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Edited Transcript of FATE earnings conference call or presentation 10-May-18 9:00pm GMT

Thomson Reuters StreetEvents

Q1 2018 Fate Therapeutics Inc Earnings Call

San Diego May 11, 2018 (Thomson StreetEvents) -- Edited Transcript of Fate Therapeutics Inc earnings conference call or presentation Thursday, May 10, 2018 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Chris M. Storgard

Fate Therapeutics, Inc. - Chief Medical Officer

* Daniel D. Shoemaker

Fate Therapeutics, Inc. - Chief Scientific Officer

* J. Scott Wolchko

Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director

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Conference Call Participants

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* David Matthew Nierengarten

Wedbush Securities Inc., Research Division - MD

* Edward Andrew Tenthoff

Piper Jaffray Companies, Research Division - MD and Senior Research Analyst

* Guyn Kim

BMO Capital Markets Equity Research - Analyst

* Nicholas M. Abbott

Wells Fargo Securities, LLC, Research Division - Associate Analyst

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Presentation

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Operator [1]

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Welcome to Fate Therapeutics First Quarter 2018 Financial Results Conference Call. (Operator Instructions) As a reminder, today’s call is being recorded.

I would now like to introduce Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics. You may begin, sir.

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [2]

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Thank you. Good afternoon, and thanks, everyone, for joining us for the Fate Therapeutics First Quarter 2018 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 March 31, 2018 was filed shortly thereafter, and can be found on the Investors and Media 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 in the company’s SEC filings included in our form 10-Q for the quarter ended March 31, 2018, 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 the call today are Dr. Chris Storgard, our Chief Medical Officer, and Dr. Dan Shoemaker, our Chief Scientific Officer. Today, I will highlight progress against our key 2018 operational objectives and review our financial results for the first quarter, after which we will open the call up to questions and further discussion.

A top operational objective for Fate Therapeutics in 2018 is to pioneer the clinical development of a new class of cell products for patients with cancer. We are seeking to initiate groundbreaking, first-in-human clinical trials of cell products that are made using master induced pluripotent stem cell lines. The use of master iPSC lines enables the manufacture of cell products that are uniformly engineered, well-characterized, and homogeneous in composition. And these cell products can be delivered to patients in an off-the-shelf manner, including in multi-dose combinations with other cancer treatments, to achieve potentially safer and more effective responses. We believe this novel, off-the-shelf product paradigm is disruptive to conventional autologous and allogeneic cell therapy.

In 2018, we plan to initiate a clinical trial of FT500, a universal, off-the-shelf, natural killer cell product manufactured from a clonal master iPSC line. We intend to initially develop FT500 as a rescue therapy for patients that are resistant to checkpoint inhibitors. This represents a significant unmet medical need in oncology today, since more than 60% of all patients treated with checkpoint inhibitors will either fail to respond, or relapse on therapy. Patient resistance to checkpoint inhibitor therapy can result from tumor cell evasion as well as from defects in the patient’s own immune cells, which are often damaged, dysfunctional, or present in insufficient numbers.

In the second quarter of 2018, we expect to submit an Investigational New Drug application with the FDA to initiate clinical investigation of FT500. We have made tremendous progress toward this goal over the past several months. First, we completed a GLP toxicity and tumorgenicity study, which evaluated multi-dose administration of FT500 at 2 different dose levels in animals. The results of the study demonstrated that FT500 was well-tolerated. Specifically, there were no adverse clinical observations related to the administration of FT500, there were no FT500 cell-related changes in hematology or clinical chemistry, there were no palpable masses or evidence of tumors, and there were no mortality events in animals administered FT500.

We also successfully completed multiple manufacturing runs at clinical scale for production of FT500 in a GMP manufacturing facility. Our characterization assessments on the final product from these runs indicate comparability. In each of these runs, FT500 met the pre-established specifications for identity, purity and potency, as set forth in our pre-IND meeting with the FDA.

Lastly, we finalized our proposed clinical protocol for FT500. We intend to enroll a monotherapy arm, and a checkpoint inhibitor combination arm, in subjects with advanced solid tumors. In the checkpoint inhibitor combination arm, we plan to administer a cycle of FT500 consisting of three once-weekly doses, in combination with the specific checkpoint inhibitor on which the subject has progressed or failed. Subjects with stable disease or better at the initial follow-up will be eligible for additional cycles of FT500 in combination with checkpoint inhibitor.

We believe that we have generated a strong package of preclinical safety, efficacy and manufacturing data in support of our IND submission. At this time, we are awaiting certain data from third-party vendors relating to the characterization of key ancillary reagents used in the manufacture of FT500, and we are in the process of finalizing the writing of the IND. We expect to submit the IND for FT500 in the second quarter, and we are very excited to engage with the FDA in their formal review. We want to reiterate that we believe our IND for FT500 may be the first IND for an iPS-derived cancer immunotherapy to be reviewed by the FDA. As such, our engagement with the FDA may extend beyond the standard 30-day review period as we work with the FDA to chart the course for this new class of cell products.

We’ve also made significant strides in advancing FT516, our second universal off-the-shelf NK-cell product toward IND submission. FT516 is produced from a clonal master iPSC line, engineered to uniformly express a high affinity, non-cleavable CD16 Fc receptor. CD16 combined antibody-coated tumor cells, enabling NK cells to actively lyse tumor cells through a mechanism known as ADCC, or antibody-dependent cellular cytotoxicity.

Since CD16 combined the Fc region of a tumor-targeting antibody, the use of FT516 is not limited to a specific tumor antigen. Rather, FT516 can be combined with a broad spectrum of monoclonal antibodies and bispecific engagers. In fact, we have shown that FT516 exhibits potent and persistent anti-tumor activity in vitro and in vivo, across a multitude of antigen-specific recognition and killing assays, including in combination with monoclonal antibody therapies that target CD20, HER2, and EGFR.

We have now generated and assessed the engineered IPSC clone that we plan to use for the clinical production of FT516. The engineered IPSC clone has been characterized for genomic stability, and copy number variation, and we have mapped the exact integration site of the CD16 trans gene in the genome. Obviously, this degree of characterization and uniformity of engineering cannot be achieved with conventional autologous or allogeneic cell therapy. We believe our ability to conduct extensive characterization at the single cell level and produce homogeneous cell products, are powerful advantages conveyed through the use of a master cell line.

Since the clinical manufacture of FT516 is intended to utilize the same production process that has already been developed and implemented for FT500, we believe a substantial amount of leverage from our upcoming FT500 IND submission can be realized. As a result, we believe we are well-positioned to submit an IND for FT516 in the second half of 2018. We intend to clinically investigate FT516 in multi-dose combinations with FDA-approved monoclonal antibody therapy. Toward that end, we recently secured a $4 million award from the California Institute for Regenerative Medicine to support the advancement of FT516 into a first-in-human clinical trial.

In addition to our development of universal NK-cell products, we are also developing universal CAR T-cell products. At the American Association for Cancer Research in April, we presented preclinical data on FT819, our first universal, off-the-shelf CAR T-cell product. Like FT500 and FT516, FT819 is also produced from a clonal master iPSC line, and in the case of FT819, the line is engineered to completely eliminate the T-cell receptor and to insert a CAR-targeting CD19 into the track locus. We have demonstrated that T cells derived from this clonal master iPSC line uniformly express CAR19 and are uniformly TCR-negative. We believe the ability to completely disrupt the endogenous TCR expression is a critical component for universality, as failure to completely remove the alloreactive TCR has induced the life-threatening complication of Graft-versus-host disease in allogeneic CAR T-cell clinical trials conducted by other parties.

In preclinical studies, we have shown that FT819 exhibits a robust cytotoxic T-cell response in vitro, when challenged with CD19-positive tumor cells. This response was found to be target-specific, killing only CD19-positive tumor cells and sparing CD19-negative tumor cells. Additionally, FT819 also displayed enhanced production of effector cytokines, including interferon gamma and TNF alpha, and cytolytic proteins including perforin and granzyme B.

As proof of concept, we engineered the FT819 master iPS line with an additional [trans-D] gene to uniformly express our high affinity, non-cleavable CD16 Fc receptor. These dual-targeted T cells demonstrated anti-tumor activity in vitro against CD19-positive tumor cells as well as against CD19-negative, CD20-positive tumor cells, in combination with rituximab. This dual-targeted approach can substantially broaden the cell products’ therapeutic reach and overcome CD19 antigen escape through combination with other proven cancer treatments. We believe this significantly differentiates FT819 from other CAR19 T-cell products that are approved and undergoing development today. We continue to work on FT819 with Dr. Michel Sadelain at Memorial Sloan Kettering, under our exclusive collaboration for the research and development of iPS-derived T cell immunotherapies, and we are targeting mid-2019 to submit an IND for FT819.

On May 16, at the American Society of Gene and Cell Therapy, Dr. Sadelain will present a 30-minute overview of our collaboration. In addition to the progress we’ve made in advancing our off-the-shelf NK and T cell cancer immunotherapies toward clinical development, we are very pleased with the initial clinical data we continue to see from our 2 donor-derived cell therapy programs. At several leading scientific conferences over the past couple months, we have highlighted initial clinical data from our PROTECT clinical trial of ProTmune, our next-generation donor cell graft for patients with hematologic malignancies, undergoing allogeneic hematopoietic cell transplantation.

In December, we first reported Day 100 clinical data on the 7 subjects administered ProTmune in the Phase I stage of PROTECT. Each of the three subjects that experienced acute Graft-versus-host disease during the first 100 days following transplant promptly responded to standard-of-care steroid treatment. This response is clinically important, as extended use of immunosuppressive agents to treat acute GVHD compromises the anti-leukemia activity of the transplant procedure and significantly increases the risk of cancer relapse and mortality.

In February, we presented immune reconstitution data from the Phase I stage of PROTECT, where we compared the kinetics of reconstitution of both the T and NK cell compartments in the 7 subjects administered ProTmune, as compared to matched historical controls. The T cell compartment of ProTmune showed comparable levels of reconstitution as compared to matched historical controls. Interestingly, the NK cell compartment showed more robust levels of reconstitution. These data indicate the ProTmune is an immunologically-active graft with the capacity to fight infections and cancer.

In March, we presented additional clinical data from the Phase I stage of PROTECT. As of the February 26 data cutoff, no serious adverse events related to ProTmune and no events of cancer relapse had been reported by investigators. Additionally, of the 7 subjects administered ProTmune in the PROTECT Phase I study, 5 of 7 subjects remained alive and relapse-free with a median time-on-study of 228 days, where the 2 incidents of non-relapse mortality were deemed not attributable to ProTmune. These initial clinical data have been well-received by our investigators.

To advance the cure of potential of allogeneic transplant, therapeutic solutions must address both severe GVHD and cancer relapse. Collectively, these clinical data indicate that ProTmune may provide the critical immunological balance necessary to reduce the incidence and severity of GVHD and maintain the fight against cancer.

Since sharing these data, we have seen a marked increase in subjects screening for enrollment in the ongoing Phase II stage of PROTECT. The randomized, controlled, and double-blinded Phase II stage is currently open at 15 U.S. centers. We have also seen encouraging clinical data in the dose escalation stages of three ongoing clinical trials of NK100, our first-in-class allogeneic donor-derived natural killer cell cancer immunotherapy, comprised of adaptive memory and K cells.

In March, a the Third Annual Innate Killer Summit, we released initial clinical data from the ongoing APOLLO Phase I study of NK100 for the treatment of women with ovarian cancer resistant to or recurrent on platinum-based treatment. Two heavily-pre-treated subjects each received a single intraperitoneal infusion of NK100 following outpatient lymphoconditioning. No dose limiting toxicities were reported in either subject, and there were no reported NK100-related serious adverse events, including no reported events of GVHD, cytokine release syndrome, or neurotoxicity. The Day 28 response evaluation for Subject 2 following a single intraperitoneal infusion showed stable disease with evidence of tumor reduction. The subject elected to receive a second infusion of NK100, which was also well-tolerated. Following the second infusion, an assessment of the cells in the cavity showed co-existence of NK100 with the subject’s own T cells at day 14. Subject 2 is now approximately three-and-a-half months out from the first infusion of NK100, and remains on study.

Three clinical trials of NK100 are currently ongoing at the Masonic Cancer Center: VOYAGE, for the treatment of relapsed refractory AML; APOLLO, for the treatment of recurrent ovarian cancer; and Dimension, for the treatment of advanced solid tumors including combination with FDA-approved monoclonal antibody therapy. We are currently conducting study startup activities at 4 additional sites. We expect to continue to share clinical data from VOYAGE, APOLLO and Dimension studies, at scientific conferences throughout 2018, as these three studies progress through dose escalation and expansion.

Turning to our financial results for the first quarter ended March 31, 2018, Fate Therapeutics reported a net loss of $14.1 million, or $0.27 per common share, as compared to a net loss of $10.1 million, or $0.24 per common share, for the same period last year.

Revenue was $1 million for the first quarter of 2018 as well as for the first quarter of 2017. Revenue in both periods was generated from our strategic research collaboration with Juno Therapeutics.

Research and development expenses for the first quarter of 2018 were $11.5 million compared to $8 million for the same period last year. The increase in our R&D expenses was attributable primarily to the conduct of FT500 IND-enabling activities, and NK100 clinical trials, equipment and material expenditures associated with the pre-clinical development of our iPS-derived NK and T cell products, and employee compensation associated with growth and head count.

General and administrative expenses for the first quarter of 2018 were $3.6 million compared to $3 million for the same period last year. The increase in our G&A expenses was attributable primarily to stock-based compensation expense, and intellectual property and licensing costs.

After adjusting for research funding proceeds from Juno of $500,000 received in April, and for stock-based compensation expense of approximately $1.4 million, total operating expenses for the first quarter of 2018 were approximately $13.2 million.

At the end of the first quarter of 2018, cash, cash equivalents and short-term investments were approximately $89 million. Common stock outstanding was approximately 52.9 million shares, and preferred convertible outstanding was approximately 2.8 million shares, each of which is convertible into 5 shares of common stock under certain conditions.

At this time, I’d like to open the call up to any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Ted Tenthoff from Piper Jaffray.

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Edward Andrew Tenthoff, Piper Jaffray Companies, Research Division - MD and Senior Research Analyst [2]

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Scott, running through the financials reminded me that you were a CFO once, you did it so effectively. You’ve done such a good job as CEO, I always forget that, the finance side craft. So great job on that. Quick question, if I may, tell us a little bit more about what Michel is going to be presenting? Is this really going to be more just overview of the platform and how iPSCs can be used to develop therapeutics? Tell us just a little bit more about that? And then also, when should we be expecting additional clinical updates from the ongoing studies?

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Daniel D. Shoemaker, Fate Therapeutics, Inc. - Chief Scientific Officer [3]

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So Michel is really going to give an overview of the work we’ve been doing over the last several years, just developing the platform of how we create engineered iPSCs, and then differentiate them through the [34-phase] into CD8, single-positive, alpha beta CAR T cells, and it’s really going to highlight the recent advances we’ve made to refining that differentiation protocol, which has been a major breakthrough in making really genuine alpha beta CD8 T cells.

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Chris M. Storgard, Fate Therapeutics, Inc. - Chief Medical Officer [4]

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Chris here, regarding the question on clinical updates, starting first with ProTmune, we expect to be able to provide the one-year update on all of the Phase I subjects at ASH this year. That’s the plans for that. As far as NK100, as those three studies continue to enroll, we’ll continue to provide updates at scientific conferences that align with the availability of data.

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Daniel D. Shoemaker, Fate Therapeutics, Inc. - Chief Scientific Officer [5]

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And Ted, I’d also like to add, back to Michel’s presentation, we’re really going to highlight the advantages of removing the TCR completely and inserting the CAR in to the track locus and merging some of the advantages that were described last year in Michel’s Nature paper. And so just to really tie everything together, and how we’re working towards a really great, off-the-shelf CD19 T cell product.

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Operator [6]

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Our next question comes from the line of David Nierengarten from Wedbush Securities.

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David Matthew Nierengarten, Wedbush Securities Inc., Research Division - MD [7]

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I had a question, you talked a little bit about this obviously being a first-in-class, NK500, the NK500 series being first-in-class for the FDA to take a look at, and think about with the IND meeting. Is there any items that are particular at -- getting particular attention with the FDA, or anything you can point to that is maybe a little bit of a concern, or just things they’re looking at in particular?

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [8]

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So we’ve had 2 different pre-IND meetings with the FDA, one for FT500 and a second one for FT516. We focused one of the IND meetings really on the nature of the iPS cell platform, how do you create clonal, master iPS cell lines, and what’s involved in that. And the second IND meeting we had, we really focused on, how do you take that clone and in an efficient manufacturing process, turn that into our cells of interest, whether it be an NK cell or a T cell. And so much -- we’ve had 2 different meetings, 2 different areas of focus. I think we’ve done a really thorough job here over the past couple months in carefully dissecting the 2 different pre-IND meetings, and ensuring as best we can that we’re addressing all the FDA’s questions. Some of the things that we’ve talked about in the past, that the FDA was concerned about obviously, is are there any residual IPS cells for instance, that remain in your final product? And we’ve developed internally at Fate Therapeutics, multiple different ways to characterize our final product, including our final product not having any residual iPS cells. So being absent of any iPS cells in the final product. And so we feel really comfortable with all the work that we’ve done in terms of characterizing the final product. As I mentioned in one of the FDA meetings, we actually set forth different criteria for the final product with respect to potency and purity and how to identify the final product as well as any residuals in the final product. And we’ve done I think a really thorough job now through multiple different manufacturing runs in a GMP facility, producing a final product at clinical scale that actually met and/or exceeded our pre-specified criteria. So I think we’re in a really good position as it relates to pioneering this, but as you mentioned, as I’ve mentioned, it is a first-of-kind and we expect it may be a little bit of a journey with the FDA to navigate through it. And we’re very excited about it, and totally up for it, and looking forward to it.

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David Matthew Nierengarten, Wedbush Securities Inc., Research Division - MD [9]

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And then just maybe a quick follow-up, you mentioned leveraging the first-in-class nature to more rapidly bring next clinical candidates. Is that fair that the FDA will kind of say, okay, you made one iPSC, you’ve made them all? Not to joke about it, but is that really what you’re hoping for then, and has the FDA indicated at least a willingness to treat subsequent candidates as, I don’t want to say, you know -- I don’t want to say easy, but you know what I’m getting at, straight forward?

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [10]

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So the way we make and the way we select our iPS clone, whether it’s for FT500 or 516, is the same exact process. So that process of creating the clonal iPS cell line is the same exact process, from product to product. Just as importantly, once you create that clonal master iPS cell line, the manufacturing process on how you turn that into large quantities of homogeneous NK cells, in this case, is exactly the same. We are not expecting to change our manufacturing process from 500 to 516. So one of the things that we note, is other than it being a different essentially, vial that we start with for manufacture of 500 versus 516, the process for all intents and purposes is exactly the same. So much of the work that we’re going through right now in terms of establishing the way we create the master iPS cell line, how we characterize our cell lines, how we bank our cell lines, how we differentiate our cell lines to create NK-cell products, how we characterize our NK-cell products, all of that is completely leverageable.

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David Matthew Nierengarten, Wedbush Securities Inc., Research Division - MD [11]

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Yes, and then the real question…

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [12]

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And it’s now leverageable over the third product and the fourth product, with respect to NK cells.

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David Matthew Nierengarten, Wedbush Securities Inc., Research Division - MD [13]

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Yes, and then the -- and then the real question, and it sounds like you’ve answered that, would be then on the purification side of things, the final product, just having the specifications in place, then?

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [14]

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Absolutely.

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David Matthew Nierengarten, Wedbush Securities Inc., Research Division - MD [15]

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And applying to every product, then? Okay, great.

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [16]

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Absolutely.

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Operator [17]

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The next question comes from the line of Jim Birchenough from Wells Fargo.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [18]

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It’s Nick in for Jim this afternoon. Lots of moving parts here, hard to know where to start, but let me start with ProTmune. You said that in case our recovery was robust, does that mean accelerated? Back to -- so an accelerated recovery, back to normal levels? And then, for the matched control, was that including post-transplant cyclophosphamide, as GVHD prophylaxis?

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Daniel D. Shoemaker, Fate Therapeutics, Inc. - Chief Scientific Officer [19]

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This is Dan. So we saw both an acceleration as well as a robust overall reconstitution of the NK in the compartment. The historical controls were matched exactly to the types of conditioning regimens that were used in the ProTmune Phase I study, so we tried to -- we aligned as many of the variables as possible to make an apples-to-apples comparison. And so yes, I would say the NK cells came back faster, and they ended up just looking at the timepoints of 30 days and 90 days, they just ended up with a nice, robust immune reconstitution. And we’re really excited as we link this towards the absence of relapse in these first 7 patients, and then we think that a lot of that can be tied to the robust immune reconstitution.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [20]

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Okay, and then the post-transplant cyclophosphamide, was that -- did some of those controls receive that?

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Daniel D. Shoemaker, Fate Therapeutics, Inc. - Chief Scientific Officer [21]

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I do not believe so.

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [22]

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The match controls came from one of the centers that participated in the Phase I study, and it was direct comparison of matched unrelated donor transplant.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [23]

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Okay, and then for FT500, Scott, you explained the design for the combination arm. What about the monotherapy arm? What are those patients going to be?

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Chris M. Storgard, Fate Therapeutics, Inc. - Chief Medical Officer [24]

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Chris Storgard, here. So the monotherapy arm is going to be a Phase I salvage population of all solid tumors for the dose escalation portion and the expansion.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [25]

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Okay, that may or may not have received PD1?

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Chris M. Storgard, Fate Therapeutics, Inc. - Chief Medical Officer [26]

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That is correct, they may or may not. Not a requirement, but certainly something we’re going to be looking for.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [27]

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Okay, and then on 516, CD16, is that -- do you put the human, non-cleavable CD16 into the CD16 gene, or a safe harbor location?

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [28]

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No, we use a lentiviral construct to insert it into the genome, but we did pick a clone that has a single insertion site, and made sure that it inserted into a safe region of the genome, not near any genes that were concerning to us. So we were able to extensively characterize the clone that was selected for the master cell bank, and I think that’s a big advantage of this approach compared to other patient-derived engineered cell therapy strategies.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [29]

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Sure, and then just maybe the last one and I’ll pop back in the queue. In the bigger picture, in terms of manufacturing, it seems like you’re very heavily reliant on Minnesota and Memorial. Do you have a plant to validate backup sites, in case one of these things floods, or goes on fire, or build your own?

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [30]

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Yes, we actually do have backup plans, and we’re in the process of bringing pieces of the manufacturing in-house. I think it’s really important to remember, and people struggle with this concept, we’re going to do one manufacturing run over 45 days, and get enough doses for the Phase I study. And then, we will do a manufacturing run for FT516, and likely again get enough doses for a Phase I study. So this is not continuous, patient-by-patient manufacturing. This is extremely leverageable, where in a single manufacturing campaign, we can produce large quantities of cells and significant doses of cells such that we can conduct meaningful studies. And that’s one of the major advantages of what we do compared to a patient-derived approach or even an allogeneic approach, where allogeneic cell therapy literally has to find donors every time, engineer every time, and then manufacture their product every time. And maybe 60% of the cells are engineered successfully. Certainly every cell is not engineered the same way, and when you want to do another campaign -- and maybe you get, I’ve seen research scale manufacturing from others that are doing allogeneic cell therapy, and it’s, “Gosh, maybe I can get 50 doses, maybe I can get 100 doses,” and then I have to repeat again and go back to get new donors, and engineer it all again. This is a completely different paradigm. That said, totally agree. We believe strategically it is important to control manufacturing, absolutely, and we do have backup plans, and we are in the process of bringing pieces of the manufacturing in-house.

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Operator [31]

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(Operator Instructions) Our next question comes from the line of Do Kim from BMO Capital Markets.

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Guyn Kim, BMO Capital Markets Equity Research - Analyst [32]

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A question on the ovarian cancer APOLLO study. What drove the decision to give a second infusion for Subject 2, and is that an option that you’ll provide to the other dose cores as you go forward?

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Chris M. Storgard, Fate Therapeutics, Inc. - Chief Medical Officer [33]

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Yes, the protocol was written in a manner that if a subject was able to have stable disease with tumor shrinkage then they’re eligible for another dose, and we were looking to do that for a number of reasons. One, obviously, to provide potential additional benefit to the participating subject, but also to answer some really important questions as to whether or not repeat dosing with an allogeneic product can result in persistence. And we’ve been able to address the second question. We have had persistence at that second dose, out to 14 days, so we’re very encouraged by that. We’re still waiting to see how that patient does, and we’re looking forward to further clinical data on that. As far as all of our other studies, yes, we’ve built in place that option in the solid tumor studies for repeat dosing with evidence of clinical benefit.

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Guyn Kim, BMO Capital Markets Equity Research - Analyst [34]

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And on ProTmune, could you tell us whether you saw CMV infections in the Phase I portion of the study, and what that says compared to historical?

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Chris M. Storgard, Fate Therapeutics, Inc. - Chief Medical Officer [35]

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Yes, so let me just talk a little bit about the CMV infections, and actually with the approval of letermovir, we’ve actually had to amend our protocol to allow that prophylaxis to be allowed. And as a result, CMV infections is something we really can’t look at from a meaningful perspective on whether or not ProTmune will have any impact on that. We have had CMV infections, but now with the allowance of the prophylactic therapy, that as an endpoint has moved from a key endpoint now to an exploratory endpoint, simply because it’s no longer something we can rigorously assess.

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Operator [36]

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We have a follow-up question from the line of Jim Birchenough from Wells Fargo.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [37]

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It’s still Nick. Just going back to NK100, have any of the trials reached the top dose, or a DLT?

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Chris M. Storgard, Fate Therapeutics, Inc. - Chief Medical Officer [38]

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So we have not had any DLTs observed so far in any of the studies. We actually are expecting to be dosing our top cohort next week, in one of the studies, so we are very close to top dose in all studies. But no DLTs have been observed.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [39]

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And then, can you give us an update on PROTECT, and when you think you’ll be able to complete enrollment?

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Chris M. Storgard, Fate Therapeutics, Inc. - Chief Medical Officer [40]

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Certainly. So as Scott mentioned, the Phase I data has been very well-received by investigators and enthusiasm is certainly on an upswing. So we do expect to continue enrollment through 2018, and we expect to have results available in 2019 on the randomized Phase II. As I mentioned, we do have, expect the one-year data on the Phase I subjects to be presented at ASH this year.

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Operator [41]

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Speakers, I’m not showing any questions at this time. I would now like to turn the call back over to Scott Wolchko, President and Chief Executive Officer, for any closing remarks.

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J. Scott Wolchko, Fate Therapeutics, Inc. - Founder, CEO, President, Principal Financial Officer, Principal Accounting Officer & Director [42]

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Thank you. Thank you, everyone, for your participation in today’s call. We look forward to speaking with you again in the near future.

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Operator [43]

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Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program, and you may all disconnect. Everyone have a nice day.