Fate Therapeutics (Nasdaq: FATE), headquartered in San Diego, CA, is a clinical-stage biopharmaceutical company dedicated to the development of first-in-class cellular immunotherapies for cancer and immune disorders. The Company is pioneering the development of off-the-shelf cell products using its proprietary induced pluripotent stem cell (iPSC) product platform. The Company’s immuno-oncology pipeline is comprised of FATE-NK100, a donor-derived natural killer (NK) cell cancer immunotherapy that is currently being evaluated in three Phase 1 clinical trials, as well as iPSC-derived NK cell and T-cell immunotherapies, with a focus on developing augmented cell products intended to synergize with checkpoint inhibitor and monoclonal antibody therapies and to target tumor-specific antigens. The Company’s immuno-regulatory pipeline includes ProTmune™, a next-generation donor cell graft that is currently being evaluated in a Phase 2 clinical trial for the prevention of graft-versus-host disease, and a myeloid-derived suppressor cell immunotherapy for promoting immune tolerance in patients with immune disorders.
Today, Fate reported business highlights and financial results for the third quarter ended September 30, 2018.
Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics stated, “We continue to see strong momentum in the enrollment of our Phase 2 PROTECT study of ProTmune, and an encouraging set of initial clinical data for FATE-NK100 is emerging across the dose-escalation phases of three Phase 1 clinical trials. In addition, we are poised to achieve a significant milestone for Fate Therapeutics as well as the entire cell therapy field, as we continue working with the FDA on the allowance of our landmark IND application for FT500, a first-of-kind, off-the-shelf NK cell product derived from a clonal master iPSC line. At ASH, we plan to share preclinical data across our entire pipeline of off-the-shelf NK cell and CAR T-cell product candidates that demonstrate the unique value in using clonal engineered master iPSC lines as a renewable source for manufacture and delivery of cell-based cancer immunotherapies.”
Fate reported the following regarding its clinical programs:
Exceeded 50% Enrollment in Phase 2 PROTECT Study of ProTmune™.The randomized, controlled and double-blinded Phase 2 PROTECT study of ProTmune is over 50% enrolled. The clinical trial is intended to enroll a total of 60 adult subjects with hematologic malignancies undergoing allogeneic hematopoietic cell transplantation (HCT). Subjects are being randomized, in a 1:1 ratio, to receive either ProTmune or a conventional matched unrelated donor hematopoietic cell graft. New clinical data from the seven subjects receiving ProTmune in the Phase 1 PROTECT study, including data on key secondary endpoints assessing disease-free survival and freedom from chronic graft-versus-host disease (GvHD), cancer relapse, and death at one-year following HCT, will be featured at the 2018 American Society of Hematology (ASH) Annual Meeting in a poster presentation.
20th Subject Treated across Three Phase 1 Studies of FATE-NK100.The twentieth subject has been treated with FATE-NK100, the Company’s first-in-class, donor-derived adaptive memory NK cell cancer immunotherapy, across the dose-escalation phases of three Phase 1 clinical trials. At the Society for Immunotherapy of Cancer (SITC) Annual Meeting, the Company plans to hold an investor event and share new clinical data of FATE-NK100, including safety, persistence and anti-tumor activity, in advanced hematologic malignancies and solid tumors. An oral presentation at the 2018 ASH Annual Meeting will describe a next-generation, GMP-compliant protocol, established by Dr. Karl-Johan Malmberg under the Company’s research collaboration with Oslo University Hospital, that enables robust ex vivo expansion of adaptive memory NK cells having a homogeneous expression of a single inhibitory killer cell immunoglobulin-like receptor (KIR).
Universal Off-the-Shelf Cancer Immunotherapy Preclinical Pipeline
Submitted First-of-Kind IND Application to FDA for FT500. In July, the Company submitted an Investigational New Drug (IND) application to the U.S. Food and Drug Administration (FDA) for FT500, a universal, off-the-shelf NK cell product derived from a clonal master induced pluripotent stem cell (iPSC) line. In response to a request by the FDA, the Company is conducting additional adventitious agents testing of the master iPSC bank used for the production of FT500, and intends to submit these test results to the FDA during the fourth quarter of 2018. Upon FDA allowance of the IND, the Company expects to begin clinical investigation of FT500 in combination with FDA-approved checkpoint inhibitors in subjects with advanced solid tumors.
Achieved IND-Enabling Milestone under FT516 CIRM Grant. In September, the Company received a $1.1 million milestone payment under its California Institute for Regenerative Medicine (CIRM) award for the preclinical development of FT516, a universal, off-the-shelf NK cell product candidate derived from a clonal master iPSC line engineered to uniformly express a high-affinity, non-cleavable CD16 Fc receptor. Since CD16 binds to the Fc region of tumor-targeted antibodies, FT516 can be combined with FDA-approved monoclonal antibody therapy to target a broad spectrum of tumor-associated antigens. The Company expects to submit an IND application to the FDA by the end of 2018 for first-in-human clinical investigation of FT516 in combination with CD20 antibody rituximab and with SLAMF7 antibody elotuzumab.
Five Presentations covering iPSC Product Platform Scheduled for ASH. Two oral presentations, including new preclinical data of FT500 in combination with checkpoint inhibitors and initial preclinical data of engineered iPSC-derived NK cells in combination with target-cell specific engagers, were accepted for presentation at the ASH Annual Meeting. Additionally, three poster presentations on other product candidates emerging from the Company’s iPSC product platform, including the Company’s first iPSC-derived chimeric antigen receptor (CAR) T-cell (FT819) and CAR NK cell (FT519) product candidates, are scheduled for presentation.
Entered into iPSC-derived CAR T-cell Collaboration with ONO Pharmaceutical.In September 2018, the Company entered into a Collaboration and Option Agreement with Ono Pharmaceutical Co. Ltd. for the joint development and commercialization of two off-the-shelf, iPSC-derived CAR T-cell product candidates. Fate Therapeutics is entitled to receive up to $70 million during the preclinical option stage of the collaboration. In addition, in connection with the development and commercialization of the product candidates, the Company is eligible to receive up to $1.2 billion in aggregate milestone payments, plus tiered royalties on net sales by Ono.
Extended iPSC Technology Leadership Position to include CRISPR-based Cell Reprogramming. In September, the Company exclusively licensed intellectual property from the J. David Gladstone Institutes that covers the generation of iPSCs using CRISPR-mediated gene activation. This new approach uses CRISPR to induce pluripotency by directly targeting a specific location of the genome and activating endogenous gene expression, and does not rely on established methods of cellular reprogramming that require the transduction of multiple transcription factors.
Completed $144 Million Common Stock Offering. In September, the Company closed an underwritten public offering of 10,648,149 shares of its common stock at a public offering price of $13.50 per share.
Third Quarter 2018 Financial Results
Cash & Short-term Investment Position: Cash, cash equivalents and short-term investments as of September 30, 2018, were $211.2 million compared to $100.9 million as of December 31, 2017. The increase was primarily driven by $134.9 million in net cash proceeds received by the Company from its September 2018 public offering of common stock. These proceeds were offset by the Company’s use of cash to fund operating activities.
Total Revenue: Revenue was $1.0 million for the third quarter of 2018 as well as for the same period in 2017. All revenue was derived from the Company’s research collaboration and license agreement with Juno Therapeutics.
R&D Expenses: Research and development expenses were $13.6 million for the third quarter of 2018, compared to $8.6 million for the same period in 2017. In the third quarter of 2018, the Company incurred a one-time $1.4 million expense associated with the in-license of intellectual property from the J. David Gladstone Institutes covering the use of CRISPR for cellular reprogramming and iPSC generation. The remaining increase in R&D expenses was primarily attributable to an increase in expenses associated with the clinical development of FATE-NK100 and with the preclinical development of the Company’s iPSC-derived product candidates, including regulatory and manufacturing activities to support the submission of its FT500 IND application, and in employee compensation associated with growth in headcount.
G&A Expenses: General and administrative expenses were $4.1 million for the third quarter of 2018, compared to $2.8 million for the same period in 2017. The increase in G&A expenses was primarily attributable to an increase in advisory fees, including audit and legal fees, and in employee compensation.
Shares Outstanding: Common shares outstanding were 64.5 million as of September 30, 2018, and 52.6 million as of December 31, 2017. Preferred shares outstanding as of September 30, 2018, and December 31, 2017, were 2.8 million, each of which is convertible into five shares of common stock. All preferred shares outstanding are from the Company’s sale and issuance of non-voting Class A convertible preferred stock to Redmile Group, LLC in November 2016.
The Company conducted a conference call today, Thursday, November 1, 2018, at 5:00 p.m. ET to review financial and operating results for the quarter ended September 30, 2018. The archived webcast is available on the Company’s website: www.fatetherapeutics.com.
Shares of FATE closed today’s trading at $13.61/share up 9.23%.
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