Lineage Cell Therapeutics Inc (LCTX) 2019 Q4 法說會逐字稿

Ladies and gentlemen, welcome to the Lineage Therapeutics Fourth Quarter and Full Year 2019 Financial Results Earnings Call. (Operator Instructions)

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 expressed written consent of Lineage are strictly prohibited. As a reminder, today's call is being recorded.

I would now like to introduce your host for today's conference, Ioana Hone, Director of Investor Relations at Lineage. Ms. Hone, you may begin.

Thank you, Howard. Good afternoon and thank you for joining us. A press release reporting our fourth quarter and full year 2019 financial results was issued earlier today, March 12, 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, financing and cost-saving matters. Such statements are subject to significant risks and uncertainties, including those described in our press release issued on March 12, 2020, and our recently filed Form 10-K. 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 our Senior Vice President of Clinical and Medical Affairs, Gary Hogge. The executives will provide prepared remarks, then take questions from analysts and institutional shareholders.

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

Thank you, Ioana. Good afternoon, everyone. We know there are a lot of important things going on right now, so we very much appreciate those of you who were able to join us today for our full year 2019 conference call. I'm first going to review our 2019 activities, then describe some of our plans for 2020, followed by a brief update on each of our clinical programs.

So I'll start off by saying that 2019 was an incredibly important year for us because we decided early in the year that the best path to success would be by focusing on clinical-stage cell therapy opportunities in areas with high unmet need.

Following that path meant that we needed to change many of our historic activities, establish and commit to new priorities and focus our resources far more intensely on product development in dry AMD, spinal cord injury and cancer. We knew that by becoming a more streamlined and focused biotech company, we would be able to offer both our current and future shareholders a compelling investment opportunity, driven by the extraordinary potential of using cell therapy to create a new class of therapeutics. Our overall objective for 2019 was, therefore, to create a strong foundation from which we ultimately could become a successful cell therapy company. And our path is now firmly set on driving forward this new branch of medicine, which is based on transplanting intact cells into the body to restore activity loss to aging, injury or disease.

Our year-long effort to move away from some of our historic initiatives and fully embrace the opportunities associated with the clinical development of cell therapies required us to make significant changes in 3 areas. First, we expanded and diversified our product development pipeline by acquiring 2 additional clinical-stage assets. This also let us move manufacturing for the spinal cord injury program to our GMP facility in Israel, where we had trained staff and available capacity. Second, we sold off or stopped conducting activities that were unrelated to our core mission, or which had diminished in value since their inception. This reduced our headcount by nearly half, cut our anticipated 2020 net operating budget from $25 million to $16 million and focused our priorities on our highest-value product opportunities. And third, we revamped our management team, changing 4 of our 6 senior executives and moved the company's headquarters to the biotech hub of San Diego. We even updated our name to reflect our new mission, which ensured we had the right pool of talent in place, not only for 2019, but also to meet our goals for 2020 and beyond.

Along the way, we demonstrated a strong track record of being able to clearly communicate and deliver on our stated goals. Altogether, these steps have created an efficient organization with an innovative pipeline, advancing through human trials and approaching significant near-term milestones.

I'll add that we were able to complete this organizational transformation without having to conduct any traditional equity offerings, relying instead on our ability to raise cash from our investments in OncoCyte and AgeX, 2 companies which have their origins at Lineage. As of yesterday, these investments represent approximately $13 million of marketable securities and $24 million of incoming note receivable payments, which we expect will be paid to us this August, and which we expect we can use to fund our operations this year and well into 2021. We achieved almost everything we set out to do 1 year ago, and I'm deeply appreciative to our team for all of their hard work for setting us up for an exciting and productive 2020.

Looking ahead, we intend to capitalize on our progress and continue our momentum. Our primary goal for 2020 is to complete enrollment in our ongoing clinical trial of OpRegen for dry AMD and collect the data that will guide our late-stage trial designs and partnership discussions. We also will continue our work to advance the OPC1 program into the next stage of clinical development by introducing enhancements to the manufacturing process, which we expect will greatly enhance its deployment into a late-stage clinical trial, its ease of use for surgeons and ultimately, its commercial launch preparedness for broad patient access.

Lastly, we have significantly increased our interactions with our development partner, Cancer Research UK, on the ongoing Phase I trial of VAC2 in patients with non-small cell lung cancer and we are evaluating whether to exercise our option to acquire the data generated in that trial.

Now before I provide the program summaries, I know many of you may be wondering whether the coronavirus has or could impact our business. And of particular note, the equity markets have been extremely erratic, which can make it difficult for some companies to raise capital. But as I explained, and as Brandi will explain even further in her section, we have access to capital, which allows us to fund our operations well into next year with no changes to our operating plan. So we have plenty of time to assess the situation in the financial markets and act accordingly. As of today, we've not been impacted by the rising number of cases or the growing number for precautions that are being put in place. However, we do monitor the situation closely because we know it is changing quickly. For this reason, we have already considered and adopted some simple mitigation plans as travel restrictions and quarantine procedures have become more widespread. For example, we acted early to procure key reagents and clean-room equipment. Looking ahead, we'll be on the watch for any impact to things like patient enrollment or supply chain disruptions. Overall, we feel comfortable with our financial and operational position and our ability to navigate the most likely virus-related disruptions. But we will, of course, continue to monitor things and adjust intelligently and as needed.

With that review complete, I next will provide an update on each development program before inviting Brandi to review our financials for the fourth quarter and for full year 2019.

I'm going to begin with OpRegen, our product candidate to treat dry AMD, for which there are millions of sufferers, but no FDA-approved therapies. We see OpRegen as the most significant value driver for the company this year, and we expect to provide clinical data updates throughout the year. Our next data update on the OpRegen program was originally scheduled for the ARVO meeting in early May. We learned this morning that the meeting has been canceled, but we still plan to provide an update on OpRegen in that same time frame, so you can continue to look forward to that event.

You've possibly heard me say that we want to combine the best cells, the best production and the best delivery in order to have the best shot at positive clinical outcomes.

I'm going to walk briefly through each of these points to explain exactly what I mean.

First, we believe we have the best cells. We manufacture our retina cells from an NIH-approved pluripotent cell line, to which we have made no genetic modifications. The cell line we use was established more than 20 years ago and has undergone extensive characterization. And because pluripotent cells are self-renewing, if we need more of them, we simply thaw vial and grow these cells, which will continuously double in number through normal cellular division and provide us with what is essentially an unlimited amount of starting material. We have millions of these cells banked away in multiple locations. And from the starting material, we can produce an almost entirely pure population of functionally active RPE cells. We have purity assays which regularly exceed 99%, and our cells go through rigorous sterility, identity and potency testing to ensure they meet our criteria for use in clinical trials.

Second, I believe we have the best cell production capabilities. Our 30-person, highly trained staff in Israel has improved our manufacturing process to the point at which we can now generate 5 billion RPE cells from a single bioreactor, smaller than a 1 gallon milk jug. And because our therapeutic dose is only 100,000 cells, we can make thousands of clinical doses from a single reactor. Obviously, this kind of scale provides some impressive savings in terms of manufacturing costs, but with millions of potential patients in this country alone, we have plans for how we can further increase production. And fortunately, because we're running an almost entirely closed production system, we can run multiple reactors and reduce risks associated with commercial scale-up. However, this isn't even something we need to work on this year because we already have thousands of clinical doses of OpRegen RPE cells frozen away ready for larger studies to begin.

Our third advantage is in having the best delivery system. We entered into a strategic option and license agreement with Gyroscope Therapeutics, under which we have the exclusive right to use their FDA-cleared subretinal delivery system to deliver cells for the treatment of dry AMD. I've described the potential advantages of this device many times, so I will simply reiterate that we believe it will lead to a safer procedure with better dose control and thus, less clinical variability. We've reported on the use of the SDS device in 2 surgeries so far, and it's encouraging that both procedures went well with no serious complications, and in fact, our best-responding patient to date, that's the individual who gained 25 letters above baseline after 6 months of treatment, that individual was dosed using the SDS device and our new Thaw-and-Inject formulation. So we're delighted with the early performance of OpRegen with the SDS device, and we're looking forward to treating more patients. Again, the option on the SDS device is exclusive to Lineage, so no other company can use this device to deliver cells for dry AMD.

We also successfully introduced our new proprietary Thaw-and-Inject formulation with the SDS device. With many other cell therapy approaches, it's necessary to prepare cells for injection the day before use, which is economically, and in some cases, operationally challenging, since not every facility is equipped to handle cells in this way. Our Thaw-and-Inject formulation permits the surgeon to thaw vial of our RPE cells just a few minutes before dosing, which is much more user-friendly and commercially attractive than a complicated and time-consuming dose preparation process.

So that is what we mean when we say we're combining the best cells, best production and best delivery. And to date, we're encouraged by the clinical evidence we've generated in support of our approach. We have preliminary evidence of improved vision, most notably, in our cohort 4 patients, who have less advanced disease and who also more accurately represent our intended patient population. And we have preliminary evidence of improvements in anatomical or structural characteristics of the retina, such as retinal layer thickening or drusen reduction.

All of this is highly encouraging, but it can become significantly more compelling if we're able to reproduce it in additional patients and increase the confidence in our observations. So for this reason, our primary goal this year is to identify eligible patients and enroll them on to this study. And obtaining permission to remove the enrollment stagger and opening 2 new clinical trial sites in the U.S. is entirely consistent with and a reflection of us trying to reach this goal as quickly as we can.

At this time, we anticipate our next data update on OpRegen will be in early May. At that time, we expect to present additional data points from previously treated patients as well as new data from the more recently treated patients. These data will help inform us with ongoing clinical, regulatory and partnership strategies and discussions. We have important decisions ahead, such as the size and design for the next study and whether to enter into a strategic partnership. So we will be collecting and interpreting the forthcoming data and share our decisions as they become available.

Moving next to our OPC1 program for spinal cord injury. We acquired this program in early 2019, and by the fall, we had successfully moved operational control to Lineage and tech-transferred all manufacturing responsibilities to our GMP facility. While this program has generated extremely positive and promising clinical data, the manufacturing process we acquired was not ready to support a late-stage clinical trial. So we immediately went to work to introduce commercially attractive characteristics of the product.

Attributes which we have been working on include things like better control of the production process for increasing consistency, reproducibility and scale-up. These are all things we have already successfully achieved with our OpRegen program, so we are optimistic that in time, we also will be successful introducing these similar features to OPC1. And these are not distant commercial considerations. Some of the enhancements we're working on will have valuable near-term benefits. As one example, in the prior clinical trial of OPC1, cells were shipped to the trauma center 1 day in advance and had to be thawed and processed and resuspended in a clinically acceptable buffer by the on-site technical staff. As I explained a moment ago in the context of OpRegen, this is not something that every facility can even do, which puts a constraint on the number of clinical sites you can open. Now this might not be an impediment for a Phase I study or a pilot study, but it's simply not practical for larger trials. So we're working on developing a Thaw-and-Inject formulation for OPC1, so the surgeon won't need to wait for the cells to be processed, and we won't be limited only to centers with dose-preparation capabilities.

If we are successful with this new formulation, it means we will be able to open more sites and finish enrolling trials sooner, which reduces the cost of those trials. And as a reminder, we were successful doing this for OpRegen, and we're using the same staff in the same facility, so we think we will be equally successful in creating a new Thaw-and-Inject formulation for OPC1.

We also have been exploring some discussions in connection with a new delivery device for OPC1. We made a very wise decision to obtain an exclusive option to the Gyroscope SDS device, and we're now looking at ways we might copy our OpRegen experience and gain exclusive access to a novel and proprietary delivery device for OPC1. We don't have anything specific to announce today, but I wanted to just share this initiative with you because it reflects our commitment to total asset management, which means we don't just make spinal cord cells. We're combining the best available component parts of cells, production and delivery to assemble and provide an optimal treatment regimen. And by analyzing every piece of the overall care proposition, we intend to outmaneuver our competition and position ourselves for long-term success. We've made excellent progress on these OPC1 enhancements, and you can expect that we will begin to share some specific updates next quarter.

Our third clinical-stage program is VAC2. This is our off-the-shelf cancer vaccine comprised of mature dendritic cells, which we manufacture from well-established pluripotent cell lines, just like our retina spinal cord cells. We load these dendritic cells with a tumor-specific marker called an antigen, which is intended to instruct the body's immune system to attack and eliminate cancer cells.

In this way, VAC2 acts like a booster for your immune system by educating your T cells to seek out and destroy cancerous cells. This immuno-oncology program is currently being managed by our partner Cancer Research UK. CR-UK is conducting a Phase I clinical trial of VAC2 patients -- excuse me, of VAC2 in patients with non-small cell lung cancer. Progress on this program was extremely slow when we acquired it last year, but things are moving much better now. And I'm pleased to share that additional patients have been dosed since we last provided an update on this program.

I'd really like to say more about the VAC2 program, but I must explain that CR-UK is solely responsible for this trial. So although we don't have to pay for the data which they are generating, we also cannot control the timing of its release, and for the most part, we're not permitted to discuss data, which we obtain from the collaboration. I can only say that data does get shared with us from time to time. And if it's in our interest to exercise the option to regain control of the VAC2 program, we will do so. However, there are many factors which will go into that decision, and it would not be done without clear and compelling supporting evidence. In particular, we would want to see evidence that some of the patients have developed the intended immune response to our VAC2 antigen. If they do, we believe there will be a compelling reason to exercise the option and expand our efforts in this exciting area of cancer research. And in the meantime, to prepare for the possibility of exercising the option, we have begun a small effort to evaluate a number of clinical development strategies which we might consider for this potentially promising product candidate.

Now although our 3 clinical cell therapy programs are the main drivers for the company currently, we have a number of other important activities ongoing that I want to mention. First, our facial aesthetics product, Renevia, was granted a CE Mark last year, which allows it to be sold in the EU and other territories where the CE Mark is recognized. This approval is further evidence of the strong clinical and regulatory capabilities of the Lineage team. But because we do not have operations in the EU, we have engaged an advisory firm to identify a partner to either launch or further develop Renevia in the European market. That partnership process is ongoing, and we have been able to present the opportunity to some of the leading aesthetics firms. But the European aesthetics market is both competitive and fragmented. So we will continue this process and see what our options are and provide our shareholders with additional information when it becomes available.

Second, late last year, we entered into licensing agreements with 3 separate companies as part of our effort to monetize our extensive intellectual property estate. We also recently hired an in-house IP attorney, which will allow us to better seek out opportunities to take in money by entering into additional license agreements as well as to save money by reducing our patent prosecution costs. And at the same time, we will seek to create new high-value IP positions in areas where we believe there's an opportunity to do so. For example, we recently were granted patents associated with the manufacturing of our unique cell types, which added further layers of protection to all 3 of our programs. We also received additional patent rights describing the use of induced pluripotent stem cells, or iPSCs, an alternate option for generating differentiated cells, further broadening the potential application of our work.

Third, last year, we were awarded more than $3 million in grants from the Israel Innovation Authority and the U.S. National Institutes of Health. We intend to continue to seek nondilutive support for our work from these and other entities, such as the California Institute for Regenerative Medicine, or CIRM, as well as to publish or present papers and abstracts describing our work.

With that, I now will hand things over to Brandi to review our financials and discuss some additional plans for this year.

Thanks, Brian. I'd like to start by reflecting a bit on my first year at Lineage. It was definitely a busy year. As Brian mentioned, we've worked hard to transform the company into a leader in cell therapy. We are extremely focused on moving our clinical programs forward in the most efficient way possible. An important component of driving efficiency was to implement a culture of responsible spending. We took a hard look at everything we spent money on and identified significant cost reductions throughout the year. We decreased our headcount from a high of 105 at the time of the Asterias merger in March 2019 to 52 currently. When we brought on new employees, we looked for people who are ready to roll up their sleeves and get work done. We don't have excessive layers of management in our organization, and I'm proud to say that we have a company full of doers.

We also worked with many of our large service providers to bring down expenses, specifically in the areas of legal, patent support and accounting. In several cases, we've switched to providers that have lower hourly billing rates and comparable services. We've also implemented new processes like international travel guidelines, things that individually don't represent a big spend but when added up can become significant. We also brought activities in-house that were historically outsourced, things like planning for conferences. We have people already on our staff with skill sets that can effectively manage these activities in addition to their day-to-day responsibilities. These types of broad-reaching cost savings initiatives will continue through 2020 while we work to progress our clinical programs.

As Brian mentioned, we brought down our budget for 2020 to a net operational spend of about $16 million based on our current plan. This is a significant decrease from our 2019 spend of $32 million and 2018 combined spend from Asterias and Lineage of $43 million.

In light of the uncertainties around COVID-19, I am glad that we implemented cost savings that will enable us to still conduct our planned operations, even if the financial markets remain volatile for some time. We believe that we can fund our operations with our current cash and cash equivalent position and the Juvenescence note that is due in late August. I'll highlight that we do have the right to review Juvenescence financial statements twice per year, so we have been able to assess their financial stability and ability to pay the note on time and in full, which, as Brian explained earlier, would provide substantial operating cash to support our business.

Now let me get back to 2019 with some highlights of our balance sheet accounts as well as our financial results for the fourth quarter of 2019 and full year 2019.

I'll start with an update on our cash position. We ended 2019 with $30.7 million in cash, cash equivalents and marketable securities. We also have the note receivable due to us from Juvenescence, the value of the note with accrued interest was $23.6 million at December 31, 2019.

During 2019, we raised about $14.3 million by selling a portion of our positions in OncoCyte, AgeX and Hadasit Bio-Holdings. In January 2020, we sold an additional 2.4 million shares of OncoCyte stock for net proceeds of $5 million. Accordingly, all of our remaining investment positions are now less than 10% of those companies' outstanding shares.

Let's turn to the statement of operations for the fourth quarter of 2019. Total revenues for the fourth quarter of 2019 were $1.2 million, an increase of $400,000 as compared to the same period in 2018. Operating expenses include R&D expenses as well as G&A expenses. Total operating expenses for the fourth quarter of 2019 were $8 million, a decrease of $2.8 million compared to the same period in 2018. The decrease was comprised of a $300,000 decrease in R&D expenses and a $2.5 million decrease in G&A expenses. I'm also happy to report that our operating expenses of $8 million for the fourth quarter were almost $900,000 less than our operating expenses for the third quarter. We have worked hard to continuously bring down our spend throughout 2019.

Our loss from operations for the fourth quarter of 2019 was $6.9 million, a reduction of $3.2 million as compared to the same period in 2018. The net loss attributable to Lineage for the fourth quarter of 2019 was $4.5 million or $0.03 per share as compared to $45 million or $0.35 per share for the same period in 2018.

I'll now recap full year 2019. As a reminder, AgeX was included in our operations through August 30, 2018, the date of the AgeX deconsolidation. AgeX activities were no longer incorporated in our financials after that date.

Total revenues for 2019 were $3.5 million, a decrease of $1.5 million as compared to 2018. Total operating expenses for 2019 were $42 million, a decrease of $4.5 million compared to the same period in 2018. The decrease was comprised of a $3.9 million decrease in R&D expenses and a $700,000 decrease in G&A expenses. It should be noted that about $5 million, related to Asterias transaction costs, were included in our 2019 expenses.

Our loss from operations for 2019 was $38.9 million, a reduction of $2.9 million as compared to 2018. And our net loss attributable to Lineage for 2019 was $11.7 million or $0.08 per share as compared to $46 million or $0.36 per share for 2018.

To wrap up, I'll end by saying that I'm happy with the progress we made in 2019. With the funding vehicles we have in hand, we believe we have the ability to support our operations well into 2021. Our focus is now to progress our 3 clinical programs forward to major milestones and drive long-term value for our shareholders.

With that, I'll turn the call back to Brian.

Great. Thanks, Brandi. We're certainly happy with what we have accomplished in 2019. To make 2020 even better, our focus is going to be to accelerate the pace of all of our clinical programs. That means an emphasis on completing enrollment in the OpRegen study. We also expect that 2020 will feature substantial business development activity because we're making greater efforts than before to identify and obtain development support for all of our assets. And we also will be evaluating the option to regain majority ownership and control of the VAC platform for oncology, if the data supports that decision. But again, the most important event in the near term will be our next data update for the OpRegen program, which we plan to provide in early May.

So with that, I'd like to thank everyone for joining us today, and let the operator know that the team here is ready for any questions.

(Operator Instructions) Our first question or comment comes from the line of Joe Pantginis from H.C. Wainwright.

Brian, with your comments on OPC1, I'm just curious with regard to things you might be working on for the new delivery device. So in the past, so obviously, when Geron first started the program, they were pioneers. And then Asterias, they put a lot of work, early work for that matter, into the stereotactic surgery and surgical training of the physicians, et cetera. So I was just curious what kind of major differences or properties you might be looking at as technology has advanced.

Yes. Thanks, Joe. I think pioneering is the correct term. If memory serves, the Geron spinal cord IND was the first cell therapy IND of its kind. What's really notable is from the time that, that IND was filed to today, some of the tools and techniques that we have available at our disposal to control and maintain production and cell type and then think about other aspects like understanding delivery, imaging techniques, we're in just such a much more advanced, and I'd say, a promising place than we were in the past. In particular, for us, one of the things that we would like to do is that we know that having a Thaw-and-Inject formulation will not only open up additional centers to us and allow us to be able to enroll studies faster, but that creates a Thaw-and-Inject formulation that obviates the need for all of that dose preparation. But like many things in the world, it involves some trade-offs. And one of those trade-offs is that there is an upper limit on how concentrated your cells can be in the Thaw-and-Inject formulation. And when you have a less concentrated formulation, it requires more time to administer it.

So what we're really trying to solve for -- the most important thing we're trying to solve for is an ability to deliver the cells while maintaining the patient on the respirator. So when the original SCiStar study was done, the cells were administered, I think, in fewer than 2 minutes. So you could actually disconnect the respirator, you had an immobilized patient, you could administer the cells. You would be doing this with a lot of stress because you're trying not to push the cells in too quickly, but you could get the cells in, in less than 2 minutes, and you're not putting the patient at significant risk. In contrast, if we need what we expect will be more like 4 or 5 minutes to administer the cells, we're going to need the patient to be connected to the respirator. So we're going to get rid of respirator risk, but it means we need more of a floating cannula-type approach. If you can imagine, the needle needs to be able to move up and down with the chest cavity of the patient. So that's one of the real major differences in what we're planning on doing and what was done in the SCiStar study.

That's actually really, really helpful. And then more towards your -- I guess, your strong financial position, especially with Juvenescence coming in, how -- what -- you have your hand -- I'm sorry, you have your hands full with regard to your clinical programs and what have you. But I guess behind the scenes, what are you doing to further boost your non-dilutive funding potential, especially through organizations like CIRM?

So we're going to look everywhere. We've enjoyed tremendous value and, frankly, validation from groups like CIRM, from groups like CR-UK and the Israel Innovation Fund, these are terrific partners for us, and it brings a lot of nondilutive capital. There also are discussions that we're having in areas that are more traditional, right, traditional business development-type activities. And then we have historically been successful with things like grants from the NIH. The aggregate of all of these opportunities are things that we are always interested in because any time we have the opportunity to avoid having to issue Lineage common stock and instead funds through other avenues, as we have for a long time and we hope to continue to do, we feel like that puts the company in a very strong position. If you think about CIRM in particular, they had exhausted the original funding, but they are going back to the voters of California to seek out additional funding. And my understanding is that of the $5 billion that's being requested, approximately $1.5 billion is earmarked for neurological indications. Spinal cord injury would fit into that bucket. So that's one area that if money becomes available, I imagine we would want to apply for some of it. And we probably apply for more money than we receive, but we really like that way of trying to maintain our business.

Our next question or comment comes from the line of Keay Nakae from Chardan.

Brian, with respect to the OpRegen's -- OpRegen patients treated with the Gyroscope device, the first 2. Anything you can tell us about baseline characteristics of the 2 patients that may have been different?

What I'll do, Keay, is I'll hand that question off to Gary, who manages the program. And -- yes.

Yes. Thanks for the question, Keay. So all of our cohort 4 patients have less severe disease than the previous first 3 cohorts, so smaller areas of GA, better vision and a less history of disease. So in particular, the 2 Orbit patients, though, they had to be worse than 20/100 as 2 humans, the Orbit 2.0 version and our OpRegen Thaw-and-Inject. So our safety committee wanted the initial first 2 patients to be worse than 20/100. So the first was 20 -- 20/225 and the second was 20/100. So now given that both of those went well, we can look forward to the full preprotocol, 20/64 to 20/250.

So basically, younger and a little bit healthier.

Okay. And having had the constraint of the staggered enrollment removed, how soon can you get more sites up? And when should we expect the next patients to be treated?

Right. So our first -- we had 2 sites that we've added on: one is Cincinnati Eye Institute and the other will be Wills. Cincinnati Eye Institute has already screened their first subject. The screen window is 8 weeks. So that patient right now is having their images reviewed and their blood work, and we'll see how they go, but hopefully, they'll remain eligible to be the next patient treated. And we hope Wills will start up shortly as well.

Okay. And then just to VAC, VAC2. I know, Brian, you talked about things have picked up a little bit. But in terms of, perhaps, a time frame for you to exercise your option, can you narrow that down a little bit for us? Is that a second half '20? Or is that something that doesn't occur until sometime in 2021?

So again, with respect to what I'm allowed to say, I think we've said that we expect that decision to occur this year. And I don't think I could narrow it but what I would say in terms of process, like how we approach it, there are trade-offs. You could go sooner with less information. You could go later with more information but for us, our view of it is, at some point, there may be a threshold. And if we meet that threshold, meaning we see enough that we feel good about, and we can arrange to exercise an option, that's fantastic. We'd like to do that. So I think what we expect is based on recent acceleration in that program that, that's an assessment or a judgment that we would make this year. It's possible it could be in a subsequent year, but I think we're quite comfortable saying that, that's a 2020 event.

Okay. And then just finally, maybe for Brandi, with respect to the Juvenescence note. What -- under what circumstances would you not be able to capture those funds in Q3 of this year?

Yes. So as I mentioned, we do have the right to review their financial statements. So I get to analyze their cash position and do things like make sure that they have been -- our note on their balance sheet. So those things can be done. But I will note that their note is convertible. And so if an IPO is done by Juvenescence with proceeds of at least $50 million, that note would convert into those Juvenescence securities. So that's kind of what we look at as being one of the things where we might not get cash. We might get securities instead.

Would -- and again, maybe you can't predict this, but if they did an IPO, would there be a lockup period on those shares?

Yes. I mean I think it's fairly typical that there would be a lockup. I think that's a pretty normal thing to have. But obviously, we're in good discussions with Juvenescence. We talk to them on a regular basis, and so if they were going to go public, we would have those discussions with them in advance.

I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to management for any closing remarks.

All right. Thanks, everyone. I really appreciate you joining us this afternoon. We're obviously very excited about our plans. We have a lot to look forward to. We certainly appreciate our shareholder and other folks' support as we position Lineage to become a leader in cell therapy and cell transplant medicine. And we're looking forward to demonstrating what OpRegen can do for people with dry AMD.

Ladies and gentlemen, thank you for -- this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.