Morning, everyone. My name is Ted Tenthoff. I'm a senior biotech analyst at Piper Sandler. Before I begin, I am required to point out certain disclosures regarding the relationship between our next presenting company, Fate Therapeutics, which are located at the back of the room and also at the registration desk. As you probably know, Fate is developing a rich pipeline of induced pluripotent stem cells, or iPSC-derived cell therapies, for both immune disease and oncology. I'm pleased to be joined with Bob Valamehr, PhD, who's President and CEO of Fate. Bob, thanks so much for being with us and for making the trip. I always enjoy our interactions.
Same here, Ted. Thank you for the invitation.
I always ask you this because I think it's a really good way to start the conversation and just sort of set the stage for what we're going to talk about. What are iPSCs? Why are they such a good source for cell therapy?
Oh, that's an excellent question, Ted. iPSCs, while they're a snapshot in the development of an embryo, they're really this unique cell that has two unique properties. The first property is, if you keep them happy, they'll grow in an unlimited manner. Most primary cells, T cells and NK cells, fibroblasts, they go through senescence after several rounds of doubling. It's a unique population that can grow, albeit you have to keep them happy in culture, but they'll grow in an unlimited manner. This gives you a unique ability to take a single cell and make a master cell bank that consists of 100 million cells of that cell line. That's very unique. No other cell can start from a single cell and reach 100 million. They usually go through some sort of quiescence or senescence.
The other attribute here is the ability to then differentiate the cell into the desired lineage. They have the propensity to become any of the 200 cell types you find in your body. Now this becomes very unique. You have a cell population that can go from a single cell to 100 million to create a bank of cells. You can engineer those cells to have the attributes you desire. At that point, use that master cell bank as a starting point to manufacture the cell type you want. This becomes truly what we call an off-the-shelf concept, where you can now make a certain drug product that is a cell in a consistent, uniform manner. Your cost of goods will come down because you're making this in bulk. It is very defined.
Most often, when you think about autologous CAR-T or even donor-derived allogeneic CAR-T, you find yourself with a heterogeneous population that changes over time as you repeat the engineering process. This really becomes what drug development should be, creating a consistent product so then every time you give it to a patient, they have the same experience.
That's really helpful. Now, one other trend that we've really noticed at Fate, I've covered the company for a long, long time, is really this transition to CAR iT cells or CAR-T-induced pluripotent CAR iTs from natural killer cells. What's really gone into this product shift at the company?
Another, you've been with us for a long time, so you know the story well. For the audience, we started wanting to make T cells. That was back when we started this campaign in 2014. It was to repeat what we saw with the likes of Juno and Kite and other companies. From folks such as UPenn and MSK, where T cells engineered with a chimeric antigen receptor were showing dramatic improvement in patients with myeloma or lymphoma targeting CD19. This has evolved since. When we started, we really wanted to make a true T cell. The T cell is a very unique population, where if you do it right, then that chassis, the T cell itself, can respond to stimulation and expand. During this process, it took us eight years to make an alpha-beta T cell.
During this period, we also were creating NK cells. While NK cells are this innate immune cell that has really multiple receptors to attack cells that should not be there, whether they are infected or transformed, they do not have the propensity to expand. When we were in cancer and other aggressive diseases, the NK chassis was just not responsive enough. At the same time, we were able to finally, after eight years, as I mentioned, working with Michel Sadelain, develop the T cell that then was being derived from an iPSC that was an alpha-beta T cell that can now respond to the stimulation of a CAR cell.
When you're thinking about truly eliminating disease, truly having a living drug, where you have a product that actually responds to the disease, not just goes into the body and decays, it actually goes in and can expand in numbers because there's more disease burden, it's really a T cell that you want to fight the disease.
That's a perfect segue into FT819, which is your CD19 CAR iT. Walk us through the data you've reported to date, mostly in lupus so far, including the most recent update at American College of Rheumatology just a couple of weeks ago.
Sure. Maybe I'll start just a couple of years earlier. We started the campaign with FT819 in 2018, going after aggressive DLBCL. We wanted to have safety and efficacy in mind. The CAR motif was edited to optimize efficacy and safety. Now, when you're going after an aggressive disease such as lymphoma, where there is about five pounds of tumor, really fine-tuning the CAR to have both safety and efficacy may not have been ideal. We saw the safety there. We saw that in DLBCL, we saw about 40% CR rates in patients that were CAR-T naive. That was great. The safety was fantastic. It wasn't durable enough for long-term durability. The CAR motif didn't allow the T cells to expand to the point that I think is necessary for DLBCL.
As we thought about autoimmune, this became the perfect opportunity because safety is paramount. The number of cells you need to eliminate is magnitudes less than in aggressive DLBCL. You could think about targeting 10 to the 10 cells in aggressive DLBCL, but something closer to 10 to the 8 cells in lupus. When we went into lupus with FT819, we saw exactly what we were hoping to see: a safety profile that was critical for patients who are living with this disease for a very long time, the cost of goods being low enough, and the accessibility being high enough to be able to give the patient the experience the minute they come in and they need it.
The efficacy, where we're seeing significant red-eye score drops, significant improvement in physician global assessments, significant improvement in FASD scores, and significant improvement in UPCR in those patients that have lupus nephritis, a 50% subcategory of SLE. In general, as we showed at ACR, and we will continue to show at ASH and going forward next year, CAR-T has a potency that is really unique, unlike any other biologic. We could talk about why CAR-T is better than monoclonal antibodies or bispecific engagers. At the same time, we are able to deliver that CAR-T experience in an accessible way. We're dubbing this term "ready when you are." That is very rare for a CAR-T product. It is something that we're very proud of because finally, our platform is really flexing its full muscle in the lupus community.
Another thing I always think about, too, is you're talking about the decreased burden of disease that you need to treat. I kind of think about it the other way in terms of the increased number of patients you need to treat. Like in DLBCL, what, maybe 100,000 patients. In lupus, you've got 200 million?
Yeah. Two hundred, flaring today, 500,000 available.
It's a massive, or 200,000, yeah, massive increase in demand. I just don't see we're struggling with autologous to even treat hematologic cancers, let alone solid tumors, let alone autoimmune disease. Tell us a little bit about those manufacturing benefits. You kind of touched on this early with the benefits. I think this is a really good way to put that in perspective.
Oh, I'd love to talk about that. From a manufacturing CMC side, as I mentioned, we have a master cell bank. We have the starting population that's already been engineered, it's been CRISPR engineered, and the iPSC bank has been tested over and over and validated for precise engineering and all the desired attributes being there and all the undesired attributes not being there, such as genomic aberrations. You have a starting master cell bank that is clonal. Every time you access this, you're going to get the same drug product out on the other side. This gives you this unique ability to manufacture tens, hundreds of thousands of doses per year at our current scale. Right now, we're projecting to be able to make about 50,000 doses a year with our current 40,000 sq ft facility. It's very modular.
If you want to double that, triple that, you either increase the scale, the volume of the bioreactors, or you go and get another 40,000 sq ft facility. This really brings the cost down. For us right now, cost of goods are close to $3,000 per dose. More importantly, the accessibility is there. For us, an enrolled patient is a treated patient because when you come in and you qualify, you're eligible for the treatment, the drug product is already there, ready to go. Is that a distribution site? Whether that distribution site is in the U.S., whether it's in the U.K. or Europe, you can do that. This really gives us a unique opportunity to treat globally with a single product that, in theory, should not run out. We don't need to go after another donor. We don't need to re-engineer.
Everything's been done. The same safety profile we see in oncology, we could rest assured we'll see it again in autoimmunity because it's the same product. It is very exciting for us to be able to deliver something that has the potency of CAR-T with the accessibility of what traditionally is expected from a drug.
It really does feel like everything's coming together here between the data, the drug supply. What are the next steps in SLE to get to registration? What are other autoimmune disease indications that you're currently treating?
Sure. Back in July of 2023, we cleared the IND, and it took us, in an 18-month period, we literally had two sites. I've been saying this before. They were our friends and family, and they came in to help us. We had two clinical sites. We couldn't get the word around because every time we talked about off-the-shelf, we talked about how it's accessible, it's available on demand. The sites were already committed to big pharma, and they didn't know what they didn't know. Over a course of 18 months, they saw the data that we generated with the first five patients. They also went through what I would call a realization that auto CAR-T is very challenging and a wake-up moment. You have the patient.
The patient either doesn't want to go through the whole process of coming off drug, procuring their T cells, waiting for the product to be made. They could flare at any point during that period. There is a risk of not being able to manufacture their CAR-Ts, to realizing that some patients don't want to go through that experience. Some patients don't want to stay in the hospital for 14 days after infusion. That drug product is not available as they need it. Now they're shifting over, and we're having a lot more sites. As we'll talk at ASH, we're getting close to nearly 14 sites now. Also, patients that we're treating, that is actually at an enrollment pace that I would say is faster than anyone else today in lupus. Enrollment is picking up.
Site activation is picking up because of that availability of drug product, but also because of the efficacy. That is our 2026 objective in SLE, both in lupus nephritis and extra-renal lupus. Sorry, extra-renal lupus. We want to basically move into a pivotal registration study in 2026 and move forward. I think that pursuing these two disease categories is something that is our number one priority. At the same time, it appears that eliminating B cells has an effect in other diseases of autoimmune, such as myositis, systemic sclerosis, and vasculitis. We are treating patients in those categories as well. We are thinking about rheumatoid arthritis and even being bold about things such as type 1 diabetes.
There is a lot of different things here that the door has opened for us in terms of FT819 and also the next generation, FT839, where more complex diseases, such as diseases that have T cell components that are aberrant, come into play. The pipeline is rich. We are very excited. Our first dip in the pool has been very successful. We are nothing but excited about what 2026 is going to bring for us.
Nice. You mentioned 839, and I think this has additional edits. I mean, these are really sophisticated cells, if you want to just kind of describe all the different edits that go into it. What is the need to continue to innovate and refine these cells for therapies?
For lupus, I think we found the perfect balance between safety and efficacy. Maybe we'll see that also for myositis and vasculitis and systemic sclerosis. In diseases where T cells are playing a critical role and dendritic cells are playing a critical role in promoting the disease, we need something more complex. We need something that has a broader net in terms of capturing the disease cells and reducing inflammation. Here we thought about, okay, what is the next target beyond a lineage target such as CD19? That's CD38. When a cell is overactivated, when it's too stimulated, it expresses CD38. Now, that's only a good thing because you're activated to eliminate disease. In autoimmune, you're overactivated attacking yourself.
By targeting CD19 and CD38, we are able to, as I mentioned earlier, have a broad approach in eliminating all the bad actors that are playing the role in promoting disease. At the same time, we put in other edits to make sure that the product is going to work without any conditioning. Also, we put in edits to make sure that the product further traffics to sites of inflammation. It is really the next generation of therapy. Today, as we sit here, we see 819 really having found its home in lupus.
Excellent. You talked about the ability to maybe reduce conditioning and/or, I think commiserate with that is outpatient treatment. What are some of the efforts that you're doing in those areas?
Excellent question. Maybe we'll start with the conditioning. When we started regimen A of FT819, we had three options available to the physician and to the patient: the combination of three days of cyclophosphamide and fludarabine, a single dose of cyclophosphamide, or two doses of bendamustine. Each one had a unique reason for it. A single dose of cyclophosphamide is there because that's what is traditionally given as one of the standard of care therapies to lupus patients. Their experience, the rheumatologist's experience with it, and so is the patient. Bendamustine is there because fludarabine shortage was a problem several years ago. Cyclophosphamide is there because that's traditionally what's given to CAR-T patients. What we experienced was that no physician nor any patients wanted the cyclophosphamide experience. It's aggressive chemotherapy. It's three days of a combination of two chemotherapies.
When you have a choice, most all, if not, I'll take that back, all PIs and patients went for the lighter conditioning. At first, we were a little bit worried because everyone else is using cycli, and we thought we're going to be handicapped. We were excited to see that in the presence of a single dose of cyclophosphamide or bendamustine, you see very good drops in disease, but at the same time, good recovery of the patient from the conditioning. A, they were either experienced through cyclophosphamide previously or bendamustine, which is much lighter than three days of cycli. That combination has also helped us expand our reach, make things more accessible because, as you mentioned, our three-day hospitalization requirement is today the least of all CAR-T companies because the safety profile is there.
We're now going down further to eliminate all needs for hospitalization stays. This basically becomes same-day infusion in an outpatient setting. Having lighter conditioning really helps that because the patient experience is rather preferred than compared to auto CAR-T.
Absolutely. It is going to help drive enrollment and really differentiate amongst the others. It really is this cycle. One of my favorite programs, you touched on it briefly, is FT836. This is for oncology, MICA/MICB. Tell us why this is such a good CAR-T target. I know it has, again, very sophisticated edits that are included in it. The IND is cleared. I believe you guys are starting to enroll patients. Give us an update on this program.
Sure. You know, having worked in oncology, specifically CAR-T in oncology for the past 10 years, we know something. That is, the antigen has to be available for the CAR-T to work. Most often, CAR-T is downstream of prior therapy against that antigen. A lot of the times, you go in targeting a specific antigen, and either the tumor has evolved since the previous treatment or the tumor has always been heterogeneous. Even though you reduce that specific antigen within the tumor or the cells expressing that specific antigen within the tumor bed, you still have a lot of other cells that you have not eliminated, and the tumor continues to progress.
Targeting a stress antigen that's always there on the cell is something that we've been working with Kai Wucherpfennig at Dana-Farber to find a way of targeting every cell because every cell will express a stress antigen, MICA and MICB. What happens is that the cancer cells are clever, and also infectious cells in the same manner are clever. They shed that stress antigen to basically evade the immune surveillance that your body has against MICA and MICB. What we did was we came up with a clever way of having the CAR target the region of MICA and MICB that does not fall off. There's always a little bit left. By doing that, we can now eliminate all sorts of different cancer cells because they all express this antigen that stays on the cell.
We're very excited about it. We put that CAR, targeting MICA and MICB in a unique way, onto a chassis of a very powerful T cell. We took the brakes off. With 819, we made sure there were all the proper safety mechanisms because, you know, this is lupus, is a chronic disease, and the disease burden is low. For a solid tumor, we know the disease burden is high. We're going after it with a sledgehammer that has the precision of a surgical knife. We're very excited. As you said, the IND has cleared on this nine-point edited CAR-T cell, and we've dosed the first patient. Their queue is already, because of the excitement of the product, the patient queue is already there. We're going to be able to discuss the outcome early next year, first half of next year.
The other exciting part is that we're able to give patients this without any conditioning. That's the other part with our sword and shield technology.
Yep. Very, very cool. We have a couple of minutes left. I'm going to try to squeeze one in real quickly, more just to get the update here. You guys have the partnership with Ono. You're developing FT825, which is a HER2 CAR iT, but again, very sophisticated edit. What's the latest here? I know it's been challenging to enroll, but you're starting to address that. What is the latest on 825?
Going back to my earlier comment, targeting HER2 after several anti-HER2 treatments has been challenging to find patients that have the HER2 disease in a broad expression within the tumor bed. In the beginning, when we went through dose level one and two, we were having all patients come in. We realized that a lot of these patients were HER2 low or HER2 negative because of treatment with prior HER2 and Herceptin therapies. The tumor was there, but because they've been treated previously with anti-HER2 therapy, the expression of HER2 was low. What we've done now is we've put in patient enrichment criteria for HER2 expression. That has dramatically slowed down enrollment. I think dosing the right patients is very important. Requiring the biopsy pre-treatment, making sure the HER2 expression is there, really has allowed us to focus on the right population.
Again, enrollment has slowed down.
You guys ended the third quarter, again, very healthy cash position, $226 million thereabout. How long does this fund the company? What's it really enabled you to accomplish?
You know, we started last year in 2024, saying we have cash runway through year 2026. Through very precise cost savings measures, through being really focused on the right diseases to pursue with the right product, we've been able to push that cash runway by another year. Now we have cash through year end 2027. That allows us to, as we continue to be smart about it, move into our pivotal study for FT819. That allows us to prosecute other diseases with FT819. That allows us to move forward with FT836 in oncology and FT839 in malignancies and in autoimmune. By being very careful, we will be able to do a lot in the next two years. I'm really looking forward to 2026 and all the inflection points that we have ahead of us.
Great. Bob, thanks so much for being with us.
Thank you.
Make sure there's a cell therapy panel today at 12:00 that Bob and I are going to be on. If you can, come join us in the big room downstairs.
Thank you, Ted.
Thanks for that.