Analyst Conference Summary

biotechnology

conference date: August 8, 2023
for quarter ending: June 30, 2023 (second quarter, Q2)

Forward-looking statements

Overview: In early clinical trials.

Basic data (GAAP):

Revenue was $1 million, down sequentially from $59 million, and down from $19 million year-earlier. All revenue was from collaborations.

GAAP net income was negative $53 million, down sequentially from negative $19 million, and up from negative $76 million year-earlier.

GAAP EPS, diluted, was negative $0.54, down sequentially from negative $0.19, and up from negative $0.79 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. Year end cash/investments should exceed $300 million.

Conference Highlights:

Scott Wolchko, President and CEO of Fate Therapeutics, said: "We have shown great resilience in advancing our most innovative and differentiated programs while reducing expenses during the first six months of 2023, creating an operating runway into the second half of 2025 that enables us to achieve key milestones across our pipeline. We have commenced Phase 1 study start-up activities for our FT522 ADR-armed, CD19-targeted CAR NK cell program for B-cell lymphoma, where we intend to assess FT522 with and without administration of conditioning chemotherapy to patients. We have also initiated GMP manufacturing of FT825/ONO-8250 under our solid tumor collaboration with ONO Pharmaceutical, and plan to submit an IND application in the second half of 2023 for this multiplexed-engineered, HER2-targeted CAR T-cell program. Finally, we continue to preclinically assess the potential of our off-the-shelf, iPSC-derived cellular immunotherapies to selectively target and durably deplete pathogenic immune cells, and are evaluating opportunities for clinical expansion into autoimmunity." Believes has cash to reach key inflection points.

For rest of year income will be reduced to about $1 million per quarter from Ono. Most Ono contributions are now accounted for as reduced R&D costs rather than income. Cost reductions started in Q2 and will continue through the year.

The cash and equivalents balance ended the quarter $385 million, down sequentially from $413 million.

Fate is preparing to start Phase 1 for FT522, following a May FDA allowance. T522 is an off-the-shelf, multiplexed-engineered, induced pluripotent stem cell (iPSC)-derived natural killer (NK) cell product candidate that incorporates five synthetic controls of cell function. It is armed with Fate's proprietary alloimmune defense receptor (ADR) technology, which is comprised of a synthetic engineered receptor targeting 4-1BB and is designed to promote anti-tumor activity without requiring administration of intensive conditioning chemotherapy to patients. Will be tried with both chemo conditioning and without. Believes will initially enroll heavily pretreated patients.

FT819 began enrolling patients in Q2 2023 for B-cell lymphoma and chronic lymphocytic leukemia. It is a T-cell product candidate manufactured from a clonal master iPSC line. FT819 incorporates several novel synthetic controls of cell function, including the integration of a novel CD19-targeted 1XX CAR construct into the T-cell receptor alpha constant (TRAC) locus, which is intended to promote uniform CAR expression, enhance T-cell potency, and prevent graft-versus-host disease.

The FT576 program is in Phase 1 for multiple myeloma. It is a BCMA targeted CAR NK cell. Encouraging interim data was presented at ASH in Q4 2022. At the first dose level one patient achieved a partial response. Currently dosing 3 dose cohort. No dose limiting toxicity in 2 dose cohort.

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 2H 2023. Plan is to test both as a monotherapy and combined with an antibody.

Fate is also looking at using its platform for autoimmune diseases, possibly including FT522.

Operating expense of $63 million consisted of $41 milion for R&D; $22 million for SG&A. Operating income negative $63 million. Interest income $4 million. Change in fair value of milestones $0 million. Other income $5 million.

Q&A selective summary:

Two dose regimen for 522? Arms can escalate in parallel. Depends somewhat on patient availability. We have a battery of translational assessments to help judge results.

New C19 NK program v. older programs? 516 and 596 data sets were more modest with respect to response and durability. But indolent lymphoma responses were impressive. With cy flu we are looking for 522 have a different profile than 516 and 596. We would like to see a high indolent lymphoma response without cyflu. The first 522 cohort, Regimen A, will use cyflu.

819 and 576 data? Likely 1H 2024.

We believe our therapies, post-autologous, could meet unmet medical need. Autologous CAR T cell therapy availability will increase, creating an opportunity for post-CAR T cell therapies.

522 ADR tech, other limiting factors? We have to see attractive response rates to have attractive durability. Preclinical models were very robust, but there are a lot of factors. Will need to wait for the clinical data.

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