Lineage Cell Therapeutics, Inc. (LCTX) CEO Brian Culley on Q1 2020 Results - Earnings Call Transcript

Lineage Cell Therapeutics, Inc. (NYSE:LCTX) Q1 2020 Earnings Conference Call May 7, 2020 4:30 PM ET

Company Participants

Ioana Hone - Director, IR

Brian Culley - CEO

Brandi Roberts - CFO

Conference Call Participants

Jason McCarthy - Maxim Group

Joe Pantginis - H.C. Wainwright

Operator

Welcome to the Lineage Cell Therapeutics First Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investors section of Lineage website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage. And recordings, reproduction, or transmission of this call without the express written consent of Lineage are strictly prohibited. As a reminder, today's call is being recorded.

I would now like to hand the call to your host today, Ms. Ioana Hone, Director of Investor Relations at Lineage. Ms. Hone, please go ahead.

Ioana Hone

Thank you, Nita. Good afternoon and thank you for joining us. A press release reporting our first quarter 2020 financial results was issued earlier today, May 7th, 2020 and can be found on the investors section of our website.

Please note that today's conference call and webcast will contain forward-looking statements within the meaning of federal securities laws, including statements regarding our strategy, goals, product candidates, clinical trials, financings and cost savings matters. Such statements are subject to significant risks and uncertainties including those described in our press release issued on May 7th, 2020 and our recent filed Form 10-K and 10-Q.

Actual results or performance may differ materially from the expectations indicated by our forward-looking statements due to those risks and uncertainties. We caution you not to place undue reliance on any of the forward-looking statements which speak only as of today.

Joining us today are our Chief Executive Officer, Brian Culley; our Chief Financial Officer, Brandi Roberts; and Senior Vice President of Clinical and Medical Affairs, Gary Hogge. The executives will provide prepared remarks and then take questions from analysts.

With that, I'd like to turn the call over to Brian Culley, our CEO.

Brian Culley

Thank you, Ioana. Good afternoon everyone. We appreciate you joining us on the call today. In addition to our financials, we're going to address each of the three announcements that we made this week. It's obviously been a very busy time for us. Really proud, the team's been able to maintain a high rate of progress, even with the current restrictions related to the COVID-19 pandemic.

Just before we dive in, I want to say that we're not aware of any cases of COVID-19 among our staff or our critical consultants, and we will continue to follow appropriate measures to maintain the team's safety and performance.

So on today's call, we're going to cover four main topics. First, I will review the new data we announced from the OpRegen clinical trial, that's our lead program for Dry AMD.

Second, I'll explain why we conducted an early exercise of the VAC option with Cancer Research U.K., which will make our immune oncology efforts significantly more prominent going forward.

Third, I will talk about our plans to apply the VAC platform toward developing a vaccine for COVID-19. And fourth, and finally, I'll provide an update on progress we've made recently with OPC1, our cell therapy to address spinal cord injuries. And then after those program updates, Brandy will review our financials and we'll open the line up for questions.

Starting with OpRegen, this is again our product candidate for Dry AMD with GA, for which there are millions of sufferers, but no FDA-approved therapies. We believe the commercial opportunity for OpRegen is incredibly attractive with only a modest number of competitors. The OpRegen therefore, continues to be our most important asset and we were please to present new clinical data at the Virtual ARVO Meeting this past Wednesday.

The presentation was given by Dr. Christopher Riemann, Vitreoretinal Surgeon and Fellowship Director at the Cincinnati Eye Institute and University of Cincinnati School of Medicine.

Dr. Riemann's clinic is one of the newly open sites in our OpRegen study. So, this is the first time that he has presented any OpRegen data. But he happens to be one of the retina surgeons who helped design the Gyroscope Orbit delivery system. And because cell therapy -- excuse me, because delivery is just as important as cell purity and engraftment, he brings a very relevant perspective to our program.

Dr. Riemann's presentation has been posted to our website, so you can watch his 12-minute presentation there on our website. If you just want the summary, what I can tell you is that we are seeing encouraging results since moving from legally blind patients into patients with better baseline vision. And those are ones who more closely represent our intended target population.

So, whereas the first 12 patients that we treated had an average vision of 20/400 and very large areas of geographic atrophy, the recent cohort for patients that we've treated to-date, they have an average baseline of just 20/125. They also have smaller areas of geographic atrophy, which we think makes them better suited to assess and respond to treatment with OpRegen.

We were pleased to report for the first time that we have seen consistent directional improvements in some patients across three separate metrics. So, that means seeing faster reading speed, improved visual acuity, or BCVA and slower progression of GA compared to the untreated eye -- and seeing all three of those changes in a single patient.

These differences in BCVA and GA progression are evidence also in the cohort for pooled data. There are only five patients in that cohort so far. So, we have evidence of trends more than statistical significance, but we're certainly hopefully these trends will continue.

The error bars will tighten as we dose our next four patients. We also have seen evidence of reduction in soft drusen and anatomical changes to the retina, which we will continue to monitor and report on.

Evidence of sustained engraftment in our earliest treated patient is now out to four years. So, I think we can comfortably say that we are not worried about the durability of these transplanted cells.

We also have had two positive surgical experiences with Gyroscopes Orbit SDS device in combination with our thaw-and-inject formulation. We are increasingly confident in the use of the Orbit device with our new formulation, but we do want to confirm the results in another four patients and once those four patients are dosed, that will conclude the Orbit portion of the study, and if the results from those patients are comparable to results that we've seen to-date, we would plan to conclude the Phase 1/2a study at that time.

If you'd like to dig deeper into our Dry AMD data, Dr. Riemann is going to be available to discuss the data and answer analysts questions on a call next Monday, that's May 11th, at 2 P.M. Pacific and 5 P.M. Eastern. In the meantime, we will be doing what we can to identify and treat the final four patients in Cohort 4.

I'm happy to share that Dr. Riemann has informed us that his center is completing their plan to reinitiate elective surgery procedures and clinical trial activities over the course of the next few weeks.

They already have identified an eligible patient and the OpRegen trial will be one of the first to begin treating patients as soon as their standardized procedures are established to protect the safety of patients and site personnel.

So, overall, things are trending well. We do want to collect additional patient data to help inform our clinical regulatory and partnership strategies. But I think it was a very positive update that we were able to share this week.

Moving next to VAC, this is our off-the-shelf dendritic cancer cell vaccine. This product candidate is comprised of mature dendritic cells which we manufacture from established pluripotent cell lines and load with a tumor specific marker to instruct the body's immune system to attack and eliminate cancer cells by educating your T cells to see out and destroy cancer cells back to acts like a booster for your immune system.

Our development partner, Cancer Research U.K. or CR U.K. is the world's largest cancer charity dedicated to saving lives through research. And they have been conducting a Phase 1 clinical trial of VAC to patients with non-small cell lung cancer.

This is a partnership that was entered into by Asterias, a company we acquired last year. And the original plan here was that CR U.K. would treat 12 patients in the initial phase of the study and Asterias, now Lineage, could decide at that time whether or not to require the program based upon that data.

And as sometimes happens, the early data were convincing enough that we didn't feel it was necessary to wait for all of the patients to be treated and we elected to exercise the option early.

And I do want to explain that this decision to exercise the option early was not driven by a concern over how long it may take to enroll the next six patients. It was already clear to us after just four patients that back to dendritic cells could provide targeted education of T cells.

And that signal was apparent in multiple assay system, so we were already leaning into this decision before the COVID pandemic hit. We exercise the option early because we saw a clinical signal, which confirmed positive data collected in earlier studies to both autologous VAC1 and allogeneic VAC2. So I just want to be clear that this was a data driven decision as obviously it should be.

Now, having said that, knowing that rolling the additional patients was likely to take more time than expected because of the coronavirus restrictions, it became even more clear to us that it would make sense to reacquire this program immediately and not wait six or 12 months for evidence that was unlikely to change our view.

Additionally, there is a lot of process development that's needed on back to just like there was with OPC1 when we obtained that asset. So it made further sense to regain control the program early and send it over to our manufacturing facility so that our CMC group could begin work on it immediately.

As all of this was happening, we were studying the biology of SARS-CoV-2 and it occurred to us that the VAC platform could be adapted to create a coronavirus vaccine by using a viral antigen like the spike glycoprotein. And after further assessment, we determined this to be a novel idea. So, we submitted a U.S. provisional patent application and began discussing this idea of COVID vaccines with CR U.K.

That discussion progressed rapidly from simply expanding the scope of the program to include COVID vaccine development, actually conducting early exercise of the options, so that our manufacturing team could begin work immediately on both the immune-oncology and infectious disease efforts. All this happened very quickly and I really want to credit CR U.K. for their impressive speed and strong support of this initiative.

So now, Lineage has controlled of the VAC2 clinical program. CR U.K. has agreed to continue collecting data from the current patients as well as to dose 2 to additional patients when they're permitted to buy the trial sites in the U.K. We now also have the ability to explore not only additional oncology applications, which we're prophetically calling back three, four and five, but also infectious disease applications for which we're seeking non-dilutive support from CIRM. And I expect soon other parties.

There's one thing that I really like about this deal and that is that all of these programs whether we're talking about VAC2, a future VAC3, VAC4 or a COVID vaccine, they all require the same process development work upfront. So the impact of the dollar spent on manufacturing the cells is really an investment in all of the programs simultaneously.

It's only the final step the expression cassette which carries the antigen, which defines the product that's specific to each individual product. And we've retained the molecular biologist at our Alameda lab to lead that internal effort. But we get a lot more bang for our buck by taking advantage of the duplicated effort of all of these different programs in that manufacturing facility.

Another reason for bringing the VAC program in-house is its partnering potential. With now full control of the asset, we're in a position to explore business development opportunities with companies in the immune-oncology space where we could provide access to the dendritic cell platform as delivery tool.

And we could generate a whole pipeline of separate product candidates with different expression cassettes, and target various types of cancer either with single-antigens or combinations. This is very much like a platform, an oncology platform.

And we do feel that the platform product nature of that will enable us to engage in new and exciting partnering discussions. And we're looking into hosting a call with a therapeutic area expert to further discuss our plans with this program.

So, I'm delighted to share this background today and really to help everyone understand the rationale behind the announcements. As we proceed with transferring the program out of CR U.K. and into Lineage, we will be sharing more information about what we've already seen in the clinic to date, and what we plan to do going forward.

Overall, I think it's a tremendous positive for Lineage that we're back in the driver's seat with a clinical stage oncology program, a broad amino oncology platform and also a plan for an infectious disease vaccine, which may be supported by non-dilutive funding.

Moving next to OPC1, our clinical stage program for spinal cord injury. Our manufacturing team is working to introduce commercially advantageous and in some cases clinically enabling characteristics to that product profile. Attributes which we have been working on include things like better control of the production process to increase consistency and reproducibility and scale up of production.

And some of the enhancements we're working on will have valuable near term benefits, such as developing a thaw-and-inject formulation for OPC1, which as you know, we successfully accomplished and tested clinically with OpRegen. A thaw-and-inject formulation of OPC1 would allow the next clinical trial to be conducted at far more sites and enable us to finish enrolling sooner thus reducing the overall cost and duration of the development program.

The team has made terrific progress on OPC1, they have conducted approximately 10 separate manufacturing runs. And from those runs, we have identified several opportunities to improve the differentiation process and purity of the product, as well as the validate growth on micro carriers, which is going to be essential if you want to have any kind of commercial scale production. Micro carriers enable you to convert your production process from two dimensional plates into three dimensional vessels. So there's a massive increase in production, volume and scale.

Process development for OPC1 that optimization work is continuing, but it's pretty clear to us that the folks who figured out how to manufacture 5 billion, 99% pure RPE cells have made really great strides on the oligodendrocyte program. And I think it's further affirmation that one of our key advantages is our cell therapy manufacturing capabilities. And that's yet another reason we wanted to get these folks started and underway on the back program early as possible.

So now further on OPC1, I wanted to let you know that we've also had discussions in connection with evaluating a new delivery device for spinal cord injury cells. Our decision to obtain an exclusive option to the Gyroscope SDS device has thus far worked out really well for our AMD program. So, we're looking at ways that we could copy that experience and gain exclusive access to a novel and proprietary delivery device for our spinal cord program.

Now, as I've said before, Lineage is committed to total asset management, which means we're not just interested in making the cells we want to be able to combine the best available component parts of cells production and delivery, which we think is going to help provide an optimal treatment regimen that cannot be imitated. And by analyzing every piece of this overall care proposition, we seek to outmaneuver our competition and really position ourselves for long-term success.

So a brief program updates for you there, I’ll now hand things over to Brandi, who can review our financials and discuss some additional plans for this year.

Brandi Roberts

Thank you, Brian. I'd like to start with some highlights of our balance sheet accounts. As of March 31, 2020, we had $25.8 million in cash, cash equivalents and marketable securities. Additionally, the value of our note receivable due from Juvenescence since it was $24 million as of this date.

During the first quarter of 2020, we sold 2.4 million shares of OncoCyte stock for net proceeds of $5 million. In April 2020 we sold another 1.6 million shares of OncoCyte stock for net proceeds of $3.7 million. After this sale, we still have about 4.3 million shares of OncoCyte stock on our books. The value of this stock as of May 5 was approximately $11.3 million. Our ownership in OncoCyte is now at about 6.3%.

Cash management is an important priority at Lineage. Throughout 2019 and continuing into 2020, we have worked to reduce our operating expenses considerably, while also advancing our programs in an efficient manner. We regularly re-forecast our anticipated expenses to ensure that we are staying the course. We also carefully evaluate our assets on a regular basis to determine how best to fund our operations.

We are excited about the future of lineage and the positive changes we announced this week. It's unfortunate that the COVID-19 pandemic has delayed our origin timeline somewhat. But we've fortunately been able to fund our operations without conducting a sale of Lineage stock.

Instead, we have funded our operations by selling additional portions of our OncoCyte, AgeX and Hadasit positions. We also continue to evaluate other non-dilutive options for funding, such as the CIRM grant request we submitted earlier this week.

Now let's turn to the statement of operations for the first quarter of 2020. Total revenues for the first quarter were $500,000, a decrease of $400,000 as compared to the same period last year. At this time, revenues are generated primarily from our IIA OpRegen related grants, and royalties from the licenses of patents.

Our operating expenses include R&D expenses, as well as G&A expenses. Total operating expenses for the first quarter of 2020 were $7.8 million, a decrease of $5.8 million compared to the same period in 2019.

R&D expenses for the first quarter were $3.3 million, a decrease of about $1.7 million compared to the same period last year. The overall decrease was related to a reduction of $1.8 million in OpRegen and other ophthalmic application expenses, primarily related to reduce level of manufacturing activity in the first quarter of this year, a $400,000 decrease in Renevia related expenses, both of which were offset by an increase of $500,000 in OPC1 related expenses.

As a reminder, we acquired Asterias on March 8, 2019. So last year, we only had a few weeks of OPC1 activity included in our financial statements for the first quarter. This trending of expenses by project is what we expected to see.

G&A expenses for the first quarter were $4.5 million, a decrease of about $4.1 million as compared to the same period last year. The decrease was primarily attributable to the following reductions $3.3 million in the serious related expenses, $900,000 in compensation expenses, $400,000 in accounting expenses, $100,000 in rent expenses, and $100,000 in consulting expenses. These decreases were offset by a $500,000 increase in legal and patent expenses, and a $200,000 increase related to the cessation of shared services reimbursements.

While we have already seen a reduction in G&A expenses quarter-over-quarter, our goal is to still bring our expenditures down throughout the year. As an example, we recently hired in-house patent counsel, maintaining our extensive patent portfolio is very expensive. Our new counsel is working to consolidate our patent work with one external law firm and help determine what patents and in what countries are critical and accordingly streamline our expenditures. He will also be flagging non-utilized patents for potential business development opportunities

Our loss from operations for the first quarter of 2020 was $7.4 million, a reduction of $5.4 million as compared to the same period in 2019. Our net loss attributable to Lineage for the first quarter of 2020 was $8.4 million or $0.6 per share as compared to net income of $39.3 million or $0.30 per share for the same period in 2019.

The variance and our net loss numbers quarter-over-quarter are significantly impacted by changes in the value of our investments in OncoCyte, AgeX and Hadasit for the applicable periods, as well as foreign currency translation adjustments related to lineages international subsidiaries.

While we absolutely pay attention to our investments and currency fluctuations, the management team at Lineage tends to utilize loss from operations as a more relevant measure of our performance in regards to moving our clinical programs forward, while effectively managing our expenses.

From a cash flow perspective, net cash used in operating activities for the first quarter of 2020 was about $5 million. This was in line with our expectations in terms of our 2020 annual net operational spend budget of $16 million. As a result of incremental expenses, we anticipate incurring during the remainder of the year related to the early exercise of our option with Cancer Research U.K., our plans for the development of a vaccine against cart against SARS-CoV-2 and other coronaviruses, and delays caused by COVID-19 to our OpRegen clinical trial, we anticipate that our net operational spend for 2020 will increase modestly.

At this time, we feel that we have enough cash, cash equivalents and marketable securities to manage our programs. And that combined with the Juvenescence note receivable, due in less than four months now, we are well funded into 2021.

With that, I will turn the call back to Brian.

Brian Culley

Thanks, Brandi. Our focus this year is really to advance each of our clinical programs, obviously with an emphasis on completing enrollment in the OpRegen study as quickly as safety permits. We also expect 2020 to feature substantial partnering activity, in part because we have now expanded our pipeline of assets and in part because we're making greater efforts and before to identify and obtain support for our assets, both in the form of direct financial and/or operational support, as well as through strategic partnering, which can help us access new capabilities.

So we're excited about the new opportunities that we're evaluating with our VAC platform for oncology and infectious diseases, and look forward to sharing more on those and other initiatives in the coming weeks and months.

So, thank you for joining us today. And operator, The Lineage team will be ready for analyst questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And your first question comes from online of Jason McCarthy with Maxim Group.

Jason McCarthy

I’ll jump right into the obvious. It's really nice first of all to see the cell therapy space, your peers are on the therapeutic side in COVID. Now you're moving on to the vaccine side for COVID. So there's a nice bright light shining on cell therapy for, I think, for the first time in a long time.

So can you help us understand a little bit more about how a dendritic cell based vaccine approach positions itself in this vaccine race, if you would, there's 120 vaccines -- was actually 123 vaccines, you'll be 124 in development, and we all know that the mRNAs are out in front for a lot of reasons from speed to geopolitical reasons mainly because they're scalable. How does a dendritic cell based vaccines fit into this paradigm this race for an effective vaccines the coronavirus?

Brian Culley

Hey, Dr. McCarthy, terrific question. One of the interesting things about cell therapy is that it really has some areas where other approaches don't always fit quite as well. So one example of that is that I like talking about on the dry AMD side that we have not -- we as an industry have not been successful at identifying dry AMD, small molecules, pretreatment or antibodies, because we don't really know what's wrong, whereas replacing the whole cell is kind of a nice solution. And so that's one example.

And I think another example is in the vaccine measles. So when I looked even just this morning, I don't recall if it was a major publication or a cell publication, but a publication came out sort of categorizing all of the different vaccine approaches. And what I look -- when I look at that, I'm so pleased that we don't look like the majority of the approaches that are in there, because at our size and scale, we're not going to directly compete with Moderna. We're not going to directly compete with a company that is looking to use full length attenuated vaccine as a therapeutic.

What we have done is, we've looked at the emerging biology and I really have to emphasize emerging, because a lot of what is being known about SARS-CoV-2 is to be determined.

But when we look at the data that's been come out, whether it's been coming out, it's clear that this virus has certain immune evasion strategies, which -- among which includes impairing immune cells like T cells and dendritic cells, and dendritic cells; they're the sentinels of the immune system, right? Their job is to present these antigens and to prime the adaptive B and T cell responses.

So, if you have a virus that this part of it's -- part of its strategy to maintain itself and reproduce is to impair that part of the immune system. If you don't, if you're not delivering that message through the antigen presenting cells, there's really no way to establish a prolonged memory against these infections, meaning they can come back and get you time and time again.

So we're really not, we're not looking at the current pandemic and saying, how can we address people who are sick today or may get sick in an intervention? We are really thinking about how we can develop a vaccine that would emphasize the Phase 2 response and help develop a multi-year protection. So using SARS as an example -- some of the publications are coming out 2014, 2015 on SARS, one of the things that that we were we're learning there is that the you could have multi-year protection from prior infection going out five or six years.

So that's not driven by the -- by the immediate antibody response. So we think that we can really be a solution that's tailored toward high risk individuals, people who are going to be on the frontlines of treating this -- this and other Corona viruses for many years to come. What we have to think about are some of these emerging issues like antibody dependent enhancement, where the virus can bind to those antibodies and then use that and actually lead to more serious disease later. So what I think we have is we -- I think that the other approaches aren't really built to establish immunological memory.

We are really focused on immunological memory. That means we have longer timelines, that's fine. We also have far fewer people in that space. So we're trying to serve an unmet need within those 120 approaches. And I see very few of those 120 that really resemble anything like what we're doing, because they're really focused on the immediate infection and not trying to establish multi-year resistance for protection. Is that helpful? They're covered kind of a lot of different parts of it.

Jason McCarthy

It does. And just a quick follow up to that. Obviously, there's a lot of enthusiasm and momentum around the mRNA vaccines and it's not just Moderna, the other one, BioNTech, but the sense that I get and I could say this, just as analysis that it just feels like yes, because it's scalable because it's safe. And yes, they've rushed it into Phase 2 there is almost a guarantee in some ways that this Moderna vaccine is going to find emergencies use authorization somewhere before we get to the end of the year, you know, whether -- whatever side somebody falls on good or bad, like it or not. How does that change the development landscape for others? That are coming up from behind it kind of lower the barriers and kind of open the doors, for you to kind of accelerate your program?

Brian Culley

Yes, it's simultaneously beneficial and horrifying. And the reason why I say that is--

Jason McCarthy

Yes.

Brian Culley

It's beneficial, were able to see things like data collection and enrollment and reporting. I mean, publications are going out without peer review. And, and in some ways, that is incredible. It shows you the potential of what happens when, when a community really focuses on an objective.

So, I think it's amazing and it's, I mean, it's literally lifesaving, that we are knocking down some of the traditional obstacle that slow things down. But it's horrifying because you end up making highly concentrated bets. And there's the old, you know, saying about, you know, you can be faster, you can be good or you can, you know, you can't be both that sort of thing. And I think that's with tremendous respect for what Moderna is doing.

There is a massive bet, being placed on that approach, and the funding is going there and patients are going there. And, and if it's unsafe, or if it's not all it's cracked up to be. Have we impaired all of the other programs? It's really it's really unsettling. A benefit for Lineage in our situation is that we are going to first work on the process development if we're going to be able to treat huge numbers of people if we're going to be going into thousand liter bio reactors to growing these cells.

We need to get the fundamental attributes of the product right from the outset and it's beneficial for us that that kind of work to build the scale of the DCS is going to be applicable to any infectious disease program, or any oncology program that we dream up.

And you could literally come up with billions of different antigens that one could imagine presenting, that in itself is going to be a really fun and interesting project. But my point is that the work that we're doing is so applicable to each of these programs, that even if you see a different SARS virus, or you see a mutation of the existing virus, or we have a totally new class of virus, we want to create a platform where you can just drop in the kinds of antigen presentation, and you're dropping it into a delivery vehicle that you're already testing you're already happy with.

It could be a solution for 10, 20, 50 years' worth of vaccine development if we get all the right pieces in place in the right way from the outset. So we're definitely in it for the long road, long road, meaning individual treatment, individual multi-year protection, also on a societal level, all of the multiple, you know, unknowable infections that come. And then we're going to double dip because we're also doing the same work for the aiming oncology platform.

Jason McCarthy

Thank you, Brian.

Brian Culley

You bet. Thank you.

Operator

Your next question comes from no line of Jason Kolbert with Dawson James Security.

Unidentified Analyst

Hi, this is actually Tucker on behalf of Jason. And my question is that we understand option as our focus. And would you be able to just take some time and walk us through the next couple of data points and catalysts, as we see them coming to fruition in the next few weeks and months?

Brian Culley

Yes, of course, I think the things to look forward to from the OpRegen study is news from the companies that we have been able to enroll again. And I think I made some comments earlier on the call that we maybe as few as just a few weeks away from being able to do that we have a patient identified, we just are waiting for the site to be able to be unrestricted. And that's totally out of our control.

Obviously, that has to do with a lot of factors like whether or not there's a second wave, this sort of stuff and everyone monitors that. So, the first sign that we are enrolling again, I think it's going to be a real encouraging positive sign. We only have four subjects left in the orbit portion.

So our agreement with Gyroscope now for the orbit device is for six subjects. The first two have been treated. They actually have quite a large amount of follow-up at this point. And we've been really happy with the performance of the surgery. The surgery is adaptable to different individuals, and for patients is a fairly small number.

So, if we get some relief from enrollment restrictions, I do not think it's going to take very long at all before we will have completed that cohort. And then, with the evidence that our thought and inject formulation are off the shelf dawn and jack formulation, plus the handful of more orbit experiences, because two are great, but you'd rather see sick.

When we have those in hand, then I think it's pencils down, I don't see a strong reason to continue the study. I think we take those patient data and prior patient data, and we can take that to the agency and in talking about designs, and we can take those two partners and say, look, here's the data set as we see it. And, and so as has been for the last year and a half since I joined the company, it has been all about collecting enough individual data points, that there's a picture there that you can see. I believe with confidence that there is a treatment effect.

So, I don't think we're far from saying that, I think internally we already feel that way very strongly. But we do want to get external enthusiasm for that. So just a few more patients for specifically in this cohort, and then I think we will, we will look to conclude the Phase 1/2a study, do some follow-up some safety follow-up and take that data, the FDA and partners as I just described.

Unidentified Analyst

All right. Great. Thank you so much.

Brian Culley

Thank you, Tucker.

Operator

And your final question comes from the line of Joe Pantginis with H.C. Wainwright.

Joe Pantginis

Hey, everyone, good afternoon. Thanks for taking the question. And I'm really glad you're all doing well. Brian, I want to focus on that too. And the CR U.K. study. So I know obviously, you said you'll get more information when you bring it in house. But I wanted to focus maybe on some of the nuances of the trial conduct to date that you can share, hopefully, so it's sort of a multi part.

So I'll just split it up in maybe two parts, if you don't mind. So, first, I was curious if the study had enrolled all 12 patients and of those 12. If I looked at the study design, do you know the balance between advanced patients versus adjuvant patients?

Brian Culley

So, Joe, hi thanks for the question. Enrollment is at six currently. And CR U.K. is going to go to eight. I don't, offhand, I pretty sure the majority were advanced, but, I'm going to need to follow up on that. The reason for that absence of specific knowledge is that our greatest level of interest from the VAC2 clinical study was seeing evidence of immunogenicity that was specific to our antigen.

We put in this little booger, do we see a response to VAC and clinical responses from just four, six or eight patients, although potentially exciting as standalone evidence, they weren't really the focus of this study. It's extensively -- it's a safety study, we want to show that this treatment is well tolerated. But really what we're trying to do is demonstrate proof of the mechanism that we put in that fragment; we see a specific response to that fragment.

So that that was apparent to us through multiple assays as pentamer staining and Eli spot and things like this, T cell activation exhausts Nastase, and just making sure that that all coincided with the timing of the vaccination. And we thought that that was highly biologically relevant. So, that's not to say that we will not report on clinical outcomes. We will, those obviously, are lagging because it takes longer and patience when you're looking at overall survival, even though that these are largely advanced cancer patients.

But for us, our focus was really on the immunogenicity samples and demonstrating that we were able to trigger and drive really an education of the T cells and measure that in multiple ways.

Joe Pantginis

Got it. Got it. And so, the part two of my question, then I'm going to steal a phrase you just used for OpRegen. When you do bring it in house, is it pencils down? Or is this study going to be continued or are you going to continue enrollment under Lineage? Or are you going to then define the next steps and move on to a different study potentially different indication?

Brian Culley

It could even be seen, both, so the nice thing is that CR U.K. has agreed that they will continue to monitor the existing patients and enroll a couple of more. So, the study will be open and going for a number of months. I mean, certainly more than a year. It would be at our discretion whether we would either invite them to enroll additional patients or not? We could have that conversation. I think that would be to be determined.

There would need to be, of course, a good rationale. I don't think that, as I explained in the body of the call, I don't think that doing that for the purpose of seeing additional immunogenicity is going to tell us anything more. We already saw that. We're confident in it. I don't think that's a good use of our money.

Doing that to try to get some clinical responses, again, we're talking about very small numbers of patients. So I'm not so sure, I think what I would prefer to do would be to move back to into an area that we're really excited about, which is in combination with checkpoint inhibitors, because biologically being able to simultaneously take the brakes off of the immune system, which is what checkpoint inhibitors are kind of doing a colloquial way, and then simultaneously hitting the accelerator, which is what our technology does by directly educating the T cells what to attack, we think that combination is going to be really powerful.

So the study that that CR U.K. has done is fine. But I think what it's really telling us is that we've got into this city, it's well tolerated. Now let's go into the optimal or more optimal settings, in combination with checkpoint inhibitors. Let's bring every indication back onto the table. Let's look at bladder, let's look at CLL. Let's look at everything and find the best places where a small company can really win. Maybe we drive it toward a partnership; maybe we drive it into a niche indication. So everything will be on the table as we bring in that data. But specifically for the VAC2 study, it was really all around the immunogenicity signal. And once we got that first report, it was champagne. It was it was a great day.

Joe Pantginis

I really appreciate that extra data. And then with regard to -- the question is still for VAC2, but I do appreciate all the extra comments you gave around OPC, on process development. So with that in mind, maybe can you just maybe list out the top two or three factors that you want to address with regard to VAC process development?

Brian Culley

Yes, so I mean, there's some really nice things that CR U.K. did. They've got this business unit dedicated to cell therapy. They might have some Carty in there. I'm not I'm not sure about all of their programs, but the directed differentiation, right, directing the Lineage of cells, that methodology is pretty well established. We'll Of course, investigate it and look to tweak it, but the directed differentiation is pretty good. The analytical steps are pretty good.

The things that we will want to do would be to establish an intermediate cell bank, so that we can kind of stop and start in different places as we look to introduce some of the improvements, growth in large suspension volumes with or without micro carriers. It's so important, especially with the DC approach, because we're talking about large numbers of cells, much larger numbers than we use in dry AMD where there is only 100,000 cells are administered. We need to be able to have really high volume.

And this is something I've been talking about since I got here is that the winners and losers in cell therapy, I think are going to be just inevitably, inextricably linked to your ability to manufacture the same thing over and over in huge numbers. So, a lot of our folks, I can't say all of it, but a lot of our focus is going to be process development that leads to high scale production first, high enough to enable larger clinical studies, and then going from there into late stage clinical studies, then ultimately, obviously, you've got to be able to remove any obstacles to commercialization. The great thing is that we've had a lot of success with the retina program doing that for DRI MD.

We're in the middle of that right now with the oligodendrocytes. We're going to be able to hit the ground running with VAC2 to and so this all keeps coming back to this notion that we have the center of excellence in cell manufacturing. And so, getting these programs in getting them to our GMP facility, and letting the folks who are the experts and figuring out how the heck you can you can grow these cells without them, derailing halfway through a differentiation is really the key here. And that's really how we're trying to add value to the program.

Joe Pantginis

Got it. Brian, thank you so much. And I hope you all get to get some rest coming into the weekend ahead of what was a very productive and busy week. Thanks a lot.

Brian Culley

You bet. Thank you.

Operator

At this time, there are no further questions. I would like to hand the call back over to Brian Culley for his final remarks.

Brian Culley

All right. Well, thanks, everyone. I really appreciate you joining us this afternoon. You can tell I'm excited about our plans, I think we have a lot to look forward to. As always, I really appreciate our shareholder support. And we'll continue to do our best to position Lineage to be a leader in cell therapy and transplant medicine as we demonstrate what our assets and operation in particular can do for DRI MD. Thanks very much and we'll be in touch

Operator

And this does conclude today's conference call. Thank you for your participation. You may now disconnect.