Stock-Based Awards

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Awards

11. Stock-Based Awards

Equity Incentive Plan Awards

In September 2021, our shareholders approved the Lineage Cell Therapeutics, Inc. 2021 Equity Incentive Plan, and in September 2023, our shareholders approved an amendment to increase the number of common shares that may be issued thereunder by 19,500,000 (as amended to date, the “2021 Plan”). The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units ("RSUs"), and other stock awards. All of our employees (including those of our affiliates), non-employee directors and consultants are eligible to participate in the 2021 Plan.

Subject to adjustment for certain changes in our capitalization, the aggregate number of our common shares that may be issued under the 2021 Plan will not exceed the sum of (i) 34,500,000 shares and (ii) the number of shares subject to awards granted under the Lineage Cell Therapeutics Inc. 2012 Equity Incentive Plan (the “2012 Plan”) that were outstanding when the 2021 Plan became effective and are not issued because such awards expire or otherwise terminate. As a result of the approval of the 2021 Plan by our shareholders, no additional awards will be granted under the 2012 Plan. As of June 30, 2024, there were 22,238,337 shares available for grant under the 2021 Plan.

A summary of activity under the 2021 Plan is as follows (in thousands, except per share amounts):

	Number of Options Outstanding (in thousands)			Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2023		10,824		$	1.42		8.63	$	4
Options granted		6,028		$	1.12
Options exercised		(20	)	$	1.40
Options expired/forfeited/cancelled		(542	)	$	1.37
Balance at June 30, 2024		16,290		$	1.31		8.65	$	26
Options exercisable at June 30, 2024		4,528		$	1.42		7.7	$	—
Options exercisable and expected to vest      at June 30, 2024		16,290		$	1.31		8.65	$	26

	Number of RSUs Outstanding			Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2023		668		$	1.11
RSUs forfeited		(100	)	$	0.21
RSUs vested		(67	)	$	1.50
Balance at June 30, 2024		501		$	1.24

A summary of activity of the 2012 Plan, and the 2018 inducement option (which was issued to a Lineage executive outside of all equity plans), is as follows (in thousands, except per share amounts):

	Number of Options Outstanding (in thousands)			Weighted Average Exercise Price (per share)
Balance at December 31, 2023		10,839		$	1.83
Options exercised		(254	)	$	0.75
Options expired/forfeited/cancelled		(496	)	$	2.15
Balance at June 30, 2024		10,089		$	1.84
Options exercisable at June 30, 2024		9,415		$	1.80

Stock-Based Compensation Expense

Operating expenses within the condensed consolidated statements of operations include stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	160	$	264	$	304	$	469
General and administrative		1,109		1,016		2,128		1,842
Total stock-based compensation expense	$	1,269	$	1,280	$	2,432	$	2,311

As of June 30, 2024, total unrecognized compensation costs related to unvested stock options and unvested RSUs under all equity plans, was $10.5 million, which is expected to be recognized as expense over a weighted average period of approximately 2.9 years for stock options and 1.6 years for RSUs.

Basic and Diluted Net Income (Loss) per Share Attributable to Common Shareholders

Basic earnings per share is calculated by dividing net income or loss attributable to Lineage common shareholders by the weighted average number of common shares outstanding, net of stock options and RSUs, subject to repurchase by Lineage, if any, during the period. Diluted earnings per share is calculated by dividing the net income or loss attributable to Lineage common shareholders by the weighted average number of common shares outstanding, adjusted for the effects of potentially dilutive common shares issuable under any outstanding stock options, RSUs, warrants (using the treasury-stock method), or convertible preferred stock (using the if-converted method).

For the three and six months ended June 30, 2024 and 2023, Lineage reported a net loss attributable to common shareholders, and therefore, all potentially dilutive common shares were considered antidilutive for those periods.

The following common share equivalents were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive (in thousands):

	Three and Six Months Ended June 30,
	2024		2023
Stock options		26,378		22,846
Restricted stock units		501		759