Welcome to the Fate Therapeutics First Quarter 2024 Financial Results Conference Call. This call is being webcast live on the Investors section of Fate's website at fatetherapeutics.com. As a reminder, today's call is also being recorded. I would now like to introduce Scott Wolchko, President and CEO of Fate Therapeutics. Please go ahead.

Thank you. Good afternoon, and thanks, everyone, for joining us for the Fate Therapeutics First Quarter 2024 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-Q for the quarter ended March 31, 2024, 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 the market today as well as the risk factors included in our Form 10-Q for the quarter ended March 31, 2024, 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 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. We will focus today's remarks on the data presented today at the American Society of Gene and Cell Therapy Annual Meeting for our off-the-shelf FT819 CAR T-cell and FT522 CAR NK cell programs and discuss key program initiatives that we are pursuing to achieve therapeutic differentiation and improved patient outcomes. In addition, we will highlight clinical readouts that we are projecting to achieve in 2024 across our iPSC product pipeline for the treatment of cancer and autoimmune diseases. Finally, we will review our financial position where our first quarter capital raise and strong cash balance have created operating runway into the second half of 2026. Beginning with FT819, our off-the-shelf CD19-targeted CAR T-cell program. Today, at the ASGCT Annual Meeting, we presented translational data from our FT819 Phase I study in relapsed refractory B-cell malignancies, which show that a single dose of FT819 exhibited multiple mechanisms of action implicated in generating an immune reset in patients with B cell-mediated autoimmune diseases. The translational data supporting these mechanisms included rapid, deep and sustained CD19+ B-cell depletion in the peripheral blood, patient case studies of primary, secondary and tertiary tissue trafficking, infiltration and activity with CD19+ B-cell elimination in tissue and patient case studies of plasma cell depletion and B-cell reconstitution with recovery of naive B cells and little to no recovery of activated memory B cells or plasmablasts. Notably, we also presented patient case studies demonstrating rapid, deep and sustained B-cell depletion accompanied by clinical responses without the use of fludarabine as a conditioning agent. Collectively, we believe these data support the disease-modifying potential of FT819 for patients with B cell-mediated autoimmune diseases. To that end, I am pleased to announce that the first lupus patient has been treated in our Phase I autoimmunity study of FT819. This first patient, a 27-year-old woman with refractory disease despite having previously been treated with multiple standard of care therapies, received conditioning chemotherapy followed by a single dose of FT819 at 360 million cells. The patient was discharged after a 3-day hospitalization stay without any notable adverse events. At ASGCT today, we also presented promising data from a first-of-kind translational assay using a sample of the patient's blood obtained prior to administration of conditioning chemotherapy, where we observed rapid and potent depletion of the patient's CD19+ B cells in an ex vivo cytotoxicity assay with FT819. It is worthwhile to note that treatment of this first patient occurred within weeks of site activation. We believe this patient experience exemplifies the potential of an off-the-shelf cell therapy to overcome challenges that may hinder autologous cell therapies in reaching patients with autoimmune diseases, including the need for apheresis, complex manufacturing and treatment logistics, and extended patient hospitalization. Furthermore, since we have observed deep B-cell depletion and clinical responses without the use of fludarabine as a conditioning agent in our Phase I study of FT819 for B cell malignancies, we believe FT819 may have disease-modifying potential in autoimmunity using alternative conditioning regimens. We plan to amend the current clinical protocol for our Phase I autoimmunity study in the second quarter of 2024 to enable FT819 administration with single-agent cytotoxan at the same dose used by rheumatologists for treatment of patients with autoimmune disease. We believe that an off-the-shelf add-on of FT819 to commonly used treatment regimens may contribute to a highly differentiating patient experience. Dose escalation in our FT819 Phase I study in relapsed/refractory B cell malignancies has now completed where 43 patients were treated with a single dose of FT819 at up to 1 billion cells without HLA matching. We observed clinical responses, including complete responses in heavily pretreated patients with aggressive disease, including in relapsed refractory large B cell lymphoma patients that were previously treated with autologous CD19 targeted CAR T-cell therapy. The safety and tolerability profile of FT819 was favorable with no dose-limiting toxicities, no events of any grade of ICANS or graft versus host disease and a low incidence of only low-grade CRS. We believe the established clinical safety and tolerability profile of FT819 is differentiated and may also be of significant import for treatment of patients with autoimmune diseases. At this time, we intend to focus all further clinical development of FT819 exclusively in autoimmunity. Today, at the ASGCT Annual Meeting, we also presented data from our FT522 off-the-shelf CD19 targeted CAR NK cell program, which is the first product candidate emerging from our iPSC product platform that incorporates alloimmune defense receptor technology. Today, the treatment course for administration of cell-based immunotherapies including both autologous and allogeneic cell therapies requires conditioning patients with chemotherapy. Conditioning chemotherapy can induce toxicities, prevent combination with standard of care treatments widely used in the community-based settings, and limit patient access and reach. ADR technology incorporated into 522 is designed to enable effective treatment without administration of conditioning chemotherapy to patients, which we believe has the potential to redefine the cell therapy treatment paradigm. We have previously presented preclinical data using cancer cell lines demonstrating that the co-culture of ADR armed CAR NK cells with alloreactive T cells promotes NK cell proliferation, enhances NK cell persistence and increases antitumor activity, indicating that arming with ADR technology has the potential to enable effector cell function in the presence of an alloreactive system. Today, at the ASGCT Annual Meeting we reported preclinical data using SLE disease cells. In a novel rechallenge assay using peripheral blood mononuclear cells from an unmatched SLE donor, FT522 uniquely drove rapid and deep depletion of CD19+ donor B cells, eliminated alloreactive donor T cells and maintained functional persistence with the ability to kill additional CD19+ donor B cells upon rechallenge. In addition, we also presented initial translational data from the first 2 patients treated in our ongoing Phase I study of FT522 in relapsed refractory B-cell lymphoma. These data show enhanced persistence of 522 in the periphery compared to clinical data observed with FT596, our prior generation CD19 targeted CAR NK cell without ADR technology. Importantly, these data also show rapid, deep and sustained B-cell depletion in the periphery throughout the 1-month treatment cycle. We intend to submit an IND application to the FDA in the middle of 2024 to expand our clinical investigation of FT522 for treatment of various B-cell mediated autoimmune diseases, including without administration of conditioning chemotherapy to patients. I'm also pleased to report that the first 3 patients in the conditioning arm of our Phase I study of FT522 for a relapsed refractory B-cell lymphoma have now completed safety assessment without any dose-limiting toxicities. And there were no events of any grade of CRS, ICANS or GvHD. Dose escalation is now ongoing at 900 million cells per dose. In addition, patient enrollment has now been initiated in the no conditioning arm at 300 million cells per dose. And we are poised to clinically assess the safety and activity of our ADR armed FT522 CAR NK cell program without administration of conditioning chemotherapy to patients. Turning to our solid tumor initiatives. I'm also pleased to announce that under our collaboration with Ono Pharmaceutical, we have recently treated the first patient in our Phase I study of FT825. Designed using the company's iPSC product platform, we believe FT825 represents an exciting new frontier in the field of cell-based cancer immunotherapy. A multiplexed engineered iPSC-derived CAR-T cell program incorporates a constellation of synthetic antitumor mechanisms that are designed to harness the potential of both innate and adaptive immunity and to overcome unique challenges in treating solid tumors. These mechanisms 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 CD16A receptor to promote antibody-dependent cellular cytotoxicity and a novel cancer specific HER2-targeted antigen binding domain, which has shown differentiated activity from that of trastuzumab in preclinical studies including against HER2 low expressing tumor cells. The first patient in the Phase I study was diagnosed with HER2+ gastroesophageal junction adenocarcinoma, had progressed after receiving multiple lines of treatment, including HER2-targeted therapies. And was administered standard conditioning chemotherapy followed by a single dose of FT825 as monotherapy at 100 million cells. As we consider our strategic direction, we believe there is a strong value proposition for our iPSC product platform and off-the-shelf cell therapies in autoimmunity for patient safety, convenience and accessibility as well as cost and scale may be key differentiating factors. We believe our ADR technology can enable effective treatment with cell therapy without requiring administration of conditioning chemotherapy to patients, which has the potential to redefine the cell therapy treatment paradigm and patient experience for cancer and autoimmunity. And we believe our multiplex engineered iPSC-derived CAR T-cell platform can deliver multiple synthetic mechanisms of antitumor activity with the potential to overcome unique challenges in treating solid tumors. As we look ahead into the second half of 2024, we are well positioned to reach a report on 5 key clinical milestones across our iPSC product pipeline for cancer and autoimmune diseases. Number one, we seek to demonstrate the disease transforming potential of FT819 in B-cell-mediated autoimmune diseases. Specifically, we expect to read out initial Phase I clinical data for the first 3 to 5 patients treated with FT819 for moderate to severe Systemic Lupus Erythematosus (SLE). Number two, we seek to administer FT819 without fludarabine and instead with commonly used treatment regimens for autoimmune diseases. Specifically, we intend to amend the current IND for our FT819 Phase I autoimmunity study to include administration with single-agent cytotoxan, and expect to read out initial patient clinical data. Number three, we seek to demonstrate the potential of our proprietary ADR technology to enable effective treatment of patients without administration of conditioning chemotherapy. Specifically, we expect to read out the first 5 no conditioning patients treated with 522 in our Phase I study for B-cell lymphoma. Number four, we seek to broadly investigate 522 without conditioning chemotherapy for treatment of various B-cell mediated autoimmune diseases. Specifically, we expect to submit an IND application and subject to IND allowance by the FDA, initiate patient enrollment in a Phase I multi-indication study of 522 for autoimmunity. And finally, we seek to establish an initial clinical proof of concept for our multiplexed engineered iPSC-derived CAR T-cell platform in treating solid tumors. Specifically, we expect to read out the first 3 to 5 patients treated with FT825 in our Phase I study for advanced solid tumors. I would now like to turn the call over to Ed to review our financial results for the first quarter.

Thank you, Scott, and good afternoon. Fate Therapeutics is in a strong financial position to advance our pipeline of iPSC-derived CAR T and CAR NK cell programs for autoimmune diseases and cancer. With the addition of net proceeds from the company's $80 million underwritten offering of common stock, and $20 million concurrent private placement of prefunded warrants in March, our cash, cash equivalents and investments at the end of the first quarter were approximately $391 million. In the first quarter, our reported revenue of $1.9 million was consistent with the prior 2 quarters and reflects the research funding associated with the development of a second product candidate against an undisclosed target in solid tumors under our collaboration with Ono Pharmaceutical. As a reminder, after opting into a U.S. and European co-development and co-commercialization arrangement with Ono for FT825 in the fourth quarter of 2022, we account for that program's reimbursable expenses as an offset within our research and development costs. We recognized $800,000 of contra R&D expense in the quarter. Research and development expenses for the first quarter were $32.1 million, essentially flat versus the fourth quarter of last year. Our expenditures in R&D were driven primarily by salaries and benefits, including share-based compensation and from clinical trial costs and demand for R&D materials. General and administrative expenses for the first quarter increased sequentially by 16% to $20.9 million. The increase in our G&A expenses was attributable primarily to increases in legal related fees. Total operating expenses for the first quarter increased by 7% relative to the fourth quarter of 2023 to $53 million, which included $11 million in noncash 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 2 additional milestone payments may be owed to MSK based on subsequent trading values of the company's common stock, ranging from $100 to $150 per share. We assess the fair value of these contingent milestone payments currently valued at $2.7 million on a quarterly basis. In the first quarter, we recorded a noncash $1.4 million nonoperating loss associated with the change in fair value. Our net loss for the quarter was $48 million or $0.47 per share. Finally, as we consider the investments we plan to make this year, we expect our GAAP operating expenses, which includes noncash items such as stock compensation expense and depreciation for the full year to be between $215 million and $230 million, and that we will end the year with more than $270 million in cash and cash equivalents and investments. I would now like to open the call for questions.

The first question comes from Michael Yee with Jefferies.

We had a 2-part question. Congrats on all the progress, Scott. On the autoimmune study that is enrolling, I know that was a bit slow to get off, but it sounds like you're going to have some good momentum and report patients. Can you just talk a little bit about how the plan to also allow single-agent cytoxan would impact things and how you think about what that would show and how that would impact the design of the study? And then the second question is related to 522, I think it's exciting you're now in the second cohort without lympho depletion. Can you just talk about the results that you might see there and how you would read through and what you see there into the idea for autoimmune as well?

Sure. In the autoimmunity study with FT819, the current design includes two different conditioning alternatives. The first is a standard 3-day cycle using cyclophosphamide and fludarabine, which is frequently utilized in oncology. This involves administering 500 milligrams per square meter of cyclophosphamide over three days, along with 30 milligrams per square meter of fludarabine over three days. The study also allows for a second conditioning regimen, which is based on bendamustine. This second option consists of a 2-day treatment with bendamustine. We believe we have established a strong proof of concept based on data from our FT819 oncology study, involving patients with cell malignancies who underwent the bendamustine conditioning instead of the cy/flu regimen. Today, we presented data specifically from these patients, showing significant B-cell depletion in the periphery maintained throughout the 30-day treatment cycle, and importantly, we observed clinical responses associated with the bendamustine conditioning regimen. So we did not use fludarabine. So in that regimen, we're not using fludarabine. So we saw activity with FT819 without fludarabine. And so that gives us confidence that we can amend the IND to add on to a cytoxan-only regimen. We believe we can accomplish that efficiently through an amendment to the IND, essentially adding a third "conditioning regimen" for patients. And so the study would provide physicians choice of cy/flu conditioning, bendamustine conditioning or single agent cytoxan conditioning. And again, since cytoxan and bendamustine are in the same class of molecule and given the activity we've seen in the oncology study, we feel confident in FT819's ability to perform in a cytoxan-only regimen without the fludarabine. Long answer, but I hope that was clear.

Yes. Very nice. And then the read-through from oncology because you're in the Cohort B without conditioning?

Yes. So with respect to 522, so with 522, obviously, we have a long history with NK cells. We have started this study with cy/flu conditioning. It provides us the opportunity to do some direct comparison with 522 based on historical data sets that we have generated with FT596, our prior generation product. We presented data today where we believe in early small numbers of patients, obviously, we think we're seeing some differentiated activity with respect to persistence, which we're excited about. And so we are very excited now to essentially begin our clinical experiment with 522 or clinical experience with 522 with no conditioning. Preclinically, and I'll let Bob talk about it, we've done a tremendous amount of work with 522 preclinically in allogeneic systems, both using cancer cell lines as well as now using donor SLE cells. And we presented the donor SLE preclinical data today. I'll let Bob talk about that because I think it does demonstrate the potential of 522 to essentially thrive in an allogeneic disease system.

Thanks, Scott. So just to talk about preclinical and also answer some of your questions about how the clinical data will play out for autoimmune. So in the preclinically, as Scott mentioned, having the ADR technology in 522 allows us to actually show activity and persistence even when there is an intact PBMC compartment. So in a petri dish, we try to mimic what's happening in the patient setting. But having the PBMCs, and there are all different types of cells from PBMC. And we showed that with 522, you can actually show functional persistence. And this is very unique to the ADR technology because if you have NK cells without ADR or autologous CAR-T, you won't get this observation. And this observation is very specific because we can co-culture 522 with PBMCs and show that we can target because there's a CAR19 and 522, the B-cells in PBMC. However, we don't see an alloreaction that's induced by the T-cell compartment. Even though these cells have an intact HLA expression under surface or product, we are able to hold off the alloreaction because we target from B positive population, which is the final stage of an activated cell. So we are able to hold off on that. And we can maintain activity through functional persistence because when we rechallenge the 522 co-culture with additional PBMCs, we can continue targeting the B-cell compartment and maintain functional persistence. This is not seen with auto CAR-T. This is not seen with NK cells. Moving to the clinical experience, I think one of the things that we're very excited about with our ability in translation on the 522 without cy/flu on, we're going to be able to look at ctDNA and see how the disease is modulated with each dose of 522 in an intact patient immune compartment and also look at the entire disease decrease over the treatment cycle. That's going to give us a hint of 522 activity without cy/flu conditioning. We'll also look at the endogenous immune compartment and see how that's modulated and also look at the PK in an intact immune compartment with a very sensitive assay. So we'll hopefully see a lot of activity there and be able to parlay that into autoimmune disease.

The next question comes from Yigal Nochomovitz with Citi.

This is Alim on for Yigal. We had a couple. First, on FT819, you mentioned patient case studies have shown secondary and tertiary tissue trafficking and infiltration. Are you doing tissue biopsies here?

Certainly. We have evidence of primary, secondary, and tertiary activity. For the primary, we see persistence in the bone marrow, which is linked to the reduction and elimination of CLL positive cells, supported by full cytometry. We demonstrate persistence and infiltration in the bone marrow along with disease clearance. For the secondary lymphoid activity, we have biopsies from the lymphoid tissues showing a reduced population. For the tertiary aspect, we referenced the liver and PEDSCORE in our presentation, which correlates to PK. Through various methods, whether by direct detection or proxy detection of cells, we are able to illustrate our activity in primary, secondary, and tertiary tissues.

Okay. Great. That makes sense. And then a second question is more of a general question. Given you're planning to file an IND for FT522 for autoimmune. How should we think about the expectations on the efficacy here? Are you hoping to see efficacy on par with CAR-Ts? Or is that the main focus is more like removing or lowering the preconditioning burden maybe a little bit of a cost on efficacy?

Yes. I think as we're going into the study, we acknowledge efficacy is really important. I think at the end of the day, what's been really exciting about cell therapy here in autoimmunity is the fact that, again, this is coming out of the German study, a single dose of CAR T-cell therapy has been able to generate immune reset in patients that have had disease and refractory disease for a significant period of time. And that's been quite remarkable. And I think folks are very excited about that. I think with respect to autoimmunity, efficacy is certainly going to be important, and we need to acknowledge that at some basic level, we need to be able to compete on efficacy. That said, autoimmunity is a very different setting than oncology. And I think safety is certainly going to be at a premium with respect to autoimmunity. I think one of the challenges that has already confronted the field is that cy/flu conditioning may not be well accepted by patients in the field of autoimmunity. And so I think safety is going to be critical. I think alternative regimens where you can add on to standard of care treatment is going to be critical. I think reaching patients where they live and breathe, which is not at the academic CAR T-cell centers is going to be critical. And so I think there are a multitude of elements here that are going to be important in autoimmunity that are different than oncology. And I do think an off-the-shelf cell therapy has significant attributes that can be very appealing for these patients.

The next question comes from Daina Graybosch with Leerink Partners.

So this is Jeff on for Daina. So we have 2 questions. The first was around competitive landscape. There are some recently published encouraging data with the first-gen CD19 by blinatumomab. What was your view of that data? And how are you thinking about T-cell engager competition overall for autoimmune disease given that the modality addresses many of the same challenges of auto CAR-T that you're off-the-shelf programs do.

Yes. Regarding your general question about CD19 engagers, we are approaching the autoimmunity space with a clear awareness of the disruptive potential of CD19 engagers. As we consider development in this area, we understand the benefits that could be provided to patients through the differentiating potential of the CD19 engager, similar to what we have observed in oncology. We are focused on how our target product profile aligns with the value proposition of T cell engagers. Therefore, during this call, we emphasized the importance of moving away from cy/flu, adding to standard treatments, reaching patients in community settings, minimizing hospitalizations, and prioritizing safety and efficacy. So I think we're going into this recognizing that T-cell engagers will play an important role in treating patients with autoimmunity and developing target product profiles directly head-to-head against those.

And then looking at kind of BCMA and your plans for a next-gen program there, do you expect to use the ADR modality there? And is that sufficient? Or are you looking at other edits? And what do you think BCMA adds that you wouldn't already achieve with your CD19 programs?

Yes. Generally speaking, this is not a specific comment on BCMA, but we're very enthusiastic about the ADR technology, especially regarding its initial assessment with 522 clinically. I believe that any product candidate emerging from Fate Therapeutics from now on will incorporate the ADR technology. We firmly believe that intense conditioning chemotherapy poses challenges for the field of cell therapy, and we need to move past that. We're eager to take the lead in this area and have invested considerable effort in research and innovation to establish a new treatment approach with off-the-shelf cell therapy.

Great. Actually, just a quick follow-up in the mitigating lympho depletion. How does bendamustine only compare to cyclophosphamide only in terms of relative potency? And would you expect the same degree of CAR-T FT819 expansion in vivo and the same level of potency as you kind of saw with the bendamustine examples?

Yes, there is data available in the field of oncology and CAR T-cell therapy that compares cy/flu conditioning to bendamustine. Generally, it has been shown that bendamustine can serve as an effective alternative treatment conditioning regimen for CAR-T cell therapy. Bendamustine belongs to the same chemical class as cyclophosphamide. We have experience with bendamustine as a standalone conditioning agent without fludarabine, so we are quite confident that our programs, particularly FT819, can perform well with cyclophosphamide.

The next question comes from Mike Ulz with Morgan Stanley.

This is Rohit on for Mike. Can you just talk about what you've seen with the first lupus patient treated with FT819 and how safety compares to what's been seen in the autologous 819 therapies? And then can you also talk about what other autoimmune diseases you would consider expanding to?

Yes. I'll focus my comments on what we have disclosed so far. The first patient is still within the 30-day DLT assessment period. I can confirm that this patient was discharged after three days of hospitalization. The hospitalization was uneventful, and there were no significant adverse events. However, the patient continues to be in the 30-day DLT assessment window. Regarding our expansion into other autoimmune indications, we are engaging in significant work to evaluate that opportunity. A key aspect of our assessment involves analyzing where other studies have had success, particularly the findings from the German study and also in the area of allogeneic stem cell transplants, where other B-cell mediated diseases have shown success based on early data from the German group. I will stop there.

The next question comes from Li Watsek with Cantor Fitzgerald.

Could you provide more information on the potential indications for 522? You mentioned exploring multiple autoimmune diseases, so I'm curious if the field is quite competitive. Are there other indications you are considering, such as rheumatoid arthritis? Also, how do you view the positioning of 522 in relation to 819 regarding the patient types you intend to target?

Sure. At this point, we are doing a lot of work. I'm not going to disclose our strategy at this point in time. We are obviously doing a lot of work in thinking about our expansion strategy in autoimmunity. We are looking at areas where there have been clinical precedent with cell therapies, whether that be in transplant or out of the first data sets that are being generated, both out of Germany as well as the initial sort of company initiatives or company programs. So not prepared to disclose today how we think about expanding our FT819 IND into additional indications or the initial multi-indication study that we plan to submit for 522.

And then maybe just wondering if you can just comment on your expectation for the patient enrollment in 819 studies. It seems like as you can dose the patients fairly quickly. And then it seems like you're going to amend the protocol to allow some alternative conditioning regimens. So do you think that might drive sort of the traction with the site investigators?

Yes. We have guided that we expect to have 3 to 5 patients in the 819 study by the end of this year. We are planning to use Cytoxan only as a third potential treatment option for patients, alongside cy/flu or Cytoxan alone. It has been discussed that cy/flu may present challenges for treating patients with autoimmunity. These patients are not oncology patients and should not be treated as such. Therefore, I believe it will be crucial to move away from cy/flu as a conditioning regimen to truly unlock the potential of cell therapy in autoimmunity, and we aim to lead in that area.

The next question comes from Kara Bancroft with TD Cowen.

This is Greg speaking on behalf of Tara. I'm wondering if you can give us any timeline for when we can expect clinical data in lupus for 819?

Sure. In the prepared remarks, we have guided to an update on the first 3 to 5 patients with FT819 in SLE by the end of this year.

The next question comes from Ben Burnett with Stifel.

This is Carolina Ibanez-Ventoso on for Ben Burnett. Congratulations on all your progress. On the ex-vivo data for FT819 on the pretreatment sample from the SLE patient. What do the ET Ratios shown imply about the necessary dose and cell expansion that you would need to achieve to get that deep B-cell depletion at the end of the CAR in vivo in the SLE patient?

I'm happy to answer that question and will use some math to illustrate my point. The data shows that at a 2:1 ET ratio, we effectively eliminated all B cells in the PBMC compartment from the patient. When considering the disease burden in autoimmune conditions, specifically SLE, we estimate that there are around 100 million to 300 million disease B cells in a patient. If we are clearing nearly all cells at a 2:1 ratio and over 95% at a 1:1 ratio, our current dose of 360 million aligns well with the effective dose observed in vitro. To answer your question directly, we are eliminating all T cells at a 2:1 ratio and over 90% at a 1:1 ratio. This provides us with confidence that the current dose is appropriate for matching that in the patient setting at 360 million.

The next question comes from Peter Lawson with Barclays.

This is Alex on for Peter. Just wondering if you could maybe just recap the data a little bit the ASGCT data. When you look at the preclinical and translational data for 819 versus 522, so the CAR program versus the NK cell program. Any notable differences you see in terms of tissue distribution, B-cell depletion or B-cell reconstitution?

Sure. I can answer that question. So FT819 and FT522, obviously, are very different. FT522 not only has the ADR technology but also has the IL-15 receptor fusion. So preclinically, we see a very good biodistribution with FT522 because it very much doesn't need antigen for expansion, doesn't need cytokine for expansion. So we see very good biodistribution. Obviously, it has the ability to be combined with a monoclonal antibody. So we see that as well, either we enhance activity against the specific cells like, for example, targeting CD19 and CD20 at the same time or going after other cell types that have eliminated the CD19 expression and are only expressing, for example, CD38. So that multi-antigen perspective also comes in through with FT522. The FT819 having the 1XX CAR and the track locus, it is a very potent CAR product. And so we see that when we go head-to-head against auto CAR-T in preclinical studies. So we see very potent activity within FT819, as I mentioned earlier as well.

And I think one of the comments I would just add on to that is FT819 with respect to its manufactured phenotype has high expression of CXCR4. And so we've seen very good sort of homing and trafficking and infiltration of secondary and tertiary tissue in preclinical studies.

Okay. And I guess does that have any implications for which type of indications you could target in the autoimmune setting?

Yes. Yes. I mean it's something we're looking at. I mean we are still doing work on thinking about exactly how to expand and what indications are going to be prioritized with 819 and 522. We are prepared and now we are preparing to expand the 819 IND to consider additional indications. And obviously, we've discussed filing a multi-indication IND for 522. So a lot of work going on, stay tuned there on that front.

The next question comes from Yanan Zhu with Wells Fargo Securities.

Great. To follow up on a previous question about the recent bispecific literature, do you have an opinion on how deep B-cell depletion achieved by bispecific antibodies compares to that of cellular therapy? If bispecifics become a treatment option, do you anticipate they would require repeated administration at specific intervals? Could this approach be viable or competitive with cellular therapy? Lastly, regarding 819, do you see the possibility of administering additional doses at certain intervals, and could this be part of the product profile? Might you be considering this in the current study?

Sure. So forgive me, I am not an expert on the bispecific engagers. And so I can't talk in an informative way about the depth of B-cell depletion that's been seen or achieved with the B-cell engagers. Obviously, in the setting of oncology, the T-cell engagers have generated complete responses. So again, we are going into the field of autoimmunity, recognizing that T-cell engagers can be an attractive modality and have the potential to drive an immune reset. Whether that's achievable, what the duration of that looks like, what the side effect of profile that looks like, how many doses, all that's TBD. We're very early, I think, just generally in the field of autoimmunity. That said, I think one of the potential strengths of an engager is that it can be multi-dosed? And I do think from our standpoint, as a company, we've always discussed the fact that an off-the-shelf cell therapy, we do think has multi-dosing potential. I think multi-dosing potential can be hindered by cy/flu conditioning. Hence, as we've discussed, we think it's important to think about both 819 and 522 being developed as add-on strategies to standard regimens that are used today to treat patients in the community setting with autoimmune disease. And I think you will see us continue to move in that direction where we are thinking about delivering and dosing cell therapies as if they were a monoclonal antibody.

The next question comes from Bill Maughan with Canaccord Genuity.

To follow up on the 819 data from this morning, all the pharmacokinetics were positive. I'm curious about how we can translate that information from oncology patients to those with autoimmune diseases, considering that antigen-dependent expansion is a crucial aspect of pharmacokinetics in CAR T-cell therapy. How do you view the translation from one patient population to another?

Yes. I think there's a lot we don't know. With respect to how the 2 diseases are going to translate, I think what we have certainly seen with the PK, is that we have seen CD19 mediated expansion that is dose-dependent. Certainly, the mechanism of action or one of the key mechanisms of action in autoimmunity is being able to recognize and target and eliminate CD19+ B-cells. So I don't necessarily presume that actually the PK profiles are necessarily going to be the same in oncology versus autoimmunity. I think at the end of the day, what's obviously critical is the kinetics and depth of B-cell depletion.

The next question comes from Ethan Markowski with Needham & Company.

This is Ethan on for Gil Blum. So I'm just looking at the chart in the ASGCT data. And I think you guys clearly show that FT522 demonstrates deeper B-cell depletion than FT596. But it looks like FT819 graph, at least the bar graph and depletion is very similar to FT596 with themselves kind of coming back up in the mid end of the cycle. I was wondering, first, how important this complete response is? And if some sales coming back at the end is clinically relevant. And then also just from a cost savings perspective, I know you're no longer planning to move forward in multiple myeloma and B-cell lymphoma. Just wondering if that has any impact in a positive way on near-term R&D spend?

Yes. Regarding the previous question on clinical development in multiple myeloma, there are patient costs involved. While we are not moving forward with 576 into dose expansion, we are actively developing multiple myeloma. We are also expanding our efforts in autoimmunity. When it comes to cash burn, we are not focused on reducing or saving; we are making significant investments. In terms of B-cell depletion, with both 819 and 522, we are observing very low levels of cells in many cases, and I will let Bob provide more insight on the lower limits of detection. When we reach such low levels, it raises questions about significance. We do not believe we are seeing different levels of depletion between 819 and 522. Bob can elaborate on that. I want to clarify that the 522 data set is based on a much smaller group compared to the 819 data set, which included 23 patients with B-cell lymphoma. Some patients in the 819 cohort had relatively high B-cell counts when they entered the study, and we found that we could deplete these elevated levels with FT819. In contrast, the 522 data set includes only 2 patients whose baseline B-cell counts were generally lower than those in the 819 group. I’ll let Bob expand on this, but generally, we've observed that B-cell reconstitution from the SHED data can occur as early as the third or fourth week and as late as 4 months.

But I'll let Bob sort of finish up on that if I missed anything. No, I think you well covered it. When discussing 819, as Scott mentioned, there was a large number of patients, but it felt pretty much in line with showing very good B-cell depletion over the treatment cycle and B-cell recovery was seen in some of the patients. Now keep in mind, this is oncology. So what's coming back up could be a lymphoma cell or something. So we're in a much more aggressive stage than what SHED showed. But as Scott mentioned, what SHED showed is that B-cells do come back from 30 days to 180 days. So every patient treated all 15 and SHED data had by, I believe, day 180 full recovery of B-cells.

So 819 aligns closely with what SHED demonstrated. Regarding 522, you raise an excellent point, and I believe it relates to its combination with cytoxan. This represents a significant impact we are observing. While I won't speculate too much on the two patients involved, it does highlight the effectiveness of CAR combined with hnCD16 in these circumstances. Overall, the data from both programs has been quite promising so far.

Ethan, I want to expand on Scott's comments. I agree that the business mix will change throughout the year. In the first quarter, we recorded approximately $52 million to $53 million in GAAP operating expenses and around $37 million in cash burn, which has remained relatively stable in the past few quarters. Although we have one or two programs slowing down, the expectation is that as we administer the first patient dose and start to reach dose levels in certain programs, there will be an increase as the year progresses. I anticipate that the previously mentioned figures, namely the $53 million in GAAP operating expenses and $37 million to $38 million in cash burn for the quarter, will remain fairly steady. I'm more than willing to back these clinical programs, so if cash burn rises to roughly $40 million, I'm optimistic about our position. The business mix will evolve, but those numbers provide a solid foundation for the remainder of the year.

This concludes our question-and-answer session. I would like to turn the conference back over to Scott Wolchko for any closing remarks.

Thank you. Thank you for everyone today for all your good questions on the ASGCT data. I appreciate all the input and thought and speak to you soon. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.