8-K: Lineage Cell Therapeutics Enters At-the-Market Sales Agreement and Provides Regulatory Update

Lineage Cell Therapeutics has entered into a sales agreement with B. Riley Securities for potential at-the-market share offerings and received an update from the FDA regarding its OPC1 clinical study.

Summary

• Lineage Cell Therapeutics has entered into a sales agreement with B. Riley Securities, allowing the company to offer and sell common shares from time to time through the sales agent.
• The company will pay B. Riley Securities a commission of up to 3.0% of the gross proceeds from any share sales.
• Lineage is not obligated to make any sales under this agreement, and the offering will terminate upon the termination of the sales agreement.
• The company has also terminated its previous at-the-market offering agreement with Cantor Fitzgerald & Co., under which it had sold approximately $6.661 million in common shares.
• The FDA has requested that Lineage delay the initiation of its DOSED clinical study for OPC1, an investigational treatment for spinal cord injury, until it provides further feedback, expected by April 26, 2024.
• The FDA has accepted the company's proposal to an initial clinical information request, which does not involve any additional activities that would delay commencement of the DOSED study.
• Lineage still intends to open its first clinical study site for the DOSED study in the second quarter of 2024, as per its previous guidance.

Sentiment

Score: 4

Explanation: The document contains both positive and negative elements. The new sales agreement is a positive, but the FDA delay is a significant negative. The overall sentiment is cautiously negative due to the regulatory uncertainty.

Positives

• Lineage has secured a new sales agreement with B. Riley Securities, providing flexibility for future capital raising.
• The FDA has accepted the company's proposal to an initial clinical information request, which does not involve any additional activities that would delay commencement of the DOSED study.
• The company is still aiming to open its first clinical study site for the DOSED study in the second quarter of 2024.

Negatives

• The FDA has requested a delay in the initiation of the DOSED clinical study for OPC1, which could impact the timeline for the program.
• The company has terminated its previous at-the-market offering agreement with Cantor Fitzgerald & Co., which may indicate a change in financing strategy.

Risks

• The FDA may provide additional feedback or information requests that could further delay the DOSED clinical study.
• The time and resources required to respond to and resolve FDA comments may be greater than anticipated.
• The FDA may not allow the DOSED clinical study to commence at the planned time or at all.
• The company's ability to raise capital through the at-the-market offering is subject to market conditions and demand for its shares.

Future Outlook

The company expects to receive FDA feedback on its DOSED study by April 26, 2024, and still intends to open its first clinical study site in the second quarter of 2024. The company will continue to respond to any additional feedback and/or information requests the FDA may provide.

Industry Context

The announcement reflects the ongoing challenges and regulatory hurdles faced by biotechnology companies in developing novel therapies. The need for capital and the uncertainty of clinical trial timelines are common in this sector. The company is using an at-the-market offering which is a common method for biotech companies to raise capital.

Comparison to Industry Standards

• The use of at-the-market offerings is a common practice for biotech companies to raise capital, especially those with ongoing clinical trials and research expenses. Companies like Athersys and BioTime have also used similar methods to fund their operations.
• The 3% commission to the sales agent is within the typical range for such agreements. For example, similar agreements by other biotech companies have ranged from 2% to 5%.
• The FDA's request for a delay in the DOSED study is not uncommon, as regulatory agencies often require additional information or clarification before approving clinical trials. Other companies such as Brainstorm Cell Therapeutics have experienced similar delays in their clinical programs.
• The termination of the prior sales agreement with Cantor Fitzgerald & Co. and the entry into a new agreement with B. Riley Securities is not unusual, as companies may switch financial partners based on various factors such as better terms or strategic alignment.

Stakeholder Impact

• Shareholders may experience dilution if the company sells shares through the at-the-market offering.
• The delay in the DOSED clinical study may impact the timeline for potential treatment availability for patients with spinal cord injuries.
• Employees may be affected by changes in the company's financial strategy and clinical trial timelines.

Next Steps

• Lineage will respond to any additional feedback and/or information requests from the FDA.
• The company will continue customary trial preparations and related activities to support opening its first clinical study site for the DOSED study.
• Lineage may offer and sell common shares through B. Riley Securities under the new sales agreement.

Key Dates

Keywords

Lineage Cell Therapeutics, at-the-market offering, B. Riley Securities, FDA, OPC1, DOSED study, spinal cord injury, clinical trial, share sales, regulatory approval