OpRegen Licensing and Collaboration With Genentech Announced. Lineage Cell and Genentech/Roche (RHHBY, $50.89, Not Rated) announced a licensing agreement covering OpRegen, the retinal pigment epithelial (RPE) cell transplant currently in Phase 1/2a development. Under the agreement Genentech will assume responsibilities and expenses for developing OpRegen through commercialization in exchange for $50 million in upfront payments, $620 million in milestones, and royalties on sales.Financial Terms Include $50 Million in Up-Front Payments Plus $620 Million in Milestones and Sales Royalties. The agreement includes an up-front signing fee of $50 million plus undisclosed milestone payments of up to $620 million, and double-digit royalties on sales. Lineage Cell is obligated to make payments to the originators of the technology, which we estimate to be about $22 million, for net proceeds of about $28 million.Genentech Will Be Responsible For Phase 2 Clinical Development. Lineage will be responsible for completing current Phase 1/2a study and continuing manufacturing and process development. Genentech will take over Phase 2 clinical development through commercialization, with manufacturing technology transfers. We believe OpRegen is an excellent fit with Genentech's prior experience with Lucentis (ranibizumab, for wet AMD), its ophthalmology programs, and its customer base.Lineage Cell Will Focus On Developing Pipeline Products The OpRegen agreement transfers the clinical development and associated expenses to Genentech. We expect the company to increase its focus on moving preclinical product to clinical trials and increase development of its pipeline products. A conference call is planned for January 2022 to discuss products and strategy.Conclusion. The collaboration with Genentech transfers the OpRegen program to a global pharmaceutical company with the financial and technical resources to take OpRegen through clinical trials. We are reiterating our Outperform rating and $8 price target. Read More >>