May 1, 2021.

a significant proportion of the regulatory framework in the U.K.

applicable to our business and our product candidates is derived from

EU directives and regulations, Brexit has had, and will continue to have, a material impact upon the regulatory regime with respect to

the development, manufacture, importation, approval and commercialization of our product candidates in the U.K.

or the EU (to the extent

any development or manufacture of our product candidates takes place in the U.K.).

For example, Great Britain is no longer covered by

the centralized procedures for obtaining EU-wide marketing authorization from the European Medicines Agency and a separate process for

authorization of drug products, including our product candidates, will be required in Great Britain.

Any delay in obtaining, or an inability

to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates

and restrict our ability to generate revenue and achieve and sustain profitability.

For medical devices, such as Renevia,

CE marking remains applicable in Northern Ireland and will continue to be recognized in the rest of the United Kingdom (i.e.,

Great Britain) until 30 June 2023.

Any devices placed on the market in Great Britain must be registered with the MHRA.

The United Kingdom

has also adopted a new UK Conformity Assessment (“UKCA”), mark, which may be used in Great Britain on a voluntary basis until

June 30, 2023 and will be mandatory thereafter.

The requirements for the UKCA for medical devices are based on the requirements set out

in the EU Medical Devices Directive (93/42/EEC), rather than the Medical Devices Regulation that applies in the European Union and has

repealed the directive.

the Trade and Cooperation Agreement provides for the tariff-free trade of medicinal products between the U.K.

and the EU, there may be

additional non-tariff costs to such trade which did not exist prior to the end of the Transition Period.

Further, should the U.K.

from the EU from a regulatory perspective, tariffs could be put into place in the future.

We could therefore, both now and in the future,

face significant additional expenses (when compared to the position prior to the end of the Transition Period) to operate our business,

which could significantly and materially harm or delay our ability to generate revenues or achieve profitability of our business.

further changes in international trade, tariff and import/export regulations as a result of Brexit or otherwise may impose unexpected

duty costs or other non-tariff barriers on us.

These developments, or the perception that any of them could occur, may significantly

reduce global trade and, in particular, trade between the affected nations and the U.K.

pricing and availability of coverage and adequate reimbursement by third-party payors and government agencies

if a product displays a favorable efficacy and safety profile upon approval, market acceptance of the product will be uncertain.

to educate the medical community and third-party payors on the benefits of the products may require significant investment and resources

and may never succeed.

If our products fail to achieve an adequate level of acceptance by physicians, patients, third-party payors, other

healthcare providers and others in the medical community, we will not be able to generate sufficient revenue to become or remain profitable.

the market opportunities for our product candidates prove to be significantly smaller than we estimate, our business prospects may suffer .

projections of addressable patient populations within any particular disease state or condition that may benefit from treatment with

our product candidates are based on our beliefs and estimates.

Market opportunity estimates and growth forecasts are subject to significant

uncertainty and are based on assumptions and estimates.

Our estimates have been derived from a variety of sources, including market research

and publications and scientific literature estimating the total number of potential patients and currently approved or used therapies.

Our estimates are also based on assumptions regarding the potential size of the market assuming broad regulatory approval or potential

usage by physicians beyond the approved label.

Any of our estimates may prove to be incorrect.

The scope of approval and potential use

of any product candidate may be significantly narrower, and the number of patients may turn out to be lower than expected.

products or approaches may be approved or come into use and the potentially addressable patient population for each of our product candidates

may be limited or may not be amenable to treatment with our product candidates, and new patients may become increasingly difficult to

identify or gain access to.

If any of our estimates proves to be inaccurate, the market opportunity for any of our product candidates

could be significantly diminished, which would have an adverse material impact on our business.

face significant competition, and if our competitors develop and market products that are more effective, safer, more convenient, or

less expensive than our product candidates, our commercial opportunities will be negatively impacted.

biotechnology and pharmaceutical industries, and particularly the still nascent area of cell therapies, is intensely competitive and

characterized by rapid and significant innovation.

Any of our product candidates that obtains regulatory approval will face substantial

competition based on many different factors, including the relative safety and efficacy of our product, the relative ease of administration

of our product for healthcare providers, the convenience of our product for patients, the timing and scope of regulatory approvals for

our product, the cost of manufacturing our product and whether sufficient quantities can be produced to meet demand, our marketing and

sales capabilities or those of our collaborators, pricing, reimbursement coverage levels, and patent positions.

Competing products could

present superior treatment alternatives, including by being more effective, safer or easier or more convenient to administer, or may

be less expensive for third-party payors or patients or marketed and sold more effectively than any products we may develop.

competitors include a variety of major pharmaceutical and biopharmaceutical companies and specialty pharmaceutical and biotechnology

companies, as well as technology and therapeutics being developed at academic institutions and other public and private research institutions.

Many of our competitors have greater financial and other resources, such as larger research and development staff, more experienced manufacturing

organizations and facilities, and established sales and marketing organizations.

Mergers and acquisitions in the pharmaceutical and biotechnology

industries may result in even more resources, including intellectual property that may be necessary or useful for the development and

commercialization of our product candidates, being concentrated in our competitors and becoming unavailable to us on reasonable commercial

terms or at all.

Third parties are commercializing, have developed, are developing or may develop product candidates, platform technologies

and processes that will compete with ours.

Competitive therapeutic treatments include those that have already been approved and accepted

by the medical community and considered standard-of-care treatments, as well as novel treatments that are currently in preclinical or

clinical development or may otherwise enter the market.

For example, in February 2023, the FDA approved Apellis Pharmaceuticals,

Inc.’s SYFOVRE® (pegcetacoplan injection) for the treatment of GA, and in February 2023, Iveric Bio, Inc.’s new drug application

for Zimura® (avacincaptad pegol) for the treatment of GA secondary to AMD was accepted by the FDA.

In addition to the foregoing, we

believe that a significant number of product candidates are currently under development, which may become commercially available in the

future for the treatment of indications for which we are developing, or may try to develop, our product candidates.

For additional information

regarding our competition, see “Item 1.

Business—Competition,” above.

I Regulatory approval and/or the achievement of

clinical or commercial success of one or more competing products or product candidates may reduce or eliminate the market for our product

In addition, if one or more competing products fail to obtain regulatory approval or achieve clinical or commercial success

and are perceived by regulators, healthcare providers, third-party payors or potential patients as comparable to our product candidates,

our regulatory strategy could be impaired, our ability to obtain regulatory approval for our product candidates could be delayed or prevented,

or the market for our product candidates may be reduced or eliminated.

products may make any product we develop obsolete or noncompetitive before we recover the expense of developing and commercializing the

If we or our collaborators are unable to compete effectively, our opportunity to generate revenue from the sale of our products

we may develop, if approved, would be adversely affected.

face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs.

the use or misuse of our products or product candidates harm patients or is perceived to harm patients even when such harm is unrelated

to our products or product candidates, our regulatory approvals could be revoked, suspended or otherwise negatively affected, and we

could be subject to costly and damaging product liability claims.

face the risk of incurring liabilities to clinical trial patients if they are injured as a result of their participation in our clinical

In the event we commercialize Renevia in the EU or in other countries that recognize the CE Mark, we will also face product liability

risks associated with the use of Renevia by consumers.

If any claims are made and if liability can be established, the amount of any

liability we or our affiliates may incur, could exceed any insurance coverage in effect, and the amount of the liability could be material

to our financial condition.

use or misuse of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval, including

Renevia, exposes us to the risk of product liability claims.

Product liability claims might be brought against us by consumers, healthcare

providers, pharmaceutical companies or others selling or otherwise coming into contact with our products.

There is a risk that our product

candidates may induce adverse events.

If we cannot successfully defend against product liability claims, we could incur substantial liability

In addition, regardless of merit or eventual outcome, product liability claims may result in:

of our business reputation;

to our products or product candidates, our regulatory approvals could be revoked, suspended or otherwise negatively affected, our reputation

could suffer, and we could be subject to costly and damaging product liability claims.

face the risk of incurring liabilities to clinical trial patients if they are injured as a result of their participation in clinical

trials of our product candidates or products.

We also face potential product liability for use or misuse of our products that obtain

regulatory approval and are commercialized.

We recently settled a product liability lawsuit, which we determined was not material, relating

to the use in a clinical trial of a product candidate that we are no longer developing and have no plans to pursue, and that is not related

to the cell therapy candidates we currently are developing.

See Note 14 (Commitments and Contingencies) and Note 19 (Subsequent Events)

to our consolidated financial statements included this report and “Item 3.

Legal Proceedings” in Part I of this report for

additional information.

We may not successfully defend any product liability claims made against us in the future.

Product liability

claims could delay or prevent completion of our clinical development programs.

Such claims could result in FDA or other regulatory authority

investigations of the safety of our product candidates or products, our manufacturing processes and facilities or our marketing programs.

If any claims are made and if liability can be established, the amount of any liability we or our affiliates may incur, could exceed

any insurance coverage in effect, and the amount of the liability could be material to our financial condition and operating results.

In addition, even if we successfully defend against product liability claims, we could incur substantial costs in defending against claims

and suffer significant reputational harm that negatively impacts our business.

use or misuse of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes

us to the risk of product liability claims.

Product liability claims might be brought against us by those who use our product candidates

in clinical trials, consumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming into contact with

our products.

There is a risk that our product candidates or future products may induce adverse events.

If we cannot successfully defend

against product liability claims, we could incur substantial liability and costs.

Legal proceedings are inherently uncertain and unpredictable

and proceedings believed to be immaterial could prove to have a material adverse effect on our business, operating results and financial

Regardless of merit or eventual outcome, product liability claims may result in:

of investigations by regulators;

of clinical trial participants;

due to related litigation;

costs due to related litigation;

of management’s attention from our primary business;

monetary awards to patients or other claimants;

inability to commercialize our product candidates;

inability to complete development of or commercialize our product candidates;

recalls, withdrawals or labeling, marketing or promotional restrictions;

demand for our product candidates, if approved for commercial sale.

believe our current product liability insurance coverage is appropriate in light of our clinical programs;

however, we may not be able

to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability.

we obtain marketing approval for product candidates, we intend to increase our insurance coverage to include the sale of commercial products;

however, we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts.

damages have been awarded in class action lawsuits based on drugs or medical treatments that had unanticipated adverse effects.

product liability claim or series of claims brought against us could cause our stock price to decline and, if the amount of damages exceeds

our insurance coverage, could adversely affect our results of operations and business.

Cure has received Israeli government grants for certain of its research and development activities.

The terms of these grants may require

Cell Cure to seek approvals and to satisfy specified conditions to manufacture products and transfer or license grant-supported technologies

outside of Israel.

In the context of such approvals, Cell Cure will be required to pay penalties in addition to the repayment of the

Such grants are applied for on a yearly basis and may not be available or only partially granted in the future, which would increase

Cure has received Israeli government grants for certain of its research and development activities.

The terms of these grants require

prior approval and the satisfaction of specified conditions to manufacture products and transfer or license technologies outside of Israel.

the Encouragement of Research, Development and Technological Innovation in the Industry Law 5744-1984 (formerly known as the Law for

the Encouragement of Research and Development in Industry 5744-1984), and the regulations, guidelines, rules, procedures and benefit

tracks thereunder (collectively, the “Innovation Law”), annual research and development programs that meet specified criteria

and are approved by a committee of the IIA are eligible for grants.

The grants awarded are typically up to 50% of the project’s

expenditures, as determined by the IIA committee and subject to the benefit track under which the grant was awarded.

A company that receives

a grant from the IIA (a “Grant Recipient”), is typically required to pay royalties to the IIA on income generated from products

incorporating know-how developed using such grants (including income derived from services associated with such products) or on all revenues

of the Grant Recipient (depending upon the terms of the approval letters issued by the IIA), until 100% of the U.S.

dollar-linked grant

plus annual LIBOR interest is repaid.

In general, the rate of such royalties varies between 3% to 5%.

obligation to pay royalties is contingent on actual revenues being generated from such products and services or actual revenues being

generated by the Grant Recipient in general (as the case may be).

In the absence of such revenues, no payment of royalties is required.

It should be noted that the restrictions under the Innovation Law will continue to apply even after the repayment of such royalties in

full by the Grant Recipient 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.

terms of the grants under the Innovation Law also (generally) require that the products developed as part of the programs under which

the grants were given be manufactured in Israel and that the know-how developed thereunder may not be transferred outside of Israel,

unless prior written approval is received from the IIA (such approval is not required for the transfer of a portion of the manufacturing

capacity which does not exceed, in the aggregate, 10% of the portion declared to be manufactured outside of Israel in the applications

for funding (in which case only notification is required), and additional payments are required to be made to IIA).

It should be noted

that this does not restrict the export of products that incorporate the funded know-how.

Innovation Law restricts the ability to transfer or license know-how funded by IIA outside of Israel.

Transfer of IIA-funded know-how

outside of Israel requires prior approval and is subject to approval and payment of a redemption fee, which can be substantial, to the

IIA calculated according to the relevant formulas provided under the Innovation Law.

A transfer or license for the purpose of the Innovation

Law is generally interpreted very broadly and include, inter alia, any actual sale or assignment of the IIA-funded know-how, any license

to further develop or otherwise exploit the IIA-funded know-how or the products resulting from such IIA-funded know-how or any other

transaction, which, in essence, constitutes a transfer of the IIA-funded know-how.

Generally, a mere license solely to market or distribute

products resulting from the IIA-funded know-how would not be deemed a transfer or license for the purpose of the Innovation Law.

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 abide by, and to ensure the abidance

of Cell Cure to, the Innovation Law.

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

OpRegen program has been supported in part by the IIA through a series of separate research grants, beginning in 2007.

As a result, and

subject to the requirements of the Innovation Law, we are obligated to pay the IIA a portion of the upfront, milestone, and royalty payments

which may be received from Roche under the Roche 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.

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

We made a subsequent payment of $12.1 million

to the IIA, pursuant to our obligations under the Innovation Law.

restrictions under the Innovation Law may impair our ability to enter into any future agreements which involve IIA-funded products or

know-how without the approval of IIA, or limit the economic benefit that we might derive under such agreements.

We cannot be certain

that any approval of IIA will be obtained on terms that are acceptable to us, or at all.

We may not receive the required approvals should

we wish to transfer or license IIA-funded know-how, manufacturing and/or development outside of Israel in the future.

Furthermore, in

the event that we undertake a transaction involving the transfer to a non-Israeli entity of know-how developed with IIA-funding pursuant

to a merger or similar transaction, the consideration available to our shareholders may be significantly reduced by the amounts we are

required to pay to the IIA.

Any approval, if given, will generally be subject to additional financial obligations.

Failure to comply

with the requirements under the Innovation Law may subject Cell Cure to mandatory repayment of grants received by it (together with interest

and penalties), as well as expose its directors and management to criminal proceedings.

In addition, the IIA may from time-to-time

conduct royalty audits.

Further grants may not be approved or reduced in the future, which would increase our costs.

is not required for the marketing or distribution of products resulting from the IIA-funded research or development in the ordinary course

international business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing

business outside of the United States.

Cure is our 99% owned subsidiary located in Jerusalem, Israel.

OpRegen is currently manufactured at Cell Cure and we anticipate transitioning

some or all of the manufacturing of OPC1 and VAC2 to Cell Cure as well.

A portion of our OpRegen Phase 1/2a clinical trial has been conducted

at sites in Israel.

Conducting operations internationally involves a number of risks, including:

in staffing and managing foreign operations;

by us to obtain the appropriate regulatory approvals;

and regulations associated with shipping drug product or patient samples, including infrastructure conditions and transportation

risks, such as longer payment cycles and exposure to foreign currency exchange rate fluctuations;

to tax on Global Intangible Low Tax Income (“GILTI”)

earned by foreign subsidiaries;

and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade and

other business restrictions;

conflicting and changing laws and regulations such as tax laws, export and import restrictions, employment laws, data and privacy

laws, regulatory requirements and other governmental approvals, permits and licenses;

and compliance risks that may fall within the purview of the U.S.

Foreign Corrupt Practices Act, UK Bribery Act, anti-boycott laws

and other anti-corruption laws.

of these factors could significantly harm our international operations and, consequently, our results of operations.

In addition, any

failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited

to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export

privileges, seizure of shipments, and restrictions on certain business activities.

Also, the failure to comply with applicable legal

and regulatory obligations could result in the disruption of our clinical trial activities.

international operations could be affected by changes in laws, trade regulations, labor and employment regulations, and procedures and

actions affecting approval, production, pricing, reimbursement and marketing of tests, as well as by inter-governmental disputes.

of these changes could adversely affect our business.

success internationally will depend, in part, on our ability to develop and implement policies and strategies that are effective in anticipating

and managing these and other risks in Israel.

Failure to manage these and other risks may have a material adverse effect on our operations

in Israel and on our business as a whole.

demand for any marketed products.

may not be able to maintain appropriate product liability insurance coverage at a reasonable cost or in sufficient amounts to protect

us against losses due to product liability claims.

If and when we obtain marketing approval for a product candidate and prior to commercial

launch, we intend to expand our insurance coverage to include the sale of commercial products;

however, we may be unable to obtain appropriate

product liability insurance on commercially reasonable terms or in adequate amounts.

Significant damages have been awarded in class action

lawsuits based on drugs or medical treatments that had unanticipated adverse effects.

A successful product liability claim or series

of claims brought against us could cause the price of our common shares to decline and, if the amount of damages exceeds our insurance

coverage, could adversely affect our results of operations and business.

currently have no marketing and sales force or distribution capabilities.

If we are unable to establish effective internal capabilities

or effectively collaborate with third parties to market and sell our product candidates, if approved, our ability to generate product

revenue will suffer.

currently have no marketing, sales, or distribution capabilities because all of our cell therapy product candidates are in preclinical

or early clinical development, or in OpRegen’s case, we have entered into an agreement whereby Roche has commercialization responsibility

for the product, if approved.

We will need to build on a territory-by-territory basis marketing, sales, distribution and supporting capabilities

to commercialize any other product candidates that obtains regulatory approval, or selectively seek to enter into similar strategic collaborations

or otherwise outsource these functions to one or more third parties such as contract sales organizations and distributors.

significant risks involved if we decide to establish our own sales and marketing capabilities or enter into arrangements with third parties

to perform these functions.

To the extent that we enter into collaboration agreements with respect to marketing, sales, or distribution,

our product revenue may be lower than if we directly marketed or sold any approved products.

Such collaborative arrangements with partners

may place the commercialization of our products outside of our control and would subject us to a number of risks, including that we may

not be able to control the amount or timing of resources that a commercialization collaborator devotes to our products or that a collaborator’s

willingness or ability to complete its obligations may be adversely affected by business combinations or significant changes in the collaborator’s

business strategy.

If we are unable to enter into these arrangements when needed on acceptable terms, or at all, we may not be able to

successfully commercialize any of our product candidates that receive regulatory approval, or any such commercialization may experience

delays or limitations.

Building our own sales and marketing team with technical expertise and supporting distribution capabilities, would

require a significant capital investment and require significant attention of our senior management team to manage, and any failure or

delay in the development of those internal sales, marketing and distribution capabilities would adversely impact the commercialization

of any of our product candidates that obtain approval.

If we are unable to develop adequate marketing and sales capabilities on our own

or effectively partner with third parties, our ability to generate product revenue will suffer and we may incur significant additional

losses, which would have a material adverse effect on our business, financial condition, and results of operations.

Related to our Intellectual Property

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patents may be challenged by third parties;

may have patents that relate to our technology or business that may prevent us from marketing our product candidates unless we are

able to obtain a license to those patents;

may have patents of which we are not aware that relate to our technology or business that may prevent us from marketing our product

candidates unless we are able to obtain a license to those patents;

pending patent applications to which we have rights may not result in issued patents;

patents may have terms that are inadequate to protect our competitive position on our products;

patents may have claims that are inadequate to protect our competitive position on our products;

may not be successful in developing additional proprietary technologies that are patentable.

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licensed or issued to us, design around the patented technologies licensed to or developed by us.

As an example, Astellas’ patent

portfolio with respect to the manufacture of its RPE products could adversely impact our rights to manufacture OpRegen.

could incur substantial costs in litigation if we have to defend ourselves in patent lawsuits brought by third parties or if we initiate

such lawsuits.

Moreover, we could incur substantial

costs in litigation if we have to defend ourselves in patent lawsuits brought by third parties or if we initiate such lawsuits.

we are unable to obtain and enforce patents and to protect our trade secrets, others could use our technology to compete with us, which

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substantial legal fees and other expenses to enforce our patent rights to protect our technology and products from infringing uses.

also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to establish and maintain a

competitive position for our product candidates and any products.

We seek to protect these trade secrets, in part, by entering into nondisclosure

and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific

collaborators, contract manufacturers, consultants, advisors and other third parties.

We also enter into confidentiality and invention

or patent assignment agreements with our employees and consultants.

Despite these efforts, any of these parties may breach the agreements

and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and

the outcome is unpredictable.

In addition, some courts both within and outside the United States may be less willing or unwilling to

protect trade secrets.

Furthermore, if a competitor lawfully obtained or independently developed any of our trade secrets, we would have

no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.

Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third

parties for misappropriating the trade secrets.

may not have the financial resources to finance the litigation required to preserve our patent and trade secret rights.

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This means that patents

owned or licensed by us may be lost if the outcome of a proceeding is unfavorable to us.

owned or licensed by us, or our trade secrets, may be lost if the outcome of a proceeding is unfavorable to us.

is no certainty that our pending or future patent applications will result in the issuance of patents.

22 unchanged sentences

or future patent applications will result in the issuance of patents.

property we may develop using grants received from governments are subject to rights maintained by those governments.

and development we perform that is funded by grants from government, and any intellectual property that we create using those grants,

is subject to certain rights of the government entities to require that we license or grant rights to the intellectual property developed

using government funding in certain circumstances.

property we may develop using grants received from governmental entities are subject to rights maintained by those governments.

and development we perform that is funded by grants from governmental entities and any intellectual property that we create using those

grants is subject to certain rights of the governmental entities to require that we license or grant rights to the intellectual property

developed using that funding in certain circumstances.

may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result

in litigation and adversely affect our business.

enter into agreements with our employees pursuant to which they agree that any inventions created in the scope of their employment are

assigned to us or owned exclusively by us, without the employee retaining any rights.

A significant portion of our intellectual property

has been developed by our employees in the course of their employment for us.

Under the Israeli Patent Law, 5727-1967 (the “Patent

Law”), inventions conceived by an employee during the scope of his or her employment with a company are regarded as “service

inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee service

invention rights.

The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation

and Royalties Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for

his or her inventions.

Previous decisions by the Israeli Compensation and Royalties Committee have created uncertainty in this area regarding

whether the right to receive remuneration for service inventions can be voluntarily waived by an employee and whether such waiver is

In addition, the Committee determined that even if such right to receive compensation and royalties for service inventions

may be waived, the waiver should be specific.

Subsequent court cases have not provided significant clarity on these matters.

Israeli Supreme Court noted (in an obiter dictum) in 2012, without making any decisive ruling, that an employee who contributes to an

invention during his employment could be allowed to seek compensation for it from their employer, even if the employee’s contract

of employment specifically states otherwise and the employee has transferred all intellectual property rights to the employer.

Supreme Court considered the possibility that a contract that revokes the employee’s right for royalties and compensation may not

necessarily foreclose the right of the employee to claim a right for royalties.

As a result, even if we believe that none of our employees

has any rights in any of our intellectual property, or to receive royalties, it is unclear if, and to what extent, our employees may

be able to claim compensation with respect to our future revenue.

As a result, we may receive less revenue from future products if such

claims are successful, or incur additional royalty expenses, which in turn could impact our future profitability.

is no certainty that we will be able to obtain licenses to intellectual property rights owned by third parties.

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of others, or, when necessary, our ability to obtain enabling licenses.

we fail to meet our obligations under license agreements, we may lose our rights to key technologies on which our business depends.

business depends on several critical technologies that are based in part on technology licensed from third parties.

Those third-party

license agreements impose obligations on us, including payment obligations and obligations to pursue development of commercial products

under the licensed patents or technology.

If a licensor believes that we have failed to meet our obligations under a license agreement,

the licensor could seek to limit or terminate our license rights, which could lead to costly and time-consuming litigation and, potentially,

a loss of the licensed rights.

During the period of any such litigation, our ability to carry out the development and commercialization

of potential products, and our ability to raise any capital that we might then need, could be significantly and negatively affected.

If our license rights were restricted or ultimately lost, we would not be able to continue to use the licensed technology in our business.

an example, Astellas’ patent portfolio with respect to the manufacture of its RPE products could adversely impact our rights to

manufacture OpRegen.

Moreover, we could incur substantial costs in litigation if we have to defend ourselves in patent lawsuits brought

by third parties or if we initiate such lawsuits.

We may also face competition from companies that have filed patent applications relating

to the propagation and differentiation of stem cells.

Those companies include Ocata, which in 2015 had certain U.S.

patents issue with

claims directed to methods of producing RPE cells and isolating and purifying such cells.

We may be required to seek licenses from these

competitors in order to commercialize certain products proposed by us, and such licenses may not be granted.

commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties.

certain that our platform technologies, product candidates, and other proprietary technologies we may develop will not infringe existing

or future patents owned by third parties.

The legal and administrative landscape related to infringement of the patents and proprietary

rights of third parties is fluid as there is a substantial amount of litigation involving patents and other intellectual property rights

in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents.

These include interference,

derivation, inter partes review, post-grant review, and reexamination proceedings before the USPTO or oppositions and other comparable

proceedings in foreign jurisdictions.

Litigation and other legal proceedings relating to intellectual property claims, with or without

merit, are unpredictable and generally expensive and time-consuming and, even if resolved in our favor, are likely to divert significant

resources from our core business and distract our technical and management personnel from their normal responsibilities.

Such litigation

or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any

future sales, marketing, or distribution activities.

We may not have sufficient financial or other resources to adequately conduct such

litigation or proceedings.

Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively

than we can because of their greater financial resources and more mature and developed intellectual property portfolios.

Uncertainties

resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our

ability to enter into or compete in the marketplace.

Related to our Dependence on Third Parties

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may enter into various kinds of collaborative research and development and product marketing agreements to develop and commercialize

our products.

The expected future milestone payments and cost reimbursements from collaboration agreements could provide an important

source of financing for our research and development programs, thereby facilitating the application of our technology to the development

and commercialization of our products, but there are risks associated with entering into collaboration arrangements.

is a risk we could become dependent upon one or more collaborative arrangements.

A collaborative arrangement upon which we might depend

might be terminated by our collaboration partner or a partner might determine not to actively pursue the development or commercialization

of our products.

A collaboration partner also may not be precluded from independently pursuing competing products and drug delivery approaches

or technologies.

our product candidates.

The expected future milestone payments and cost reimbursements from collaboration agreements could provide an

important source of financing for our research and development programs, thereby facilitating the application of our technology to the

development and commercialization of our products, but there are risks associated with entering into collaboration arrangements.

described elsewhere in this Risk Factors section, we are dependent on our collaboration with Roche to develop and commercialize OpRegen,

and we could become dependent upon one or more possible future collaborative arrangements.

A collaborative arrangement upon which we

might depend might be terminated by our collaboration partner or a partner might determine not to actively pursue the development or

commercialization of our products.

Termination of a collaboration agreement by a collaboration partner could dissuade other organizations

from collaborating with us and negatively impact our ability to enter into new collaborations or achieve favorable collaboration terms.

A collaboration partner also may not be precluded from independently pursuing competing products and drug delivery approaches or technologies.

is a risk that a collaboration partner might fail to perform its obligations under the collaborative arrangements or may be slow in performing

its obligations.

In addition, a collaboration partner may experience financial difficulties at any time that could prevent it from having

available funds to contribute to the collaboration.

If a collaboration partner fails to conduct its product development, commercialization,

regulatory compliance, sales and marketing or distribution activities successfully and in a timely manner, or if it terminates or materially

modifies its agreements with us, the development and commercialization of one or more product candidates could be delayed, curtailed

or terminated because we may not have sufficient financial resources or capabilities to continue such development and commercialization

its obligations, or that we have a dispute that harms our working relationship and requires significant resources to resolve, or that

we are unable to resolve on our own, resulting in costly legal proceedings.

In addition, a collaboration partner may experience financial

difficulties at any time that could prevent it from having available funds to contribute to the collaboration.

If a collaboration partner

fails to conduct its product development, commercialization, regulatory compliance, sales and marketing or distribution activities successfully

and in a timely manner, or if it terminates or materially modifies its agreements with us, the development and commercialization of one

or more product candidates could be delayed, curtailed or terminated because we may not have sufficient financial resources or capabilities

to continue such development and commercialization on our own.

do not have the ability to independently conduct clinical trials required to obtain regulatory approvals for our product candidates.

will need to rely on third parties, such as CROs, data management companies, contract clinical research associates, medical institutions,

clinical investigators and contract laboratories to conduct any clinical trials we may undertake for our product candidates.

rely on third parties to assist with preclinical development of our product candidates.

If we outsource clinical trials, we may not directly

control the timing, conduct and expense of our clinical trials.

If we enlist third parties to conduct clinical trials and they fail to

perform their contractual duties or regulatory obligations or fail to meet expected deadlines, if they need to be replaced or if the

quality or accuracy of the data they obtain is compromised due to failing to adhere to our clinical protocols or regulatory requirements

or for other reasons, our preclinical development activities or clinical trials may be extended, delayed, suspended or terminated, and

we may not obtain regulatory approval for or successfully commercialize our product candidates.

currently rely, and plan to continue to rely, on third parties such as CROs, data management companies, contract clinical research associates,

medical institutions, clinical investigators and contract laboratories to assist with preclinical development and conduct clinical trials

of our product candidates.

Due to our reliance on these third parties, we may not directly control the timing, conduct and expense of

our clinical trials.

If the third parties we engage fail to perform their contractual duties or regulatory obligations or fail to meet

expected deadlines, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to failing to

adhere to our clinical protocols or regulatory requirements or for other reasons, our preclinical development activities or clinical

trials may be extended, delayed, suspended or terminated, and we may not obtain regulatory approval for or successfully commercialize

our product candidates.

addition, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions

on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at these third

parties, which could disrupt our clinical timelines, which could have a material adverse impact on our business, prospects, financial

condition and results of operations.

have relied on CIRM to fund past clinical trials of OPC1 and we do not know if they will provide additional funding for future studies

received $14.3 million of funding from CIRM to support clinical development of OPC1.

We intend to apply for additional CIRM grants, if

however, we cannot provide any assurance that such grants will be awarded.

If we are unable to obtain another CIRM grant,

we will need to raise funds through other mechanisms to support future clinical studies of OPC1, which may take additional time and effort.

If capital is not immediately available, this may force us to amend, delay, or discontinue the clinical trial and development work for

OPC1 until funding is secured.

may need to rely on marketing partners or contract sales companies.

we are able to develop our product candidates and obtain necessary regulatory approvals, we may need to rely on marketing, selling or

distributing partners.

If we do not partner for commercial services, we will depend on our ability to build our own marketing, selling

and distribution capabilities, which would require the investment of significant financial and management resources, or we will need

to find collaborative marketing partners, sales representatives or wholesale distributors for the commercial sale of our 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.

As a result, our gross profit from product sales may be lower than it would be if we sold

our products directly to end users at retail prices through our own sales force.

There can be no assurance we will be able to negotiate

distribution or sales agreements with third parties on favorable terms to justify our investment in our products or achieve sufficient

revenues to support our operations.

on the conduct of business operations could occur, related to COVID-19 or other public health crises could result in staffing shortages

at these third parties, which could disrupt our clinical studies, increase development timelines, and have a material adverse impact

on our business, prospects, financial condition and results of operations.

obtain reagents and specialized materials and equipment required for the manufacture of our cell therapy product candidates from third-party

manufacturers and suppliers, which include, in some instances, sole source manufacturers and suppliers.

The loss of these suppliers,

or their failure to provide us with sufficient key materials or equipment on a timely basis at an acceptable cost, or at all, could materially

and adversely affect our business.

development and manufacture of our cell-based product candidates depends on the availability of reagents and specialized materials and

equipment which are required to be acceptable to the FDA and applicable foreign regulatory authorities, and such reagents, materials,

and equipment may not be available to us on acceptable terms or at all.

We rely on third-party suppliers for key components required

for the manufacture of our product candidates, including in some cases, sole source manufacturers and suppliers, and we currently do

not have long-term commitments or supply agreements to obtain certain of these components.

use reagents, in our manufacturing processes, some of which are manufactured or supplied by small companies with limited resources and

experience with respect to supporting clinical or commercial biologics production.

We currently depend on a limited number of vendors

for certain materials and equipment used in the manufacture of our product candidates.

Some of these suppliers may not have the capacity

to support manufacturing of products under cGMP or may otherwise be ill-equipped to support our needs, particularly as we scale up our

manufacturing processes.

Reagents and other key materials from these suppliers may have inconsistent attributes and introduce variability

into our manufactured process and possibly into product candidates, which may contribute to variable patient outcomes and possible adverse

We do not have long-term commitments or supply agreements with many of these suppliers and may not be able to enter into supply

contracts with them on acceptable terms or at all.

Accordingly, we may experience delays in receiving key materials and equipment to

support our clinical, and ultimately commercial, manufacturing operations.

some of the reagents, materials, and equipment we require, we currently rely and may in the future rely on sole source suppliers or

a limited number of suppliers.

We may be unable to continue to source reagents, materials, or equipment from any of these suppliers

for various reasons, including due to regulatory actions or requirements affecting a supplier, adverse financial or other strategic

developments experienced by a supplier, labor disputes or shortages, unexpected demands from other customers and supply limitations,

or quality issues.

We cannot be sure that these suppliers will remain in business, or that they will not be purchased by one of our

competitors or another company that is not interested in continuing to supply us with these materials in sufficient quantities, on

acceptable terms, or at all.

The lead time needed to establish a relationship with a new supplier who has access to the required raw

materials can be lengthy.

The time and effort to identify and qualify a new supplier could result in additional costs, diversion of

resources, or reduced manufacturing yields, any of which may negatively impact our business.

Additionally, due to global

geopolitical, economic, and other factors beyond our control, there has been, and there may continue to be, a shortage of key

materials and equipment that are necessary to manufacture our product candidates, including certain consumables such as bags,

flasks, and pipette tips, which has affected and may continue to affect our ability to obtain the materials and equipment necessary

to manufacture our product candidates and increased our research and development costs.

Failures or difficulties faced at any level

of our supply chain could delay or impede the development and commercialization of our product candidates and adversely affect our

business, financial condition and results of operations.

In light of the unpredictable nature of the current economic climate,

including global rates of inflation, it may be increasingly difficult for us to predict and control our future expenses for the

reagents, materials, and equipment we require to manufacture our product candidates.

If any of the foregoing events were to occur,

we may experience significant delays in manufacturing our product candidates, and in turn, in the commencement and completion of

preclinical development and testing or clinical trials and potential regulatory approval of our product candidates, which could harm

our business.

we are required to change suppliers, or modify the components, equipment, materials or disposables used for the manufacture of our product

candidates, we may be required to change our manufacturing operations or clinical trial protocols or to provide additional data to regulatory

authorities in order to use any alternative components, equipment, materials or disposables, any of which could set back, delay, or increase

the costs required to complete our clinical development and commercialization of our product candidates.

Additionally, any such change

or modification may adversely affect the safety, efficacy, stability, or potency of our product candidates, and could adversely affect

our clinical development of our product candidates and harm our business.

some cases, specialized delivery systems or devices may be used to administer our cell therapy product candidates, and we may rely on

third parties to manufacture and supply those systems or devices and provide us with intellectual property rights to develop and commercialize

them with our cell therapies, if approved.

If we are not able to obtain those systems or devices in quantities needed in accordance with

our quality standards and regulatory requirements and at acceptable costs, or at all, or those systems or devices fail to perform as

expected, clinical development and possible regulatory approval of our product candidates may be significantly delayed and more expensive

than anticipated and our business may suffer.

administration of certain of our cell therapy product candidates requires invasive surgical procedures.

We may seek to improve the accuracy

or reduce the complexity, risk and variability of administering of our cells to the targeted site in the human body by integrating into

the surgical procedures specialized delivery systems or devices developed, manufactured and supplied by third parties.

For example, we

believe a novel parenchymal spinal delivery (“PSD”) system developed by a third party could improve usability and precision

in administering OPC1 to the injury site in the spinal cord, hence we entered into an exclusive option and license agreement with that

third party to collaborate on the clinical testing of the PSD system for OPC1.

To the extent we collaborate with third parties for specialized

delivery systems or devices for administration of our product candidates, we may become dependent on those third parties and their contract

manufacturers and suppliers not only for rights to use those systems or devices, but also for the manufacture and supply of those systems

or devices in sufficient quantities and at acceptable quality levels and costs for our clinical trials, and ultimately to potentially

market and sell them with our product candidates, if approved.

Our dependence on such third parties is subject to a multitude of risks,

including these risks:

or their third-party manufacturers might not manufacture in a timely manner the device systems or components in the quantity or quality

required to meet our clinical trial needs and, if approved, commercial needs.

or their third-party manufacturers may not perform as agreed, may terminate their agreements, or may not remain in the contract manufacturing

business for the time required to supply our clinical trials or to successfully produce, store and distribute on a commercial scale,

or their third-party manufacturers may not produce the systems or devices in accordance with applicable regulatory requirements,

and their processes or facilities may fail inspection by the FDA or corresponding state or foreign regulatory agencies.

have control over their compliance with applicable laws and regulations.

or their third-party manufacturers may not obtain or maintain intellectual property rights necessary for the development, manufacture

and, if approved, commercialization of the systems or devices.

or their third-party manufacturers may experience manufacturing difficulties as a result of resource constraints, labor shortages,

supply chain failures, public health emergencies such as the COVID-19 pandemic, geopolitical conflict, acts of terrorism, political

or economic instability or crises, natural disasters, or other events outside of their control or the control of their third-party

manufacturers.

This may result in business closures that adversely affect our ability to obtain clinical or commercial supplies as

may be subject to product liability exposure arising out of use of the systems or devices to administer our product candidates in

clinical trials or, if approved, for commercial use, and our insurance may not cover all potential claims.

any such third-party collaborator or their contract manufacturers or suppliers were to encounter any of these difficulties, our ability

to commence and conduct clinical trials of certain of our cell therapy product candidates on communicated timelines, or at all, could

be jeopardized.

These third-party collaborators and their contract manufacturers and suppliers would also be subject to many of the same

risks we face in developing our own manufacturing capabilities, as described elsewhere in these Risk Factors.

Any delay or interruption

in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining

clinical trial programs and, depending upon the period of delay, could require us to either conduct additional clinical trials at additional

expense or terminate clinical trials completely.

Each risk could delay our clinical trials, any potential approval of our product candidates

by the FDA, or the commercialization of our product candidates, and could result in higher costs or deprive us of potential product revenue.

Pertaining to Our Common Shares

we are engaged in the development of pharmaceutical and stem cell therapy products, the price of our common shares may rise and fall

market price of our common shares, like that of the shares of many biotechnology companies, has been highly volatile.

The price of our

common shares may rise rapidly in response to certain events, such as the commencement of clinical trials of an experimental new therapy,

even though the outcome of those trials and the likelihood of ultimate FDA approval of a therapeutic product remain uncertain.

prices of our common shares may fall rapidly in response to certain events such as unfavorable results of clinical trials or a delay

or failure to obtain FDA approval.

For example, from January 1, 2021 through March 4, 2022 the closing price of our common shares

has ranged between $1.26 and $3.10 per share.

In addition, the failure of our earnings to meet analysts’ expectations could

result in a significant rapid decline in the market price of our common shares.

we do not pay cash dividends, our common shares may not be a suitable investment for anyone who needs to earn dividend income.

market price of our common shares has been and may continue to be volatile, and you could lose all or part of your investment.

trading price of our common shares has been and is likely to continue to be highly volatile.

The stock market in general, and the market

for biotechnology companies, as well as small cap and microcap companies in particular, have experienced extreme price and volume fluctuations

that have often been unrelated or disproportionate to the operating performance of particular companies.

Broad market and industry factors

may negatively affect the market price of our common shares, regardless of our actual operating performance, financial condition or progress

in development of our product candidates.

The market price for our common stock may be influenced by a variety of factors, some of which

are beyond our control, including:

in progress or completion of clinical trials of our product candidates, or other changes in the development status of or anticipated

development timeline for our product candidates;

of clinical and nonclinical studies of our product candidates;

in laws or regulations applicable to our product candidates, including but not limited to clinical trial and manufacturing requirements

for regulatory approvals;

concerning the manufacture or supply of our product candidates;

unanticipated

serious safety concerns related to the use of our product candidates or third-party product candidates perceived to be similar;

in our regulatory submissions and any adverse development or perceived adverse development with respect to the applicable regulatory

authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file”

letter or a request for additional information;

regulatory decisions relating to our product candidates or third-party product candidates perceived to be similar or competitive

inability to establish or maintain important collaborations and license agreements, including any material disputes or amendments;

announcements

of strategic collaborations or significant licenses, acquisitions or dispositions, joint ventures or capital commitments by us or

companies perceived to be comparable to us;

or departures of key personnel;

cash position and the level of expenses related to development of our product candidates;

announcements

or expectations of additional financing efforts;

of our common shares by us, our insiders or other shareholders;

volume of our common shares;

in the market valuation of companies perceived to be comparable to us;

or anticipated variations in our operating results;

in accounting policies and practices or material weakness or ineffectiveness of our internal controls or disclosure controls;

disagreements

with our auditor or termination of an auditor engagement;

or other developments relating to proprietary rights, including patents and trade secrets, or other avenues of market exclusivity

for our product candidates or products and product candidates perceived to be competitive to ours;

in the structure of healthcare payment systems;

lawsuits, including intellectual property, product liability or shareholder litigation;

of research reports about us or our industry, or cell therapies in particular, or positive or negative recommendations or withdrawal

of research coverage by securities analysts;

or potential suspension of trading or delisting of our common shares by our Stocks Exchanges.

in or exclusion from stock indices such as the Russell 3000® Index;

business disruptions caused by natural or manmade disasters, such as the COVID-19 pandemic;

conditions in the biotechnology sector and general political and economic conditions;

factors described in this Risk Factors section.

the past, securities class action litigation has often been instituted against companies following periods of volatility in the market

price of their shares.

This type of litigation, if instituted against us, could result in substantial costs and a diversion of our management’s

attention and resources, which could materially and adversely affect our business and financial condition.

we do not intend to pay cash dividends, our common shares may not be a suitable investment for anyone who needs to earn dividend income.

do not pay cash dividends on our common shares.

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will be used to finance the growth of our business and will not be paid out as dividends to holders of our common shares.

that our common shares may not be a suitable investment for anyone who needs to earn income from their investments.

that any return to our shareholders will be limited to the appreciation of their shares and, therefore, our common shares may not be

a suitable investment for anyone who needs to earn dividend income from their investments.

continue to have substantial influence over our company, which could limit your ability to influence the outcome of key transactions,

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additional capital or to hire or retain employees or consultants, or in connection with future acquisitions of companies or licenses

to technology or rights, or for other business purposes.

The future issuance of additional securities may be dilutive to our shareholders

and may create downward pressure on the trading price of our common shares.

are currently authorized to issue an aggregate of 252,000,000 shares of capital stock consisting of 250,000,000 common shares and 2,000,000

“blank check” preferred shares, which means we may issue, without shareholder approval, one or more series of preferred

stock having such designation, powers, privileges, preferences, including preferences over our common shares respecting dividends and

distributions, terms of redemption and relative participation, optional, or other rights, if any, of the shares of each such series of

preferred stock and any qualifications, limitations or restrictions thereof, as our board of directors may determine.

The terms of one

or more series of preferred stock could dilute the voting power or reduce the value of our common shares.

Any preferred shares may also

be convertible into common shares on terms that would be dilutive to holders of common shares.

Our subsidiaries may also issue their

own preferred shares with a similar impact on our ownership of the subsidiaries.

of December 31, 2021, Lineage had 169,477,347 common shares outstanding, 14,883,344 common shares reserved for issuance upon the exercise

of outstanding options under our employee stock option plans, and 30,900 common shares reserved for issuance upon the vesting

and settlement of restricted stock units under our equity incentive plan.

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

Fitzgerald, common shares of Lineage (“ATM Shares”) having an aggregate offering price of up to $25.0 million.

not obligated to sell any ATM Shares.

Subject to the terms and conditions of the Sales Agreement, Cantor Fitzgerald has agreed to use

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

regulations, and the rules of the NYSE American, to sell the ATM Shares from time to time based upon Lineage’s instructions, including

any price, time or size limits specified by Lineage.

Under the Sales Agreement, Cantor Fitzgerald may sell the ATM Shares by any method

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

any other method permitted by law, including in privately negotiated transactions.

Cantor Fitzgerald’s obligations to sell the

ATM Shares are subject to satisfaction of certain conditions, including the continued effectiveness of Lineage’s Registration Statement

on Form S-3 (File No.

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

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

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

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

As of December 21, 2021, $14.1 million remained

available for sale under the Sales Agreement.

On December 21, 2021, Lineage filed a prospectus supplement with the SEC in connection

with the offering and sale of up to $64.1 million of common shares (the “New Sales Agreement”), with Cantor Fitzgerald as

the sales agent, no additional sales will be made under the Sales Agreement.

The $64.1 million under the New Sales Agreement which may

be issued are registered pursuant to Lineage’s effective shelf registration on Form S-3 (File No.

333-237975), as filed with the

SEC on May 1, 2020 and declared effective on May 8, 2020 (the “May 2020 Registration Statement”), and Lineage’s effective

shelf registration statement on Form S-3 (File No.

333-254167), which was filed with the SEC on March 5, 2021 and declared effective

on March 19, 2021.

As of December 31, 2021, under the Sales Agreement, Lineage had issued 14,908,735 common shares at a weighted average

price per share of $2.41 for gross proceeds of $35.9 million.

As of December 31, 2021, under the New Sales Agreement, Lineage had issued

108,200 common shares at a weighted average price per share of $2.55 for gross proceeds of $0.3 million (which includes $0.2 million

of cash in transit related to a 2021 transaction that settled in early 2022).

As a result, as of December 31, 2021, $63.9 million remained

available for issuance under the New Sales Agreement.

to technology or rights, in settlement of lawsuits, or for other business purposes.

The future issuance of additional securities may

be dilutive to our shareholders and may create downward pressure on the trading price of our common shares.

articles of incorporation, as amended, authorize us to issue an aggregate of 252,000,000 shares of capital stock consisting of 250,000,000

common shares and 2,000,000 “blank check” preferred shares, which means we may issue, without shareholder approval, one or

more series of preferred stock having such designation, powers, privileges, preferences, including preferences over our common shares

respecting dividends and distributions, terms of redemption and relative participation, optional, or other rights, if any, of the shares

of each such series of preferred stock and any qualifications, limitations or restrictions thereof, as our board of directors may determine.

The terms of one or more series of preferred stock could dilute the voting power or reduce the value of our common shares.

Any preferred

shares may also be convertible into common shares on terms that would be dilutive to holders of common shares.

Our subsidiaries may also

issue their own preferred shares with a similar impact on our ownership of the subsidiaries.

of December 31, 2022, we had 18,173,332 common shares reserved for issuance upon the exercise of outstanding options under our employee

stock option plans, and 938,870 common shares reserved for issuance upon the vesting and settlement of restricted stock units under our

equity incentive plan.

The exercise of outstanding options and vesting and settlement of outstanding restricted stock units would be

dilutive to our existing shareholders.

have used “at the market” (“ATM”) offerings of our common shares under agreements with Cantor Fitzgerald &

acting as sales agent and “shelf” registration statements on Form S-3 to raise substantial capital.

For information regarding

such sales of our common shares see “At the Market (‘ATM’) Offering” in Note 11 (Shareholders’ Equity)

to our consolidated financial statements included in this report.

We may continue to use ATM offerings to fund our operations.

December 31, 2022, $63.8 million remained available for sale under our ATM offering program.

Additional sales of our common shares in

our ATM offering may result in substantial dilution to our existing shareholders and such sales, or the anticipation of such sales, may

cause the market price of our common shares to decline.

operation of some of our subsidiaries has been financed in part through the sale of shares of capital stock and warrants to purchase

securities of those subsidiaries to private investors.

Future sales of such securities by our subsidiaries could reduce our ownership

interest in the applicable subsidiary, and correspondingly dilute our shareholder’s ownership interests in our consolidated enterprise.

Certain of our subsidiaries also have their own stock option plans and the exercise of stock options or the sale of restricted stock

under those plans would also reduce our ownership interest in the applicable subsidiary, with a resulting dilutive effect on the ownership

interest of our shareholders in our consolidated enterprise.

Future sales of such securities by our subsidiaries could reduce Lineage’s

ownership interest in the applicable subsidiary, and correspondingly dilute our shareholders’ ownership interests in our consolidated

Certain of our subsidiaries also have their own stock option plans and the exercise of stock options or the sale of restricted

stock under those plans would also reduce Lineage’s ownership interest in the applicable subsidiary, with a resulting dilutive

effect on the ownership interest of our shareholders in our consolidated enterprise.

is no assurance that we will be able to maintain compliance with the NYSE American’s continued listing standards, and failure to

do so could result in the suspension of trading or delisting of our common shares, which could substantially impair our shareholders’

ability to sell their shares and our ability to raise additional capital.

common shares are listed on the NYSE American.

To maintain our listing, we must satisfy several continued listing standards, including

financial condition and/or operating results standards, market value and distribution standards, a low selling price standard, and corporate

governance standards.

For example, for as long as we have net losses for our five most recent fiscal years, the exchange may consider

delisting our common shares if our shareholders’ equity is less than $6 million, and under the low selling price standard, if the

exchange determines our common shares have been selling for a substantial period of time at a low price per share, which we believe would

be an average of less than $0.20 over 30 days, and we fail to effect a reverse stock split within a reasonable time after being notified

by the exchange, the exchange will consider de-listing our common shares.

In addition, any developments which substantially reduce the

size of our company, the nature and scope of our operations, the value or amount of our securities available for the market, or the number

of shareholders, may occasion a review of continued listing by the exchange.

If a security sells at a price below $0.06, the exchange

may immediately suspend the security from further trading on the exchange.

We cannot assure you that we will be able to continue to meet

the NYSE American’s continued listing requirements.

suspension or delisting of our common shares, or the commencement of delisting proceedings, for whatever reason could, among other things,

substantially impair our ability to raise additional capital;

result in the loss of interest from institutional investors, result in

restrictions or prohibitions on brokers from trading in our common shares, result in the loss of confidence in our company by shareholders,

collaborators and employees, and result in fewer financing, strategic and business development opportunities.

The suspension or delisting

of our common stock, or the commencement of delisting proceedings for whatever reason may materially impair our shareholders’ ability

to buy and sell shares of our common stock and could have an adverse effect on the market price of, and the efficiency of the trading

market for, our common shares.

In addition, our common shares have been included in the Russell 3000 ® Index from time to time.

the short term, inclusion in the index may favorably impact the price, trading volume, and liquidity of our common shares, in part, because

holders attempting to track the composition of that index may have been required to buy our common shares, which could cause a material

increase in the price at which our common shares trades.

If our common shares are removed from the index because they do not meet the

criteria for continued inclusion, index funds, institutional investors, or other holders attempting to track the composition of that index

may be required to sell our common shares, which would adversely impact the price and frequency at which it trades.

are subject to stringent and changing obligations related to data privacy and security.

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the ordinary course of business, we 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 proprietary and confidential

business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, and

sensitive third-party data.

Our data processing activities subject us to numerous data privacy and security obligations, such as various

laws, regulations, guidance, industry standards, external and internal privacy and security policies, contracts, and other obligations

that govern the processing of personal data by us and on our behalf.

the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach

notification laws, personal data privacy laws, and consumer protection laws.

For example, HIPAA, as amended by HITECH, imposes specific

requirements relating to the privacy, security, and transmission of individually identifiable health information.

In addition, the CCPA

imposes obligations on covered businesses.

These obligations include, but are not limited to, providing specific disclosures in privacy

notices and affording California residents certain rights related to their personal data.

The CCPA allows for statutory fines for noncompliance

(up to $7,500 per violation) and includes a private right of action for certain data breaches.

Although the CCPA exempts some data processed

in the context of clinical trials, the CCPA may increase compliance costs and potential liability with respect to other personal data

we maintain about California residents.

In addition, it is anticipated that the CPRA, effective January 1, 2023, will expand the CCPA.

The CPRA establishes a new California Privacy Protection Agency to implement and enforce the CPRA, which could increase the risk of enforcement.

Other states have enacted data privacy laws.

For example, Virginia passed the Consumer Data Protection Act, and Colorado passed the Colorado

Privacy Act, both of which become effective in 2023.

In addition, data privacy and security laws have been proposed at the federal, state,

and local levels in recent years, which could further complicate compliance efforts.

the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.

the EU GDPR and the UK GDPR impose strict requirements for processing personal data.

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 annual global revenue, whichever

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

In addition, Israel’s PPL

and the regulations promulgated thereunder impose certain obligations with respect to the manner personal data is processed.

PPL, government regulators may issue fines or sanctions.

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 European Economic Area, or 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, any of which could increase the

cost and complexity of doing business.

we cannot implement a valid compliance mechanism for cross-border data transfers, we may face increased exposure to regulatory actions,

substantial fines, and injunctions against processing or transferring personal data from Europe or other foreign jurisdictions.

The inability

to import personal data to the United States could significantly and negatively impact our business operations;

limiting our ability

to collaborate with parties that are subject to such cross-border data transfer or localization laws;

or requiring us to increase our

personal data processing capabilities and infrastructure in foreign jurisdictions at significant expense.

obligations related to data privacy and security are quickly changing in an increasingly stringent fashion, creating some uncertainty

as to the effective future legal framework.

Additionally, these obligations may be subject to differing applications and interpretations,

which may be inconsistent or conflict among jurisdictions.

Preparing for and complying with these obligations requires significant resources

and may necessitate changes to our information technologies, systems, and practices and to those of any third parties that process personal

data on our behalf.

Although we endeavor to comply with all applicable data privacy and security obligations, we may at times fail (or

be perceived to have failed) to do so.

Moreover, despite our efforts, our personnel or third parties upon whom we rely may fail to comply

with such obligations, which could negatively impact our business operations and compliance posture.

For example, any failure by a third-party

processor to comply with applicable law, regulations, or contractual obligations could result in adverse effects, including inability

to or interruption in our ability to operate our business and proceedings against us by governmental entities or others.

we fail, or are perceived to have failed, to address or comply with data privacy and security obligations, we could face significant

consequences.

These consequences may include, but are not limited to, government enforcement actions (e.g., investigations, fines, penalties,

audits, inspections, and similar);

litigation (including class-related claims);

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.

As a result, we are, or may become, subject to numerous data privacy and security

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

and industry standards.

Business—Government Regulation—Privacy and Data Security Laws,” above.

requirements may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.

Preparing for and complying with these requirements requires significant resources and may necessitate changes to our information technologies,

systems, and practices and to those of any third parties that process personal data on our behalf.

we, or our personnel or third parties upon whom rely, fail, or are perceived to have failed, to address or comply with applicable data

privacy, security, protection and transfer requirements, we could face significant consequences.

These consequences may include, but

are not limited to, government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);

(including class-related claims);

additional reporting requirements and/or oversight;

on processing personal data;

and orders to destroy or not use personal data.

of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to:

bans on processing personal data;

and orders to

destroy or not use personal data.

Any of these events could have a material adverse effect on our reputation, business, or financial

condition, including but not limited to:

loss of customers;

interruptions in our business operations (including, as relevant, clinical trials);

inability to process personal

data or to operate in certain jurisdictions;

interruptions in our business operations (including, as relevant, clinical

inability to process personal data or to operate in certain jurisdictions;

limited ability to develop or commercialize our products;

expenditure of time and resources

to defend any claim or inquiry;

expenditure of time and resources to defend any claim or inquiry;

adverse publicity;

or revision or restructuring of our operations.

In the United States, privacy and security obligations are often enforced under deceptive and unfair trade practice laws, using theories

that a company’s activities were either misleading or unfair.

our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience

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other adverse consequences.

are increasingly dependent on information technology systems and infrastructure to operate our business.

In the ordinary course of our

business, we may process confidential, and sensitive, including personal data (such as health-related data), intellectual

property, and proprietary business information (collectively, sensitive information).

It is critical that we do so in a

secure manner to maintain the confidentiality, integrity and availability of such information.

We have also outsourced some of our operations

(including parts of our information technology infrastructure) to a number of third-party service providers who may have, or could

gain, access to sensitive information.

In addition, many of those third parties, in turn, subcontract or outsource some of their

responsibilities to third parties.

are dependent on information technology systems and infrastructure to operate our business.

In the ordinary course of our business, we

may process confidential, and sensitive, including personal data (such as health-related data), intellectual property, and proprietary

business information (collectively, sensitive information).

It is critical that we do so in a secure manner to maintain the confidentiality,

integrity and availability of such information.

We have also outsourced some of our operations (including parts of our information technology

infrastructure) to a number of third-party service providers who may have, or could gain, access to sensitive information.

many of those third parties, in turn, subcontract or outsource some of their responsibilities to third parties.

Cyberattacks,

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Some actors now engage and are expected to

continue to engage in cyber-attacks, including, without limitation, nation-state actors for geopolitical reasons and in conjunction with

continue to engage in cyberattacks, including, without limitation, nation-state actors for geopolitical reasons and in conjunction with

military conflicts and defense activities.

During times of war and other major conflicts, we and the third parties upon which we

rely may be vulnerable to a heightened risk of these attacks, including cyber-attacks that could materially disrupt our systems and operations,

During times of war and other major conflicts, we and the third parties upon which we rely

may be vulnerable to a heightened risk of these attacks, including cyberattacks that could materially disrupt our systems and operations,

supply chain, and ability to produce, sell and distribute our products.

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due to, for example, applicable laws or regulations prohibiting such payments.

Similarly, supply-chain attacks have increased in

frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’

supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption

Similarly, supply-chain attacks have increased in frequency

and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply

chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption

to our information technology systems or the third-party information technology systems that support us and our services.

Additionally,

the COVID-19 pandemic and our remote workforce poses increased risks to our information technology systems and data, as more of our employees

work from home, utilizing network connections outside our premises.

Moreover, the prevalent use of mobile devices to access confidential

information increase the risk to our information technology systems and data.

Future or past business transactions (such as acquisitions

or integrations) could also expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected

by vulnerabilities present in acquired or integrated entities’ systems and technologies.

many of our employees who began working from home early in the COVID-19 pandemic continue to work remotely at least part of the time,

utilizing network connections outside our premises, which may increase risks to our information technology systems and data.

the prevalent use of mobile devices by our employees and third-party service providers to access confidential information increases the

risk to our information technology systems and data.

Future or past business transactions (such as acquisitions or integrations) could

also expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities

present in acquired or integrated entities’ systems and technologies.

of the previously identified or similar threats could cause a security incident or other interruption.

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could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure

of, or access to our sensitive information.

A security incident or other interruption could disrupt our ability (and that of third parties

upon whom we rely) to conduct our business operations.

of, or access to our proprietary or sensitive information.

A security incident or other interruption could disrupt our ability (and that

of third parties upon whom we rely) to conduct our business operations and divert significant resources.

Though we have insurance that

may cover some of the costs and fees resulting from a cyberattack, data security incident, or data breach, that insurance may not be

sufficient to cover all of the costs, fees, losses, damages, fines, and penalties that may arising from a data security incident

may expend significant resources or modify our business activities to try to protect against security incidents.

Certain data privacy

and security obligations may require us to implement and maintain specific security measures, industry-standard or reasonable security

measures to protect our information technology systems and sensitive information.

and security obligations may require us to implement and maintain specific security measures and tools, industry-standard or reasonable

security measures to protect our information technology systems and proprietary and sensitive information.

we have implemented security measures to protect our information technology systems and infrastructure, there can be no assurance that

such measures will prevent security incidents that could adversely affect our business.

We may be unable in the future to detect

vulnerabilities in our information technology systems because such threats and techniques change frequently, are often sophisticated

in nature, and may not be detected until after a security incident has occurred.

Despite our efforts to identify and remediate vulnerabilities,

if any, in our information technology systems, our efforts may not be successful.

Further, we may experience delays in developing and

deploying remedial measures designed to address any such identified vulnerabilities.

In addition, failure to maintain effective internal

accounting controls related to security incidents and cybersecurity in general could impact our ability to produce timely and

accurate financial statements and subject us to regulatory scrutiny.

data privacy and security obligations may require us to notify relevant stakeholders of security incidents.

Such disclosures are costly,

and the disclosures or the failure to comply with such requirements could lead to adverse consequences.

If we (or a third party upon

whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.

such measures will prevent cyberthreats, cyberattacks, security incidents, data breaches, malware, ransomware attacks and other disruptions

that could adversely affect our business.

We may be unable in the future to detect vulnerabilities in our information technology systems

because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security

incident has occurred.

Despite our efforts to identify and remediate vulnerabilities, if any, in our information technology systems,

our efforts may not be successful.

Further, we may experience delays in developing and deploying remedial measures designed to address

any such identified vulnerabilities.

In addition, failure to maintain effective internal accounting controls related to security incidents

and cybersecurity in general could impact our ability to produce timely and accurate financial statements and subject us to regulatory

data privacy and security obligations, including data breach notification laws in the US and elsewhere, may require us to notify relevant

stakeholders of security incidents.

Such disclosures are costly, and the disclosures or the failure to comply with such requirements

could lead to adverse consequences.

If we (or a third party upon whom we rely) experience a security incident or are perceived to have

experienced a security incident, we may experience adverse consequences.

These consequences may include:

government enforcement actions (for example, investigations, fines, penalties, audits, and inspections);

government enforcement actions

(for example, investigations, fines, penalties, audits, and inspections);

additional reporting requirements and/or oversight;

restrictions on processing sensitive information (including personal data);

(including class claims);

on processing sensitive information (including personal data);

litigation (including class claims);

financial obligations to third parties,

indemnification obligations;

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monetary fund diversions;

interruptions

in our operations (including availability of data);

interruptions in our operations (including

availability of data);

financial loss;

and other similar harms.

Security incidents and attendant consequences

may cause interruptions in our operations and could result in a material disruption of our programs.

For example, the loss of clinical

trial data for our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs

to recover or reproduce the data.

Security incidents and attendant consequences may cause interruptions

in our operations and could result in a material disruption of our programs.

For example, the loss of clinical trial or nonclinical study

data for our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs due to

additional time and resources necessary to recover and verify or potentially reproduce the data.

contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in

our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.

We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out

of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or

that such coverage will pay future claims.

We cannot be sure that our insurance coverage will be sufficient to protect us from or to mitigate liabilities arising out of our privacy

and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage

will pay future claims.

of our internal control over financial reporting could harm our business and financial results.

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Section 404 of the Sarbanes-Oxley Act in a timely manner or assert that our internal control over financial reporting is effective, or,

if our independent registered public accounting firm is unable to express an opinion or expresses a qualified or adverse opinion about

the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of

our financial reports and the market price of our common shares could be negatively affected.

In addition, we could become subject to

investigations by the NYSE American, the Securities and Exchange Commission, and other regulatory authorities, which could require additional

financial and management resources.

economic and stock market conditions may adversely affect the price of our common shares.

stock market has been experiencing extreme price and volume fluctuations which have affected the market price of the equity securities

without regard to the operating performance of the issuing companies.

Broad market fluctuations, as well as general economic, political

and other conditions (such as the recent coronavirus outbreak), may adversely affect the market price of our common shares.

when required, if our independent registered public accounting firm is unable to express an opinion or expresses a qualified or adverse

opinion about the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness

of our financial reports and the market price of our common shares could be negatively affected.

In addition, we could become subject

to investigations by the NYSE American, the SEC, and other regulatory authorities, which could require additional financial and management

risks associated with the ongoing military conflict between Russia and Ukraine could have an adverse impact on our business, financial

condition and results of operations, including our clinical trials.

results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence.

war in Ukraine and the uncertain nature, magnitude, and duration of the conflict and the potential effect of sanctions and other measures

being imposed in response thereto have contributed to increased levels of economic and political uncertainty, which could have an adverse

impact on macroeconomic factors that affect the financial markets, the global economy and our business and operations.

Additionally,

the ongoing conflict in Ukraine may disrupt the ability of third parties on which we rely to perform in accordance with our expectations,

including on commercial research organizations to conduct clinical trials.

Moreover, enrollment and retention of clinical trial participants

may be adversely affected.

We cannot be certain what the overall impact of this conflict will be on our ability to conduct and complete

our clinical trials on schedule.

However, interruptions of our clinical trials could significantly delay our clinical development plans

and potential authorization or approval of our product candidates, which could increase our costs and jeopardize our ability to successfully

commercialize our product candidates.

may be adversely affected by the effects of inflation and other macroeconomic factors.

has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall

cost structure.

The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital

costs, supply shortages, increased costs of labor, components, manufacturing and shipping, as well as weakening exchange rates and other

similar effects.

As a result of inflation, we may experience cost increases.

Changes in other economic conditions, including rising interest

rates, ongoing pandemics, including the COVID-19 pandemic, lower consumer confidence, volatile equity capital markets and ongoing supply

chain disruptions and the impacts of the war in Ukraine, may also affect our business.

Although we may take measures to mitigate the

effects of economic conditions, if these measures are not effective, our business, financial condition, results of operations and liquidity

could be materially adversely affected.

Even if such measures are effective, there could be a difference between the timing of when the

benefits of such measures and the effects of such conditions impact our results of operations.

Given these economic considerations, among

other potential consequences, cost increases may outpace our expectations, causing us to use our cash and other liquid assets faster

than forecasted.

If this happens, we may need to raise additional capital to fund our operations sooner than expected, which may not

be available in sufficient amounts or on reasonable terms, if at all.

See also the discussion in this Risk Factors section under “We

will need to obtain substantial additional funding to complete the development and seek regulatory approval of our product candidates

and to commercialize products approved for marketing, if any.

If we are unable to obtain adequate capital when needed, we may delay,

reduce, limit the pace of, suspend or discontinue our product and technology development programs or other operations, which could significantly

harm our business and prospects and cause the market price of our common shares to decline.” In addition, if the risks described

in this paragraph materialize, the possibility of other risks described herein materializing and/or the impact of those risks may increase.

litigation judgments or settlements resulting from legal proceedings in which we may be involved could expose us to monetary damages

or limit our ability to operate our business.

recently settled a putative shareholder class action lawsuit, as well as a product liability lawsuit, and may in the future become involved

in other class actions, derivative actions, private actions, collective actions, investigations, and various other legal proceedings

by shareholders, collaborators, clinical trial participants, employees, suppliers and other vendors, service providers, competitors,

government agencies, or others.

The results of any such litigation, investigations, and other legal proceedings are inherently unpredictable

and expensive.

Although some of the costs and expenses of such claims may be covered by insurance, any claims against us, whether meritorious

or not, could be time consuming, result in costly litigation, damage our reputation, require significant amounts of management time,

and divert significant resources.

Additionally, a dramatic increase in the cost of directors’ and officers’ liability insurance

may cause us to opt for lower overall policy limits or to forgo insurance that we may otherwise rely on to cover significant defense

costs, settlements, and damages awarded to plaintiffs.

If any of these legal proceedings were to be determined adversely to us, or we

were to enter into a settlement arrangement, we could be exposed to monetary damages or limits on our ability to operate our business,

which could have an adverse effect on our business, financial condition, results of operations and prospects.

In addition, the uncertainty

associated with material litigation could lead to increased volatility in our stock price.

business could be negatively impacted by environmental, social and corporate governance (“ESG”) matters or our reporting

of such matters.

is an increasing focus from certain investors, employees, collaborators, and other stakeholders concerning ESG matters.

While we have

internal efforts directed at ESG matters and preparations for any increased required future disclosures, we may be perceived to be not

acting responsibly in connection with these matters, which could negatively impact us.

Moreover, the SEC has recently proposed, and may

continue to propose, certain mandated ESG reporting requirements, such as the SEC’s proposed rules designed to enhance and standardize

climate-related disclosures, which, if adopted, would significantly increase our compliance and reporting costs and may also result in

disclosures that certain investors or other stakeholders deem to negatively impact our reputation, which could adversely affect the price

of our common shares.

In addition, except as required by SEC and applicable stock exchange rules, we currently do not generally report

on ESG matters, including our environmental emissions, and lack of reporting could result in certain institutional and other investors

declining to invest in our common shares.

business could be negatively affected as a result of actions of activist shareholders, and such activism could affect the trading value

of our securities.

may, from time to time, engage in proxy solicitations or advance stockholder proposals, or otherwise attempt to effect changes and assert

influence on our board of directors and management.

Activist campaigns that contest or conflict with our strategic direction or seek

changes in the composition of our board of directors could have an adverse effect on our operating results and financial condition.

proxy contest would require us to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated

costs and require significant time and attention by our board of directors and management, diverting their attention from the pursuit

of our business strategy.

Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy,

or changes to the composition of our board of directors or senior management team arising from a proxy contest could lead to the perception

of a change in the direction of our business or instability which may result in the loss of potential business opportunities, make it

more difficult to pursue our strategic initiatives, or limit our ability to attract and retain qualified personnel and business partners,

any of which could adversely affect our business and operating results.

If individuals are ultimately elected to our board of directors

with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create additional value

for our stockholders.

We may choose to initiate, or may become subject to, litigation as a result of the proxy contest or matters arising

from the proxy contest, which would serve as a further distraction to our board of directors and management and would require us to incur

significant additional costs.

In addition, actions such as those described above could cause significant fluctuations in our stock price

based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and

prospects of our business.

may, from time to time, engage in proxy solicitations or advance shareholder proposals, or otherwise attempt to effect changes and assert

influence on our board of directors and management, and the SEC’s new “universal proxy” rules could significantly lower

the cost and increase the ease and likelihood of shareholder activism.

Activist campaigns that contest or conflict with our strategic

direction or seek changes in the composition of our board of directors could have an adverse effect on our operating results and financial

A proxy contest would require us to incur significant legal and advisory fees, proxy solicitation expenses and administrative

and associated costs and require significant time and attention by our board of directors and management, diverting their attention from

the pursuit of our business strategy.

Any perceived uncertainties as to our future direction and control, our ability to execute on our

strategy, or changes to the composition of our board of directors or senior management team arising from a proxy contest could lead to

the perception of a change in the direction of our business or instability which may result in the loss of potential business opportunities,

make it more difficult to pursue our strategic initiatives, or limit our ability to attract and retain qualified personnel and collaboration

partners, any of which could adversely affect our business and operating results.

If individuals are ultimately elected to our board

of directors with a specific agenda, it may adversely affect our ability to effectively implement our current business strategy.

choose to initiate, or may become subject to, litigation as a result of a proxy contest or matters arising from a proxy contest, which

would serve as a further distraction to our board of directors and management and would require us to incur significant additional costs.

In addition, actions such as those described above could cause significant fluctuations in the price of our common shares based upon

temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects

of our business.

Furthermore, the trading value of and demand for our common shares could be adversely affected by allegations made

or reports issued by short sellers, analysts, activists or others regarding our business, further influencing volatility in the market

price of our common shares.

analysts may not initiate coverage or continue to cover our common shares, and this may have a negative impact on the market price of

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What changed 10-K

Item 1A. Risk Factors