Fate Therapeutics, Inc. Q1 FY2023 earnings call

• Terminated collaboration with Janssen, completing wind down of activities, including discontinuing research and withdrawing an IND. No longer incurring costs from Janssen.
• Prioritized pipeline by focusing on CAR NK and CAR T-cell candidates, discontinuing some NK cell programs and continuing follow-up for patients in FT516 and FT596 studies.
• Substantially reduced workforce, curtailed investigator-initiated studies, and reduced overhead.
• Progressed FT576 BCMA-targeted CAR NK cell program in multiple myeloma, enrolling in Phase I with CD38 monoclonal antibody combination.
• Submitted IND for FT522 CD19-targeted CAR NK cell program for B-cell lymphoma, planning clinical study with CD-targeted monoclonal antibody.
• Continued progress on FT819 CAR T-cell program, enrolling in Phase I and planning dose expansion.
• Conducting IND enabling activities for FT825/ONO-8250 with ONO in solid tumors.
• Conducted preclinical work on autoimmunity with FT819 and FT522.

In the first quarter of 2023, Fate Therapeutics had revenue of $59 million, up from $18.4 million in the same period last year. Most revenue ($58.6 million) came from non-recurring sources: $41.2 million from Janssen collaboration wind down, $11.1 million from Janssen wind down activities, and $6.2 million from ONO collaboration R&D expense reimbursement. R&D expenses decreased by $6.5 million to $65.6 million, primarily due to Janssen collaboration termination, lower share-based compensation, and reduced R&D supplies. General and administrative expenses increased by $1.2 million to $21.9 million, mainly due to legal fees. Total operating expenses were $87.6 million, including severance and share-based compensation. Net loss was $18.9 million or $0.19 per share.

• Revenue will be mostly from ONO collaboration, approximately $800,000 per quarter through Q3 2024.
• GAAP operating expenses expected to be between $265 million and $285 million in 2023, with cash runway extending into the second half of 2025.
• Expect clinical updates on 819 and 576 within the next 12 months, not necessarily at the ASH 2023 conference.

• Forward-looking statements involve risks, including those detailed in the company's Form 10-Q. Termination of the Janssen collaboration and pipeline prioritization changes could impact future financial and operational results.

Q: About the trial starting in the second half, details on FT522 study design and cohorts.

A: Wayne Chu discussed a draft clinical schema for FT522 with multiple doses of FT522 in combination with rituximab, including parallel assessments with and without conditioning chemotherapy in patients with relapsed/refractory lymphoma.

Q: Update on 819 and 576 data at medical conferences.

A: Scott Wolchko stated the company is not committing to providing clinical updates on 819 and 576 at the ASH 2023 conference but expects to have data within the next 12 months.

Q: Confidence in ADR technology replacing CIFU.

A: Bob Valamehr discussed preclinical data showing ADR's potentiation and activity in allogeneic models, indicating its potential to replace CIFU.

Q: Path to autoimmune disease for FT522.

A: Scott Wolchko mentioned preclinical work with FT819 and FT522, with 819 potentially expanding into autoimmunity, while FT522 needs initial safety data before advancing into patients.

Q: Why ADR is superior to HLA knockouts.

A: Bob Valamehr argued ADR overcomes challenges of other strategies like HLA knockout by comprehensively addressing issues related to NK cell function and persistence in different models.