Analyst Conference Summary

biotechnology

conference date: February 28, 2023
for quarter ending: December 31, 2022 (fourth quarter, Q4)

 I bought initial shares on February 17, 2023
Forward-looking statements

Overview: In early clinical trials.

Basic data (GAAP):

Revenue was $44 million, up from $17 million year-earlier. All revenue was from collaborations.

GAAP net income was negative $56 million, up from negative $67 million year-earlier.

GAAP EPS, diluted, was negative $0.58, up from negative $0.72 year-earlier.

Guidance:

Restructuring provides a longer cash runway. Q1 2023 will not see savings from restructuring, but will see charges. Savings will start in Q2.

Conference Highlights:

Scott Wolchko, President and CEO of Fate Therapeutics, said: "We have focused our operations on advancing our most innovative and differentiated programs for patients with cancer and autoimmune disorders, and we have substantially reduced our expenses with the intent of providing the necessary cash runway to achieve key clinical milestones across our multiplexed-engineered, iPSC-derived CAR NK and CAR T-cell product candidates. We are now enrolling multi-dose treatment cohorts with FT576 for multiple myeloma, including in combination with CD38-targeted monoclonal antibody therapy to promote dual-antigen targeting and selective depletion of activated host immune cells. We also plan to submit an IND application in the middle of 2023 for FT522, which incorporates our proprietary ADR technology designed to enable patient dosing with reduced conditioning chemotherapy, and intend to initiate clinical development in B-cell lymphoma with plans to expand clinical investigation to severe autoimmune disorders. In addition, we are excited with the progress of our iPSC-derived CAR T-cell pipeline for the treatment of hematologic malignancies and solid tumors. Dose escalation is continuing in our landmark Phase 1 study of FT819, with interim clinical data showing a favorable safety profile and demonstrating complete responses in heavily pre-treated patients with aggressive B-cell lymphoma. Finally, we plan to submit an IND application in 2023 for FT825/ONO-8250 under our collaboration with ONO Pharmaceutical, which incorporates seven novel synthetic controls designed to more effectively attack solid tumors."

The cash and equivalents balance ended the quarter at $441 million. $475 million if receivables were included.

After the quarter ended, on January 3, 2023 Janssen terminated its collaboration agreement to develop CAR NK and CAR T cell product candidates.

On January 5, 2023, Fate completed a strategic review of its NK cell programs and elected to advance its most innovative and differentiated product candidates. Fate is discontinuing development of its FT516, FT596, FT538, and FT536 NK cell programs and is reducing its workforce in the first quarter of 2023 to approximately 220 employees. Charges of approximately $12 million to $16 million for severance and other employee termination-related costs are expected in the first quarter of 2023.

The FT576 program is in Phase 1 for multiple myeloma. Encouraging interim data was presented at ASH in Q4 2022. At the first dose level one patient achieved a partial response. Currently dosing 2 cohorts, plans for 3 more.

FT522, a CD19 targetting CAR NK therapy, is being readied for an IND application to the FDA midyear. The Phase 1 study will be on B-cell lymphoma. May be extended to treat autoimmune disorders.

FT819 for B-cell malignancies continues Phase 1 dose escalation. One patient already achieved a complete response. Testing for B-cell lymphoma and chronic lymphocytic leukemia.

FT825, or ONO-8250, in partnership with Ono for HER2-positive solid tumors, should have its IND submitted in 2023.

Q&A selective summary:

576, 819 timelines for new data? Focussing on enrollment, could update timeline in a few months.

FT576 competitive position? As with other NK cells, a three dose schedule will be important to get the right cell load. Currently doing 2 doses in the cohorts. Next will move to 3 dose cohorts, and at a higher dose. In multiple myeloma there are not cures, patients will progress through multiple lines of therapy. Our off-the-shelf platform should be able to deliver relatively early, highly differentiated therapy.

FT522, choice of edits? ADR platforms can target 401DD, which may mitigate rejection. CD38 is an interesting approach. CD54/CD58 knockout is another interesting approach, but does not seem to be an important mechanism of rejection.

We have limited NK cell experience with solid tumors, we believe they will play a role, but we see FT825 T-cell product to have features that will enable success with solid tumors.

NK cells future? We believe they have significant activity, but for a highly-differentiated product in a competitive landscape you need multiple mechanisms of action in an off-the-shelf therapy.

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