What Lineage Cell Therapeutics (LCTX) Said on Its Q3 Earnings Call

Key Points

• Lineage acquired NeuroAirmid Therapeutics, adding HUNT1, an experimental cell therapy for Huntington’s disease. Six patients have received it in an early-stage trial, with no serious adverse events reported; the study is primarily designed to assess safety.
• The acquisition shortened Lineage’s projected cash runway by one quarter, to Q2 2028. The company ended September with $45.2 million in cash, equivalents and marketable securities, and expects HUNT1 clinical costs to be under $2 million annually.
• Q3 operating performance weakened: revenue fell to about $1.5 million from $3.7 million, while the operating loss widened to $7.3 million from $3.8 million. Lineage reported net income of $4.2 million, largely due to a noncash warrant-liability remeasurement.

Lineage Cell Therapeutics NYSEAMERICAN: LCTX has acquired privately held NeuroAirmid Therapeutics, adding an experimental Huntington’s disease cell therapy to its clinical pipeline as the company reported a wider third-quarter operating loss.

The acquisition gives Lineage rights to HUNT1, formerly known as hNSC01, which is being evaluated in an early-stage clinical trial. Six patients have received the therapy, and no serious adverse events have been reported to date, Priyantha Herath, Lineage’s senior vice president and head of clinical, said on the company’s Nov. 12 earnings call.

Chief Financial Officer Jill Howe said the transaction shortened Lineage’s projected cash runway by one quarter, to the second quarter of 2028. The company ended September with $45.2 million in cash, cash equivalents and marketable securities.

Huntington’s Therapy Enters Lineage’s Pipeline

HUNT1 is an allogeneic neural progenitor cell therapy administered directly into the striatum, a brain region affected by Huntington’s disease. Herath said the approach is intended both to replace lost neurons and to support surviving cells through the production of growth factors.

The ongoing REGEN4HD study, sponsored by the University of California, Irvine, is primarily designed to assess safety. Its Phase 1b portion calls for four groups of three patients each, with doses rising from 2 million to 16 million cells. The planned Phase 2a portion would add nine patients, for a total of 21.

The trial will also explore clinical measures, imaging and biomarkers for potential signs of treatment activity. Herath cautioned that the study is focused on safety, though the company is looking for early efficacy signals.

Chief Executive Officer Brian Culley said Lineage has more access to information on HUNT1 than it does on OpRegen, its partnered eye-disease program, but does not necessarily control the timing of disclosures from the UC Irvine-run study.

Lineage already held commercial development rights to the cell line underlying HUNT1, Culley said. The company plans to take responsibility for manufacturing and process development and to assume clinical development after the current study. Existing material is sufficient for the 21-patient trial, he said, although a future manufacturing process will require bridging or comparability testing.

Deal Terms and Third-Quarter Results

At closing, Lineage paid NeuroAirmid shareholders $2.4 million in cash and issued approximately 2.2 million shares valued at $2.1 million. It also paid $1.9 million in cash to third parties, bringing total initial external cash payments to about $4.3 million, Howe said.

On the first anniversary of closing, Lineage expects to pay shareholders up to approximately $2.6 million in cash and $2.4 million in shares, plus $356,000 in cash to the California Institute for Regenerative Medicine, or CIRM. Further payments to shareholders depend on clinical progress and can be paid half in stock at Lineage’s election.

Howe said a $12 million CIRM grant to UC Irvine is funding the current trial. Lineage expects its clinical costs for HUNT1 to be less than $2 million annually, including an obligation to co-fund up to $3.1 million of the grant.

For the third quarter, revenue fell to approximately $1.5 million from $3.7 million a year earlier, primarily because of lower collaboration revenue from the Roche and William Demant Invest agreements. Operating expenses rose to $8.8 million from $7.5 million, and the operating loss widened to $7.3 million from $3.8 million.

Lineage reported net income of $4.2 million, compared with a $28 million net loss a year earlier. Howe said the change was primarily driven by a noncash remeasurement of the company’s warrant liability. The company reported basic earnings of 2 cents per share and a diluted loss of 3 cents per share.

Updates Across Other Programs

OpRegen remains under evaluation by Genentech in the Phase 2a GAlette study for geographic atrophy secondary to age-related macular degeneration. Culley said he could not provide guidance on the partner’s timing for further development, but confirmed that multiple batches of clinical material had been produced, released and shipped to Genentech.

For OPC1, Lineage continues to enroll patients in the DOSED study of a delivery device. Culley said the third patient, who has a chronic injury, was scheduled for surgery in December, and the company expects a fourth patient to be dosed in the first quarter of 2027. No unexpected procedural, product or device-related adverse events have been reported among patients treated with the device to date, he said.

Lineage also expects to share initial preclinical data for COR1, its corneal cell program, in the first quarter of 2027. For ILT1, its type 1 diabetes program, Culley said researchers had produced islet cell precursors using the company’s 5D manufacturing system; further work would seek to develop those precursors into islet cells.

Separately, Lineage and William Demant Invest agreed to advance their research collaboration on the ReSonance hearing-loss program into a second year. A scientific advice meeting with the Danish Medicines Agency is scheduled for December, Culley said.

About Lineage Cell Therapeutics (NYSEAMERICAN:LCTX)

Lineage Cell Therapeutics is a biotechnology company developing cell-based therapies for serious medical conditions. The company uses its cell therapy platform to create and manufacture specialized human cells intended to replace or support damaged cells and tissues. Its programs include OpRegen, a retinal pigment epithelial cell therapy being developed for retinal diseases; OPC1, an oligodendrocyte progenitor cell therapy for spinal cord injury; ANP1, an auditory neuron progenitor cell program for hearing loss; and VAC2, a cell-based cancer immunotherapy.

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