Operational Milestone #A

We have been able to make tremendous progress on our AST-OPC1 program since the initiation of the CIRM grant in October, 2014.

In February 2016, the FDA granted Orphan Drug Designation for AST-OPC1. Orphan Drug designation is a special status that the FDA may grant a drug intended to treat a rare disease or condition. Orphan Drug Designation qualifies the sponsor of the drug for certain benefits and incentives, including seven years of marketing exclusivity following regulatory approval, and financial incentives such as potential tax credits for certain activities and waiver of certain administrative fees.

We have also made significant process in the conduct of our clinical study and in process development efforts. We completed enrollment of the first cohort in our clinical study (The SCiStar study). This clinical study will test three sequential escalating doses of AST-OPC1 administered at up to 20 million AST-OPC1 cells in patients with sub-acute, C-5 to C-7, neurologically complete cervical spinal cord injuries (SCI). These individuals have essentially lost all sensation and movement below their injury site with severe paralysis of the upper and lower limbs. AST-OPC1 will be administered 14 to 30 days post-injury and patients will be followed by neurological exams and imaging methods to assess the safety and activity of the product. Additional information on the Phase 1/2a study, including trial sites, can be found at www.clinicaltrials.gov, using Identifier NCT02302157, and at the SCiStar Study Website (www.scistar-study.com).

At 3 months post-injection the first patient in the first cohort had demonstrated neurological improvement progressing from a complete ASIA Impairment Scale (AIS) A injury to an incomplete AIS C injury. Recruitment is currently underway in the second cohort of the study, in which five patients will be administered a dose of 10 million AST-OPC1 cells, the first of two dose cohorts designed to bracket the predicted optimal dose range of AST-OPC1 based on the preclinical studies.

We also continue to make progress on improving the process for AST-OPC1 manufacture as well as determining additional cellular markers which correlate with potency and the presence of undesired populations of cells. Our focus for process development continues to be identifying a process which is robust and consistently provides high-quality AST-OPC1.