Analyst Conference Summary

biotechnology

conference date: May 3, 2023
for quarter ending: March 31, 2023 (first quarter, Q1)

Forward-looking statements

Overview: In early clinical trials.

Basic data (GAAP):

Revenue was $59 million, up sequentially from $44 million, and up from $18 million year-earlier. All revenue was from collaborations.

GAAP net income was negative $19 million, up sequentially from negative $56 million, and up from negative $66 million year-earlier.

GAAP EPS, diluted, was negative $0.19, up sequentially from negative $0.58, and up from negative $0.68 year-earlier.

Guidance:

Cash expected to be above $300 million at end of year 2023 with a runway into 2025. For the full year 2023, expects GAAP operating expenses to be between $265 and $285 million.

Conference Highlights:

Scott Wolchko, President and CEO of Fate Therapeutics, said: "We have sharpened our clinical focus and significantly reduced our operating expenses, creating the necessary cash runway to achieve key milestones across our multiplexed-engineered CAR NK and CAR T-cell pipeline. We are now well-positioned to clinically assess higher therapeutic exposures for our FT576 BCMA-targeted CAR NK cell program in multiple myeloma and our FT819 CD19-targeted CAR T-cell program in B-cell malignancies. In addition, we aim to bring our FT522 CD19-targeted CAR NK cell program, which incorporates our proprietary ADR technology designed to enhance NK cell potency, extend functional persistence, and resist host immune cell rejection, into clinical development in the second half of 2023 for B-cell lymphoma, and intend to expand its clinical reach to include severe autoimmune disorders. Finally, we are excited to be jointly developing our clinical strategy with ONO Pharmaceutical for FT825/ONO-8250, our HER2-targeted CAR T-cell collaboration program for solid tumors for which we plan to submit an IND application in the second half of 2023." Believes has cash to reach key inflection points.

For rest of year income will be reduced to about $1 million per quarter from Ono. Cost reductions to start in Q2 and continue through the year.

The cash and equivalents balance ended the quarter $413 million, down sequentially from $441 million.

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 $12.9 million for severance and other employee termination-related costs was made in Q1 2023. Also curtailed some support for investigator sponsored studies.

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 dose cohort, plans for 3 dose cohort.

FT522, a CD19 targetting CAR NK therapy IND application made to the FDA; first dosing in 2H 2023. It incorporates proprietary alloimmune defense receptor (ADR) technology, which has been shown in preclinical studies to increase NK cell potency, enhance functional persistence, and confer resistance to host immune cell allo-reactivity. The Phase 1 study will be on B-cell lymphoma, combined with standard of care and/or CD20 or CD38 mAb therapies. 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. Reported positive interim data at ASH 2022.

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

Fate is also looking at using its platform for autoimmune diseases. Is in preclinical studies of FT522 and FT819 for this purpose.

Operating expense of $87.6 million consisted of $65.6 milion for R&D; $21.9 million for SG&A. Operating income negative $28.6 million. Interest income $3.7 million. Change in fair value of milestones $1.7 million. Other income $4.3 million. Unrealized gain $1.2 million.

Q&A selective summary:

Study design with FT522? Proposing multiple doses in combination with Rituximab. Following conditioning chemo, would give 3 doses, then a second cycle. Will also look at it without conditioning chemo in R/R lymphoma.

Thinking on why starting in early-line setting ith FT522? We are not starting with front line. Will start with patients who progressed on at least one line, likely Rituximab.

We are not committing to provide an update at ASH this year for clinical programs.

522 has a new feature, the ADR functionality. It is a potentiating signal. We are proposing to start with a 3 dose schedule, at 300 million cells/dose. That is what we are proposing to the FDA.

We don't think of our portfolio as NK cells v. T cells. We look at the individual therapy and indication. For solid tumors, most likely there will be T cell programs.

Multiple myeloma treatment will continue to be fragmented and complex, we do not expect the majority of patients to be cured with autologous T cell therapies.

Extension of persistence in 576? Suppression of CD-38 cells maintains space and cytokine availability, thus enhancing persistence.

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