Lineage Cell Therapeutics, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our accompanying unaudited condensed consolidated interim financial statements and notes thereto and our audited financial statements and notes thereto for the year ended December 31, 2024 included in the 2024 10-K. Past operating results are not necessarily indicative of results that may occur in future periods.

The following discussion includes forward-looking statements. See “Special Note Regarding Forward-Looking Statements,” above. Forward-looking statements are not guarantees of future performance and our actual results may differ materially from those currently anticipated and from historical results depending upon a variety of factors, including, but not limited to, those discussed in Part I, Item 1A. Risk Factors of our 2024 10-K, and in our subsequent filings with the SEC, including any discussed in Part II, Item 1A of this report under the heading “Risk Factors.”

All information presented in this report is based on our fiscal year. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ending December 31 and the associated quarters, months and periods of those fiscal years.

Company and Business Overview

We are a clinical-stage biotechnology company developing novel allogeneic, or “off-the-shelf”, cell therapies for serious medical conditions. Our programs are based on our proprietary, cell-based technology platform and associated development, formulation, manufacturing and delivery capabilities. From this platform, we design, develop, manufacture, and test specialized human cells with anatomical and physiological functions similar or identical to cells found naturally in the human body. The cells we manufacture are produced by applying directed differentiation processes to established, well-characterized, and self-renewing pluripotent cell lines. These processes are based on specific developmental lineages and generate cells with desired characteristics. Functional cells developed from such lineages that are relevant to the underlying condition are transplanted into patients in an effort to (a) replace or support cells that are absent or dysfunctional due to degenerative disease, aging, or traumatic injury, and (b) restore or enhance the patient's functional activity. Our business strategy is to efficiently leverage our technology platform and our development and manufacturing capabilities to advance our programs internally or in conjunction with strategic partners to further enhance their value and probability of success.

Our pipeline of allogeneic, or “off-the-shelf”, cell therapy programs currently available to us for development includes:

• OpRegen® (RG6501), an allogeneic retinal pigmented epithelial (“RPE”) cell replacement therapy currently in Phase 2a development under a worldwide collaboration with F. Hoffmann-La Roche Ltd and Genentech, Inc., a member of the Roche Group (collectively or individually, “Roche” or “Genentech”), for the treatment of geographic atrophy (“GA”) secondary to age-related macular degeneration (“AMD”).
• OPC1, an allogeneic oligodendrocyte progenitor cell therapy currently in Phase 1/2a development for the treatment of spinal cord injuries (“SCI”).
• ReSonanceTM (ANP1), an allogeneic auditory neuron progenitor cell transplant currently in preclinical development under a collaboration with William Demant Invest 2 Aps (“WDI”) for the potential treatment of auditory neuropathy.
• PNC1, an allogeneic photoreceptor cell transplant currently in preclinical development for the treatment of vision loss due to photoreceptor dysfunction or damage.
• RND1, a cell transplant program for an undisclosed indication, currently being developed through a gene editing collaboration with Factor Biosciences Limited.
• A proprietary hypoimmune cell line, which may have utility in additional central nervous system indications.
• ILT1, an allogeneic islet cell transplant research program for the treatment of type 1 diabetes (T1D). We aim to deploy our manufacturing capability to address the issue of large-scale production of islet cells, with an initial goal of establishing a production modality that can support the entire production process in a dynamic culturing system, potentially solving a major hurdle to commercialization of islet cell therapy product candidates.

Our lead cell therapy program, known as OpRegen, is being developed for the treatment of ocular disorders, including GA secondary to AMD under the Collaboration and License Agreement we entered into with Roche in December 2021 (the “Roche Agreement”). OpRegen (also known as RG6501) is a suspension of human allogeneic RPE cells and is currently being evaluated in a Phase 2a multicenter clinical trial in patients with GA secondary to AMD which is referred to as the GAlette Study. OpRegen subretinal delivery has the potential to counteract RPE cell loss in areas of GA lesions by supporting retinal cell health and improving retinal structure and function. Under the terms of the Roche Agreement, we received a $50.0 million upfront payment in January 2022 and are eligible to receive up to an additional $620.0 million in developmental, regulatory, and commercialization milestone payments. We also are eligible to receive tiered double-digit percentage royalties on net sales of OpRegen in the U.S. and other major markets. In May 2024, we entered into an additional agreement with Genentech pursuant to which we agreed to provide Genentech with supplemental clinical, technical, training, manufacturing, and procurement services that support the ongoing advancement of the OpRegen program in exchange for certain payments. In September 2024, Roche and Genentech announced receipt of Regenerative Medicine Advanced Therapy (“RMAT”) designation from the U.S. Food and Drug Administration (“FDA”) for OpRegen for the treatment of GA secondary to dry AMD. In June 2025, Roche and Genentech presented positive 36-month visual acuity results at Clinical Trials at The Summit 2025, from the Lineage-run Phase 1/2a clinical trial of OpRegen. The presentation showed that (i) gains in Best Corrected Visual Acuity (BCVA) in patients in Cohort 4 (less advanced GA) measured at month 12 remain evident through month 36 following subretinal administration of OpRegen cell therapy; (ii) improvement in BCVA and outer retinal structure in patients with extensive OpRegen bleb coverage of their GA area was greater than in patients with limited coverage and persisted through month 36; (iii) in those patients with extensive OpRegen cell therapy coverage of atrophic areas at the time of surgical delivery, the mean change in BCVA was +9.0 ETDRS letters for those completing 3-year follow-up (compared to +7.4 ETDRS letters at 24 months) (n=5); and (iv) these data suggest that OpRegen cell therapy may counteract RPE cell dysfunction and loss in GA by providing support to the remaining retinal cells within atrophic areas, and these effects appear durable through at least 36 months after a single administration.

Our most advanced internally owned product candidate is OPC1, an allogeneic oligodendrocyte progenitor cell therapy designed to improve recovery following an SCI. Improved functional activity can lead to greater mobility and enhanced quality of life for those affected by a SCI and significant cost-savings for caregivers and payors. OPC1 also has an extensive long-term safety profile based on two clinical trials conducted to date: a five-subject Phase 1 safety trial in acute thoracic SCI, where all active participants have been followed for at least 13 years, and a 25-subject Phase 1/2a multicenter dose-escalation trial in subacute cervical SCI, where all active participants were evaluated for at least 7 years. Results from these studies have been published in the Journal of Neurosurgery Spine. In February 2025, we announced that we were initiating our DOSED (Delivery of Oligodendrocyte Progenitor Cells for Spinal Cord Injury: Evaluation of a Novel Device) clinical study to evaluate the safety and utility of a novel spinal cord delivery device designed to administer OPC1 to the spinal parenchyma in both subacute (between 21 to 42 days following injury) and chronic (between 1 to 5 years following injury) SCI participants. The DOSED study is the first study of OPC1 to include participants with a chronic injury, a condition which comprises the majority of individuals affected by SCI. In August 2025, we announced the dosing of the first participant in the DOSED study. We expect DOSED will enable future subsequent studies aimed to demonstrate OPC1’s ability to impact functional outcomes. In July 2025, the first chronic SCI participant (a neurologically complete SCI injury (American Spinal Injury Association Impairment Scale [AIS] grade A), with a single neurological level of injury (NLI) from levels T1 to T10) was treated in the DOSED study at UC San Diego Health, and the novel delivery system successfully administered a one-time injection of OPC1. No significant safety events have been reported through sixty days post treatment in the first treated chronic SCI participant in the DOSED study. OPC1 clinical development has been supported in part by a $14.3 million grant from the California Institute for Regenerative Medicine (“CIRM”) and we have applied for approximately $7.0 million of additional funding from CIRM to support continued clinical development of OPC1 for the treatment of SCI. Subsequent to the submission of our grant application and as part of the standard grants review process, Lineage has provided additional information in support of its application to CIRM in response to request from CIRM representatives. CIRM continues to review Lineage’s application for a clinical grant to support the DOSED study and Lineage believes that CIRM will make a decision as to the grants it will award in December 2025. No assurances can be given that Lineage will be awarded a grant or, if awarded, the amount or timing thereof.. See “Item 1. Business - Grants from Government Entities – Grants from the California Institute for Regenerative Medicine,” in the 2024 10K.

Our second most advanced internally owned product candidate is ReSonance (ANP1), an allogeneic auditory neuron progenitor cell transplant, currently in preclinical development for the treatment of sensorineural hearing loss. In August 2025, we announced that we entered into a research collaboration agreement with WDI to advance the preclinical development of ReSonance for the treatment of hearing loss. WDI will fund up to $12 million in research collaboration costs over the approximate three-year term of the agreement. The main objective of the agreement is for the parties to complete a preclinical phase achieving readiness to potentially progress to human clinical trials under one or more separate clinical agreements, the terms of which would be negotiated in good faith before the expiration of the agreement. Development activities will be jointly conducted and managed by Lineage and scientists from Eriksholm Research Centre, part of Oticon A/S, which is a subsidiary of the Demant Group. See Note 13. (Commitments and Contingencies—Collaborations—Demant Collaboration) to our condensed consolidated interim financial statements included in this report for additional information.

Scalable, cost-effective manufacturing, which we believe is a significant hurdle to overcome for cell therapy companies, can help make cell therapies available and affordable for wider patient populations. We previously completed a current Good Manufacturing Practice, or cGMP, production run for each of OpRegen and OPC1, two of our product candidates, from a customized, two-tiered cGMP compliant and genetically stable cell banking system. A vial from a stable cGMP master cell bank created from a single, well-characterized pluripotent cell line can be the source of a cGMP working cell bank, which thereafter generates hundreds or thousands of vials of a final cell-based product comprised of millions of cells per vial. In total, we have to date produced unique cGMP banking systems for three of our product candidates, the third being ReSonance. We expect the cell banks we have manufactured will support a production capability exceeding the reasonably foreseeable number of patients with the conditions that OpRegen and OPC1 are currently intended to address (each of which we currently expect to be a single-administration dose) without requiring the manufacture of a new starting master cell bank. We therefore believe we have reduced to practice and demonstrated a reproducible and scalable cGMP cell therapy production capability with the purity, potency, and production scale implied by an “off the shelf” allogeneic product. We plan to leverage this expertise to produce a cost-effective, scalable, and consistent supply of allogeneic cell transplant product candidates for ourselves and others, including for indications requiring large cell doses or with large patient populations.

Other Programs and Technologies

Although we have to date primarily focused on neurological and ophthalmic cell types, the pluripotent cells which our platform is based on are capable of becoming any of the cell types of the human body. We currently maintain a list of additional undisclosed product candidates which may be considered for development or partnership in the future, and which altogether cover a range of therapeutic areas and conditions. Generally, these product candidates are based on the same platform technology and employ a similar guided cell differentiation and transplant approach as the product candidates discussed above, but in some cases may also include genetic modifications designed to enhance efficacy and/or safety profiles. We may elect not to develop, terminate the development of, or not partner any of these product candidates.

In addition to seeking to create value for shareholders by developing product candidates through clinical development, we also may seek to create value from our intellectual property or related technologies and capabilities, through licensing collaborations and/or other strategic transactions.

Israeli Regional Conflict

All of our manufacturing processes, including cell banking and product manufacturing for our cell therapy product candidates, are conducted by our subsidiary, Cell Cure Neurosciences Ltd. (“CCN”), at its facility in Jerusalem, Israel, and more than two-thirds of our workforce are CCN employees based in that facility.

As a result of safety concerns and in response to government-imposed restrictions on movement and travel and other precautions taken from time to time since the Israeli regional conflict that began in October 2023, our operations at our facility in Israel were temporarily impacted. Further, a number of our employees in Israel are members of the military reserves and subject to immediate call-up. In addition, the general impact on our employees operating in a region of conflict could adversely impact our operations. Although we have business continuity plans in place to address medium- or long-term disruptions that could result from regional instability, any long-term closure of our facility in Israel, or if that facility were damaged, or if hostilities otherwise disrupt our ongoing operations at that facility, or if a meaningful number of our employees are unable to work for significant portions of time, our operations would be materially and adversely impacted.

As of the date of the filing of this report, our operations have not been materially or adversely impacted as a result of the Israeli regional conflict. It is currently not possible to predict the scope, duration or severity of the conflict or its effects on our operations, financial condition or operating results. The conflict is currently the subject of a cease fire agreement between Israel and Hamas announced in October 2025, however it continues to rapidly evolve, and could materially adversely impact our business and operations, including our ability to raise capital, as well as the overall economy in Israel and the value of the New Israeli Shekel. See the risk factor in Item 1A. Risk Factors in Part I of the 2024 10-K titled, “All of our manufacturing operations currently are conducted at our facility in Jerusalem, Israel. Accordingly, political and economic conditions in Israel and war, cyberattacks, terrorist attacks or other armed conflicts involving Israel and the broader region 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”.

Our commercial insurance may not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.

Macroeconomic, Political, and Regulatory Environment Considerations

Our business, financial condition, operating results, stock price, and our ability to raise additional capital may be adversely affected by evolving macroeconomic, political, and regulatory developments and conditions, such as inflation, trade disruptions and restrictive measures, including tariffs, high interest rates, slowed economic growth or recession, uncertainty with respect to the federal budget and debt ceiling, potential or prolonged U.S. government shutdowns, volatility in financial markets, liquidity concerns at financial institutions, supply chain disruptions, changes in the regulatory landscape in the U.S., including due to significant reductions in funding and staffing of federal agencies and changes in leadership, and geopolitical factors. Further, third parties with whom we have business relationships, including clinical investigative sites, financial institutions, and our collaborators, may be adversely affected by the foregoing risks, which could directly impact our ability to achieve our operating goals within planned timelines and budgets.

In addition, there may be significant future effects on the pharmaceutical and biopharmaceutical industries as a result of federal policy and regulatory changes under the current U.S. presidential administration, including in areas relating to regulatory framework and oversight, research and development funding, drug pricing reform, global trade policy and tariffs, and others. Recent initiatives have resulted in significant reductions in staffing levels at the FDA and other governmental agencies. The foregoing could impact agencies’ ability to retain remaining key personnel and hire additional personnel, which may disrupt their ability to perform routine activities or function in the normal course. For example, with respect to the FDA, this may result in delays or limitations on our ability to obtain guidance from agency staff and slow review times for applications we submit with respect to clinical studies, any of which could negatively impact the cost and timelines for developing and obtaining regulatory approval of our product candidates. A prolonged federal government shutdown with additional agency staff furloughed or laid off could exacerbate these risks. Moreover, the current U.S. presidential administration has taken and may take additional future actions to freeze or reduce federal funding for medical research, which could decrease the ability of facilities that rely on such funding to conduct clinical trials or increase the costs to us of conducting clinical trials at those facilities. Given the high level of uncertainty regarding federal policy, enforcement and regulatory changes, and that circumstances are rapidly evolving, we cannot reasonably predict the potential impact on our business at this time.

Critical Accounting Estimates

An accounting policy is deemed critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. See the discussion under the Critical Accounting Estimates heading in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Result of Operations in the 2024 10-K and our audited financial statements and notes thereto for the year ended December 31, 2024 in Part II, Item 8 of the 2024 10-K for accounting policies and related estimates we believe are the most critical to understanding our condensed consolidated interim financial statements, financial condition and results of operations and which require complex management judgment and assumptions or involve uncertainties. The estimates and judgments involved in our accounting policies as described in our audited financial statements and notes thereto for the year ended December 31, 2024, continue to be our critical accounting policies and there have been no material changes to our critical accounting policies during the nine months ended September 30, 2025.

Results of Operations

Comparison of Three and Nine Months Ended September 30, 2025 and 2024

Revenues

The following table shows our revenues for the periods presented (amounts in thousands except percentages):

For the three months ended September 30, 2025, the $0.1 million decrease in total revenues as compared to the prior year was primarily attributable to a $0.3 million decrease related to lower royalty revenue and other service revenues. This decrease was partially offset by a $0.2 million increase in collaboration revenue resulting from the combined impact of a $1.8 million increase in revenue resulting from the research collaboration agreement with WDI which was executed in the current quarter, partially offset by a $1.6 million decrease in revenue recognized under the Roche Agreement.

For the nine months ended September 30, 2025, the $1.3 million increase in total revenues as compared to the prior year was primarily attributable to the $1.8 million collaboration revenues resulting from the research collaboration agreement with WDI executed in the current quarter, combined with the offsetting effects of (i) a $0.7 million increase in revenue related to the remaining deferred revenue recognized upon the termination of the license agreement with Immunomic Therapeutics, Inc., in the second quarter of 2025; (ii) a $0.8 million decrease in revenue related to the Roche Agreement; and (iii) a decrease of approximately $0.4 million in royalty revenue and other service revenues. See Note 13 (Commitments and Contingencies) to our condensed consolidated interim financial statements included in this report for additional information.

Collaboration revenues from the Roche Agreement may fluctuate from period to period based on changes in estimated costs to support the performance obligations. Under the Roche Agreement, delivery is determined to be over time and revenue is recognized utilizing an input method of costs incurred over total estimated costs to complete the performance obligation. The collaboration revenue recognized each period was included within deferred revenue at the beginning of each reporting period. See Note 3 (Revenue) to our condensed consolidated interim financial statements included in this report for additional information.

Operating Expenses

Our operating expenses generally consist of cost of royalties, research and development expenses, and general and administrative expenses.

Cost of royalties. These expenses consist of costs associated with royalty revenue which has resulted from product royalties by our sublicensees.

Research and development expenses. These expenses consist of costs incurred for company-sponsored, collaborative and contracted research and development activities. These costs include direct expenses and indirect research-related overhead expenses including compensation and related benefits, stock-based compensation, consulting fees, research and laboratory fees, rent of research facilities, amortization of intangible assets, and license fees paid to third parties to acquire patents or licenses to use patents and other technology. Research and development costs with no future benefit or alternative use are expensed as incurred. Research and development expenses incurred and reimbursed by grants from third parties approximate the grant income recognized in our condensed consolidated statements of operations. Royalties and sublicensing fees are recorded as research and development expenses, unless they are associated with product royalties, which we classify as cost of royalties in our condensed consolidated statements of operations. We expect our total research and development expenses to fluctuate each reporting period based on several factors including (i) the stage of development for each cell therapy program, (ii) the availability of resources to work on each program, and (iii) the timing of contractual obligations.

General and administrative expenses. These expenses consist of employee and director compensation and related benefits, including stock-based compensation, for executive and corporate personnel, professional and consulting fees, and allocated overhead such as facilities rent and equipment rent and maintenance, insurance costs allocated to general and administrative expenses, costs of patent applications, prosecution and maintenance, stock exchange-related costs, depreciation expense, marketing costs, legal and accounting costs, and other miscellaneous expenses.

The following table shows our operating expenses for the periods presented (amounts in thousands, except percentages):

The following table shows the amount of our total research and development expenses allocated to our primary research and development programs for the periods presented (amounts in thousands, except percentages):

Research and development expenses. For the three months ended September 30, 2025, the $0.1 million increase in total research and development expenses as compared to the prior year was primarily driven by $0.2 million for our OPC1 program, $0.4 million for our preclinical and other undisclosed programs, partially offset by approximately $0.5 million for our OpRegen program.

For the nine months ended September 30, 2025, the $0.4 million increase in total research and development expenses as compared to the prior year was primarily driven by $0.7 million for our preclinical and other undisclosed programs, $0.2 million for our OPC1 program, partially offset by $0.5 million for our OpRegen program.

General and administrative expenses. For both the three and nine months ended September 30, 2025, the $0.2 million decrease in general and administrative expenses as compared to the prior year was primarily attributable to stock-based compensation expense and services provided by third parties.

Loss on impairment of intangible asset. In the second quarter of 2025, we abandoned the VAC platform and its related research and development efforts, and concluded the IPR&D asset had no alternative future use. Consequently, we derecognized the intangible asset and recorded a non-cash pre-tax impairment charge of $14.8 million within total operating expenses of the condensed consolidated statement of operations. See Note 6 (Goodwill and Intangible Assets, net) and Note 13 (Commitments and Contingencies) to our condensed consolidated interim financial statements included in this report for additional information.

Other Income and Expenses, Net

The following table shows the amount of other income (expenses), net, for the periods presented (in thousands):

Interest income, net. For the three and nine months ended September 30, 2025, the change in interest income, net, as compared to the prior year was de minimis.

Gain (loss) on marketable equity securities, net. We expect our net gain or loss on marketable equitable securities to fluctuate each reporting period based on the changes in the market price of marketable equitable securities held by us which could impact our net income or loss reported in our condensed consolidated statements of operations for a particular reporting period. These marketable equitable securities are carried at fair market value on our condensed consolidated balance sheet. See Note 4 (Marketable Securities) to our condensed consolidated interim financial statements included in this report for additional information regarding our marketable equity securities. For the three and nine months ended September 30, 2025 and 2024, the change in the values of our marketable equity securities was de minimis and primarily related to changes in the fair market value of such securities during the respective periods.

Change in fair value of warrant liability. The liability-classified warrants issued in connection with the November 2024 registered direct offering (“November 2024 RDO”) are valued at each reporting period end date while the warrants are outstanding, and at the time of each warrant exercise, using a Black-Scholes option pricing model that maximizes the use of observable inputs and minimizes the use of unobservable inputs to the extent possible. A significant increase or decrease in these inputs could result in significantly higher or lower fair value measurements. The changes in fair value of the liability-classified warrants are non-cash adjustments recorded in the condensed consolidated statements of operations and we expect this fair value to fluctuate each reporting period. For the three and nine months ended September 30, 2025, the change in the fair value of the warrants was primarily driven by an increase in the Company’s common share price during these periods. There were no liability-classified warrants outstanding for the three and nine months ended September 30, 2024.

Foreign currency transaction gain (loss), net. Foreign currency transaction gain (loss), net primarily results from currency fluctuations applied to our subsidiary’s U.S. dollar-denominated intercompany balances with Lineage. The functional currency of our subsidiaries, CCN and ES Cell International Pte. Ltd. (“ESI”), is the Israeli New Shekel (“ILS”) and the Singapore Dollar (“SGD”), respectively. Foreign currency transaction gains and losses for the periods presented are principally related to the remeasurement of the U.S. dollar denominated notes payable and notes receivable between Lineage and its subsidiaries.

Other income (expenses), net. For the nine months ended September 30, 2025, the Company recorded $0.2 million of other expense related to the allocated transaction costs for warrants issued in connection with the second closing of the November 2024 RDO in January 2025. No comparable expense was recorded for the nine months ended September 30, 2024.

Income Taxes

Under ASC 740, Income Taxes, a valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. We established a full valuation allowance as of December 31, 2018 due to the uncertainty of realizing future tax benefits from the net operating loss carryforwards and other deferred tax assets, including foreign net operating losses generated by our subsidiaries. Lineage did not record a deferred tax benefit or provision expense for either of the nine months ended September 30, 2025 or 2024.

Liquidity and Capital Resources

Overview

As of September 30, 2025, we had $40.5 million in cash, cash equivalents and marketable securities and our accumulated deficit was $467.8 million. For the nine months ended September 30, 2025, we incurred a loss from operations of $30.1 million and had negative cash flow from operations of $14.0 million. Since inception, we have incurred significant operating losses and we expect to continue to incur significant operating losses for the foreseeable future.

We have historically funded our operations primarily through proceeds from the sale of our common shares and securities exercisable or convertible into our common shares, the sale of common stock of our former subsidiaries, research grants, revenues from collaborations, and royalties from product sales that are unrelated to our current cell therapy product candidates. In January 2025, we raised approximately $5.4 million in net proceeds from the second closing of the November 2024 RDO. We may receive up to an additional $36 million in gross proceeds upon the full cash exercise of OpRegen clinical milestone-linked warrants we issued to the investors in the November 2024 RDO, of which we have received $318,500 through September 30, 2025. However, no assurances can be given as to the extent to which additional warrants will be exercised, or if exercised, that they will be exercised on a cash basis.

During the nine months ended September 30, 2025, we issued and sold 1.0 million common shares under our at-the-market offering program for gross proceeds of $1.3 million. As of September 30, 2025, $38.7 million remained available for sale under our at-the-market offering program. See Note 10 (Shareholders’ Equity) to our condensed consolidated interim financial statements included in this report for additional information regarding our at-the-market offering program.

Cash Flows

(in thousands)

Cash Used In Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2025 was $14.0 million and consisted of a net loss of $64.3 million plus the net changes in operating assets and liabilities of approximately $4.2 million, partially offset by $54.4 million in non-cash adjustments. The net changes in operating assets and liabilities were primarily due to a $5.6 million reduction in deferred revenues, partially offset by a $1.1 million increase in prepaid expenses and other current assets. The non-cash adjustments were primarily due to a $37.0 million change in the fair value of the warrant liability, as well as a $14.8 million loss on impairment of our IPR&D intangible asset related to the VAC platform.

Net cash used in operating activities was $16.7 million for the nine months ended September 30, 2024, which primarily reflects the loss from operations of $16.4 million plus the changes in operating assets and liabilities of $5.7 million. These items were partially offset by the non-cash expenses of $3.8 million for stock-based compensation and $0.5 million for depreciation and amortization. The foreign currency remeasurement had no effect on cash flows.

Cash Provided by (Used In) Investing Activities

Cash provided by investing activities for the nine months ended September 30, 2025 was $1.9 million and primarily consisted of maturities of U.S. Treasury securities.

Cash used in investing activities for the nine months ended September 30, 2024 was $4.9 million and primarily resulted from the purchase of U.S. Treasury securities, net of proceeds from maturities of U.S. Treasury securities.

Cash Provided by Financing Activities

Cash provided by financing activities for the nine months ended September 30, 2025 was $6.6 million and consisted of net proceeds from the sale of our common shares and warrants in the November 2024 RDO, as well as proceeds from the exercise of options and warrants and proceeds from the sale of common shares under our at-the-market offering program. These cash inflows were partially offset by principal payments for our financed insurance liability and principal payments for our finance lease liabilities.

Cash provided by financing activities for the nine months ended September 30, 2024 was $14.1 million and primarily consisted of net proceeds from the sale of our common shares in our registered direct offering and from the sale of our common shares under our at-the-market offering program.

Financial Obligations

Our financial obligations primarily consist of obligations to our licensors under license agreements, obligations related to grants received from government entities, including the Israel Innovation Authority (“IIA”), obligations under vendor contracts for research services and other purchase commitments with suppliers.

We have received grants under the Innovation Law and are required to pay royalties to the IIA from the revenues generated from the sale of product candidates and related services developed, in whole or in part pursuant to, or as a result of, a research and development program funded by the IIA. Under the Innovation Law, we are also required to pay redemption fees to the IIA. To date, through a series of separate grants beginning in 2007, CCN has received a total of $15.4 million from the IIA to support the OpRegen program. We are obligated to pay approximately 24.1% of any future payments we may receive under the Roche Agreement to the IIA, up to an aggregate cap on all payments to IIA, such cap growing over time via interest accrual until paid in full. As of September 30, 2025, the aggregate cap amount was approximately $96.9 million. Redemption fees due to the IIA under the Innovation Law are due upon receipt of any milestone payments and royalties received under the Roche Agreement. As of September 30, 2025, we have not included any future financial obligations due to the IIA under the Innovation Law in the accompanying unaudited condensed consolidated balance sheet because the achievement and timing of the events that would require future payments to the IIA under the Innovation Law is not fixed and determinable. See Note 13 (Commitments and Contingencies) to our condensed consolidated interim financial statements included in this report for additional information.

Our obligations to licensors under license agreements and to other government entities under the terms of grants we have received require us to make future payments relating to sublicense fees, milestone payments, redemption fees, royalties and patent maintenance costs. Sublicense fees are payable to licensors or government entities when we sublicense underlying intellectual property to third parties; the fees are based on a percentage of the license-related revenue we receive from sublicensees. Milestone payments are due to licensors or government entities upon future achievement of certain commercial, development and regulatory milestones. Royalties are payable to licensors or government entities based on a percentage of net sales of licensed products, including those related to the Roche Agreement. Patent maintenance costs are payable to licensors as reimbursement for the cost of maintaining licensed patents. Due to the contingent nature of the payments, the amounts and timing of payments to licensors under our in-license agreements and to government entities under the terms of grants we have received are uncertain and may fluctuate significantly from period to period. As of September 30, 2025, we have not included these commitments on our condensed consolidated balance sheet because the achievement and timing of these events are not fixed and determinable.

As of September 30, 2025, under the terms of the leases for the facilities from which CCN and Lineage operate, a total of $2.6 million of rent payments will become due, of which $0.3 million will become due in the remainder of 2025.

In the normal course of business, we enter into services agreements with contract research organizations, contract manufacturing organizations and other third parties. Generally, these agreements provide for termination upon notice, with specified amounts due upon termination based on the timing of termination and the terms of the agreement. The amounts and timing of payments under these agreements are uncertain and contingent upon the initiation and completion of the services to be provided.

Future Funding Requirements and Potential Sources

We expect to continue to incur losses for at least the next several years. We expect that our operating expenses will continue to increase for the foreseeable future as we continue the development of, and seek regulatory approval for, our product candidates. As a result, we will need significant additional capital to fund our operations. Our determination as to when we will seek additional capital and the amount of additional capital that we will need will be based on our evaluation of the progress we make in our research and development programs, changes to the scope and focus of those programs, changes in grant funding for certain of those programs, and projection of future costs, revenues, and rates of expenditure. If we are unable to raise additional capital when and as needed, we may be required to delay, postpone, or cancel our clinical trials or limit the number of clinical trial sites.

We may receive up to an additional $36 million in gross proceeds upon the full cash exercise of OpRegen clinical milestone-linked warrants we issued to the investors in the November 2024 RDO, of which we have received $318,500 through September 30, 2025. However, no assurances can be given as to the extent to which additional warrants will be exercised, or if exercised, that they will be exercised on a cash basis. As of September 30, 2025, $38.7 million remained available for sale under our at-the-market offering program. See Note 10 (Shareholders’ Equity) to our condensed consolidated interim financial statements included in this report for additional information regarding our at-the-market offering program.

We may seek to obtain the additional capital we may need through one or more equity offerings, debt financings, government or other grant funding, or other third-party funding transactions, including potential strategic alliances and licensing or collaboration agreements, or structured financings such as royalty monetization transactions. We cannot provide any assurance that adequate additional capital will be available on favorable terms, if at all. The issuance of additional securities, whether equity or debt, or the possibility of such issuance, may cause the market price of our common shares to decline, and the issuance of additional equity securities could result in the dilution of the interests of our current shareholders. If we obtain additional capital through strategic alliances and licensing or collaboration agreements or structured financing, we may be required to relinquish rights to our intellectual property, our product candidates or rights to future revenue streams or otherwise agree to terms unfavorable to us. The unavailability or inadequacy of additional capital to meet future capital needs could force us to modify, curtail, delay, or suspend some or all aspects of our current planned operations. Our ability to raise additional capital may be adversely impacted due to external factors beyond our control, such as unfavorable global economic conditions, disruptions to and volatility in the credit and financial markets in the United States and worldwide, political and economic uncertainty, geopolitical conflicts, rising inflation and interest rates, and other macroeconomic factors.

We believe that our $40.5 million in cash, cash equivalents and marketable securities at September 30, 2025, will be sufficient to fund our planned operations through at least twelve months from the issuance date of our condensed consolidated interim financial statements included elsewhere in this report. We believe we will meet our longer-term expected future cash requirements and obligations with our current cash and cash equivalents, milestone and other payments we expect to receive under our collaboration agreements, and proceeds we receive from sales of our common shares under our at-the-market offering program.

Under SEC rules and regulations, as a smaller reporting company, we are not required to provide the information required by this item.

Evaluation of Disclosure Controls and Procedures

It is management’s responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Exchange Act. Our management, including our principal executive officer and our principal financial officer, reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Following this review and evaluation, management collectively determined that our disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act: (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) is accumulated and communicated to management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

An investment in our common shares involves a high degree of risk. You should carefully consider the risks and uncertainties described in the 2024 10-K, in addition to other information in this report, when evaluating our business and before deciding whether to purchase, hold or sell our common shares. Each of these risks and uncertainties, as well as additional risks and uncertainties 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. Except as described below, there have been no material changes from the risk factors disclosed in Part I, Item 1A. Risk Factors in the 2024 10-K.

No assurances can be given that we will be able to continue to consistently manufacture clinical quantities of our product candidates in accordance with cGMP from a master and working cell bank system, or at a cost-effective or commercially viable scale, for one or more of our product candidates.

We previously completed a cGMP production run of two of our clinical-stage product candidates from a customized two-tiered cGMP cell banking system. However, at this time, no assurances can be given that we will be able to consistently continue to produce production lots in the future in compliance with cGMP or do so at a cost-effective or commercially viable scale. See also the risk factor titled, “The 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. Any failure to manufacture our product candidates in sufficient quantities in accordance with applicable 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,” set forth in “Item 1A. Risk Factors” of our 2024 10-K.