Good afternoon, everyone. Welcome to Barclays Global Healthcare Conference. We're in Miami and, you know, do raise your hand or email us if you have questions. My name is Peter Lawson. I'm one of the mid-cap biotech analysts at Barclays focusing on oncology. Really delighted to have up on stage with me, the CEO from Fate, so Scott Wolchko. I guess the first question is really kind of, you know, I guess pertinent for most people is this kind of J&J collaboration, kind of how that unfolded, if you can kind of shed any more light a round that process.
I mean, I'll do as best I can with it. It was certainly as a bit of a surprise. We were making a lot of progress under the J&J collaboration. Headed into the fourth quarter, J&J had already exercised a commercial option on a first product candidate. In the fourth quarter, actually exercised a commercial option around a second product candidate. In addition, one of those product candidates we had filed an IND on actually the week before Thanksgiving. That IND cleared in early December. By all accounts, I think we're well poised to advance two different product candidates under the collaboration into clinical development in early 2023. In the middle of December, J&J came to us and asked us to reconsider some of the terms and conditions of the agreement, including some of the financial aspects and intellectual property.
We tried to reach agreement with them on that, and unfortunately, we weren't able to reach agreement and, J&J terminated the collaboration.
Gotcha. That discussion around IP, how did that evolve? They wanted.
It was a discussion that came up. I mean, we carefully negotiated the intellectual property provisions of the agreement originally. I mean, obviously, we are an iPSC-derived cell therapy company. We think there's tremendous value in our platform. If you remember from the agreement, we were the manufacturer of product candidates too. You know, there was just a request to reconsider some of the key terms of intellectual property and license, licensed intellectual property, and it was just something we felt like we couldn't agree to.
Was there an attempt to kind of restructure the revenue, the cash flows around that?
There was definitely an element of that. Yes. Yes. I mean, the original discussion was... I mean, you can look at our revenue and you know, obviously, what our quarterly run rate was. J&J was supporting research and development of at least 100 people within Fate Therapeutics. In addition to that, two product candidates were headed into clinical development, both of which carried substantial milestones over the next 12-18 months. There's certainly a financial aspect to it as well.
Gotcha. Thank you. Thanks for s ome clarity around that. It was a painful blow for the company.
Oh, yeah. It was a difficult time. Very difficult. You know, arguably, of all my time at Fate Therapeutics, which I helped start the company, was probably of the, you know, most challenging four weeks that we have faced as a company.
Is there a drive to kind of try and replace that collaboration? How should we think about?
We're probably not gonna rush into a new collaboration. We have a collaboration also with Ono Pharmaceutical. Generally, I'm very pro-collaboration. I do view Fate Therapeutics fundamentally as a platform company. We have multiple product candidates that we are advancing out of that platform, and I do think platform companies should be built at One of the avenues they should be built through is collaboration. I continue to remain very pro-collaboration, although we just had a painful separation. Yes.
It's something that's kind of on the cards, but it's not something you need to act on.
Yeah, absolutely. I mean, I think as you've seen with the Ono collaboration as well as J&J, I mean, we've had successes under collaborations, I do think there's a lot of synergy that, for instance, some of the pharma companies can bring to Fate Therapeutics with respect to our cell therapy platform and building product candidates together. With both Ono and J&J, we view what they brought to the table as very complementary to what we do. They're experts in identifying novel targets and binding domains that can that, for instance, cells can target. We think we have one of the leading cell therapy platforms where we can integrate those targets into our platform in our multiplex engineered NK cells and T cells.
Together bring build product candidates that, you know, are sort of unmatched and unrivaled with respect to their potential.
Yeah. Okay. I'd love to talk through some of the, I guess, upcoming catalysts in the second half around, I guess, FT576. Your BCMA-directed iPSC cell line. Kind of where you think that could fit into a very competitive landscape.
I absolutely. I think the myeloma landscape is competitive. I think we think of FT576 as a product candidate that can be very differentiated in that landscape. Certainly, it is an off-the-shelf cell therapy. There has been certainly challenges with patient reach with respect to the first generation of autologous product candidates. I think also the one of the novelties of our product candidates is it's a multi-antigen targeted product candidate. We're not just targeting BCMA with a CAR. We have the ability to combine with daratumumab, as an example, and target CD38. We think we have a multi-antigen targeted product against BCMA as well as CD38. I think there's another element associated with the product candidate in that CD38 may wind up serving as a conditioning agent.
If you deliver a cell therapy in combination with that particular monoclonal antibody targeting CD38, it may actually serve to condition the patient's immune system to promote the activity of the cell therapy. We think there's some novel mechanisms of action of FT576. Ultimately, I think it's a product candidate. I think there will continue to be multiple lines of therapies in myeloma. Nothing has proved to be curative yet in myeloma, and it's not unfortunate, but many patients do advance to fourth and fifth and sixth lines of therapy. I think there will be lines of therapy that are post-autologous CAR T-cell therapy. I think that's a rich area to develop in, including with an off-the-shelf targeted product candidate.
I also think if we have a product candidate that can synergize with a monoclonal antibody regimen, you can reach into the community where most patients are treated. I think, you know, there's ample room for multiple lines of cell therapy to exist in the treatment landscape of myeloma.
Gotcha. That kind of post-cell therapy landscape, is that big enough? I know we've had pushbacks about the, you know, NPV and stuff like that.
I think it depends. I mean, interestingly enough, I think, you know, as I think about the off-the-shelf cell therapy paradigm, for the sake of argument, let's say that, you know, the autologous product candidates continue to live at, for instance, an academic center, and they don't reach into the community in really an outpatient setting. Well, that's a terrific opportunity then for an off-the-shelf cell therapy. In one sense, if they're limited to the academic center, I think that provides a huge opportunity to jump ahead of those types of product candidates. If those candidates do move earlier line, there's gonna be more and more patients that are post-autologous CAR T-cell therapy. Again, I think it's a yo u've pointed out, I think it's a rapidly evolving landscape, but I think there's rich areas and opportunity for development.
Gotcha. Just data that we should see end of the year for the BCMA count candidate, kind of how much should we expect to see? Kind of durability data, will that be included and kind of what dose level?
Right now we're dosing patients with our FT576 product. We're giving two doses at 300 million cells per dose. That's a relatively low dose for an NK cell therapy. If you look at, for instance, the autologous CAR T-cell products that are approved, those CAR T-cell products are given in the dose range of 300 million-500 million cells. We're at a relatively low dose with NK cells still. The next, once we clear the dose cohort at two doses in 300 million cells, we can continue to dose escalate. Actually, the next cohorts that are scheduled to open are now three doses at 1 billion cells per dose.
Now I think we'd be getting into the range at the next dose cohorts that are more in line with what we would expect to be active with respect to an NK cell therapy. You know, at that dose level, the next 20 patients, arguably at that dose level, three times a billion cells per dose, I think will really be a really great test of the potency of the product candidate and its potential to fit into the landscape. I think, you know, we will want to generate data on 20-25 patients before we release that data set, and so, you know, I think that's something that we can achieve in the next nine to 12 months.
Okay. For that, 20-25 patients, but at that point, we should have durability as well.
Some patients we may have durability, right? I don't expect we're gonna treat all 20 patients, for instance, in the first month, right? I think, you know, at some level, we'll have some early patients that we've treated with some durability, and then the later patients obviously will need to continue to follow. I think we'll get a first sense of durability, but I think the first readout primarily will be with respect to what is the primary antitumor activity with respect to initial response.
Gotcha. With that BCMA data, that nine-12 months, we shouldn't be holding our breath for ASH for that data set?
No. ASH abstracts are typically due in August, right? I don't think we'll have that data set at, for those ASH abstracts. Now, we can always hold, and we have held events at ASH in the past. We can hold an event in the first quarter. I wouldn't necessarily expect it to be part of the ASH agenda, if you will, because that would require an August submission of an abstract. I don't think We're not necessarily gonna have this data set for then, no.
Gotcha. More than likely a company-sponsored event.
Yeah. We, you know, an event early next year. For instance, there's obviously conferences in the first half of next year.
Gotcha. What do you need to see to move that forwards?
I think, again, I think of it depends on the setting you're going to sort of target and live in. I think, you know, one of the benchmarks that we certainly look at is the T-cell engager benchmark that in that space, I mean, when we think of an off-the-shelf cell therapy, we tend to think about that has the same type of opportunity and patient reach of an engager. We do think, for instance, engagers will be given early and often to patients. We think cell therapies that are off-the-shelf that can have a differentiated safety profile can be given early and often to patients, especially a program that would synergize with a CD38 targeted regimen that is given early and often in treating patients. When we look at engagers, the engager profile is somewhere between 50%-60% ORR.
Gotcha. You kind of make that mix of thinking about response rate and access. That's the key thing.
Response rate and access, we also balance that with. I think there's a really rich opportunity for development in late-line post-CAR T-cell therapy. If we extrapolate at least the lymphoma observations to myeloma, I think they are you can do that extrapolation, the responses post-CAR T-cell therapy are fairly dismal, there's not many options for those patients. I do think that continues to be also a rich area for development. I sort of think of the landscape generally in three different buckets. There's the very late line post-CAR T-cell therapy, where outcomes I think are dismal. There's if you wanna go head-to-head with a CAR T-cell therapy, for instance, at, you know, given at the academic centers at Memorial Sloan Kettering or MD Anderson.
There's early, where the bulk of patients are treated or actually in the community setting, and how do you bring an off-the-shelf cell therapy to those patients early in care?
Gotcha. Okay. When you talk to physicians about durability, kind of, what do they wanna see? You know, presumably nothing about.
I think it depends on setting, but for the sake of argument, if you're gonna go head-to-head with an autologous CAR T-cell therapy, I don't think physicians are willing to sacrifice, for instance, outcome, efficacy outcome for a patient. I think you certainly have to be competitive with respect to efficacy if you're gonna go head-to-head at, for instance, the Memorial Sloan Kettering or the MD Andersons of the world with an autologous CAR T-cell therapy. That said, there are, as you know, there are a whole host of patients that, for whatever reason, are eligible and do not get autologous CAR T-cell therapy. I think the latest estimates that I saw of all the patients that are actually eligible for autologous CAR T-cell therapy, only about 10%-15% of patients actually receive the therapy.
Again, I think there is going to be a significant need, and it's not necessarily a zero-sum game because quite a few patients who are eligible do not receive the therapy.
Okay. Just in that, I guess that post setting, sorry to go back to that, but is there evidence that a patient can respond the second time to a BCMA-directed therapy?
Yeah, absolutely. And that's true in both lymphoma and myeloma with the targeted therapy. Certainly CD20 appears to be a durable target. CD19, there's been responses post-CD19 following CD19-targeted therapy, and that's certainly true in BCMA-targeted therapy. I think there's interesting data actually emerging, though, and back to your point on, gosh, what do you need to show with respect to responses? There does seem to be a degradation though of activity profile when you continue to attack the same target. I think attacking BCMA, for instance, in a follow-on line absolutely can drive responses, but there can be a degradation of activity, and that's actually why I think our multi-antigen targeting strategy is, you know, quite interesting because CD20 on the lymphoma side and CD38 on the myeloma side are fairly durable targets.
Okay. Perfect. Kind of thinking about that multi-antigen approach and also just like these, you know, multiple generations of NK cells you've developed kind of, I don't know if there's a right number of edits but is there a point where you get diminishing returns essentially?
I think that's possible. I think when we've looked at the first generation NK cell products, certainly, we absolutely have looked at them, and we certainly believe there is significant room for enhanced potency. I think we continue to see with NK cells, and the field continues to see with NK cells, a really clean safety profile. I do believe there's absolute ways to continue to enhance the potency of NK cells, and I think we need to as a field, for those of us focused on NK cells, we have to continue to focus on driving potency.
Gotcha. I guess the other thing you may be able to address here is around replacement of Flu/Cy conditioning.
Yeah. I mean, so when we think about... I mentioned the different sort of buckets that we think of in being able to treat patients. When you talk about that ear, that early line patient in the community setting, Cy/Flu is a real barrier to reaching those patients. When we think of additional functionality that we want to build into our cell therapies, we are trying to break the link between cell therapy and requiring high degrees of intense patient conditioning. As you know, autologous CAR T-cell therapy requires intense Cy/Flu conditioning, even for autologous CAR T-cell therapies to work. If you're taking a different approach, and you really wanna maximize the potential of an off-the-shelf cell therapy and patient reach, I think you, we need to develop strategies.
The field needs to develop strategies where you can break that linkage or tie to Cy/Flu, so you can reach patients earlier in care.
Yeah. What are the solutions and you think that you can address? You know, is it CD38 or engineering?
Yeah. There's different strategies for this, and I don't think there's a one-size-fits-all necessarily. I think, you know, there's certainly a strategy where combining with a monoclonal antibody may provide degrees of conditioning. For instance, like CD38-targeted monoclonal antibody in myeloma. When you give CD38-targeted monoclonal antibody, forget about the cells. When you give that monoclonal antibody to patients, it actually blunts the host immune system. You see selective depletion of activated NK cells and T cells when you deliver that kind of monoclonal antibody. That may act as actually a conditioning agent in combination with our cell therapy because, obviously, we're now going into an environment that has been depleted of these activated host immune cells that can mitigate rejection.
It can provide targeting for the cell therapy because it's CD38-targeted, and because of features we've engineered into our cells, like our CD16 receptor, it actually serves to activate the cell as well. I think that's one strategy, for instance, as we look at FT576, CD38-targeted monoclonal antibody may serve as a conditioning agent. That's something we're super excited about and exploring. There are other strategies, for instance, that we've included in our FT522 program for lymphoma, where we actually now have engineered in what we call an Alloimmune Defense Receptor, which is essentially a CAR that targets 4-1BB expressed on host T and NK cells.
Again, this is a means of being able to deliver a cell therapy in the background of a host immune system, and that host immune system will actually serve to activate the cell because it's a CAR construct that targets 4-1BB. Here's a cell therapy that we've designed to be given in the background of a functional host immune system to activate the cell.
Do you think that's where the, like I guess the brass ring is? Like this is the real opportunity being able to generate?
When I think about, I mean, lymphoma and myeloma are highly competitive landscapes, whether you're talking about T-cell engagers, autologous CAR T-cell therapies, allogeneic cell therapies that are being delivered. I think the real... When you start thinking about how do you really differentiate your product candidate, I think at the end of the day, a big part of differentiation is patient reach, and how do you bring these cell therapies to patients earlier in care? I think that is a very strong value proposition, to carry that type of value proposition, I think you need to reduce the dependency on intense Cy/Flu conditioning. That will certainly differentiate from autologous CAR T-cell therapy as an example.
The other area that I think is really unique that we potentially bring to the table with an iPSC-derived approach is I do think it is a platform that allows for, uniquely allows for multiplex engineered cells, where you can embed three, four, five, six different pieces of functionality. When I think of, for instance, the solid tumor space, I think, you know, honestly, in attacking solid tumors, when you think about cell therapies, one of the unique value propositions is you can embed multiple mechanisms of action that have prevented challenges in successfully treating cell therapies. Oh, sorry, in successfully treating solid tumors.
Gotcha. FT522, I should think about this data. You've got the IND submission middle of the year.
Middle of the year.
Kind of how will those clinical trials differ from, say, your first generation CD19 integrated?
Yeah, I mean, what we're gonna try and do is test this value proposition with respect to dependency on Cy/Flu very early. Again, we have to file the IND, and their clinical protocol has to get cleared. What we're proposing, at least as an initial clinical protocol, is to have two arms to that study. One will be, for instance, an arm that has Cy/Flu. After we've cleared a dose cohort, we would continue to escalate the Cy/Flu arm. In parallel then, we would open an arm without Cy/Flu. While it's not sort of randomized, we will be able to get this really interesting comparative data set between the product candidate with Cy/Flu and without Cy/Flu.
Gotcha. What would you wanna see in that data set? 'Cause, I mean, presumably there's gonna be a delta between the two different arms.
There may be, but there may not be. I mean, it's gonna be really interesting because, like I said, the way that we've designed FT522, and again, I think with respect to NK cells, part of the trick is to engineer in additional potency. In the non-Cy/Flu arm, there is additional potency that is being sort of delivered to that cell therapy because of that CAR construct that targets 4-1BB. Interestingly enough, in the Cy/Flu arm, that CAR construct may not be as active or potent because the patient lacks a functional host immune system. We may actually see e nhanced activity in the no-Cy/Flu arm.
I'd love to move on to your Ono collaboration, so the HER2 t argeted T-cell.
Yeah. Ono developed a very differentiated binding domain that we'll begin to talk about the uniqueness of that binding domain, in latter part of 2023. They contributed that to the collaboration, and we built a multiplex to engineer T-cell backbone that has several different features and functionality, that are designed to overcome challenges in solid tumors.
That latter part of 2023, that's when we see phase I data or?
No. We're gonna file an IND probably, middle of this year, maybe later summer with respect to that product candidate. Our goal is to be positioned with Ono to treat the first patient by the end of this year. Data for that program would be 2024 data.
Later this year, this is when Ono starts talking about that, how it that hitting patients?
Yes. The differentiating features of the binding domain, which is a HER2 binding domain that they developed, and they have been developing for quite some time, and contributed to the collaboration. I think we'll be able to talk more about sort of the uniqueness of that binding domain and its features and functionality in the second half of this year.
Okay. What other functionality does FT825 have that kind of helps o vercome that hurdle with solid tumors?
Yeah. I would. Other than the CAR, I'd point out three different features. There's, again seven edits in this product candidate, but I'd highlight three features. One of the challenges, obviously, with solid tumors is solid tumors can be localized, you need the cell therapy. If you're administering the cell therapy, it has to traffic to the solid tumor. We've developed a synthetic CXCR2 receptor, which is attracted to ligands that are all expressed in the solid tumor microenvironment. We have built in a homing mechanism to this cell so it can effectively find the solid tumor. Number two, the solid tumor environment is highly immunosuppressive. You need to come. So when a, for instance, a cell therapy goes into that tumor microenvironment, it can experience significant suppression. One of the mechanisms of suppression is through TGF-beta.
We've built in functionality so that the cell can actually hijack immunosuppressive signals and redirect it to activate the cell. We have a TGF-beta redirect receptor. It's a synthetic receptor, and it's designed to essentially convert an immunosuppressive signal into a potentiating signal. The third element that I think is really exciting about that cell therapy, and this is the first time I think, you know, certainly we've brought together the idea of both adaptive immunity and innate immunity. The cell is a CAR T-cell, but in the backbone of that CAR T-cell, we've engineered in our hnCD16 receptor, which takes sort of a page out of the NK cell biology book. This receptor allows the cell therapy to be effectively combined with a monoclonal antibody.
We're bringing sort of a piece of innate biology and putting it into the backbone of a adaptive immune cell.
Gotcha. Okay. No, that's great. I guess final question, really, is there anything to worry about with SVB?
No. No.
Any other kind of non-bank lenders?
No. Almost all other than a small amount of cash that we keep in an operating account, essentially to handle weekly inflows and outflows, all our cash is in custodial accounts.
Okay.
Yes.
Thank you so much, Mr. Scott.
Thank you.
Always a pleasure.
Great to see you. Thank Thank you very much.