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Item
1.01.
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Entry
into a Material Definitive Agreement.
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On
December 17, 2021, Lineage Cell Therapeutics, Inc. and its subsidiary, Cell Cure Neurosciences Ltd. (“Cell Cure” and collectively,
“Lineage”) entered into a Collaboration and License Agreement (the “Agreement”) with F. Hoffmann-La Roche Ltd
and Genentech, Inc., a member of the Roche Group (collectively, “Roche”), wherein Lineage granted to Roche exclusive worldwide
rights to develop and commercialize retinal pigment epithelium (“RPE cells”) cell therapies, including its proprietary cell
therapy known as OpRegen®, for the treatment of ocular disorders, including advanced dry age-related macular degeneration with geographic
atrophy.
Under
the terms of the Agreement, Roche will assume responsibility for further clinical development and commercialization of OpRegen®,
which currently is being evaluated in a Phase 1/2a open-label, dose escalation clinical safety and efficacy study in patients with advanced
dry age-related macular degeneration with geographic atrophy. Lineage will be responsible for completing activities related to the ongoing
clinical study, for which enrollment is complete, and performing certain manufacturing and process development activities.
Roche
will pay Lineage a $50 million upfront payment and Lineage is eligible to receive up to an additional $620 million in certain developmental,
regulatory and commercialization milestone payments. Lineage is also eligible for tiered double-digit percentage royalties on net sales
of OpRegen. All regulatory and commercial milestone payments, and royalty payments, are subject to the existence of certain intellectual
property rights that cover OpRegen at the time such payments would otherwise become due, and the royalties on net sales of OpRegen are
subject to financial offsets based on the existence of competing products.
The
OpRegen program has been supported in part with contributions made by Hadasit Medical Research Services and Development Ltd. (“Hadasit”),
the technology transfer company of Hadassah Medical Center, and the Israeli Innovation Authority (the “IIA”), an independent
agency created to address the needs of global innovation ecosystems. A significant portion of early development on the OpRegen program
occurred at Cell Cure, which is a 99%-owned subsidiary of Lineage. Cell Cure was established by the Hadassah Medical Center, where the
intellectual property underlying the differentiation and manufacture of RPE cells originated. In addition, significant monetary support
for the OpRegen program was provided by the IIA through a series of separate research grants, beginning in 2007. Each of these parties’
contributions began when the OpRegen program was in its earliest stages of development. As a result, and subject to the terms of contracts
among the applicable parties, Lineage is obligated to pay Hadasit and the IIA a portion of the upfront, milestone, and royalty payments
which may be received from Roche under the Agreement. Lineage is obligated to pay approximately 24.3% of the upfront payment and any
milestone payments, and 3% of all royalty payments it receives from Roche to the IIA, up to an aggregate cap on all payments to IIA of
approximately $103 million.
In
addition, pursuant to that certain Second Amended and Restated License Agreement, dated June 15, 2017, between Cell Cure and Hadasit,
as amended, and a certain letter agreement entered into on December 17, 2021, by and between Cell Cure and Hadasit, Cell Cure is obligated
to pay to Hadasit a maximum of 21.5% of the upfront payment (subject to certain reductions) and any milestone payments, and up to 50%
of all royalty payments (subject to a maximum payment of 5% of net sales of products), Lineage receives from Roche. The letter agreement
generally terminates upon the termination of the Agreement.
Unless
earlier terminated by either party, the Agreement will expire on a product-by-product and country-by-country basis upon the expiration
of all of Roche’s payment obligations under the Agreement. Roche may terminate the Agreement in its entirety, or on a product-by-product
or country-by-country basis, at any time with advance written notice. Either party may terminate the Agreement in its entirety with written
notice for the other party’s material breach if such party fails to cure the breach. Either party also may terminate the Agreement
in its entirety upon certain insolvency events involving the other party.
The
representations, warranties and covenants contained in the Agreement were made only for the purposes of the Agreement, were made as of
specific dates, were made solely for the benefit of the parties to the Agreement and may not have been intended to be statements of fact,
but rather, as a method of allocating risk and governing the rights and relationships among the parties to the Agreement. In addition,
such representations, warranties and covenants may have been qualified by certain disclosures not reflected in the text of the Agreement
and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be viewed as
material by Lineage’s shareholders. In reviewing the representations, warranties and covenants contained in the Agreement, it is
important to bear in mind that such representations, warranties and covenants were not intended by the parties to the Agreement to be
characterizations of the actual state of facts or conditions of Lineage or OpRegen®. Moreover, information concerning the subject
matter of the representations and warranties may change after the date of the Agreement, which subsequent information may or may not
be fully reflected in public disclosures. For the foregoing reasons, the representations, warranties and covenants in the Agreement should
not be read alone and should instead be read in conjunction with the other information contained in the reports, statements and filings
that Lineage publicly files with the U.S. Securities and Exchange Commission.