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Investor Update

Nov 15, 2021

Operator

Good day, and thank you for standing by. Welcome to the Fate Therapeutics Investor Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker today, Scott Wolchko. Please go ahead.

Scott Wolchko
President and CEO, Fate Therapeutics

Thank you. Good afternoon. This is Scott Wolchko, President and CEO of Fate Therapeutics. Thank you all for joining us this afternoon to discuss our emerging cell-based cancer immunotherapy pipeline for solid tumors. We hope today's discussion will be informative and will serve to highlight several areas of interest, including, number one, the unique features of our proprietary iPSC product platform and the distinct advantages it affords in developing multiplexed engineered cell therapies. Number two, several novel mechanisms of attack that we are exploiting in the fight against solid tumors, including in concert with other immunotherapies that are used as standard of care. Number three, our emerging multiplexed engineered cell-based cancer immunotherapy pipeline, as well as new innovative features and functionality that we are currently assessing for integration into our product candidates.

Number four, clinical data that we have observed with our FT500 and FT516 pilot programs, which suggest cooperation between NK cells and T cells in overcoming resistance to checkpoint inhibitor therapy. Please note that during our discussion, our comments will include forward-looking statements that involve risks and uncertainties. These factors are detailed in our SEC filings, and I refer you to our most recent Form 10-Q filed with the SEC on November 4 for full disclosure of these risks and uncertainties. I am pleased to be joined today by Dr. Wayne Chu, our Senior Vice President of Clinical Development, Dr. Sarah Cooley, our Senior Vice President of Clinical Translation, and Dr. Bob Valamehr, our Chief Research and Development Officer. After our presentation, we will open the session to Q&A, which will be moderated by Ed Dulac, our Chief Financial Officer.

As we think about next-generation therapeutic strategies to attack solid tumors, we recognize that there are numerous challenges which limit the effectiveness of today's treatments. First and foremost, it has been demonstrated that many patients with cancer have depleted or dysfunctional immune cells. As such, the administration of immune cells to a patient has the unique potential to rejuvenate the patient's capacity to fight cancer. One of the most exciting prospects of cell-based cancer immunotherapy is that administered cells can be precisely engineered with multiple synthetic features to mount a multipronged attack against tumors. We believe our iPSC product platform is uniquely suited to develop multiplex engineered cell-based cancer immunotherapies, and our emerging pipeline of iPSC-derived NK and T cell product candidates are specifically designed to exploit novel mechanisms of action and to overcome challenges that limit conventional therapies.

At the core of our development of multiplex engineered cell-based cancer immunotherapies is our proprietary iPSC product platform, which is supported by over 350 issued patents and 150 pending applications. While Bob will discuss our iPSC product platform in more detail, we believe our iPSC product platform is highly differentiated from autologous and allogeneic approaches for cell therapy, both of which require the sourcing and engineering of large populations of immune cells and are fraught with batch-to-batch and cell-to-cell variability that can affect product quality, safety, and efficacy. Instead, our iPSC product platform enables us to select a single engineered induced pluripotent stem cell, which can be exquisitely characterized and rigorously assessed for aberrant effects of engineering and maintenance of genomic integrity.

Analogous to master cell lines used to manufacture monoclonal antibodies, clonal master engineered iPSC lines serve as a renewable source for mass production of our product candidates. To be clear, our manufacturing process does not involve the engineering of patient or donor NK cells or T cells. We engineer iPSCs in a one-time event and use the clonal master-engineered iPSC line as a renewable cell source to make large quantities of NK cells and T cells that are uniformly engineered, well-characterized, cryopreserved, and delivered off the shelf to reach patients with the urgency needed to treat cancer. We believe iPS cell technology is the platform of the future for best-in-class cell therapies.

Here you see our emerging product pipeline of multiplex engineered cell-based cancer immunotherapies for solid tumors. We started our journey with our FT500 and FT516 pilot programs, with FT500 being the first-ever iPSC-derived cell therapy to undergo clinical investigation in the U.S., and FT516 being the first-ever engineered iPSC-derived cell therapy to undergo clinical investigation in the world. We are now advancing five multiplex engineered product candidates for solid tumors, beginning with FT538, our iPSC-derived NK cell product candidate that incorporates three synthetic features to promote innate immunity. Building off of FT538 as a foundation, we have created two additional wholly-owned product candidates, FT536, which incorporates a CAR targeting the stress-induced proteins MICA/B, and FT573, which incorporates a CAR targeting B7H3.

In addition, we are also developing multiplex engineered CAR NK and CAR T-cell product candidates for solid tumors alongside our two partners, Janssen and Ono. Wayne and Bob will discuss the attributes of these product candidates in more detail. What excites us most about our multiplex engineered product pipeline for solid tumors is our commitment to exploit orthogonal mechanisms of attack. For example, we are exploring the cooperation between innate and adaptive immunity and the potential for our NK cell product candidates to reinvigorate an adaptive immune response and resensitize tumors that are resistant to checkpoint blockade. We are also leveraging the ability of NK cells to recognize, bind, and kill antibody-coated tumor cells, and the potential to deliver a fully optimized NK cell compartment to patients to maximize antibody-dependent cellular cytotoxicity.

In addition, we are addressing tumor escape and designing product candidates to overcome loss of antigen presentation and shedding of stress ligands, the prominent mechanisms of T and NK cell evasion, respectively. We are targeting a hallmark of cancer, its metabolic profile, as a pan-tumor targeting strategy aimed at the foundation of carcinogenesis and metastasis. We believe our product candidates' novel mechanisms of attack can drive profound outcomes for patients with solid tumors, including in synergy with other therapies that are commonly used early and often in care. I would now like to turn it over to Wayne to discuss our clinical programs in solid tumors.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Thanks, Scott. Initial clinical investigations with our iPSC-derived NK cell product candidates for the treatment of solid tumors are based on preclinical observations demonstrating the potential synergy between NK cells and T cells to augment antitumor activity. Recently published preclinical work conducted by our scientists in collaboration with the University of Minnesota exemplified this interaction. First, through the ability of iPSC-derived NK cells to recruit T cells to tumor sites. Second, by demonstrating that antitumor activity is maximized by combining iPSC-derived NK cells with T cells and an anti-PD-1 antibody. FT500 and FT516 are the first-ever iPSC-derived NK cell therapies to undergo clinical investigation in the world. Our initial clinical studies focused on these candidates' potential to combine with immune checkpoint inhibitors.

FT500 is a non-engineered iPSC-derived NK cell product, and FT516 is engineered to express the high-affinity non-cleavable CD16, which, as I will describe in more detail later, is designed to promote antibody-dependent cellular cytotoxicity, or ADCC, when combined with a monoclonal antibody. Key assessments in these landmark studies included safety and tolerability of a universal cell therapy in the absence of patient matching, and the feasibility of multi-dose, multi-cycle treatment in an outpatient setting when combined with approved checkpoint inhibitor therapy. This table summarizes the phase I studies of our FT500 and FT516 pilot programs. The data that we will be presenting today is from FT500 dose expansion and FT516 dose escalation. Both studies are enrolling patients with tumors who have failed approved anti-PD-1 or anti-PD-L1-directed therapy.

Both studies also evaluated two treatment cycles, each cycle containing three weekly doses of iPSC-derived NK cells with concurrent IL-2 administration in combination with an anti-PD-1 or anti-PD-L1 antibody. Our phase I study of FT500 treatments involve patients with classical Hodgkin lymphoma or non-small cell lung cancer, while our phase I study of FT516 primarily treated patients with stage 4 melanoma. Patients enrolled into these two studies were all heavily pretreated patients who received multiple lines of prior systemic therapy, including at least one line of prior anti-PD-1 or anti-PD-L1-directed therapy.

Clinical data suggests that the multi-dose, multi-cycle treatment regimens of FT500 and FT516 are safe and tolerable when used in combination with anti-PD-1 or anti-PD-L1 antibodies. The number of grade 3 or greater adverse events deemed related to the product candidates is low, and there were no related serious adverse events reported with either product candidate. With the exception of a single case of grade 1 CRS on the FT516 study, characterized by fever with no other CRS manifestation, there are no observed adverse events of interest of any grade, including CRS, ICANS, and graft-versus-host disease. Antitumor activity from the two phase I studies is summarized here. FT500 expansion included four efficacy- evaluable patients with relapsed refractory classical Hodgkin lymphoma and four efficacy- evaluable patients with non-small cell lung cancer.

Most patients enrolled into the FT516 study were patients with relapsed refractory melanoma. Antitumor activity with these first generation programs was evidenced by documented objective responses and reductions in measurable disease. With FT500, all four Hodgkin lymphoma patients and three of four non-small cell lung cancer patients had reductions in target lesion burden from baseline. With FT516, five of nine patients had a reduction in target lesion burden from baseline. Moreover, early evidence of durable responses was observed as assessed by disease control 16 weeks after the initiation of treatment. It is important to remember that all patients in these studies had progressed or relapsed following prior anti-PD-1 or anti-PD-L1-directed therapy. The observed objective responses further support our preclinical findings demonstrating that iPSC-derived NK cells can cooperate with T cells and reestablish sensitivity to anti-PD-1, anti-PD-L1 therapy.

I will now highlight three case vignettes from our studies. This first case is from the FT500 study and describes the clinical course of a patient with classical Hodgkin lymphoma who received 14 lines of prior systemic therapy, including two rounds of stem cell transplant, and was refractory to the last prior line of nivolumab-containing therapy. The patient received FT500 in combination with nivolumab and over the course of treatment and post-treatment follow-up, achieved a complete metabolic response, which is ongoing at 7.9 months from the initiation of treatment. The second case is also from the FT500 phase I study and describes the clinical course of a patient with advanced non-small cell lung cancer who received five prior lines of systemic therapies and was refractory to two prior lines of pembrolizumab-containing therapy.

Moreover, the patient had a tracheal stent placed to protect the patient's airway from rapidly progressing disease. The patient received FT500 in combination with pembrolizumab and achieved a partial response that is ongoing at 9.8 months from initiation of treatment. Notably, because of the response to FT500 plus pembrolizumab, the tracheal stent was removed. This final case is from the FT516 study and describes the clinical course of a patient with advanced melanoma whose disease was refractory to two prior lines of anti-PD-1-based therapy. The patient received FT516 in combination with avelumab and achieved a partial response that is ongoing at four months from the initiation of treatment. In addition to the clinical data, this case vignette also highlights certain translational observations of interest, which we are conducting as an integral part of all of our clinical studies.

I will now turn it over to Sarah Cooley to walk you through these observations.

Sarah Cooley
SVP of Clinical Translation, Fate Therapeutics

Thanks, Wayne. On slide 20 on the left, we assess the peripheral blood of patient 11. On day eight post-administration, the FT516 cells in orange maintain homogeneous and high expression of CD16 while the patient's NK cells demonstrate heterogeneous expression pattern reflective of CD16 downregulation and loss of activity. In the middle panel, we see the gradual recovery of the patient's peripheral blood CD8 T cell compartment over the course of the multi-cycle treatment schedule, where the CD38 positive T cells show that activation was immediate, robust, and maintained over both cycles. We also observed a similar trend in tumor infiltration by T cells and concurrent activation. Shown on the right are the immunohistochemical stains of sections of the tumor biopsy from patient 11 collected prior to treatment and at day 16 post-treatment.

The population of infiltrating CD8-positive T cells increased from 38% to 64%, and an increase in interferon gamma activating signals was also observed correlating with a rapid tumor response. I'll turn it back to Wayne.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Thanks, Sarah. Moving forward, the key area of investigation for our clinical programs includes optimizing innate immunity through augmentation of antibody-dependent cell cytotoxicity or ADCC. ADCC has been shown to be a key mechanism of action of monoclonal antibody therapy approved for the treatment of cancer patients. ADCC is dependent on the expression and function of CD16A, which is the FcγRIIIa receptor naturally expressed on NK cells. CD16A binds to the Fc portion of IgG antibodies, which in turn triggers NK cell activation, resulting in cytokine production and cytotoxic effector activity. Clinical experience has demonstrated the impact of compromised innate immunity in cancer patients mediated in large part by diminished ADCC activity, either because of downregulation or shedding of CD16A or because of genetic polymorphisms that result in decreased CD16A binding affinity. The clinical importance of maximizing ADCC is highlighted in this slide.

Multiple clinical studies have shown that patients who are homozygous for the 158V/V polymorphism that encodes for the high-affinity CD16A variant have improved survival outcomes when treated with monoclonal antibodies. Examples of such observations with cetuximab in colorectal cancer, and more recently with trastuzumab in HER2-positive breast cancer are illustrated here. FT538 is our first multiplex-engineered iPSC-derived NK cell product candidate for solid tumors and builds upon our continued learnings to incorporate functional components designed to optimize NK cell activity and achieve maximal clinical benefit in cancer patients. FT538 is the first-ever CRISPR-edited iPSC-derived cell therapy and is specifically designed to synergize with monoclonal antibodies through the high-affinity non-cleavable CD16 Fc receptor to maximize ADCC. This is achieved by editing the CD16A gene to express the high-affinity 158V/V variant and introducing a point mutation that prevents CD16 shedding.

In addition to hnCD16, FT538 incorporates two additional functional components to further enhance innate immune function. An IL-15 receptor fusion to promote survival, proliferation, and transactivation of NK and T cells, and knockout of CD38, which has been shown to improve potency and metabolic fitness of NK cells. Our phase I study of FT538 in solid tumors is designed to assess a multi-dose, multi-cycle treatment schedule in combination with one of four monoclonal antibody therapies. Patients are to receive an initial two cycles of treatment, each cycle comprising conditioning therapy, followed by three weekly doses of FT538 in combination with a monoclonal antibody. FT538 doses ranging from 100 million-1.5 billion cells per dose are being evaluated.

The monoclonal antibodies include the anti-PD-1 and anti-PD-L1 checkpoint inhibitor therapies pembrolizumab and avelumab, and the tumor-targeting therapies trastuzumab and cetuximab to investigate interactions between innate and adaptive immunity as well as ADCC. Importantly, dose escalation and expansion in the four-arm study occurs independently. The eligibility criteria enable the assessment of FT538 antibody combinations in a broad array of solid tumor indications. We are particularly interested in assessing various combinations in non-small cell lung cancer, given its immunologic features, including that many tumor subsets express targets of interest for NK cell-based therapy. Study FT538-102 is currently open for enrollment, and we have enrolled our first patient. With that, I will now turn the presentation over to Bob.

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Thanks, Wayne. Continuing Scott's original description of our orthogonal approaches for attacking solid tumors, I will now describe two novel targeting strategies that we have introduced into our pipeline. The first mechanism of attack is focused on overcoming tumor escape by directly targeting and killing tumors expressing stress-inducible molecules. Stress antigens MICA and MICB are commonly associated with transformation and cancer progression, and their expression has been observed in many tumor types. However, advanced cancers frequently promote proteolytic shedding of the polymorphic alpha one and alpha two domains of MICA and MICB, which can significantly reduce immune cell recognition by the canonical NKG2D receptor found on activated NK and T cells. To this end, soluble MICA and MICB has been associated with poor clinical prognosis in cancer patients. In collaboration with Dr.

Kai W. Wucherpfennig at Dana-Farber Cancer Institute, we have identified a novel binding strategy to target a conserved membrane-proximal alpha three domain of MICA and MICB to prevent shedding and antigen escape and effectively reengage tumor cells as a novel pan-tumor targeting mechanism. To develop the ideal CAR targeting the alpha three domain of MICA and MICB, we focused on two goals, which are shown here on slide 26 and further exemplified in later examples. Primarily, we ensured that the correct binding sequence was selected to properly target alpha three domain of MICA and MICB. As seen in this aggressive disseminated xenograft model of NALM-6 MICA-positive cancer cells, NKG2D CAR targeting the alpha one and alpha two domains of MICA and MICB failed to control the tumor, while anti-MICA/MICB CAR1 targeting the alpha three domain demonstrates near complete elimination of the tumor burden.

Secondly, we tailored each CAR construct for their respective binding domain and effector cell type. In comparing CAR1 to CAR5, it is clear that only CAR1 demonstrates durable control of the tumor growth. We next took our optimized CAR MICA/MICB construct and plugged it into our FT538 backbone to establish FT536, a multiplex-engineered iPSC-derived NK cell product candidate incorporating four antitumor modalities. One, a novel high-affinity non-cleavable CD16 Fc receptor to maximize ADCC in combination with various therapeutic antibodies. Two, a unique IL-15, IL-15 receptor fusion designed to promote NK cell survival, proliferation, and antitumor activity, and avoid the need for exogenous cytokine support. Three, knockout of CD38 for enhanced NK cell activation and function. And four, a novel anti alpha-three domain of MICA and MICB CAR optimized for pan-tumor targeting of solid tumors.

As highlighted on slide 28, FT536 demonstrates superior ability to control tumor burden by trafficking to the lung and eliminating metastatic lesions caused by B16 MEK-positive cancer cells. Similar observations of tumor control and elimination of lesions were seen in other tissues, including the spleen. Notably, the study was a single-dose study absent of any cytokine support, which is reflective of the strength of the CAR and the durability of enhanced NK cell function provided by the FT538 backbone. In a separate in vivo model of lung adenocarcinoma, where the Calu-3 cancer cells initially traffic to the lung, then disseminate to other tissues, including the bone marrow, FT536 as a monotherapy exemplifies the exceptional ability to decrease the tumor burden in the lung as well as other tissues.

The ability to further control the tumor is enhanced with the addition of Herceptin to serve as a second targeting mechanism of action through hnCD16. As evident by the images and BLI plot highlighted in blue, the combination of CAR and hnCD16 plus mAb Herceptin nearly eliminated all tumor cells. Similar to previous in vivo studies, no cytokine support was provided. We believe our work on FT536 demonstrates our combined knowledge of binder discovery, CAR design, and effector cell biology, all of which enable us to uniquely develop and rapidly translate through preclinical development, multiplex engineer cell-based cancer immunotherapies incorporating novel mechanisms of attack against solid tumors. We remain on track to submit the IND for FT536 this quarter. A second pan-tumor targeting approach seeks to target transformed cells with aberrant metabolic activity associated with induction of carcinogenesis and metastasis.

B7-H3 protein is overexpressed in a wide variety of cancers with limited expression at low levels in normal tissues and is often associated with poor prognosis. Recent studies have shown that B7H3 is a critical promoter of tumorigenesis and metastasis, and its expression is a metabolic hallmark of cancer. Importantly, therapeutic strategies targeting B7H3 have shown early clinical activity in patients with advanced solid tumors. Similar to our approach in developing FT536, we initially focused on developing a novel binder to B7H3 and coupled it with a custom-made CAR motif. In collaboration with Dr. Miller at the University of Minnesota, we generated a single-domain targeting sequence from a novel anti-B7H3 camelid antibody.

Camelid antibody-derived single-domain fragments are desirable antigen-binding strategies as they maintain high target affinity and specificity, while at the same time demonstrate stability, reduced immunogenicity, and agility associated with their reduced size. We then coupled the single-domain targeting sequence with unique CARs developed separately for NK and T cells. As seen on the right-hand panel, CAR B7H3 T cells demonstrate robust long-term cytotoxicity against a myriad of tumor cell lines from various cancers. As illustrated on the left-hand side of slide 32, our FT538 product candidate consists of uniform expression of CAR B7H3 inserted in the FT538 backbone. As seen in the middle and right-hand panels, FT573 demonstrates antigen specificity and function as verified by superior directed cytotoxicity, antigen specificity, cytokine release, and degranulation.

In addition to our wholly-owned solid tumor programs, we are collaborating with Janssen and Ono to develop multiplex engineered iPSC-derived CAR NK and CAR T cell product candidates for solid tumors. While I can't disclose how much about these programs today, under our Janssen collaboration, we are incorporating novel Janssen binding domains into our multiplex iPSC-derived NK cell and T cell backbones. On the left-hand side, the potency and specificity of our first Janssen collaboration product candidate is highlighted in a solid tumor spheroid assay, where spheroids of antigen-bearing cancer cells are effectively eliminated at lower effector-to-target ratio. Under our Ono collaboration, we are incorporating novel Ono binding domains into our multiplex engineered iPSC-derived T cell backbones.

On the right-hand side, the differentiated specificity of our Ono collaboration product candidate is exemplified in the CAR's ability to target only antigen-bearing cancer cells and not healthy tissue with normal antigen-bearing expression, as shown with the red lines. Collaboration programs with Janssen, with both Janssen and Ono, are proceeding well through preclinical development, with the aim of IND submissions over the course of the next 18 months. Switching to platform and innovation, as Scott highlighted earlier, our proprietary iPSC platform is uniquely suited to develop multiplex engineered cell products. It allows us to select a single engineered iPSC from which we can make clonal master iPSC lines and mass produce our cell products.

As shown on this slide, all engineering methods inherently introduce variability and chaos into the cell population, including iPSCs, as illustrated on the top row of slide 36, where the engineered pool is now completely heterogeneous. Unfortunately, with most approaches, this chaos is included within the drug product itself and subsequently gets passed to the patient. Our platform uniquely facilitates single cell selection and cloning. Once the population has been engineered, we have the unprecedented ability to separate single cell within the population, clone it, clonally expand the single cells, and characterize each clone to pick the ideal candidate for master cell line generation. The pie chart in the middle of the slide gives us a unique look at our high-resolution capacity to assess every engineered cell event within the population. To be clear, resolution at this level has not been shown before.

Mediated by either nucleases Cpf1 or MAD7, we can now actually assess every engineered event within the population and mark them as either having the correct edit, a random integration, a combination of both, or having neither. Through this unique approach, we can select the desired clone in the background of engineered chaos to ensure full integrity of the engineering and avoid carrying forward variability and heterogeneity to the patient. Our unprecedented ability to interrogate and select a single iPSC for the making of the clonal master iPSC banks is further described on slide 37, where I have outlined multiple assessments we conduct on each clone, including assessment of off-target edits, maintenance of genomic stability, and final drug product functionality.

To be clear, this rigorous testing is not only conducted during clone selection, but repeated again once the master cell bank has been made, where the master cell bank is thawed, passaged, then fully retested for full characterization prior to release. Turning now to innovation, we want to highlight several R&D initiatives where we continue to focus. Three areas of intense research include novel approaches. One, to overcome host immune system, including competition for cytokines and alloreactivity, two, to promote trafficking to the tumor microenvironment, and three, to prevent exhaustion and improve functional persistence. Overcoming the host immune system is a complex endeavor without a simple solution, nor is it solved by simply evading host immune recognition. Other factors such as host immune cell competition for cytokine availability, as well as product exhaustion over time, need to be considered to achieve persistence of functional cells.

To this end, I will discuss three novel approaches that we are investigating under our Stealth initiative. They include cloak, selectively deplete, and selectively deplete and activate. Cloaking itself from the host immune system requires evasion from multiple immune cell types. Elimination of cell surface human HLA molecule expression by genetic knockout has long been known to abrogate T cell reactivity. However, loss of class I HLA elicits a potent NK cell-mediated recognition and clearance, and therefore must be combined with other immune-modulating strategies to limit host NK cell reactivity. Allogeneic models combining class I HLA deletion with inhibitory molecules such as HLA-E and CD47 have been described. However, HLA-E is the canonical activator of NKG2C, a dominant activating receptor found on human NK cells.

Likewise, the expression of signal regulatory protein alpha, the major interactor for CD47, is mostly restricted to macrophages and dendritic cells and not on human NK cells. As seen in our missing self model of NK cell detection, where the white color on the detection scale is representative of 18 donors with NK cell compartments of each donor segmented into various subsets, we see that CD47 fails to inhibit any of the NK cell subsets, as seen in all white boxes in the top row. While HLA-E inhibits only the NKG2A NK cell compartment, as shown by blue. However, as expected, HLA-E activates the NKG2C NK cell subset, as shown by light red in the second row. In collaboration with Dr. Karl-Johan Malmberg at the Oslo University Hospital, we have developed a novel cloaking strategy to disengage product cells from the host immune cells.

To this end, when our strategy is applied in the missing self model of NK cell detection, as seen in the bottom row, all NK cell subsets are suppressed and do not react against the cloak cells. In our selectively deplete strategy, we leverage two key attributes found in the backbone of FT538, hnCD16 to facilitate MAP-directed killing, and CD38 knockout to avoid anti-CD38 MAP-mediated fratricide. Through this unique lympho-conditioning strategy, an anti-CD38 MAP can be administered to the patient to selectively deplete activated immune cells without compromising our CD38 knockout cell products. As demonstrated in the plot on slide 41, in a culture consisting of activated PBMCs, iPSC-derived CD38 knockout NK cells lose persistence over a two-week period. However, in the presence of anti-CD38 MAP daratumumab, a clear initial expansion of iPSC-derived CD38 knockout NK cells is seen, followed by maintenance of persistence.

In our third approach, aimed to selectively deplete and activate, we seek to hijack the host immune system and deliver a biological signal that promotes product activation and proliferation. We believe this is an exciting approach to maintain long-term functional persistence. In collaboration with Maksim Mamonkin at Baylor College of Medicine, we are deploying synthetic allodefense receptors, or ADRs, to target and eliminate neighboring host immune cells through the receptor's unique anti-4-1BB binding motif, which also serves to activate the cell product. The ADR structure is highlighted in the middle of slide 42. In the initial test of ADR functionality with iPSC-derived NK cells, we co-culture allogeneic PBMCs with iPSC-derived CAR NK cells in a mixed lymphocyte reaction assay. As highlighted by the green line on the right-hand side plot, iPSC-derived NK cells armed with synthetic ADR maintain durable persistence, while iPSC-derived NK cells without ADR fail to persist.

Collectively, our study suggests that iPSC-derived NK cells armed with a synthetic ADR have the potential to enhance functional persistence. This arming strategy may enable the delivery of off-the-shelf cell-based cancer immunotherapies with reduced chemotherapy conditioning, an approach that may facilitate combination with standard-of-care regimens that are used in earlier-line treatment of solid tumors. A second area of innovation focuses on homing and trafficking, where we seek to exploit signals upregulated on solid tumors post chemo and radiation therapies. In our survey of homing and trafficking signals highlighted on slide 43, we demonstrate that at baseline and following irradiation or exposure to common chemotherapy drugs, the selected tumor cell lines, including breast, ovarian, and prostate, specifically upregulate several chemokines, notably the CXCR2 ligands, including CXCL8.

To leverage the upregulation of CXCR2 ligands as a mechanism of directing iPSC-derived CAR NK and T cell trafficking to the tumor site, we created a novel synthetic CXCR2 receptor. iPSC-derived CAR T cells armed with our synthetic CXCR2 receptor demonstrate functional migration. To this end, we have developed a novel synthetic TGF-beta redirector receptor to overcome resistance and promote activity. By coupling the endodomain of TGF-beta receptor with a proprietary selected endodomain, our synthetic TGF-beta redirector receptor can convert the suppressive signal of TGF-beta into a positive activation signal, as highlighted in the lower right-hand plot on slide 45. As such, instead of suppressing cell activity, TGF-beta signaling is shown to activate engineered T cells, as demonstrated by phospho-STAT5 signaling, and does so in a manner that is comparable to IL-2-mediated activation.

The potency of our novel synthetic TGF-beta redirector receptors is further highlighted in the serial restimulation assay, as shown on slide 46. Without the introduction of TGF-beta into the culture, both iPSC-derived CAR T cell arms demonstrate durable response over four rounds of tumor cell restimulation. However, only iPSC-derived CAR T cells armed with a synthetic TGF-beta redirector receptor are able to eliminate tumor cells over four rounds of restimulation while continuously co-cultured with high levels of TGF-beta. These studies demonstrate that our novel synthetic TGF-beta redirector receptor can be deployed to hijack the immune-suppressive signals of TGF-beta often found in the tumor microenvironment and activate iPSC-derived CAR NK and T cells to improve functional persistence and enhance antitumor activity. I will now turn it to Scott for summary and key takeaways.

Scott Wolchko
President and CEO, Fate Therapeutics

Thanks, Bob. In summary, we are very pleased with the clinical observations from our FT500 and FT516 pilot programs in solid tumors, both of which demonstrated a favorable safety profile, feasibility of a multi-dose, multi-cycle treatment schedule with outpatient administration, and responses in heavily pretreated checkpoint-resistant patients. This is a strong first step in validating the potential of off-the-shelf iPS-derived NK cell therapy to cooperate with T cells and reinvigorate an adaptive immune response in patients resistant to checkpoint blockade. We believe Fate Therapeutics is uniquely positioned to lead in the development of multiplex-engineered cell-based cancer immunotherapies for solid tumors.

Our iPSC product platform is highly differentiated, and we believe iPS cell technology is the platform for the future of best-in-class cell therapies, enabling multiplex engineering, mass production of cell products with each dose uniform in composition, thaw and infuse on-demand administration, and potential to reach patients without delay and with high convenience. We have proven our ability to advance both iPS-derived CAR NK cell and CAR T cell product candidates into clinical development for the treatment of hematologic malignancies. We are excited about our robust pipeline of multiplex-engineered iPSC-derived NK and T cell product candidates for solid tumors. These product candidates incorporate novel synthetic features designed to exploit differentiated mechanisms of action, synergize with approved agents, and overcome mechanisms of resistance.

We have now initiated enrollment of our clinical study of FT538 in combination with one of an array of four monoclonal antibodies, including those in both the FT500 and FT516 programs. We are poised to begin clinical investigation in 2022 of FT536 to overcome tumor escape. Additional preclinical development is ongoing for three other product candidates, including under our collaborations with Janssen and Ono, for which we expect to submit INDs over the course of the next 18 months. With that, I'd like to open it up to questions.

Operator

Here's a reminder. To ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key.

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

Mara Goldstein
Managing Director and Biotechnology Analyst, Mizuho

Thanks very much for taking the question. Hey, I wanted to ask on similar, I guess, consistent with what you're thinking as a post-checkpoint strategy and on the hematological side, are you thinking about that as a potential accelerator for solid tumors? Maybe if you could also hone in a little bit on expanding out into which tumor types you might be looking at FT516 for.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure. I think I'll answer some of that, and then I'll send it to Wayne. With respect to FT516... FT500 and FT516 solid tumors, we consider both those programs pilot programs. With FT538 now enrolling patients, we've included the strategies that we were pursuing with FT500, so patients resistant to anti-PD-1 and FT516, anti-PD-L1, we've included those within the FT538 clinical protocol. On a go-forward basis, while we will continue to wind down enrollment with FT500 and FT516, we will look to enroll patients in combination with monoclonal antibodies, including resistant to checkpoint inhibitor in the five thirty-eight's clinical study. I'll turn it over to Wayne to talk a little bit more about the types of tumors we plan to treat in the FT538 study.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Sure. Thanks, Scott. Yeah. As Scott mentioned, and I think as we mentioned in the presentation, a lot of the concepts that we have initiated evaluation with FT500 and FT516, namely combinations with checkpoint inhibitor therapy as well as monoclonal antibody therapy, we plan to continue those assessments through the FT538 study. And specifically with respect to the FT538 study, the trial was designed such that for each of the different combinations of FT538 and monoclonal antibody, we would go into tumor indications where we have the highest chance of seeing, you know, a signal, mostly an efficacy signal based on what we know about the biology, you know, of those individual tumor types.

For example, with in combination with a checkpoint inhibitor, we are focusing on not only tumors that we know are you know, relatively immunogenic based on prior experience, but also on tumors where there's documentation of you know, of the relevant biomarker, in this case, PD-L1 expression for tumors such as non-small cell lung cancer. We look at FT538 not only as an opportunity to look at safety you know, in a dose escalation scheme, but we're also looking at an opportunity for early signal detection. Then certainly you know, like all sponsors you know, we remain very opportunistic with respect to the ability to identify patient populations where if we see early signs of activity, we would further expand on that investigation with the intention of potential accelerated approval.

Mara Goldstein
Managing Director and Biotechnology Analyst, Mizuho

If I could just ask a question around backbone treatment, particularly on J&J, like what you are thinking would be appropriate for backbone.

Scott Wolchko
President and CEO, Fate Therapeutics

Scott, for the J&J collaboration, it's a four-year research collaboration, and there are multiple facets to that collaboration. There are what we have termed internally fast track programs where we are essentially leveraging Janssen's novel binding domains and developing CAR constructs and incorporating those into the FT538 backbone, much like we did in the development of FT536 and FT573. In addition, we do have an iPS-derived CAR T-cell backbone which we have not yet publicly disclosed. In addition, we are dropping these CAR constructs into T-cell backbones and looking at both NK and T-cell product candidates.

In addition, Bob highlighted some significant innovation that we are working on, and we are also under the Janssen collaboration, researching areas of innovation, including some of the ones that we outlined and over the course of four years, have the opportunity to develop and incorporate that innovation into next generation product candidates under the Janssen collaboration.

Mara Goldstein
Managing Director and Biotechnology Analyst, Mizuho

All right. Thanks, I really appreciate it. I'll hop back in.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure.

Operator

Our next question is from Robyn Karnauskas of Truist. Your line is open.

Speaker 16

Hey, guys. Thank you so much for taking our question. This is Krupan for Robyn. It was a great talk, and thanks for all the color on your solid tumor strategy. Especially interested in the cooperation between NK cells and T cells. Can you talk a little bit about maybe I missed some of the data you presented, but can you talk a little bit about how you expect this to translate into patients? Like how long does it take for the patient T-cells to be activated? Do you need to see this activation in order for the synergy between the NK cells and checkpoint inhibitors? And also, what do you see as the long-term impact of this to be given the time frame that you expect to be treating patients with the NK cells? Thank you so much.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure. They're all good questions, and obviously we're early in clinical investigation here. I think, you know, what we're encouraged by is that with these, with an un-engineered NK cell and with a single edited iPSC-derived NK cell, we've clearly been able to demonstrate, as Wayne alluded to, clinical activity measured both in terms of responses and in fact durability of responses. I think Sarah's data pointed out some interesting observations on the translation side. Number one, we do see rapid activation of CD38 positive T cells. Upon the delivery of our iPSC-derived NK cells, and we can talk more about what we think is happening based on preclinical data, but certainly we've been able to see these iPSC-derived NK cells. We've seen a corresponding increase in T-cell activation.

We've certainly seen that in the blood, and we've also seen that in the example that we gave with respect to T-cell infiltration and activation within the tumor. We do think there is a unique cooperation going on where NK cells have the ability to, for instance, target solid tumors, target tumors that, for instance, may be resistant to checkpoint inhibitor and reinvigorate a response.

Speaker 16

Great, thank you. I have a follow-up question. It's to do with the cells armed with the ADR.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure.

Speaker 16

If you do indeed see increase, it's really cool. I can't wait to see clinical data, but if you do see increased NK cell proliferation, you know how you talk about functional persistence as being more important than just persistence. Is that something that you have already seen that they're functionally persistent? And also, if that happens to be the case, what sort of impact do you think this could have for your dosing frequency or the dose of the cells that you start treating these patients with? Thank you.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure. I'll let Bob answer as well as Wayne. Wayne can hypothesize on the clinical impact of it potentially. I think one of the things we're excited about is with the ADR strategy is potentially to deliver off-the-shelf cell therapies in a reduced background of conditioning or potentially no conditioning. But I'll let Bob talk about the ADRs and what we're seeing preclinically with respect to activation and Wayne to talk a little bit about the clinical opportunities.

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Thanks, Scott. That's a great question. I think, you know, we're always searching for signal three and as Scott mentioned and I mentioned, you know, active potentiation. The CD3 zeta signaling domain of ADR has been shown to basically potentiate the cells for enhanced efficacy. We've seen this in the pub, Max's publication in Nature Biotechnology and in-house when we apply it to iNK and T-cells. When that signal three occurs, when 4-1BB engages or anti-4-1BB engages and you get a CD3 zeta signaling, you do get a boost. You know, we're trying to combine not just ADR, but also TGF-beta redirect and other strategies to give really the cell signal one, signal two from the CAR, signal three from ADR, signal four from TGF-beta redirect.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

This is kind of the direction we're going and preclinically, to answer your question, yes, it does enhance CAR activity.

Speaker 16

Great.

Scott Wolchko
President and CEO, Fate Therapeutics

Yeah.

Speaker 16

Great. Thank you.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Just a few comments from the clinical perspective. You know, I think that you look at all of our clinical investigations so far with cell therapies as what, you know, us as well as other sponsors, and it's always been in the context of administration of fludarabine and cyclophosphamide. I think the cumulative, you know, experience with flu-cy is that while it has been demonstrated to be pretty effective in generating the immunologic space to support adoptive cell therapies, it does come at a cost, particularly with respect to patient safety and tolerability.

You know, we know from, for example, the use of CAR Ts and other adoptive cell therapies in hematologic malignancies that treatment-emergent adverse events, particularly with respect to cytopenias, and the clinical sequelae that arise from cytopenias such as, you know, infections that could be potentially serious and life-threatening, you know, remain a considerable barrier for the broad use of these cellular therapies utilizing flu-cy conditioning. You know, the other important thing to consider as we try to understand development pathways for these cell therapies is that while flu-cy conditioning may be commonly used, they are most commonly used in patients with relapsed refractory disease.

Ultimately, if we show clinical benefit with our cell therapies, the big goal from that point would be to see what are the opportunities to develop cellular therapies in earlier line patients, particularly patients with newly diagnosed disease. I think that in the setting of solid tumors, to do that with a minimum of conditioning or genotoxic chemotherapy that leads to significant adverse events, I think it's gonna be a really important question of, you know, of clinical significance. I think that's why the efforts that Bob described to, you know, for ADR, to develop ways to allow cells to persist with minimum, if any, conditioning is gonna be a really important question to address in this field.

Speaker 16

Great. Thank you so much for all the color. I appreciate you taking my question.

Operator

Our next question is from Michael Yee of Jefferies. Your line is open.

Michael Yee
Managing Director and Senior Biotechnology Analyst, Jefferies

Hi, guys. Thank you. We had two questions. First was on the clinical data you presented for FT500 and FT516. Could you maybe comment or hypothesize around the data you saw? I think it's one out of one out of 11 responses in FT516 and one out of four and one out of four in FT500. I guess your takeaways on that in the context that melanoma you would think would be in a more immune sensitive tumor, but, you know, they're small numbers, and quite frankly, these are pretty beat-up patients. So maybe just comment on that and how to interpret that. Then our second question was around MICA, MICB, which is very exciting and starting the phase I.

Can you remind me, I think you should be able to enrich the study design, or would you enrich the study design for a higher expression of MICA/B, I presume, based on checkpoint failures? Is that kind of obvious, and is that what you would think about to sort of enrich, I would think, and learn about what you can from a phase I? Thank you.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure. I'll let Wayne respond to both questions. Initially, though, just to give you some thoughts on the first question that you brought up. Keep in mind, FT516 is a three-by-three dose escalation study. We released data that the patients that were evaluable, I think there were N of nine that were evaluable for efficacy. Three were at 90 million cells, three were at 300 million cells, and three were at 900 million cells. I'm not sure you can take too much away from a three-by-three dose escalation study.

Michael Yee
Managing Director and Senior Biotechnology Analyst, Jefferies

Got it.

Scott Wolchko
President and CEO, Fate Therapeutics

I'll let Wayne sort of address the questions.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

With respect to the FT516 in melanoma, it's largely, as Scott said, keeping in mind that this is a dose escalation study where it was essentially three patients in each of the three different dose levels that were tested. The other thing, more specifically to the melanoma population is, yes, while in general, we consider melanoma to be more immunogenic tumors, and but I think one detail that we did not mention during the presentation was that among those eight patients with melanoma and on the FT516 study, only three of them were the ones with the kind of the canonical cutaneous melanoma, which is thought to be the more immunogenic subtype. Whereas the other five patients were patients with rare, so-called non-cutaneous melanoma.

We know that non-cutaneous melanoma, in contrast to cutaneous melanoma, are more difficult tumors to treat. By nature of the fact that they are less immunogenic, they generally have less levels of PD-L1 expression and clinical experience with therapies in that patient population have been, you know, quite poor relative to the cutaneous melanoma. If you break that down into how the patients do with FT516, the responses that we saw, including the one that was highlighted in the case vignette, were patients with cutaneous melanoma. There we had, I think, that one PR, and then we had two patients with prolonged stable disease. Whereas in contrast, among the five patients, you know, who were treated with a non-cutaneous melanoma subtype, the best response for, I think, three of them were progressive disease.

I think in addition to the dose escalation nature of the study, it's also the subtypes of melanoma that were enrolled onto the trial that contributed to the efficacy profile we observed.

Michael Yee
Managing Director and Senior Biotechnology Analyst, Jefferies

Got it. Very clear. That was good. Okay. MICA, MICB, thoughts around phase I and how to enrich, if you could.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Yeah. No, it's a great question. You know, with our FT536 MICA, MICB, the way that we've been thinking about the phase I design is it's still, you know, primarily focused on the combinations with monoclonal antibodies and as far as targeting is concerned. Because, you know, MICA, MICB is a pan-tumor target, and because even with MICA, MICB expression, it's still not very clear as to the specific thresholds of MICA, MICB expression that define response versus non-response. Our initial foray into FT536 phase I is really focused on targeting indications that are dictated by the partner monoclonal antibodies, right? So somewhat similar to the FT538-102 study, for patients, you know, that are being treated with anti-PD-1 or anti-PD-L1.

We are targeting tumor types with known you know activity with those agents as well as tumors that have demonstrable expression of PD-L1, just as a kind of a crude first pass patient selection. Certainly as part of the clinical translation program for both 530 and 536, we will be looking at expression levels of not only MICA, MICB, but also things like soluble MICA, MICB, you know, as we further try to understand the biology and then hopefully identify potential patient populations for which these product candidates would work most effectively.

Michael Yee
Managing Director and Senior Biotechnology Analyst, Jefferies

Got it. Thank you.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Sure.

Operator

Our next question is from Michael Schmidt of Guggenheim. Your line is open.

Michael Schmidt
Senior Analyst and Senior Managing Director, Guggenheim

Hey, guys. Thanks for taking my questions. Two from us as well. Just thinking about the potential benefit of the CD38 knockout feature in a solid tumor setting. I guess based on your translational data, how much more potent would you expect you know FT538 to be perhaps relative to FT516 in clinical studies, just given those added features. So that's question one. And then the second question was, you know, it looks like you're still sticking with the two-cycle dosing regimen in the FT536 study so far. But I did note that you're going higher, as high as 1.5 billion cells.

You know, just wondering how you're thinking longer term about you know sticking with a fixed-dose regimen versus you know a fixed-time regimen versus moving towards a more chronic dosing paradigm. Thanks so much.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure. I'll let Bob talk about FT538, and then Wayne can talk about some of the flexibility that we've introduced into both the FT538 and the FT536 studies in solid tumors that will allow additional cycles.

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Thanks, Scott. Remember Scott's forward-looking statement because I'm gonna exemplify a lot of excitement here. FT538 is nothing like FT516 when it comes to durability of response, serial killing. Preclinical studies, you know, previously, we always had to give cytokine to the mouse or, culture a lot of cells in a Petri dish to see a good efficacy. When you introduce 538 in a mouse setting, in vivo or in vitro, it's just a night and day difference. It is an NK cell that has a very high rate of efficacy, whether that's ADCC and innate killing. If you add the CAR, it well supports that as well. Just taking what we see preclinically, it is something that's gonna be very differentiated in terms of persistence, in terms of activity.

You know, we just published recently, so you could take a look at that Cell Stem Cell paper. You know, traditionally, we would see persistence of NK cells for a week or two, especially if you didn't add cytokine with FT538 in a cytokine-free environment. You see that for 60 days and combine it with any monoclonal antibody, and that tumor is gone. Very excited and expect to see a very differentiated profile in the clinic with FT538.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

And then, um-

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Wayne, do you wanna talk?

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

With respect to our

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Yeah, Wayne, do you wanna talk about?

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Sure.

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Go ahead. Sorry, Wayne.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

No, no worries. So with respect to our approach to dose schedules, you know, and this applies to both FT538 as well as FT536. You know, I think it's important to keep in mind that, you know, the off-the-shelf, on-demand attributes of our iPSC-derived NK cell gives a lot of latitude in terms of defining, you know, the optimal number of doses as well as the optimal number of cycles. Both studies, you know, do have the ability to, you know, continue dose escalation to either a maximum tolerated dose or a maximum assessed dose, that, you know, may not necessarily be, you know, limited by what we may have pre-specified, although our goal is to get at least to 1.5 billion cells per dose with FT538.

In addition to, you know, identifying the maximum number of cells that we can give in an individual dose, we are looking at options to see how many doses and how many cycles of treatment we can give. Remember that, you know, cycles of treatment are defined not only by the cells, but also by the rounds of conditioning therapy. For both studies, we allow initial treatment with two cycles of treatment, and each cycle consists of conditioning followed by three weekly doses of cell product. After that initial treatment, there are actually two ways patients can continue to receive additional therapy. The first situation is where a patient, after the initial two cycles, has evidence of a response, and the question is whether or not we could drive a deeper response with additional therapy.

The studies do have that option to explore that ability to drive a deeper response, you know, with additional rounds of cycles and treatment. The second situation is in a patient who receives initial treatment says, and let's just say observes clinical benefit in the form of a deep partial response or a complete response. In those instances, we would follow those patients for durability. At the point when the patient exhibits progressive disease or relapse, the protocols do allow for an option for retreatment to see whether or not another round of conditioning followed by cells can actually drive an objective response in those patients. Both studies have the flexibility for additional treatment cycles depending on the clinical situation I just described.

Michael Schmidt
Senior Analyst and Senior Managing Director, Guggenheim

Great. Thanks so much.

Operator

Our next question is from Alethia Young of Cantor Fitzgerald. Your line is open.

Speaker 15

Hi. Thanks for taking our question. This is Nina in for Alethia. We were curious if there was any external technology that you believe could potentially enable greater activity in solid tumors that you might consider in synergy with your platform. Thanks.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Sure. This is Scott. We're always on the lookout for that, and I do think that we've shown, at least historically, the ability to bring, appreciate and bring in external technologies. For instance, the ADR technology that Bob spoke about that we are really excited about, we think is incredibly novel, and that was not discovered at Fate Therapeutics. That was discovered by investigators at Baylor, and we did in-license that technology exclusively for iPS-derived cell therapy. Super excited about that. Always on the lookout for technologies. Another example is the CAR MICA/MICB binding domain that we've incorporated into 536 was originally identified by investigators at Dana-Farber. Yes, we're big fans of collaboration, and we'll continue to bring in interesting technologies as we see fit.

Speaker 15

Very exciting. Thank you.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure.

Operator

Our next question is from Daina Graybosch of Leerink Partners. Your line is open.

Daina Graybosch
Senior Managing Director and Biotechnology Analyst, Leerink Partners

Hi. Two questions for me. Maybe I'll ask the first, wait for the answer, and ask the second. The first is on the MIC-A, MIC-B program, and it's a two-part question. In these two neuro models you'd show, did you overexpress MIC-A, or did you stress these tumors so that they express the stress receptors? And have you looked at models that are more stress induced, whether through the tumor or other drugs? And with that, do you plan to think about combinations beyond, let's say, monoclonal antibodies that are more therapies that induce stress, whether chemotherapy or other TKIs?

Scott Wolchko
President and CEO, Fate Therapeutics

Sure. I'll let Bob address both questions.

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Great question. In the two models that we described, the first one is a B16 overexpressing MICA, and the reason we selected that was B16 is a mouse cell line, and we didn't wanna interfere with traditional MICA, MICB expression. This way, when we target B16 MICA is very specific to our CAR as opposed to NKG2D that might be on our cells. That was the reason for that. The second one, the Calu-3, that's natural expression.

You bring up a good point that didn't make it to the slide deck, but we've taken every cell line we have at SADE, cancer cell line, heme or solid, and basically 99% of them naturally express MICA, MICB, and we can target them very effectively with a CAR MICA, MICB. That's not the case with NKG2D. So we're very excited, and most of the studies we do with CAR MICA, MICB is based on natural MICA expression, which leads to your second question. Yeah, absolutely, we're...

Scott even okayed a $1 million purchase of a machine that focuses, and it's staring at me now, that basically focuses radiation onto a unique place in the mouse just because we wanna see if radiation or chemotherapy upregulates MIC-A, MIC-B and also supports trafficking and migration to that site. Very interested in that, exploiting it, and initially, we do see upregulation of MIC-A, MIC-B. I'll add that the only line that we didn't see MIC-A, MIC-B express, we did irradiate it, and it did express MIC-A, MIC-B and was recognized by FT536. Overall, your questions are great, and I hope I answered them.

Daina Graybosch
Senior Managing Director and Biotechnology Analyst, Leerink Partners

Yeah, you did. Then the second question is on the stealth or not just stealth, the immune evasion. I mean, you had this grid showing that depending on the particular patient's NK cells, different methods could be better at avoiding rejection by that patient's NK cell. I think it was page 40. I'm wondering if you've repeated this in vivo. I noticed that on CD47, you don't see much in vitro, but I think some others have published that they see good avoidance of NK cell rejection in vivo.

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

No, that's a great question. We're developing those models. A lot of those models are not the easiest models to develop in vivo. I don't recall that others have done it in human cells in vivo. I think many of them were mouse models or maybe monkey. Yeah, no, that's the direction we're going. I didn't show all the data we have. ASH would be the first place where you'll see our in vivo data. Please tune into that, and we're targeting AACR as well. Your question about whether we see that in vivo, we're looking at it, and initially we do. I think I answered your question, but let me know if I didn't.

Daina Graybosch
Senior Managing Director and Biotechnology Analyst, Leerink Partners

You did. Thank you very much for answering both.

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Sure.

Operator

Our next question is from Matthew Biegler of Oppenheimer. Your line is open.

Matthew Biegler
Executive Director, Oppenheimer

Hey, guys. Thanks for the question. Philosophical one, Scott. I think Wayne actually touched on it a bit, but do you guys think that preconditioning is necessary? 'Cause it seems like the NK cells don't really expand that much, and obviously depleting T cells in that setting might not be that advantageous. I'm just kinda curious on your thoughts on that. Thanks.

Scott Wolchko
President and CEO, Fate Therapeutics

I think conditioning plays multiple different roles. I think one of the most important and often overlooked role is the fact that conditioning spikes cytokines throughout the body. I mean, autologous CAR T cell therapy, where there's no risk of immune rejection, requires Cyflu conditioning. The conclusion that at least I would reach associated with that is that the autologous CAR T cells are dependent on cytokines for activity. A lot of the innovation and engineering and synthetic receptors that you hear us talk about is really underlining all of that, underpinning all of that, is really about making sure the adoptively transferred cells are cytokine primed. I do think the big challenge is what we've sort of touched on today, this idea of functional persistence.

I do think allogeneic NK cells can be given safely from donor to patient. I think multiple doses can be given. I think there is low risk of rejection, but I think cells need essentially a fuel system to be potentiated. That is a lot of the focus in terms of what we're doing with product candidates like FT538 and beyond, and a lot of the innovation that we're focusing on, including, for instance, the allodefense receptor. Not only that, but thinking about, for instance, how if, you know, we can essentially convert an immunosuppressive signal through TGF-beta into an activating signal for the cell. Okay. That's fair. Thanks. Sure.

Operator

Our next question is from Tazeen Ahmad of Bank of America. Your line is open.

Tazeen Ahmad
Managing Director, Bank of America Securities

Hi, good evening and good afternoon. Thanks for taking my questions. Mine are a little bit more general, Scott. Just given the way that you have been able to quickly produce data on a few indications in heme indications, should we expect to see the same pace of ability to provide updates, even if they're early updates, as you progress through solid tumors? With that in mind, are there specific solid tumors that you would like to take a closer look at, let's say, over the next year? If so, are you able to share which ones those are? Then lastly, if we think about R&D expense going forward, you know, could you give us a sense of what proportion of that would be used to explore solid tumors versus liquid tumors? Thanks.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure. I'll start from backwards and go reverse. I can't give you a specific percentage today, but you know, we did allude to this. Keep in mind that, you know, we do have two really terrific collaborations with both Janssen and Ono. The funding with respect to research operates a bit differently between Janssen and Ono. However, a substantial portion of, obviously, our efforts under those collaborations is research and development that is funded by our collaborators. It's funded not only with respect to specific product development, but also several of the innovative features that we talked about today.

I think that's one of the great things that we look for when we think about collaborations, is making sure that our partners are committed to innovation as much as Fate Therapeutics is, and that they're willing to essentially support that innovation, with a long-term perspective into develop best-in-class cell therapies. You know, that's one perspective on innovation, as we think about it. I do think, you know, we will stay very committed to it, and I think our partners, appreciate that, and it's one of the reasons they selected Fate Therapeutics to partner. With respect to specific areas of solid tumor, I mean, we alluded to this. Look, there's. You will see obviously the

If you look at FT538, you will see that the monoclonal antibodies that we have chosen to combine with, two of them are checkpoint inhibitors. One of the areas that obviously we're very interested in exploring with checkpoint inhibitor therapy, where they are most often used, for instance, is in non-small cell lung cancer. We continue to be excited about the potential for NK cells in non-small cell lung cancer. If you deliver an NK cell systemically, it tends to want to traffic almost immediately through the lungs. We think there's sort of inherent mechanism of homing built into the cells in the non-small cell lung cancer patient setting.

In addition, there are notable mechanisms of resistance in non-small cell lung cancer, where T cells can no longer recognize those tumors and those include downregulation of the HLA class I expression, loss of antigen presentation, as well as and accompanying that, upregulation of stress ligands. We think NK cells can be, you know, uniquely tailored to attack non-small cell lung cancer as an example. In addition, we will also explore, as Wayne alluded to, combinations with tumor-targeting monoclonal antibodies, whether that be HER2 or EGFR. That will lead us to branch out outside of non-small cell lung cancer as well, where tumors are upregulated with those cell surface proteins. In terms of updates and our ability to generate data in solid tumors, look, FT500 and FT516 we view as pilot programs.

I mean, I think I've always said that we really did not, you know, had modest expectations for a non-engineered and a single-point edited NK cell in solid tumors, especially in patients that are heavily pretreated and resistant to checkpoint inhibitor therapy, and that ultimately it was gonna take multiplexed engineered solutions. We're now in the clinic with FT538, a three-point edited cell therapy, which is optimized across multiple vectors for innate immunity. It is a four-arm study. It does have the potential to enroll each arm independently. I think from this point forward, we're pretty excited about the pace of clinical development in solid tumors.

Tazeen Ahmad
Managing Director, Bank of America Securities

Okay. Thank you.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure.

Operator

Our next question is from Yigal Nochomovitz of Citigroup. Your line is open.

Yigal Nochomovitz
Director, Citigroup

Yeah. Hi. I just had a quick clarifying question, Scott and team. In the initial data you showed today in solid tumors, could you please explain why you chose FT516 primarily for melanoma, whereas you chose FT500 for Hodgkin's and non-small cell lung cancer? Thanks.

Scott Wolchko
President and CEO, Fate Therapeutics

Sure. I'll let Wayne answer that question. I think at some level, the FT516 study, which Wayne can extrapolate on, was actually intended to be a basket study with the vast majority of patients, and it was only a relatively small number of sites, but the vast majority of patients that enrolled at those sites actually wound up having, you know, melanoma. Relapsed refractory melanoma, stage four relapsed refractory melanoma, but I'll let Wayne elaborate.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

For both FT500 and FT516, and remember, you know, what we presented today was expansion data from FT500. For both studies in the dose escalation part, the enrollment criteria was very broad in the sense that it was essentially relapsed refractory solid tumors who failed, you know, prior therapies. We did not put any more specific stipulations on the types of tumors, nor did we put any constraints with respect to, you know, expression of relevant markers. It was a basket in the sense that we took basically all-comer relapsed refractory solid tumors.

For FT500, once we completed the dose escalation part of the study, we then focused on expansion in select tumor types, and we chose classical Hodgkin's lymphoma, as well as non-small cell lung cancer. That's the data that we showed today. For FT516, it's the same thing. You know, the dose escalation was in a broad, relatively nonspecific population of relapsed refractory solid tumors, where, you know, we did have, you know, some requirements around prior immune therapy. It just so happened that the patients that were enrolled in that dose escalation part of FT516 were mostly melanoma patients. There was one patient with non-small cell lung cancer, but other than that, it was all melanoma.

As Scott alluded to, FT516, the study originally had other combinations with monoclonal antibodies that we chose not to pursue, primarily because we were coming in with FT538. Many of the antibody combinations that we showed in the context of the FT538 study would have been combinations that we, you know, had the option to explore with the FT516 solid tumor study, but we chose not to pursue that because we have FT538 now. Okay. Makes a lot of sense. Thank you.

Operator

Our next question is from Peter Lawson of Barclays. Your line is open.

Peter Lawson
US Biotech Equity Analyst and Managing Director, Barclays

Hey. Thanks, Scott. Thanks for the update. Just on the lung PR, kind of what state was the patient's NK cells in and what CD16 isotype did they have?

Scott Wolchko
President and CEO, Fate Therapeutics

I'm not sure, Sarah or Wayne, feel free to answer. I'm not sure we have that data, actually.

Peter Lawson
US Biotech Equity Analyst and Managing Director, Barclays

Gotcha.

Sarah Cooley
SVP of Clinical Translation, Fate Therapeutics

You know, we did measure the CD16 isotype, and I do not know for that patient off the top of my head, what their endogenous type was. I'm sorry.

Peter Lawson
US Biotech Equity Analyst and Managing Director, Barclays

The durability of that PR, so it's 9.8 months and ongoing, how does that compare to prior therapies for that patient? The other factor we're trying to get to is like how comfortable are you that that PR wasn't a retreatment effect?

Scott Wolchko
President and CEO, Fate Therapeutics

I think, Wayne can correct me if I'm wrong, but I believe that patient was double refractory to the checkpoint inhibitor that we deliver.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Yes, that's correct. For the patient on the FT500 study who has the partial response of 9.8 months from start of treatment, that was a patient who was double refractory to prior checkpoint-based therapy, including the most recent line, which was combination of ipilimumab and pembrolizumab. As far as-

Scott Wolchko
President and CEO, Fate Therapeutics

And treat, and-

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

As far as that. Go ahead.

Scott Wolchko
President and CEO, Fate Therapeutics

I was gonna say, and Wayne, correct me if I'm wrong, we treated the patient with pembro.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Correct. Correct. That was a specific aim of that part of the FT500 study, to treat patients with the same checkpoint inhibitor that they previously relapsed or were refractory to. Along those lines, you know, the fact that we saw that, you know, case of a partial response in that patient was quite encouraging, especially given the fact that the duration, you know, was 9.8 months and was ongoing at the time of the data cutoff. That, I think, is the evidence that the FT500 is doing something, you know, that results in clinical benefit.

Remember, I think the other interesting or notable thing about this particular patient, which was not manifested in the CT scans, was the fact that this patient did have a progressing lesion that was compressing on the patient's airway that required the placement of a stent. What was interesting is that following treatment with FT500, that lesion apparently regressed, and as a consequence, that stent had to be removed, in part because it became dislodged as a result of that tumor regression.

Peter Lawson
US Biotech Equity Analyst and Managing Director, Barclays

Wow. Perfect. Thank you. The data you present today, does that in any way kind of change the way you think about which primary cancers you're gonna go after for 538?

Scott Wolchko
President and CEO, Fate Therapeutics

No. I mean, we’ve been obviously well aware of this data, and have continued to design our clinical strategies based on this data. I mean, these were pilot programs. We continue to be excited about the potential to combine with checkpoint inhibitor therapy, combine with tumor-targeting mAbs, go after some of the other orthogonal approaches that we talked about, and our clinical strategy that we laid out today is consistent with that.

Peter Lawson
US Biotech Equity Analyst and Managing Director, Barclays

Great. Okay. Thank you so much. Thanks for taking the questions.

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Operator, just one final question, please.

Operator

Yes. Our last question is from David Dai of SMBC. Your line is open.

David Dai
VP and Senior Biotech Analyst, SMBC

Great. Thank you guys for taking my questions. I have a philosophical question for the FT536, the MICA/B program. Could you just comment on the, are you exploring potentially other types of immunodepletion conditioning to improve NK persistence and potentially cause more chemo stress that could upregulate a MICA/B in the tumor cells?

Scott Wolchko
President and CEO, Fate Therapeutics

This is Scott. I'll let Bob talk about some of the preclinical data that we've seen with, for instance, looking at radiation, and maybe I'll pass that to Wayne, and he can talk about, you know, the potential to look at combined FT536 with other types of therapy.

David Dai
VP and Senior Biotech Analyst, SMBC

Chemo conditioning.

Bob Valamehr
Chief Research and Development Officer, Fate Therapeutics

Really quickly, as we mentioned earlier, we are combining FT536 with radiation therapy, not only at Fate, but also Michel Sadelain is very excited about that opportunity. We are looking at, like you said, other strategies. FT536 with radiation therapy seems to do both. It appears to, you know, give the tumor a hit as well as increase stress ligands, and that seems to also help the cells traffic. It's a great combination, and I think, or we know that in discussions with Wayne and Scott, we're planning to go in that direction.

Scott Wolchko
President and CEO, Fate Therapeutics

Wayne, do you just wanna comment on obviously where we're starting with Cy/Flu, but believe there's a potential to look at combinations, for instance, with other opportunities?

Wayne Chu
SVP of Clinical Development, Fate Therapeutics

Sure. Scott alluded to, you know, currently our study is focused primarily on Flu/Cy conditioning at the outset, and then looking at FT536. I would say that once, you know, we get to a point where we have a pretty good idea of the clinical and translational data, you know, around FT536 in the context of that conditioning paradigm. I would say essentially at that point, there's a lot of different ways we can go forward with combinations as Bob, you know, mentioned. More specifically with respect to conditioning, looking at other conditioning regimens, particularly those that are, you know, regimens that are standard of care for a given indication.

We'd be very interested, for example, to understand the capacity of those regimens not only with respect to their ability to add or synergize with FT536 from an anti-tumor activity perspective, but also understanding whether or not they can subserve roles, you know, from a conditioning standpoint. Obviously this is gonna be, you know, an iterative process, and we're gonna see what the data looks like before we decide, you know, what particular combinations we would want to explore.

David Dai
VP and Senior Biotech Analyst, SMBC

Great. I think that's it for my questions.

Scott Wolchko
President and CEO, Fate Therapeutics

Thank you. With that, I wanna thank everyone for participating in today's discussion. I hope it was informative and provided you all a good picture of where we're heading with our emerging cell-based cancer immunotherapy pipeline for solid tumors. Thank you very much.

Operator

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

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