Lineage Cell Therapeutics, Inc. Revenue Disclosure

3. Revenue

Our revenue is primarily generated from our collaborative research and development agreements as well as royalty and other service agreement revenues.

Collaboration revenues

The following paragraphs provide information regarding the accounting treatment of the Company’s most significant collaborative agreements, which are all within the scope of ASU 2014-09 – Revenue from Contracts with Customers (Topic 606).

For our collaboration agreements where revenue is recognized over time, an input method of costs incurred over total estimated costs to be incurred is used to measure progress toward completion of the performance obligation and to calculate the corresponding revenue to recognize each period. During each reporting period, we update our total estimated collaboration costs, and any resulting adjustments are recorded on a cumulative basis, which would affect revenue and deferred revenue (the latter, if applicable) in the period of adjustment. For our collaboration agreements where revenue is recognized over time, we believe the input methodology represents the most appropriate measure of progress towards satisfaction of the identified performance obligation.

Roche Agreement - From the inception of the December 2021 Roche Agreement through the quarter ending September 30, 2025 the total transaction price was equal to the $50.0 million upfront payment received and was allocated among two performance obligations. The license, technology transfer and related clinical deliverables were determined to be highly interdependent and interrelated and were combined as the first performance obligation. Delivery related to the first performance obligation is determined to be over time using the input methodology which we believe represents the most appropriate measure of progress towards satisfaction of the identified performance obligation. A material customer option for additional goods and services was included in this initial total transaction price, of which $12.0 million was allocated to a second performance obligation. This customer option will be recognized as revenue, as appropriate, when the customer exercises the option or when this option expires. Regulatory and development milestones within the agreement are variable considerations that are fully constrained until the uncertainty of each milestone has been resolved. Sales-based milestones and royalties are variable considerations that will not be included in the transaction price until the related commercialization milestones and sales targets have occurred.

In the fourth quarter of 2025, the achievement of the first milestone under the agreement in the amount of $5.0 million resulted in a corresponding increase in the transaction price for the first performance obligation. Revenue recognized during 2025 from performance obligations satisfied in prior periods was $3.9 million, driven by the $5.0 million change in the transaction price. There were no further changes to the transaction price in the current year. See Note 13 (Commitments and Contingencies) for additional information.

WDI Agreement - In August 2025, the Company entered into a multi-year, multi-phase research collaboration agreement (the RCA) with WDI. During the RCA period, the parties will perform preclinical development activities to support a potential IND and/or clinical trial application (CTA) filing related to the Company’s ReSonance (ANP1) program, for the treatment of hearing loss. The preclinical research activities assigned to Lineage were determined to be highly interdependent and interrelated and have been combined as one performance obligation. Delivery is determined to be overtime and revenue will be recognized utilizing an input method of costs incurred over total estimated costs to complete the performance obligation. We believe the input methodology represents the most appropriate measure of progress towards satisfaction of the identified performance obligation.

The initial transaction price for the RCA of $3.6 million includes a non-refundable upfront payment and variable consideration attributed to cost reimbursement for Lineage’s costs incurred during the first phase of the research program. Based on the billing and payment terms of the arrangement, the Company’s actual costs will be known each period and therefore the variable consideration will be recognized as revenue as these costs are incurred as there is no estimation uncertainty at such time. Additional variable consideration related to the second and third phase of the research program are excluded from the initial transaction price until the uncertainty of progressing into these phases is resolved. As of December 31, 2025, the Company recognized $2.5 million from partial satisfaction of its first phase of the single performance obligation. See Note 13 (Commitments and Contingencies) for additional information.

Royalties, license and other revenues

Revenues from royalties, licenses and service agreements are recognized as revenue in the period earned and are generated from royalty and service agreements. Costs related to royalties are included within costs of royalties and costs from service agreements are included within research and development expenses in our consolidated statements of operations.

For contracts with customers, including collaboration partners which are within the scope of ASU 2014-09 – Revenue from Contracts with Customers (Topic 606), the aggregate amount of the transaction price allocated to remaining performance obligations as of December 31, 2025 was $18.4 million, of which $15.7 million is reported as deferred revenues. The $18.4 million is estimated to be substantially recognized as revenue by December 2027.

For the year ended December 31, 2025 based on the location of our customers, $2.5 million of our revenues were attributed to countries outside of the United States. For the year ended December 31, 2024, there were no revenues generated outside of the United States.

Contract assets, which consist of revenue recognized and performance obligations satisfied or partially satisfied in advance of customer billing were $671,000 and zero as of December 31, 2025 and 2024, respectively, and was included within prepaid expenses and other current assets on the consolidated balance sheet. There were no contract assets at the beginning of the twelve months ending December 31, 2025 or 2024.