Fate Therapeutics Inc Q4 FY2023 Earnings Call

Welcome to the Fate Therapeutics Fourth Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investors 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.

Thank you. Good afternoon and thanks everyone for joining us for the Fate Therapeutics Fourth Quarter 2023 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 section of our website under press releases. In addition, our Form 10-K for the year ended December 31, 2023, was filed shortly thereafter and can be found on the Investors section of our website under Financial Information. Before we begin, I would 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 included in our Form 10-K for the year ended December 31, 2023, 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 Ed Dulac, our Chief Financial Officer; and Dr. Bob Valamehr, our Chief Research and Development Officer. During today's discussion, we will highlight clinical milestones that we are poised to achieve in 2024 across our off-the-shelf iPSC-derived CAR NK cell and CAR T-cell programs. In addition, we will discuss our ongoing initiatives to continue the clinical expansion of our iPSC product platform into autoimmunity. Finally, we will review our financial position, where our operating discipline and strong cash balance have created the opportunity to continue our investment in developing a deep pipeline of highly differentiated preclinical and clinical product candidates, with the potential to bring significant therapeutic benefit to patients with cancer and autoimmune diseases. Beginning with FT819, our off-the-shelf CD19 targeted CAR T-cell program. I am pleased to announce that the company has been awarded $7.9 million by the California Institute of Regenerative Medicine to support the conduct of our FT819 Phase 1 clinical trial for the treatment of patients with moderate to severe SLE. In its review of our application, CIRM scientific working group unanimously scored our application as having exceptional merit. Notably, FT819 was recognized as offering a novel therapeutic approach for the treatment of SLE with its ready-to-use supply, which can be administered to patients without apheresis and without premature discontinuation of immunosuppressive therapy. We are currently conducting study start-up activities at multiple US clinical sites, with patient enrollment set to commence at the first dose level of 360 million cells. The Phase 1 study for the treatment of SLE is designed to evaluate safety, pharmacokinetics, and anti-B-cell activity of a single dose of FT819 administered following a standard three-day chemotherapy conditioning regimen. And we plan to share initial clinical data from the study in 2024. We also continue to enroll patients in our FT819 Phase 1 clinical trial for the treatment of relapse refractory B-cell lymphoma. This landmark study is the first-ever clinical investigation of a T-cell product candidate manufactured from a clonal master iPSC line. We are currently enrolling patients in single-dose treatment cohorts at 540 cells and at 1 billion cells using a standard three-day chemotherapy conditioning regimen. Clinical data previously presented by the company from the FT819 Phase 1 study in relapse refractory B-cell lymphoma showed a favorable safety profile and antitumor activity. Of the first 11 patients treated with a single dose of FT819, at up to 360 million cells, we observed no dose-limiting toxicities, no events of any grade of immune effector-cell associated neurotoxicity syndrome, and mild cytokine release syndrome in only two patients. We observed antitumor activity in heavily pre-treated patients, including three complete responses, and we observed translational data consistent with known T-cell biology with CAR T-cell expansion that peaked in the peripheral blood between days eight and 11 and deep suppression of CD19-positive B cells in the peripheral blood through day 30. At the American Society of Gene and Cell Therapy Conference to be held in May, we expect to share our new data from our FT819 Phase 1 clinical trial for the treatment of relapse refractory B-cell lymphoma at these higher dose cohorts. As well as new clinical translational data that support the potential clinical benefit of FT819 for the treatment of B-cell mediated autoimmune diseases. Turning to our solid tumor clinical initiatives, I am pleased to announce that under our collaboration with Ono Pharmaceutical, we have now initiated our Phase 1 clinical trial of FT825 for the treatment of advanced solid tumors. Patient enrollment is currently ongoing at multiple clinical sites at the first dose level of 100 million cells. We believe FT825 represents an exciting new frontier in the field of cell-based cancer immunotherapy. The multiplexed engineered iPSC-derived CAR T-cell program incorporates a constellation of antitumor mechanisms that are designed to harness the potential of both innate and adaptive immunity and to overcome the unique challenges in treating solid tumors. These novel synthetic controls include a CXCR2 receptor to promote cell trafficking, a chimeric TGF-beta receptor to redirect immunosuppressive signals in the tumor microenvironment, a high affinity non-cleavable CD16 receptor to promote antibody-dependent cellular cytotoxicity, and a novel cancer-specific HER2 targeted antigen binding domain, which has exhibited unique and differentiated activity from that of trastuzumab. In preclinical models, FT825 has exhibited similar potency with greater specificity toward HER2-expressing malignant cells compared to trastuzumab and has shown robust antitumor activity in vitro against HER2 low expressing tumor cells. The FT825 Phase 1 study is designed to assess the safety, pharmacokinetics, and activity as monotherapy and in combination with monoclonal antibody therapy in patients with advanced solid tumors. Including cancers where HER2-targeted therapies are approved, as well as cancers where HER2 targeting has recently shown promising clinical activity, such as endometrial, ovarian, and cervical cancers. The dose escalation schema for the Phase 1 study includes two treatment regimens. Regimen A where the monotherapy arm consists of a standard three-day preconditioning regimen and a single dose of FT825 as monotherapy. Eligibility includes patients with advanced HER2-expressing solid tumors. Regimen B or the combination arm consists of a standard three-day preconditioning regimen and a single dose of FT825 in combination with cetuximab where we seek to additionally exploit innate immunity by leveraging the product candidate's high affinity, non-cleavable CD16 receptor to target EGFR expressed on solid tumor cells. Enrollment into regimen B will commence at the first dose level of 100 million cells upon clearance of dose-limiting toxicities at this first dose level of regimen A. Turning to our NK cell programs, FT522 is our off-the-shelf CD19 targeted CAR NK cell program and is the first product candidate emerging from our iPSC product platform that incorporates our proprietary alloimmune defense receptor technology, which is designed to reduce or eliminate the need for administration of intense chemotherapy conditioning to patients receiving cell therapies. Today, conditioning patients with intense chemotherapy is a necessary component of the treatment course for cell-based cancer immunotherapy, including for both autologous and allogeneic cell therapies. Conditioning chemotherapy induces toxicities, limits patient access, and prevents combination with standard-of-care immunotherapies widely used in the community-based settings. FT522 incorporates a synthetic-engineered receptor targeting 41BB expressed on alloreactive immune cells. In preclinical studies, we have shown that the engagement of ADR-armed CAR NK cells with alloreactive immune cells mitigated rejection, promoted NK cell proliferation, and increased antitumor activity. These preclinical data suggest that FT522 has the potential to drive clinical responses without the administration of intense conditioning chemotherapy to patients. Our ongoing multicenter Phase 1 clinical trial of FT522 in patients with relapsed refractory B-cell lymphoma includes two regimens. Regimen A or the conditioning arm, which consists of three days of standard conditioning chemotherapy, one dose of rituximab, and three doses of FT522. Regimen B or the no conditioning arm consists of one dose of rituximab and three doses of FT522 without conditioning chemotherapy. Enrollment into regimen A is ongoing at the first dose level of 300 million cells per dose and upon the clearance of dose-limiting toxicities at this first dose level, enrollment into regimen B or the no conditioning arm will commence at this first dose level of 300 million cells. Each regimen may proceed with dose escalation independently. We believe we have the opportunity to establish clinical proof-of-concept for our ADR technology and for our FT522 program without conditioning chemotherapy early in dose escalation. We will look to provide initial clinical data from our FT522 program in the second half of 2024. We also continue to enroll patients in our multicenter Phase 1 clinical trial of FT576. Our BCMA-targeted CAR NK cell product candidate for the treatment of relapsed refractory multiple myeloma. The study is currently accruing patients in three dose treatment cohorts as monotherapy as well as in combination with CD38-targeted monoclonal antibody. Using a standard three-day chemotherapy conditioning regimen, the company has treated six patients at 1 billion cells per dose with no dose-limiting toxicities and no reports of any grade of CRS or ICANS. The study is currently enrolling patients at 2.5 billion cells per dose. Any further clinical development of FT576 for the treatment of multiple myeloma will be determined by the company based on safety and activity at these higher dose levels. As we advance these clinical programs, we remain committed to pursuing new therapeutic opportunities in autoimmunity where early clinical data with autologous CD19-targeted CAR T-cell therapy has shown profound clinical benefit. We believe there is a very strong value proposition for our iPSC product platform and off-the-shelf iPSC-derived cellular immunotherapies in autoimmunity, where a relatively short-lived cell can deeply eradicate an aberrant B-cell population and enable rapid reconstitution of a healthy immune system and where safety, patient convenience, accessibility, cost, and scale will be key differentiating factors. We believe our FT819 CAR T-cell program and our FT522 CAR NK cell program have the potential to durably deplete a patient's pathogenic immune cells, drive immune reset, and meaningfully improve quality of life across a wide spectrum of autoimmune diseases. As we look forward into 2024, we expect to expand our clinical investigation of FT819 and autoimmunity to include treatment of additional diseases beyond SLE. Additionally, we also plan to submit an investigational new drug application for FT522 in autoimmunity, where we think the potential to reduce chemotherapy conditioning and to target and deplete B cells, plasma cells, and autoreactive T-cells offers a highly differentiated therapeutic profile across a broad range of autoimmune diseases. I would now like to turn the call over to Ed to review our financial results for the fourth quarter.

Thank you, Scott, and good afternoon. Fate Therapeutics is in a solid financial position to advance our pipeline. Our cash, cash equivalents, and investments at the end of the fourth quarter were approximately $316 million. In the fourth quarter, our revenue declined to $1.7 million compared to $44.4 million for the same period last year. As described previously, our revenue is now derived exclusively from our collaboration with Ono Pharmaceutical and specifically reflects research funding associated with the development of a second product candidate against an undisclosed target in solid tumors. Research and development expenses for the quarter decreased more than 60% from the same period last year to $31.8 million. The decline in our R&D expenses was attributable primarily to a decrease in salaries and benefits, including share-based compensation expense, following the company's restructuring in the first quarter of 2023, and from lower clinical trial costs and lower demand for R&D materials and equipment. We also benefited from $2 million of contra R&D expense in the quarter in connection with our clinical development of FT825 with Ono. As a reminder, after opting into a co-development and co-commercialization arrangement for FT825 in the US and Europe with Ono, in the fourth quarter of 2022, we account for that program's reimbursable expenses as an offset within our research and development costs. General and administrative expenses for the fourth quarter decreased by 17% from the same period last year to $17.9 million. The decline in our G&A expenses was attributable primarily to a decrease in salaries and benefits, including share-based compensation expense. Total operating expenses for the fourth quarter declined 54% from the same period last year to $49.8 million, which includes $9.5 million in non-cash share-based compensation expense. Note that in connection with the development of our off-the-shelf iPSC-derived CAR T-cell product candidate, FT819, we previously achieved the clinical milestone set forth in our amended license agreement with Memorial Sloan Kettering Cancer Center, which triggered a first milestone payment to MSK in 2021. Up to two additional milestone payments may be owed to MSK based on subsequent trading values of the company's common stock ranging from $100 per share to $150 per share. We assessed the fair value of these contingent milestone payments, currently valued at $700,000 on a quarterly basis. In the fourth quarter, we recorded a non-cash $645,000 non-operating loss associated with the change in fair value. Our net loss for the fourth quarter was $44.1 million or $0.45 per share. Finally, in what could be considered a challenging year in 2023 for the company, I wanted to recognize the resilience and collective efforts of our employees. Our cross-functional teams were able to respond to challenges, advance key clinical programs, and discover next-generation technologies while doing so with efficiency. Our full-year GAAP operating expenses of $254 million compared favorably to our guidance range of $265 million to $285 million, enabling us to finish the year with more than $300 million on our balance sheet. I would now like to open the call for questions.

Thank you. Our first question comes from Michael Yee of Jefferies. Please go ahead, Michael.

Hey, guys. Good afternoon and thank you for all the updates. I'm in your backyard in San Diego. Quick question for you on 819, in your ongoing lupus program. Can you affirm whether you are about to treat a patient, will treat a patient, and whether you would have data on some of those patients by the end of the year or around there? And is there any doubt in your mind, Scott, that those results should basically replicate autologous? And how you expect or what you would expect there to differentiate? Thank you.

Sure. On the first point, with respect to where exactly are we in this study? So we are working today with FT819 in the lupus study with multiple different sites on study start-up. And I think we are well positioned to treat the first patient in the coming weeks based on interactions that we've had with multiple sites. As a company, we are committed to providing a clinical update with FT819 in lupus. While I certainly am not in the business of predicting patient outcomes for novel therapies, especially, I think we are encouraged based on what we've seen with respect to 819 and its resemblance to autologous CAR T-cell therapy, at least with respect to how the product performs in patients from a translational perspective. As we've sort of highlighted in the past with FT819, we've seen a really clean safety profile through multiple dose levels. We have seen what you would consider to be a traditional CAR T-cell expansion, where we've seen cells peak in the peripheral blood between days 8 and 11. We have seen persistence of a single dose of FT819 stretching out into the second and third week, day 15, and we've seen B-cell suppression that has extended out throughout the first 30-day cycle. So with respect to how FT819 is behaving in patients in vivo, we're really excited about that and think we have the potential to replicate what's been seen in a relatively small number of patients with autologous CAR T-cell therapy.

Thank you, guys.

Thank you. Our next question comes from the line of Yigal Nochomovitz of Citigroup. Your question, please, Yigal.

Hi, Scott and team. Thank you for taking my question. What evidence do you have so far regarding FT819? Not only in clearing the plasma cells but also in reaching the tissue component, specifically the germinal centers where there are tissue-resident B-cells that may also need to be eliminated. How do the iPSCs perform in terms of trafficking into that area? Thanks.

I believe it's crucial to highlight that FT819 has shown promising results based on the responses we've observed in hematologic malignancies, particularly B-cell lymphoma. We have successfully reached tissues containing CD19 positive cancer cells. Our findings from responses and CT scans indicate that FT819 moves from the bloodstream to target tumor cells located outside of the blood, effectively eliminating CD19 positive tumors. While we cannot definitively confirm that FT819 targets all tissues potentially harboring harmful B-cells based on our current clinical data, we are encouraged by FT819's demonstrated capability to reach secondary and tertiary tissues, where tumor cells are present.

Okay, thanks. And then the other question is sort of more strategic. I believe the IND for lupus has been open for about half a year, maybe six or seven months. And as you know, it's obviously a super competitive space. In fact, there was one other company that decided to not pursue their CD19 in SLE. I'm just wondering, you're sticking with it, I'm just wondering to what extent you're going to look at other indications for 819? And whether you would accelerate those plans given the competitive nature of this lupus space?

It's a valid question. We are fully committed to FT819 in autoimmunity. One advantage we have is that we currently have a study underway with FT819 in oncology. This has allowed us to effectively collaborate with various oncology centers that are running FT819, partnering oncologists with rheumatologists to build momentum for the study. We believe we are in a unique position due to our extensive oncology experience with FT819 and the relationships we have with key investigators in this area, which has facilitated our collaboration with rheumatologists. Additionally, one of the benefits of an off-the-shelf cell therapy is that we have product and inventory ready. Once these studies are launched, we face no manufacturing risk, as the product has already been made and we can quickly begin treating patients, which we are very excited about. We also recognize that we are in a highly competitive space, and as I mentioned earlier, we are definitely looking to expand the IND for FT819 into more indications in autoimmunity.

I have a quick question about the dose for autoimmune. How did you determine the dose? Are you using the same one as for oncology, or have you made any adjustments?

So we've completed dose escalation, and one reason we continue this process in oncology is due to the high importance of safety in the autoimmunity space. At the time we submitted the IND to the FDA, we had cleared 360 million cells at that dose level in oncology. Throughout the B-cell lymphoma study, we've observed what seems to be a dose-dependent expansion of FT819, with peaks of expansion that rise with the dose level, all while maintaining a clean safety profile to date. We're confident in starting at 360 million cells. We also have the option to continue escalating the dose in the autoimmunity study or de-escalate if necessary.

Okay. Thanks, Scott.

Sure.

Thank you. Our next question comes from the line of Tara Bancroft of TD Cowen. Please go ahead, Tara.

Hi. Good afternoon, guys. So, I was wondering if you could tell us more about what it would take for you to choose FT819 versus FT522 for autoimmune disorders going forward, or if you are planning on pursuing both for the long-term? Thanks.

Tara, as we consider the future, we plan to pursue both options. We're particularly excited about FT522 because it has been engineered with ADR technology. While we find the potential in autoimmunity appealing, the reality is that patients currently receive intense chemotherapy conditioning. We can all agree that this approach may not be the best way to effectively reach and treat patients with autoimmune diseases. What excites us about FT522 is the possibility of administering cell therapy without chemotherapy conditioning, which would be a substantial advancement in the field. This would allow us to decouple the need for intense chemotherapy and offer a cell therapy that can be delivered off-the-shelf while achieving comparable B-cell reset levels without the conditioning. We're very enthusiastic about FT522 and its ADR technology. Additionally, since FT522 is an NK cell, it has the potential to combine with monoclonal antibody therapies that target CD19, reaching early B cells and potentially engaging plasma cells. This combination could be a significant differentiator for FT522. So, we’re looking forward to both product candidates.

All right. Great. Thank you. I agree 522 is very exciting. Thanks, guys.

Thanks.

Thank you. Our next question comes from the line of Tazeen Ahmad of Bank of America.

Hi, guys. Thanks for taking my questions. Just some simple ones on timing and maybe just a little bit on bar for efficacy. So for 576 in multiple myeloma, what level of data are you expecting to generate and what level of efficacy should we be looking for there? And then I have a follow-up.

Sure. So obviously, the multiple myeloma space is very crowded, and we've seen remarkable results with the autologous programs. I think from our perspective, as we think about 576, I think 576 needs to have a therapeutic profile which is similar to what's been achieved with T-cell engager. So we are talking about high response rates and certainly complete response rates that are significant. So for us to continue the program with 576. I think it's really important that we see relatively high response rates, including complete response rates. The durability profile will obviously take time to play out, but that's how we're thinking about 576 currently today.

Okay. And just to give a little bit more of a bracket, what type of response rate should we be thinking of in a range?

Yeah. I think what we've seen with the T-cell engagers is the T-cell engagers' response rates are probably north of 60% with respect to ORR and CR rates that are in the 40% range.

When can we expect data for FT522 in patients with relapsed and refractory T-cell lymphoma?

Sorry, did you say FT522?

Yeah.

Yeah, FT522, I think we have the potential with 522 to show early proof-of-concept with the monotherapy arm or sorry in the arm without conditioning chemotherapy. So the way the study works is the first three patients are treated with Cy/Flu. In the 522 study, this is at a dose of three times 300 million cells. As soon as we clear that dose level, two things can happen. We can dose escalate the Cy/Flu arm to three times 900 million cells. Importantly though, we also open the no conditioning arm. And so patient four, for example, could be in the no conditioning arm that would open at three times 300 million cells. So we do believe that in short order, we have the potential to show proof-of-concept with 522. Early clinical proof-of-concept with 522, without conditioning chemotherapy and we're looking to provide a data update in the second half of '24.

And will you say that you've confirmed no DLTs at the Regimen A low dose before you give us the update?

I think we'll probably give an update as we progress the study.

Okay. Thank you.

Sure.

Thank you. Our next question comes from the line of Daina Graybosch of Leerink Partners.

Hi. Thank you for the question. I'm interested in understanding when you and others will have a larger number of lupus patients being treated. Could you discuss the challenges you've encountered in the past six months, particularly in getting these sites operational? You mentioned the collaboration between rheumatologists and oncologists. Are there any ongoing challenges that might hinder enrollment in these lupus studies? Or are there challenges related to the start-up of the study that you see being resolved? Finally, when can we expect to see a cohort for either 819 or 522 with around 15 or 20 patients?

I think it's important for us to step back and acknowledge that most autoimmunity patients and the physicians treating them are not well-versed in cell therapies. While there are certainly challenges in launching a study in this groundbreaking field, an advantage for us has been our background as an oncology company, which has allowed us to establish strong relationships with multiple centers conducting the 819 study. These centers have been supportive in partnering with their rheumatologist colleagues. While we need to approach this with caution, we are working with CAR T-cell therapies that involve patient staggers mandated by the FDA, which means we will only be able to enroll patients at a certain pace. Most protocols in autoimmunity tend to have 28-day patient staggers. We are optimistic about the potential in this area and are moving forward actively. However, there are some safety concerns related to autologous CAR T-cell therapies that the FDA has highlighted, particularly regarding T-cell malignancies. We believe that our iPS-derived cell therapies do not carry the same risk profile because we engineer a single iPSC, fully characterize it, and ensure the integrity of our engineering process. We are committed to providing updates on the 819 study in autoimmunity this year, but it is crucial that we remain patient as this field begins to evolve.

Yeah. Maybe one follow-up. Once you get a center up and running and have rheumatologist onboard and ready to enroll patients. Do the enrollment criteria, do they set a new barrier for finding the right patient? Or how do you anticipate doing that?

I believe that the enrollment is challenging due to the severity of many autoimmune diseases, which have significantly impacted patients' lives. Once the study is operational, I think the enrollment criteria will facilitate patient enrollment. However, it's important to note that the speed of enrollment is somewhat regulated by the 28-day staggers often required by the FDA. Sure.

Thank you. Our next question comes from the line of Mike Ulz of Morgan Stanley. Your question, please, Mike.

Hey, guys, thanks for taking the question. Maybe just to follow up on 522, Scott. So you mentioned sharing the data potentially in the second half of this year. Just curious if you would expect to have cohort B data at that time as well, which is without conditioning. And then maybe just secondly, assuming ADR technology is validated, is that something you could easily add to 819, or are there notable challenges there? Thank you.

Sure. Yeah. The date update that we're looking to provide in the second half of 2024 would certainly include a cohort of patients or cohorts of patients with no Cy/Flu conditioning. Obviously, we think that is a significant milestone for the field of cell therapy, being able to deliver a cell therapy and allow it to thrive without conditioning chemotherapy. So super excited about that. Pushing on that, very hard and favoring, actually regimen B, in terms of thinking about enrollment and the implications for that, as we think about our platform and how to reach patients without conditioning. I think as we look at 522, building ADR technology into our platform, while we have not spent a lot of time talking about it publicly, we have ADR technology embedded into multiple different iPS cell lines, including on the T-cell side.

Got it. Thank you.

Yes.

Thank you. Our next question comes from the line of Peter Lawson of Barclays.

Great. Thanks so much. Just a follow-up on 522, in autoimmune disorders kind of, firstly, what autoimmune disorders you're thinking about, well, that could also include SLE. And would you start without conditioning with 522?

So with 522, we won't discuss the specific strategy we are pursuing for the IND. However, regarding 522, we are optimistic about a wider range of B-cell mediated autoimmune diseases, which could potentially include SLE, but we are not ruling it out. There are many autoimmune diseases mediated by B-cells, including those where plasma cells play a more significant role and that we might address in conjunction with monoclonal antibody therapy. At this point, we are very enthusiastic about exploring FT522 for various potential indications. While we will learn a lot from the oncology study, it wouldn't surprise me if we file the initial IND that involves multiple conditioning regimens. One option might be Cy/Flu, given its precedent, but we are also considering other regimens that might be applicable in autoimmunity. Ultimately, the real opportunity is to assist patients with autoimmune conditions, think about the regimens they currently follow, and evaluate whether adding a cell therapy without Cy/Flu could significantly improve their lives by facilitating an immune reset.

Got you. Thank you. And then quick question for Ed. Just on kind of any guidance around SG&A and R&D, just considering it has declined significantly year-over-year. Just curious what the run rate is for the '24?

Yeah, Peter, we're not providing guidance today, but I think if you look back at the last two quarters, and I tend to want to look at this on a cash operating expense basis. But if you look at cash operating expenses in the third quarter, I think they were about $37 million, a very similar number, about $35 million in the fourth quarter. I think that's a reasonable baseline to carry into at least the first half of 2024. And as the prepared remarks have indicated, we obviously have essentially five ongoing programs, 819 in oncology, 819 emerging in autoimmunity, 522, 825 across a couple of different indications. So the second-half burn rate, I think is a good indicator of what at least the first half of 2024. But as we have indicated, we are at the higher dose levels of both FT576 myeloma and FT819 in oncology, and we'll have a go/no-go decision sometime later this year. So, there may be some puts and takes to the extent our data allows us to continue later development. We'll provide the appropriate guidance at that time. But for the time being, that $35 million to $40 million per quarter is a reasonable run rate to assume in the first half of 2024.

Great. Thanks so much.

Thank you. Our next question comes from the line of Ben Burnett of Stifel. Your question, please, Ben.

Hi, good afternoon. This is Carolina Ibanez on for Ben Burnett. Thank you for taking our question. For 819 in autoimmune disease, there is this aspect that autoimmune disease patients have a stronger immune system than cancer patients, which may drive a more energetic rejection of the allogenic CAR T-cells. What's your perspective on this? And do you think a more intense depletion regimen may end up being required, at least for 819, to ensure that a sufficient B-cell depletion can occur?

Based on the data we've analyzed in oncology, we feel quite confident. As you're likely aware, we've continued using the standard Cy/Flu conditioning regimen that's been effective for treating autoimmune patients, as well as for the conditioning used with autologous CAR T-cell therapy. The translational data we've gathered indicates that FT819 behaves similarly to its autologous counterparts. We've observed a dose-dependent expansion and peak expansions that match those of the autologous counterparts. The persistence of the product candidate has extended for several weeks, and we've also noted B-cell suppression lasting at least 30 days. Given all this, we are very comfortable with the profile of FT819 in oncology, and we are enthusiastic about its potential in autoimmunity. The existing data from patients treated so far, particularly from a group in Germany, suggests that a short-lived autologous cell is acting quickly, with rapid kinetics of depletion. This rapid action is important for clearing the patient, allowing the B-cell compartment to rebound and trigger an immune reset. In the context of autoimmunity, we believe, based on the autologous data produced to date, that a short-lived cell can significantly impact and facilitate the necessary depletion to enable a relatively quick immune reset. We are very excited about this.

Okay. Understood. Thank you.

Thank you. Our next question. Please stand by for our next question. Our next question comes from the line of Andrea Tan of Goldman Sachs. Your question, please, Andrea.

Hi. This is Talani Usman on for Andrea Tan. Thanks for taking our questions. Firstly, could you please walk through the considerations for FT819 and B-cell malignancies and then for 576 in multiple myeloma? And the profile you're looking to see at the higher doses to warrant further development relative to the autologous and allogenic CAR-T therapies?

I believe I have already addressed the topic of multiple myeloma. The profile for an allogeneic cell therapy must align with the therapeutic value offered by engagers. Therefore, when considering both lymphoma and myeloma, it's essential to use the T-cell engagers that have been approved and are currently in development as a benchmark.

Perfect. Thank you. And then secondly, for FT522, just how are you thinking about the delta in efficacy that you'd be willing to give up to achieve better safety and tolerability through the exclusion of the chemotherapy of conditioning?

I think that's something we're absolutely going to look at. I mean, I think the reality of this is, as we look at the autoimmunity space, you know, people can have an opinion on this, but I don't think the vast majority of autoimmunity patients are going to be treated or reached at specialized academic centers that treat oncology patients. So I think it's going to be absolutely critical in the field of autoimmunity that we reach patients where they live and breathe in the community, and that these patients are treated without intense chemotherapy conditioning. And I think that's going to be critical for the autoimmunity space.

Thank you.

Thank you. Our next question comes from the line of Yanan Zhu of Wells Fargo Securities. Your question, please, Yanan.

Thank you for taking our questions. I’d like to follow up on the earlier question about tissue specificity. Specifically, does treating SLE require CAR T-cells to reach additional tissues compared to treating B-cell malignancies? Do you think the derived T-cells could also target those additional tissues if necessary? My other question is regarding the patient population for the SLE study. Will you enroll patients who are refractory to biologics and other treatments, or could you include some milder cases as well? Lastly, do you foresee any competition for patient enrollment given the number of ongoing clinical trials in SLE? Thank you.

Let's start by discussing the patients to be treated. These patients will have active systemic lupus erythematosus, characterized by moderate to severe disease, and they will have undergone multiple lines of therapy prior. The criteria for patient enrollment are similar to those treated previously in Germany with autologous counterparts, focusing on moderate to severe active disease. The landscape is competitive, with over ten autologous CAR T-cell programs starting to enter the field of autoimmunity. However, our off-the-shelf cell therapy program offers unique advantages even when compared to autologous alternatives at the same treatment center. We do not need to perform leukapheresis on patients, nor do we have to discontinue their immunosuppressive therapy prematurely. Our product is available in inventory, allowing us to intervene and treat patients quickly. As we continue to demonstrate safety and efficacy with our off-the-shelf program, we see an opportunity to extend our reach beyond academic medical centers into community settings. Our experience with NK cells illustrates this, as our protocols allow for outpatient treatment in infusion centers without the need for hospitalization. Ultimately, this capability will be essential for effectively treating patients with autoimmunity. We are enthusiastic about the differentiated profile of our off-the-shelf cell therapy, especially in comparison to autologous options, which present significant challenges regarding patient delivery in today's autoimmunity landscape.

Very helpful. And the question about whether SLE might involve additional tissue specificity?

Yeah. So without a doubt, I think there are bad-acting B-cells that are sitting within secondary and tertiary tissue. I guess, my comment on that, I've made comments about that earlier with respect to certainly we've seen from a clinical setting, 819 reach tumor cells that are in these secondary tertiary tissues and deplete CD19 positive tumor cells. I'd also note that we've done a significant amount of work with CAR NK versus CAR T-cells pre-clinically, and we're very confident in essentially the homing and trafficking, and infiltration potential of our T-cell programs, iPS-derived CAR T-cell programs. And again, that's based on some significant models we've done on the solid tumor side.

Got it. Thanks for the answers.

Sure.

Thank you. Our next question comes from the line of Gil Blum of Needham & Company. Please go ahead, Gil.

Hi. This is Ethan on for Gil. Thank you for taking our questions. I'm just wondering, in your view, if there are any clinical results, let's say, in B-cell lymphoma that would potentially gate FT522 from moving forward into autoimmune indications. And then for second question, I might have just missed this, but are you still expecting to have data for FT576 and multiple myeloma in the first half of this year? Thank you.

Yeah. For 576, we'll give an update when we complete the dose cohort at 2.5 billion cells. And so we're looking at both Regimen A as a monotherapy and Regimen B in combination with CD38 targeted mAb. When we complete that cohort, with respect to responses, we'll give an update on the 1 billion cell cohort as well as the 2.5 billion cell cohort. I suspect that'll be sometime in the middle of this year, based on where we are currently in that study. As it relates to NK cells moving into autoimmunity or FT522 specifically, certainly excited by the potential for NK cells in autoimmunity. As I sort of mentioned before, we've seen, including with multidose regimens, super clean safety profiles across our entire class of NK cell therapies. Whether that be in hematologic malignancies or solid tumors, we've been able to deliver NK cells in the outpatient setting in the community. And so I think that bodes very well for our potential to differentiate and reach patients with autoimmunity outside of the academic medical centers.

Thank you.

I would now like to turn the conference back to Scott Wolchko for closing remarks. Sir?

Thank you. And thank you, everyone, for all your great questions today. Look forward to seeing you in the near future. Be well.

This concludes today's conference call. Thank you for participating. You may now disconnect.