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Lineage Cell Therapeutics, Inc. (LCTX)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue was $1.408M, down 56% YoY, with operating expenses down 12% YoY; GAAP net loss was $5.760M ($-0.03 EPS) versus $5.229M ($-0.03 EPS) in Q2 2023, driven by lower deferred collaboration revenue recognition under the Roche agreement .
  • Cash, cash equivalents and marketable securities were $38.5M, extending the cash runway to Q4 2025 versus Q1’s Q3 2025, supported by delayed OPC1 device study costs and cost controls .
  • Strategic momentum in OpRegen: Genentech initiated a new services agreement, opened the first ex‑US Phase 2a trial site in Israel, and highlighted strong interest in GA, while 24‑month Phase 1/2a data show BCVA gains and retinal layer preservation after a single administration .
  • Near‑term catalysts: FDA inter‑center (CBER/CDRH) review of OPC1 device IND amendment with a call arranged, potential additional OpRegen updates from Genentech, and ANP1 manufacturing/process data presentation next month; Russell 3000 inclusion may broaden investor awareness .

What Went Well and What Went Wrong

What Went Well

  • Expanded partner engagement: Genentech entered a fully funded services agreement for OpRegen (clinical, training, manufacturing), indicating continued prioritization in Roche’s pipeline; first ex‑US site opened in Israel .
  • Positive OpRegen durability signals: 24‑month Phase 1/2a data showed mean BCVA gain of 5.5 letters (Cohort 4, n=10) and +7.4 letters in patients with improved outer retinal structure; maintenance or increases in ELM/RPE areas observed, suggesting multi‑year effects post single administration .
  • Cash runway extended: $38.5M cash/marketable securities supports operations into Q4 2025; management cited prudent spend and FDA delays deferring trial costs as drivers .
    • Quote: “Our reported cash…$38.5 million…is expected to support plant operations into Q4 2025…primarily due to the delay…with the FDA on the dose trial, along with other smart cost‑saving measures” – CFO Jill Howe .

What Went Wrong

  • Top‑line pressure: Total revenues fell to $1.408M from $3.225M YoY, primarily due to lower recognition of deferred collaboration/licensing under the Roche agreement .
  • Loss widened modestly: Loss from operations increased to $5.867M from $5.024M YoY; GAAP net loss rose to $5.760M from $5.229M YoY despite lower operating expenses .
  • Regulatory timing uncertainty: FDA’s inter‑center review (CBER/CDRH) for the OPC1 delivery device IND amendment caused delays; management cannot provide a timeline, though an FDA team call was arranged .
    • Analyst concern: When will OPC1 enroll and CIRM funding timing? Management noted a rolling/graduated grant process and that CIRM is slowing due to application influx .

Financial Results

P&L Summary and EPS (USD Thousands; EPS in $)

MetricQ4 2023Q1 2024Q2 2024
Total Revenues~$2,100 1,444 1,408
Operating Expenses8,200 8,105 7,275
Loss from Operations(6,400) (6,661) (5,867)
Other Income (Expense), net1,600 103 94
Net Loss Attributable to Lineage(4,800) (6,542) (5,760)
GAAP EPS (Basic/Diluted)$-0.03 $-0.04 $-0.03

Margins (computed from reported values)

MetricQ4 2023Q1 2024Q2 2024
EBIT Margin %(304.8%) (461.3%) (416.7%)
Net Income Margin %(228.6%) (452.9%) (408.5%)

Revenue Breakdown (USD Thousands)

MetricQ1 2024Q2 2024
Collaboration Revenues1,187 1,098
Royalties, License and Other257 310
Total Revenues1,444 1,408

Operating Expense Detail (USD Thousands)

MetricQ1 2024Q2 2024
Research & Development3,010 2,868
General & Administrative4,997 4,363
Total Operating Expenses8,105 7,275

KPIs and Balance Sheet Highlights

MetricQ4 2023Q1 2024Q2 2024
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$35.5 $43.6 $38.5
Deferred Revenues – Current (USD Thousands)10,808 10,106 9,142
Total Shareholders’ Equity (USD Thousands)62,023 70,990 66,875

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash RunwayOperating plan horizonSupport operations into Q3 2025 Support operations into Q4 2025 Extended

Notes: Company does not provide revenue/EPS guidance; qualitative program timing depends on FDA review for OPC1 device study .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
Macro/Capital DisciplineEmphasis on fiscally conservative operations; $14M financing strengthened balance sheet “Biotech sector…unprecedented bear market”; focus on cash optimization and 1–2 priorities Continued caution; disciplined spend
OpRegen Partnership & DataINDa progress; ongoing Phase 2a; 24‑mo durability data highlighted in Q1; new services agreement with Genentech First ex‑US site opened (Israel); Roche Ophthalmology Day: “interest in geographic atrophies remains really strong” Strengthening momentum
OPC1 Device StudyINDa cleared in Feb; targeting device safety/performance; site onboarding prep FDA inter‑center review (CBER/CDRH) causing delays; call arranged; plan to open first site ASAP post feedback Near‑term clarity pending
CIRM FundingPrior grants for SCI symposium CIRM grants slowed due to high applications; expected graduated funding post IND clearance Timing slower, still supportive
Manufacturing PlatformEmphasis on in‑house cGMP; tech transfer barriers/advantages Services agreement includes manufacturing support; Lineage currently manufactures OpRegen clinical material Ongoing leverage of platform
Pipeline (ANP1)UMich PoC; hypoimmune iPSC effort with Eterna Animal functional test ongoing; manufacturing/process data abstract accepted for next month Advancing preclinical proof points
Investor AwarenessRussell 3000 index inclusion Continuing inclusion cited as awareness/liquidity support Incremental positive

Management Commentary

  • CEO on macro discipline: “It’s critical…to manage cash wisely, to focus only on 1 or 2 priorities…Our staged and measured approach, coupled with fiscal discipline, has ensured we’ve weathered multiple years…better than many peers” .
  • On OpRegen trial and signals: “We are happy to announce…first ex‑US clinical site…in Israel…we are encouraged that…statements from our partners continue to confirm their strong focus in geographic atrophy” .
  • On FDA process for OPC1 device: “FDA advised…review was complicated by inter‑center review…unable to provide a timeline…a call…is being arranged…we’re hopeful to have a positive update soon” .
  • CFO on runway: “$38.5 million…as of June 30, 2024…expected to support…into Q4 2025…primarily due to the delay…with the FDA…along with other smart cost‑saving measures” .
  • Strategic framing: “We believe the far more exciting…opportunity for cell therapy lies…in using the appropriate cell type in…non‑oncology indications…” .

Q&A Highlights

  • Genentech services agreement scope: Management highlighted added 5‑year follow‑up for Phase 1/2a patients and manufacturing/tech transfer support; compensation for services noted, consistent with partner enthusiasm .
  • Milestones and cash: $620M potential milestones remain undisclosed by trigger; runway guidance excludes milestone assumptions to remain conservative .
  • OPC1 enrollment: Chronic patients likely easier to identify than sub‑acute; outreach will leverage SCI community, social media; primary safety endpoint at 30 days .
  • CIRM grant: Typically ~half of study costs can be covered; graduated disbursement and slowed application processing noted .
  • Data disclosure cadence: 36‑month OpRegen data timing controlled by Roche/Genentech; prior behavior suggests eventual disclosure .

Estimates Context

  • S&P Global consensus EPS and revenue for Q2 2024 could not be retrieved at the time of analysis due to API limits; as such, we cannot formally assess beat/miss versus Street estimates. If coverage is sparse, investors should assume limited consensus and rely on reported GAAP metrics and partner program milestones for near‑term stock drivers. Values retrieved from S&P Global.*

Where estimates may adjust:

  • Lower recognized collaboration/licensing revenue and decreased R&D spend suggest Street may revise revenue models to reflect deferred revenue timing and OpEx trajectory; extended runway to Q4 2025 may reduce financing overhang assumptions .

Key Takeaways for Investors

  • Near‑term stock drivers: Additional OpRegen program signals from Genentech (site activations, public data updates) and FDA clarity on OPC1 device study are likely catalysts; Russell 3000 inclusion supports liquidity/awareness .
  • Execution despite macro: Cash runway extended to Q4 2025 enables focus on OpRegen support and OPC1 device study preparation without near‑term financing pressure .
  • Differentiated clinical profile: 24‑month BCVA gains and retinal layer preservation after a single transplant provide a compelling contrast to anti‑complement therapies that slow GA progression but do not improve vision .
  • Partnership validation: Genentech’s funded services agreement and ex‑US site opening point to continued prioritization of OpRegen within Roche’s ophthalmology portfolio .
  • Risk management: Revenue volatility from deferred collaboration recognition and FDA review timing for OPC1 device remain key uncertainties; monitor regulatory updates and partner communications closely .
  • Medium‑term thesis: If OpRegen delivers durable functional/anatomical benefits, scale‑up and tech transfer can underpin a commercially viable profile; Lineage’s in‑house cGMP capabilities are a strategic asset .
  • Pipeline optionality: ANP1 preclinical data and hypoimmune iPSC progress expand optionality; modest, disciplined investment balances upside against macro constraints .
Citations: 
Q2 2024 8-K and Exhibit 99.1 press release: **[876343_0000950170-24-093947_lctx-ex99_1.htm:0]** **[876343_0000950170-24-093947_lctx-ex99_1.htm:1]** **[876343_0000950170-24-093947_lctx-ex99_1.htm:2]** **[876343_0000950170-24-093947_lctx-ex99_1.htm:5]** **[876343_0000950170-24-093947_lctx-ex99_1.htm:6]** **[876343_0000950170-24-093947_lctx-ex99_1.htm:7]**
Q2 2024 earnings call: **[876343_LCTX_3398242_1]** **[876343_LCTX_3398242_2]** **[876343_LCTX_3398242_3]** **[876343_LCTX_3398242_4]** **[876343_LCTX_3398242_5]** **[876343_LCTX_3398242_6]** **[876343_LCTX_3398242_7]** **[876343_LCTX_3398242_8]** **[876343_LCTX_3398242_9]** **[876343_LCTX_3398242_10]** **[876343_LCTX_3398242_11]** **[876343_LCTX_3398242_12]** **[876343_LCTX_3398242_14]** **[876343_LCTX_3398242_15]** **[876343_LCTX_3398242_16]** **[876343_LCTX_3398242_17]**
Q2 2024 standalone press release: **[876343_f03fcaa81ec34bfba516138ba5e91eec_0]** **[876343_f03fcaa81ec34bfba516138ba5e91eec_1]** **[876343_f03fcaa81ec34bfba516138ba5e91eec_2]** **[876343_f03fcaa81ec34bfba516138ba5e91eec_3]** **[876343_f03fcaa81ec34bfba516138ba5e91eec_6]** **[876343_f03fcaa81ec34bfba516138ba5e91eec_7]** **[876343_f03fcaa81ec34bfba516138ba5e91eec_8]**
Q1 2024 8-K: **[876343_0000950170-24-056948_lctx-ex99_1.htm:1]** **[876343_0000950170-24-056948_lctx-ex99_1.htm:2]** **[876343_0000950170-24-056948_lctx-ex99_1.htm:5]**
Q1 2024 earnings call: **[876343_LCTX_3388125_2]** **[876343_LCTX_3388125_3]** **[876343_LCTX_3388125_5]** **[876343_LCTX_3388125_7]** **[876343_LCTX_3388125_10]** **[876343_LCTX_3388125_11]**
Q4 2023 8-K: **[876343_0000950170-24-027951_lctx-ex99_1.htm:0]** **[876343_0000950170-24-027951_lctx-ex99_1.htm:1]** **[876343_0000950170-24-027951_lctx-ex99_1.htm:5]**
Russell 3000 press release: **[876343_fed4b2c0574549518d30f1cff0d773c0_0]**