Fate Therapeutics Inc Q2 FY2020 Earnings Call

Welcome to Fate Therapeutics Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investors and Media section of Fate's website at fatetherapeutics.com. As a reminder, today's call is being recorded. I would now like to introduce Scott Wolchko, President and CEO of Fate Therapeutics. You may begin.

Thank you. Good afternoon, and thanks everyone for joining us for the Fate Therapeutics second quarter 2020 financial results call. Shortly after 4:00 P.M. Eastern Time today, we issued a press release with these results, which can be found on the Investors and Media section of our website under Press Releases. In addition, our Form 10-Q for the quarter ended June 30, 2020 was filed shortly thereafter and can be found on the Investors and Media section of our website under Financial Information. Before we begin, I'd like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Please see the forward-looking statement disclaimer on the company's earnings press release issued after the close of market today as well as the risk factors in the company's SEC filings included in our Form 10-Q for the quarter ended June 30, 2020 that was filed with the SEC today. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made, as the facts and circumstances underlying these forward-looking statements may change. Except as required by law, Fate Therapeutics disclaims any obligation to update these forward-looking statements to reflect future information, events or circumstances. Joining me on today's call are Dr. Dan Shoemaker, our Chief Scientific Officer; Dr. Bob Valamehr, our Chief Development Officer; and Dr. Wayne Chu, our Senior Vice President of Clinical Development. Today, I will provide an update on our business operations as we continue to navigate through the COVID-19 pandemic and highlight certain key accomplishments we achieved over the past several months that underscore the unparalleled advantages afforded by our proprietary iPSC product platform and our unique ability to bring multiplex, engineered cell-based cancer immunotherapies to patients. In response to the COVID-19 pandemic, over the last several months, we have implemented and expanded numerous measures to protect the health and safety of our employees, their families and the extended community, while continuing to operate our business. Through the commitment, resilience and compliance of our employees, we continue to maintain strong execution and a rapid pace of innovation. And we have achieved several important milestones, including treating the first patients with FT596, our off-the-shelf multi-antigen targeted CAR19 NK cell product candidate for B-cell malignancies, clearing our IND applications with the FDA for FT538, the first-ever CRISPR-edited, iPSC-derived Cell Therapy as well as for FT819, the first-ever iPSC-derived CAR-T cell therapy. And we're informing and launching a transformative partnership with Janssen, bringing together our industry-leading iPSC product platform with Janssen's proprietary tumor targeting antigen binders to develop novel off-the-shelf CAR NK and CAR T-cell immunotherapies for both hematologic malignancies and solid tumors. We have also continued to leverage the significant advantages that come with controlling our own in-house GMP manufacturing operation. As we produced hundreds of cryopreserved infusion-ready doses of our product candidates, which are now stored in inventory and are available off-the-shelf for use in our clinical studies. And although the COVID-19 pandemic has slowed the cadence of new clinical site initiation and patient enrollment, introducing some uncertainty with respect to our projected timelines for study enrollment and data readouts, we have successfully opened new clinical sites and initiated enrollment at these new sites during the past quarter. In March, the first patient was treated in our multi-center Phase 1 clinical trial of FT596, our off-the-shelf iPS-derived CAR NK cell product candidate for patients with B-cell malignancies. FT596 is our first product candidate that fully leverages the unparalleled advantages afforded by our proprietary iPSC product platform, made from a multiplexed engineered clonal master iPSC cell line. FT596 is the industry's first cellular immunotherapy that incorporates three active anti-tumor modalities and is currently designed to target multiple tumor-associated antigens expressed on cancerous B cells for best-in-class potential. In addition to a proprietary CAR targeting CD19, FT596 expresses our novel, high-affinity, non-cleavable CD16 Fc receptor, enabling targeting of additional tumor-associated antigens, such as CD20. FT596 also expresses a novel IL-15 receptor fusion, a potent cytokine complex that promotes the survival, proliferation, and transactivation of NK cells and CD8 T cells, eliminating the need for systemic cytokine support. Early indications of best-in-class potential of FT596 were observed at the lowest dose level in our Phase 1 clinical study, where we reported the day 29 response assessments for the first two patients, each of which was treated with a single dose of FT596 as a monotherapy for relapsed/refractory diffuse large B-cell lymphoma. Not unexpectedly, the first patient, who was most recently relapsed following treatment with an FDA-approved CD19 targeting CAR-T cell therapy, had progressive disease. The second patient, however, achieved a partial response following treatment with a single dose of FT596 as a monotherapy at the low dose level of 30 million cells. The FT596 response assessment showed a greater than 70% reduction in metabolic activity and a greater than 50% reduction in tumor size as assessed by PET-CT scan. Notably, the responding patient was most recently refractory to an ex vivo expanded, healthy donor-derived, peripheral blood NK cell therapy. Importantly, no dose-limiting toxicities, no FT596 related serious adverse events and no events of cytokine release syndrome, neurotoxicity, or graft-versus-host disease were reported by investigators in either patient. I am pleased to announce that the third patient has been treated with FT596 at the lowest dose level in our Phase 1 clinical study, and that the patient successfully cleared the dose-limiting toxicity assessment period. This event is significant as it enabled us to initiate enrollment of patients in a second treatment regimen of our Phase 1 clinical study, the assessment of FT596 in combination with the anti-CD20 monoclonal antibody rituximab. Recall that in the universe of CAR19 cell-based cancer immunotherapies, FT596 offers unique therapeutic potential as the product candidate's engineered CD16Fc receptor is specifically designed to augment the anti-tumor activity of monoclonal antibody therapy. Therefore, FT596 not only has the potential to improve the therapeutic activity of rituximab, it enables dual antigen targeting of CD19 and CD20 expressed on cancerous B-cells. We believe combining FT596 with rituximab is a highly differentiated therapeutic strategy, one that may lead to deeper, more durable responses for patients and one that may enable FT596 to be positioned in early lines of therapy where rituximab-containing regimens are used as a standard of care for the treatment of B-cell malignancies. Enrollment into this dose-escalating combination regimen of FT596 and rituximab has been initiated at 30 million cells for patients with relapsed/refractory B-cell lymphoma. In addition, we are working with investigators from the Masonic Cancer Center University of Minnesota to initiate enrollment in a second Phase 1 clinical trial of FT596 for relapse prevention in patients undergoing autologous hematopoietic stem cell transplant for the treatment of non-Hodgkin's lymphoma who are at high risk of early relapse. In the second quarter, we successfully expanded the clinical application of our proprietary iPSC product platform to multiple myeloma, where rates of relapse remain high and where clinical data suggests that deficiencies in NK cell-mediated immunity, which are evident even at the earliest stages of disease, continue to accumulate through disease progression. We submitted and cleared with the FDA our IND application for FT538, our off-the-shelf NK cell product candidate derived from a clonal master iPSC line engineered with three functional components to enhance innate immunity: a novel CD16 Fc receptor, an IL-15 receptor fusion, and the elimination of CD38 expression to mitigate anti-CD38 antibody-mediated fracture side effects. We believe the administration of FT538 to patients can restore innate immunity, and that the anti-cancer effect of certain standard of care treatments in multiple myeloma, including anti-CD38 monoclonal antibodies, can be more effective when combined with the engineered functionality of FT538. The multicenter dose escalation Phase I clinical trial of FT538 is designed to assess the safety and efficacy of three once-weekly doses of FT538 in up to four dose cohorts starting at 100 million cells per dose. The study will assess two treatment regimens: Regimen A as a monotherapy for patients with relapsed/refractory acute myeloid leukemia (AML) and Regimen B in combination with daratumumab, an FDA-approved anti-CD38 monoclonal antibody, for patients with relapsed/refractory multiple myeloma. We plan to initiate patient enrollment in the FT538 Phase I clinical trial in the fourth quarter of this year. To support clinical investigation, FT538 drug product was manufactured from a clonal master engineered iPSC cell line, which is renewably used as starting material for routine manufacture of FT538. The clonal iPSC cell line was made by sourcing cells originally from a healthy donor and reprogramming and engineering the cells to induce pluripotent capabilities using a proprietary non-integrating system and to integrate a bicistronic cassette containing CD16 and our IL-15 receptor fusion into the CD38 locus, which resulted in complete disruption of the CD38 gene. The first batch of our manufacturing campaign, which was conducted at small scale, produced a total of 3.10^11 FT538 NK cells, which were filled into over 300 units of cryopreserved infusion-ready drug product. Notably, since we right-sized our fill/finish activities to successfully produce drug product for dose escalation only, the campaign was not designed to maximize drug product yield. We calculated, though, that the potential yield of the cGMP campaign was on the order of 4.5.10^12 FT538 NK cells, or approximately 15,000 unit doses at a dose of 300 million cells per unit. In the second quarter, we also achieved a groundbreaking milestone in the field of cell-based cancer immunotherapy, having filed and cleared with the FDA our IND application for FT819, the world's first off-the-shelf iPSC-derived CAR-T cell therapy. This achievement fulfills an unprecedented journey we began four years ago under our partnership with Memorial Sloan Kettering, led by Dr. Michel Sadelain, to build upon the revolutionary success of patient-derived CAR-T cell therapy and to bring universal off-the-shelf CAR-T cells to patients. We designed FT819 to specifically address several limitations associated with the current generation of patient and donor-derived CAR-T cell therapies, incorporating several first-of-kind features into the FT819 master engineered iPSC cell line to improve safety and efficacy. These include a novel CAR-signaling domain, which has been shown to extend T cell effector function without eliciting exhaustion. Also, insertion of the CAR transgene directly into the T-cell receptor alpha constant locus, which has been shown to promote uniform CAR expression and enhanced T-cell potency. And of course, complete biallelic disruption of T cell receptor expression for the prevention of graft-versus-host disease, a potentially life-threatening complication associated with allogeneic T-cell therapy. Our FT819 clinical trial design is robust and innovative. The multicenter Phase I clinical trial is designed to assess the safety and activity of FT819 across three types of B-cell malignancies: chronic lymphocytic leukemia, acute lymphoblastic leukemia, and non-Hodgkin lymphoma. Notably, each indication will enroll independently, and each indication will evaluate three dose-escalating treatment regimens. Regimen A as a single dose starting at 90 million cells, Regimen B as a single dose starting at 90 million cells with IL-2 cytokine support, and Regimen C as three fractionated doses starting at 30 million cells each. We plan to initiate patient enrollment in the FT819 Phase I clinical trial in the fourth quarter of this year. At the American Society of Gene and Cell Therapy Virtual Annual Meeting in May, we highlighted one of the most profound advantages of our proprietary iPSC product platform: our ability to perform complex genetic engineering, including further engineering of an already established clonal master engineered iPSC line. Specifically, we demonstrated the use of an already established clonal master cell line, further engineering of that line to introduce additional functional elements, selection of a new engineered iPSC clone, incorporating both the original and the additional functional elements, and the creation of a new clonal multiplex engineered iPSC cell line. This is an unparalleled feat, one that is uniquely enabled by iPSC cell technology and enables the building of multiplexed engineered cell products of increasing complexity on top of core engineered functionality. We are applying this approach to rapidly innovate and efficiently create next-generation product candidates, such as FT576 as well as new product candidates such as FT536. Specifically for FT576, we presented preclinical data at ASGCT, demonstrating the further engineering of our already established master cell line for FT538, which incorporates three functional elements to enhance innate immunity. We introduced a fourth functional element, a CAR targeting BCMA, to create a clonal master engineered iPSC line for FT576, our off-the-shelf multi-antigen targeted CAR BCMA NK cell product candidate for multiple myeloma. Analogous to FT596 in lymphoma, FT576 is uniquely designed to target multiple tumor-associated antigens expressed on multiple myeloma cells for best-in-class potential. We remain on track to submit our IND application for FT576 in the fourth quarter. At ASGCT, we also introduced a new product candidate, FT536. Built off of the clonal master engineered iPSC line for FT538, FT536 is engineered with a fourth functional element, a CAR targeting the stress-inducible cell surface proteins MICA and MICB, which are selectively expressed at high levels on many solid tumors. While the NK-cell activating receptor, NKG2D, can recognize and engage stress ligands on tumor cells, the shedding of stress ligands is a common escape mechanism deployed by many tumors to avoid NK cell-mediated immunity. To overcome tumor escape, our novel CAR design uniquely targets a specific region of MICA/MICB, the α3 domain, which has been shown to remain on tumor cells post shedding. In fact, a recent publication in cancer immunology research by investigators from Dana-Farber Cancer Institute demonstrated that cancers with the loss of MHC Class I expression can be effectively targeted with alpha-three domain-specific antibodies to restore NK cell-mediated immunity. We believe the targeting of the α3 domain of MICA/MICB is a novel and exciting pan-tumor targeting strategy, including and especially for certain solid tumors resistant to cytotoxic T-cells. We are also leveraging our unique ability to build multiplexed engineered cell products of increasing complexity, using already established clonal master engineered iPSC lines with our collaboration partners, including under our newly formed collaboration with Janssen, which brings together Janssen's deep domain expertise in oncology and our industry-leading iPSC cell product platform. We have successfully launched this collaboration with strong momentum. Janssen has already contributed proprietary antigen-binding domains against one hematologic malignancy target and one solid tumor target, for which we are building novel CAR constructs. As a first step, we are incorporating these constructs into existing multiplex engineered master iPSC cell lines, which may enable an efficient and accelerated pathway to clinical development for the collaboration's initial product candidates. In parallel, we continue to drive innovation, including toward the research and development of next-generation features and functionalities and for the scaling of our GMP manufacturing processes to support commercial scale operations, as we seek to bring best-in-class, off-the-shelf CAR NK and CAR-T cell cancer immunotherapies to patients. Turning to our financial results. Revenue was $5.5 million for the second quarter of 2020, compared to $2.8 million for the same period last year. Revenue in the current quarter was derived from our collaboration with Janssen and ONO Pharmaceutical. Research and development expenses for the second quarter of 2020 were $26.7 million, compared to $21.6 million for the same period last year. The increase in our R&D expenses was attributable, primarily to an increase in employee headcount and compensation, including share-based compensation and expenses associated with the facility lease for our new corporate headquarters. G&A expenses for the second quarter of 2020 were $7.5 million, compared to $5.3 million for the same period last year. The increase in our G&A expenses was attributable, primarily to an increase in headcount and employee compensation, including share-based compensation and in legal fees. Total operating expenses for the second quarter of 2020 were $26.9 million, net of non-cash share-based compensation expense of $7.2 million. The company ended the second quarter of 2020 with $533 million of cash, cash equivalents, and investments. Common stock outstanding was 86.8 million shares and preferred convertible stock outstanding was 2.8 million shares, each of which is convertible into five shares of common stock under certain conditions. I would now like to open up the call to any questions. Thank you.

Our first question comes from Robyn Karnauskas with Truist Securities. Your line is open.

Thank you for taking my question and congratulations on all the progress. Now that the IND for FT538 has been approved and you're discussing moving into AML and multiple myeloma, which you’ve mentioned before, is the main focus on combinations with DARZALEX? Additionally, you brought up FT576 with the BCMA CAR. Looking at the long-term, how are you planning to approach multiple myeloma with these various drugs and combinations?

Ladies and gentlemen, please standby. You may proceed.

Sorry about that.

No worries.

You may ask your question again.

Thank you. So now that the IND for FT538 is approved and you're talking about going into multiple myeloma, I was just wondering about your strategy given that you also have FT576, which has a BCMA CAR. Are you thinking mainly in terms of DARZALEX combination with FT538? What is your big picture strategy for targeting multiple myeloma using multiple drugs and multiple combinations?

Absolutely. It's a great question. So keep in mind as well, FT538 is also in a clinical study. One of the arms of the study is also AML, and we're very excited about FT538 being in a monotherapy arm in AML, given the three functional elements that we've engineered into FT538 and the potential activity in AML. As it relates to myeloma, yes, I mean, you touched on it. We're very interested in the potential of FT538 to combine with DARZALEX and enhance the anti-tumor activity of DARZALEX, but certainly, very analogous to the lymphoma setting. We do believe, ultimately, that best-in-class potential, potentially, especially in myeloma, is going to require dual antigen targeting. And so ultimately, the product candidate, as we think about it today for myeloma, if we continue to strive for innovation and best-in-class potential, you have to assume in my mind, in our mind, that dual antigen targeting is going to be very critical. So as we sit here today, I would tell you, ultimately, the product candidate for multiple myeloma is, in fact, FT576.

Great. If I could ask one more question, could you provide an update on recruitment for FT596 and when we might expect a data update? I know you mentioned that you would like to gather a significant number of patients before sharing the data. Can you give us a timeline for when we might see some data from DLBCL?

Yes, absolutely. So I mean, on this call, we obviously indicated that FT596 has progressed into a dose escalation arm in combination with rituximab. I think, from my perspective, we've said on the last call, and we've been pretty consistent about this. We're not going to disclose data patient by patient. We want to have a meaningful dose cohort through escalation to describe data. And we'll give sort of a heads up on when we think we're going to disclose that. We will not be doing it on these financial update calls. We will do it in conjunction with medical conferences and accepted abstracts or in conjunction with investor events. Generally, I would make the comment, I think we will have a tremendous amount of data coming out over the next six, nine, 12 months across the company. I mean, at this point in time, the company has five different products with cleared INDs. And I think if you total up the number of arms in our studies, we probably have close to 20 different arms that are running or will be launched before the end of this year.

Great. Thank you so much for taking my question. I will get back in the queue.

Thank you. Our next question comes from the line of Michael Schmidt with Guggenheim Securities. Your line is open.

This is Kelsey on for Michael. Thanks for taking our question. I just have two quick ones. First, while it's too early to tell based on the first patient treated with FT596, I guess we've seen from Allogene a similar situation where prior CAR-T nonresponders or suboptimal responders maybe don't respond well to a second cell therapy. I'm just wondering maybe what your thoughts are on this potential subpopulation of CAR-T resistant patients? And then for FT596 also in terms of the design. I guess there was room to potentially get this amended later on where you could do more than just one treatment. I guess, what are your thoughts around what needs to be shown? And how many patients do you think you'll need to show us in to get the protocol amendment approved?

Certainly. Regarding redosing, the current protocol allows us to collaborate with the FDA at the end of the first treatment cycle to provide additional doses to patients. We plan to do this with FT596. As patients move through the first cycle and reach its conclusion, if we see a potential benefit in administering a second dose, and both the principal investigator and the patient agree, we aim to work with the FDA to facilitate this. Our goal is to continue delivering benefits to the patients. Long term, we believe in multi-dose treatment strategies, which we are applying in our ongoing clinical studies, including FT538. With some data and collaboration with the FDA, we expect to amend the protocol for a multi-dose approach with FT596, similar to what we have done with FT500, FT516, and FT538. Regarding your question about resistance in the CD19 space with previously treated patients, this is indeed a promising area for investigation. There have been relatively few patients treated with CAR19 T-cell therapy, and even fewer have undergone retreatment, making this a valuable area for exploration. We are particularly excited about FT596 due to its dual antigen targeting potential, especially when combined with monoclonal antibody therapy like rituximab. This might offer a unique opportunity to treat patients who are challenging to address with single antigen targeted therapies after relapse or refractoriness. Initially, we plan to include one or two patients in the dose escalation with FT596 along with rituximab, especially those who have previously relapsed or been refractory to CD19 therapies. We see this as a real opportunity for FT596, and we will see how it unfolds.

Great. Thank you, Scott.

Thank you. Our next question comes from the line of Daina Graybosch with SVB Leerink. Your line is open.

Awesome. Thank you for the question. You guys have to do like two hours for these calls. There's a lot of content. Congratulations. Two for me. I wonder outside of starting the two programs from Janssen, if their target. If you have any new learnings or changes from the collaboration that you can share? And then a second question is, with all these programs that's starting the dual targeting with your high affinity non-cleavable CD16 receptor, I wonder how you are thinking about and monitoring any risk from IgG competition with such a high-affinity receptor? Thanks.

Sure. Regarding Janssen, it's still early days. We signed the collaboration in April during the COVID period and have been in discussions with them for quite a while. Consequently, we were able to begin the collaboration swiftly. We've made significant progress in outlining our plans for initial preclinical development, potentially fast-tracking certain product candidates. Additionally, we've considered how to innovate together and what extra features we want to incorporate into our product candidates for both hematologic malignancies and solid tumors. We've also started the process of scaling CMC and are already thinking about commercial-scale manufacturing methods. So far, it's been a promising start to the collaboration. As for IgG, I'll let Bob address that, and Wayne is welcome to join in as well.

Sure. Hi. This is Bob. So one of the things about CD16 is the dissociation constant with the antibody is 10 to the minus six, so it doesn't stick and stay. And so all the IgGs that you find in your body, in order for them to react with CD16, you need cross-linking. So you need the interaction of the NK-cell with the antibody with the target cell. And so that is the reason why you don't see serum levels of IgG really interfering with CD16 biology. And that's another reason why CD16 is natural biology, we all have it, and that's why you don't have autoimmunity caused by CD16. And so this is why we're very excited about our CD16 platform. It allows for a very specific targeting of the cancer cell without eliciting undesired autoimmunity issues. So that's the reason why you don't see competition with serum IgG when it comes to hnCD16.

Very helpful. Thank you.

Wayne, do you have any additional comments on top of that?

No, I have nothing to add from my viewpoint except to say that when we use therapeutic monoclonal antibodies like rituximab, we are leveraging the cross-linking phenomenon due to the expression of the target on the tumor cells.

Yes, to elaborate, it's important to remember that CD16 is a naturally occurring biological feature. In fact, 15% of the population has a high-affinity CD16 receptor. In the context of monoclonal antibody therapy, as mentioned by Wayne, patients with a high-affinity CD16 receptor tend to experience better progression-free survival outcomes with various monoclonal antibodies such as Rituxan, Herceptin, and potentially daratumumab.

Awesome. Thank you.

Sure.

Our next question comes from the line of Mara Goldstein with Mizuho. Your line is open.

Thank you. I have two questions. First, regarding FT538 and its cost, will the cost per dose align with that of the other products? Secondly, can you discuss the steps and timeline for FT536 in relation to MICA and MICB as you move towards an Investigational New Drug application? Thank you.

Sure. Regarding FT538, FT596, and the cost of manufacturing, it's important to note that we perform engineering only once. The initial material we use is an engineered master cell line, which serves as the basis for manufacturing. We invest significant time and effort in the preclinical development of our master engineered cell line. However, once that step is completed, we do not engineer again. Therefore, our cGMP manufacturing process does not include any engineering. Consequently, the cost to manufacture FT500, for instance, which is not engineered, is not significantly different from FT538, which has three engineering features.

Okay. Thank you. And then just on the...

Yes. With respect to FT536 and thinking about IND timing, it's a 2021 IND.

Okay, great. Thank you.

Sure.

Thank you. Our next question comes from the line of Peter Lawson with Barclays. Your line is open.

Thanks, Scott. I appreciate you taking my question. Regarding the potential data from the five INDs this year, will we likely see the FT500 sensors in the first quarter? What additional data might be available?

Yes, historically, we have shared data at SITC and ASH, and we will continue to seek opportunities for data presentation. I want to clarify that while we prefer to wait for meaningful data related to a dose escalation arm, some of our collaborators are very enthusiastic about our projects, such as FT819, especially with Memorial Sloan Kettering, where we've been working on the first iPS-derived CAR-T cell for four years. If Michel Sadelain submits an abstract and wishes to discuss the first patient, we will certainly take advantage of opportunities like that as well.

Great, and then just on the three dosing fractionated dosing schedule for 819. Just the rationale there.

Sure. I'll turn that over to Wayne. I mean, Wayne spent a tremendous amount of time working with investigators who have historically pioneered and been at the forefront of autologous CAR-19 T therapy, including discussing the potential for fractionated doses and the value of that. So I'll turn it over to Wayne.

Yes, sure. Thanks. So it's a great question. I think that the clinical experience of autologous CD19 CAR-Ts have really been focused on their administration as a single dose. And we know that with a single dose of cells, especially as you dose escalate, there are issues from a safety perspective with cytokine release syndrome and neurotoxicity. And I think one of the liabilities with autologous CD19 CAR-T cells is the fact that the administered cells are limited to that single dose. We know from other immunotherapies, specifically some of the T-cell recruiting bispecifics, that you can actually take advantage of dose and schedule design treatment regimens that not only can maintain efficacy because you are able to deliver meaningful dose levels but do it in a way that can potentially mitigate toxicity, like reducing the frequency and severity of cytokine release syndrome and neurotoxicity. In fact, to a certain degree, this was demonstrated with the University of Pennsylvania experience with autologous CD19 CAR T and B-cell ALL, where they demonstrate that if you fractionate or you split a CD19 CAR-T cell dose into three, you actually have evidence of better anti-tumor activity. And more importantly, you have better safety as assessed by the frequency and severity of cytokine release syndrome. And so we wanted to take that concept and explore it in the context of FT819, primarily because of the fact that the way FT819 is manufactured, we can actually do this on a very consistent basis such that every patient that's enrolled into that regimen can get a split dose of FT819. And so what the plan is for the study is to not only test the fractionation of FT819 but essentially fine-tune the individual day doses such that if it turns out that a step-fractionated regimen indeed delivers on a better safety profile, while maintaining efficacy, then that can be established as a treatment regimen paradigm for products such as FT819.

Got you. Thanks very much, guys.

Thank you for the question.

Thank you. Our next question comes from the line of Matt Biegler with Oppenheimer. Your line is open.

Hey guys. Thanks for taking my questions. My first question is on the 596 patient with the partial response. As of the last update, I think the investigators were filing for emergency authorization to re-dose the patient. Can you just confirm if that patient was re-dosed?

I can't confirm that on this call. We've not announced that yet. But we have obviously said, historically, that we're going to take opportunities to work with the FDA to re-dose patients to the extent we think additional clinical benefit can be provided and to the extent the physician and treating patients think it's the right course. So, we are very much pro-engaging with the FDA to retreat patients.

Okay. Understood, at least that's right. And I also want to ask about the motivation behind the recent Baylor collaboration, which you didn't really discuss much on your call today, but for the autoimmune defense receptor technology. So at the ASH presentation last year, it didn't look like there was a lot of host versus graft responses against the iPS at least for FT500. So, are you envisioning this technology as a replacement for preconditioning or really, where do you see it fitting in?

Yes, absolutely. And keep in mind, right; NK-cells and T-cells may behave differently. We don't know that yet, right? So, I agree with you. I think we're accumulating a substantial amount of data now that suggests that NK-cells may have some degree of immune privilege based on all the data that we've seen clinically so far, including in 516, with respect to are there antiproduct rejection programs that are emerging. And NK-cells may be uniquely advantaged. We don't know about T-cells yet. And so quite honestly, we brought this technology in. We first saw this technology over a year ago at ASGCT. It is super interesting technology from my perspective because not only does it serve as a defense mechanism, but that defense mechanism, in the way that those receptors are engineered and designed, they actually, in defending the cells, also serve to activate the cells. So it's very, very interesting technology. I think as we think long term, there are different approaches and philosophies as people are thinking about cell-based cancer immunotherapy and other cell therapies outside of cancer immunotherapy. And clearly, I would say two things. Number one, certainly, in cell-based cancer immunotherapy, people have talked about and do condition patients. And people have talked about wanting to condition patients even more and drive extended periods of, for instance, immunosuppression. I think long term, especially if you want to be part of an early line therapy, the idea of heavily conditioning patients and having lengthy times of immunosuppression is absolutely not the direction you want to move in. And, number two, as you think about moving beyond cell-based cancer immunotherapy and you start thinking about driving long-term durable engraftment of cells or replacing tissue, I think creative solutions are going to be required to enable that, and this may be one approach to enable it.

Matt, this is Dan. One thing to add to that is, another thing we really like about this technology, is it selectively depletes the alloreactive T-cells while leaving sort of the good T-cells behind that will provide protection against infections and relapse. So it's a much more sophisticated strategy rather than just blowing up the entire T-cell compartment, which certainly will make room for an allogeneic product, but there's also some consequences of that, too. So that's one of the other things that we really like about this idea.

Makes sense. Thanks for the questions, guys.

Thank you. Our next question comes from the line of Debjit Chattopadhyay with H.C. Wainwright. Your line is open.

Hi everyone. Thanks for joining the call. This is Aaron stepping in for Debjit. I have a question regarding the expected durability of FT596 and your potential strategies for enhancement. I've noticed that previous cord blood-derived CAR-T cells often had limited effectiveness, leading many patients to require additional therapies. However, those CAR-T cells showed significant persistence, thanks to the IL-15 study you have. Do you believe the addition of rituximab could improve their potency? Are there any other strategies you are considering to modify the study? What are your thoughts on enhancing the study?

Yes. I think, generally, it's too early to know. I mean, there's a lot of speculation, even just generally in autologous CAR-T cell therapy, which leads to deep durable responses. Generally, we subscribe to a position that single-dose long-term persistence is not the answer. There's lots of data to show persisting in the face of persisting cells, relapse occurs. So clearly, the idea of just giving one dose and thinking that that one dose is going to lead to durable cures in the majority of patients, to us, is not the right therapeutic paradigm. It's not a therapeutic paradigm that exists anywhere in cancer. And so from our perspective and the platform we're building, we think uniquely enables the idea that you can give multiple doses. And we think giving multiple doses is the right strategy and the right way to go. Essentially, giving new cells, every, call it, one, call it, every two weeks, once a month, I think is, in our mind, the best way to drive deep durable responses for cancer.

Okay. Yes, that's something certainly the autologous persists from a dose, so that makes sense. Thanks. Thanks, Scott.

Sure.

Thank you. Our next question comes from the line of Yigal Nochomovitz with Citigroup. Your line is open.

Thank you, Scott, for addressing the questions. I wanted to follow up on the discussion regarding the challenges with the approved CD19 CAR T. Could you provide more insights into why the two B-cell lymphoma patients treated with the approved CD19 CAR T did not respond to FT596 and FT516? Was it due to a low dose, or did the patient receiving FT596 perhaps need rituximab as well, or might there have been CD19 antigen loss in the FT596 patient? Additionally, do you have any biomarker strategies in place to identify patients who did not respond to the approved CD19 CAR T and may benefit from FT596 or FT516? Thank you.

Yes, those are all very good questions. We are definitely putting a lot of effort into understanding clinical translation. For example, as we progress, we are focusing on evaluating CD19 expression levels and any factors that might be contributing to relapse, as well as whether another CD19-targeted strategy could address that relapse. It’s important to note that we are still in the early stages, and much of the data we have, particularly regarding allogeneic cell therapies, involves what I would consider low doses. For Fate Therapeutics, we’re discussing NL-1, which involves a single administration of 30 million cells—an incredibly low dose, about one-tenth of what’s typically given in an autologous CAR-T setting. Therefore, I am hesitant to make predictions based on our initial observations. It has been difficult so far to reinvestigate CD19-targeted failures, but we believe there is significant learning ahead and see this as an opportunity, especially with the potential for dual antigen targeting.

Got it. That's very helpful. I have one housekeeping question. I believe you submitted an amendment to the FDA after the VLT that you observed with Rituxan and 516 regarding the incomplete neutrophil recovery. Has that amendment been approved? Additionally, are you planning to adjust the rituximab dose in Regimen B with FT596?

Yes. The answer to both those questions is yes. So with FT516, we admittedly probably weren't as careful with the protocol as we potentially could have been. But certainly were with FT596 such that FT596 did not require amendment, and 516 obviously has now been amended. And we are, in fact, treating patients in the dose escalation arm with FT516 and rituximab.

Great. Thank you so much.

Sure.

Thank you. Our next question comes from the line of Ben Burnett with Stifel. Your line is open.

This is Kelly Brisa on for Ben Burnett. Thanks for taking our question. We were just wondering if you could talk a little bit more about the enrollment trends into the FT596 studies. Particularly, should we expect any differences in types of patients enrolled in the monotherapy arm versus the combination arm? Thank you.

Sure. So I would say eligible, all patients are essentially eligible for both arms. So whether it's a 596 monotherapy or 596 in combination with rituximab, there's no real difference with respect to eligibility criteria in either arm.

Thank you.

Thank you. Our next question comes from the line of Biren Amin with Jefferies. Your line is open.

Hi, guys. Thanks for filling me in. Scott, maybe I'll start with 516. Can you provide an update on the combinations with avelumab? And then also, what are your plans in terms of eGFR and HER2 antibodies that you've mentioned previously?

Sure. So 516 with avelumab, the study is open. We are likely going in a position to treat the first patient with FT516 in avelumab in the third quarter of this year. I think we want to see a little bit of data with avelumab before moving on to other additional monoclonal antibodies in solid tumors. Keep in mind that as we think about the true solution, one of the true solutions that might have maximal potential in solid tumors may be a product candidate, for instance, that has the CD16 receptor and can synergize with a monoclonal antibody like FT516, but might also be engineered with additional features and functionality to hit other targets, for instance, as an example, stress ligands with MICA and MICB.

Okay. And then on FT819, can you discuss the dose ranges you plan to evaluate? I believe you mentioned earlier in the call that you're starting at 90 million cells. What is the maximum cell dose for the dose escalation in the Phase I trial? Additionally, in the NHL and ALL cohorts, will you allow for a prior CD19 CAR?

So on the last question, yes, we don't necessarily exclude prior therapy. It doesn't mean that we won't direct the study to appropriate patients, obviously. So as we learn more about CD19 relapse and failures and what may or may not be the cause of that in biomarkers, we obviously have the ability to work with investigators to choose an appropriate profile where we think the product can be effective. So that's how we're thinking about with FT819 and whether to enroll patients or not with respect to previous experience with CD19 targeted therapy. As it relates to dose, the monotherapy arms or the monotherapy arms start at 90 million cells. The fractionated starts at 30 million. From 90 million, we're able to escalate to 300, and then step fractionated at 100.

And then what subset of T cells consists within 819? And then I guess, on the IL-2 dosing, are there any read-throughs from FT500 in the dosing with IL-2 there in terms of just influence on cell kinetics and whether you have any read-throughs into how 819 will behave with IL-2?

No. I believe some of our efforts with cytokines in the T cell area have been influenced by others in the field, such as TIL therapy, which utilizes IL-2 with T cells. We have the capability to maintain a high level of control because all patients receive the same product, derived from a clonal master cell line, rather than dealing with the significant variability that comes from patient- or donor-derived products. This allows us to accurately assess what we believe to be significant pharmacokinetic and pharmacodynamic differences regarding T cells alone compared to those supported by cytokines. Regarding the T cell phenotype, I’ll let Bob address that. It is something we have dedicated substantial time to optimizing over the past four years in collaboration with Memorial Sloan Kettering and Michel Sadelain to refine our T cell profile. Bob can also provide insights into the preclinical work we've conducted with 819 and how it compares to primary T cells and CAR-T cells.

Sure. Just real quickly since we've been presenting this work in the previous conferences. The product is basically exclusively T lymphocytes that carry the alpha-beta phenotype and gene expression profile also suggesting that they're very similar to primary CAR-Ts.

Okay. Given that you're using the subtherapeutic IL-2 dose, what are your thoughts on its influence on regulatory T-cells and on the T cell itself in this case, 819? Do you anticipate that the subtherapeutic IL dose would result in T cell activation and the inhibition of regulatory T cells?

Yes. So that is actually something that you can discern from our previous studies with NK cells, actually, obviously, because we've given IL-2 in the past with donor either going back years donor NK 100, our donor-derived product, or for instance, with FT500, now combining with IL-2 and FT516 combining with IL-2. So yes, we are able to get a look on what is going on with endogenous NK cells and T cells within the patient and how they respond to IL-2. I think, as you suggest, we're giving, relatively speaking, very low doses of IL-2. And so we have not historically seen much impact on that with respect to, for instance, regulatory T-cells, although it's something we're absolutely looking at.

Great. Thanks for taking my questions.

Sure.

Thank you. Our next question comes from the line of Jim Birchenough with Wells Fargo. Your line is open.

Hi, everyone. Congratulations on all the progress. I have a few questions about FT596 to start. What are the plans for dose escalation in the monotherapy? What will the dose look like? Is there a specific strategy for the monotherapy? Also, regarding the Rituxan combination, could you explain the types of patients you will enroll that would help clarify the added benefit of 596 to Rituxan compared to what you would typically expect from Rituxan retreatment?

Sure. So on point number two, start there, I mean, the criteria is certainly for enrollment in this study is that the patients will have already failed at least one Rituxan regimen. And so these patients will certainly have seen Rituxan, will certainly have relapsed or been refractory to a Rituxan regimen. And also in the literature, I think there's pretty clear publications with respect to in patients, for instance, that have failed Rituxan and receiving Rituxan, what does Rituxan look like as a monotherapy to initially benchmark against that. And again, we're not necessarily looking for subtle here, right. So if you would expect to treat patients with a Rituxan regimen, patients that have failed multiple lines of Rituxan regimens, I mean the response rates are very low, and that's certainly not what we're looking for here with respect to FT596 in combination. We're looking for pretty profound response rates. As it relates to the monotherapy arm and where we can go, as you know, when we initially submitted the protocol, we were giving a choice of dose escalating one of the arms. And because of the significant benefits that we believe we can bring to patients through dual antigen targeting, we selected initially to dose escalate the 596 arm in combination with rituximab. And once we find the MTD in that arm, we're able to then go back and dose escalate the monotherapy arm. Now given the fact that we have seen activity in one of the first two patients as a monotherapy, I think that does provide us an avenue to go back to the FDA early and provides, I think, pretty strong support to have a discussion around now amending to dose escalate the monotherapy arm in parallel with the combination one, and that's something we are exploring.

Got it. And then maybe just on the multiplex engineering. As you increase the complexity, are you seeing any impact on viability or potency of the cells or how do you monitor that to just ensure that you've got as viable and as potent cell population as you're increasingly engineering the cells?

Yes. I mean, it's a great question, and it's one of the massive advantages associated with what we do, because you can check for that, you can completely check for that at multiple points in this entire paradigm, and you can do all of it preclinically. So, for instance, if you further engineer a master cell line, you can fully characterize that newly engineered master cell line, as an example. You can do all kinds of characterization before the product candidate ever sees a patient. And that includes, to be really clear, taking that newly engineered master cell line and differentiating it into, for instance, the product candidate, and comparing it against, for instance, the already established master cell line. And so you can do all kinds of really diligent preclinical studies to really validate the engineering, and you can, again, before it ever sees a patient and you're locking it in at the master cell line level for the product, so that every patient is getting it. There's no heterogeneity here from patient-to-patient, batch-to-batch with respect to engineering because it's all been locked in at the master cell line level based on extensive preclinical study, including benchmarking against prior versions of that master cell line.

Got it. That's very helpful. Maybe just finally and quickly, Scott, just on the FT596 patient who responded, did you observe persistence of CAR positive cells in for how long? Or what would you have expected? And then did you monitor for that?

We're working with patients who are relatively new in terms of their medical history. We're conducting a lot of clinical translational work with both patient one and patient two to gain as much insight as we can. Generally speaking, 30 million cells, which I mentioned earlier, is a low dose for CAR-T cell therapy. If we exclude the ATE one data from Ener, I don't think anyone would expect 30 million cells to be an effective or optimized dose. Therefore, we are looking forward to dose escalation, utilizing higher doses, and combining them with rituximab.

Great. Thanks for taking the questions.

Sure.

Thank you. Next question comes from the line of Alethia Young with Cantor Fitzgerald. Your line is open.

Hey, guys. Thanks for taking my questions, and congrats on all the progress. So I guess, I just wanted one strategic question. I know you have this Johnson collaboration, which seems to be going well. I mean, how are you thinking about maybe other kinds of collaborations to leverage such a broad platform that you have? And then, I guess, I kind of wanted to just go back and revisit a question very early in the queue about differentiation, in particular, with 576 on the BCMA platform. Is that kind of like kind of the moon-shot for targeting BCMA, or maybe not the moon-shot, but you're pretty much moving along nicely there. So those are my two questions. Thanks.

Sure. So with respect to 576, let's just start there. Look, I think there's differences that we've seen in just cell-based therapy with lymphoma and myeloma so far. And the data sets in myeloma are emerging; they are still emerging. So I'll be sort of cautious with my comments in myeloma. But clearly, in lymphoma, we've seen cures. We've seen cures with CAR-T cell therapies targeting CD19. I'm not sure we've seen that yet in myeloma with BCMA as, at least a single antigen targeting. We'll see what happens when we do dual antigen targeting. And we're not the only ones pursuing dual antigen targeting. But maybe we will drive to deeper durable responses that enable cures in myeloma. That said, I don't think BCMA is the last target that will emerge in the myeloma space that folks will be excited about. There are other targets beyond BCMA that are certainly emerging, but at least preclinically, look just as exciting, if not more exciting, with respect to as compared to, for instance, BCMA. I do think, though, in myeloma, especially more than hitting more than one antigen is going to be required if you want to drive for cures. I think that's going to be necessary. As it relates to your question with respect to other partnerships, yes, I mean, I agree with you. I mean, we have a very broad platform. There's a lot of opportunity just in cell-based cancer immunotherapy as well as outside of cell-based cancer immunotherapy. I think iPSC technology is really starting to catch a lot of folks' attention with respect to its potential and the unique advantages that come with IPS cell technology, especially as it relates to multiplex engineering. And so yes, I think there's, I mean, we're super happy, obviously, with the launch of the Janssen collaboration. But I think there's opportunity for more partnerships, absolutely, including beyond cancer immunotherapy.

Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to Scott Wolchko for closing remarks.

Terrific. Thank you, everyone, and I appreciate everybody on the East Coast, especially hanging with us through this late hour. Appreciate everybody's participation in today's call and all your continued support and interest in Fate Therapeutics. Be well. Good night.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.