Welcome to the Fate Therapeutics Second Quarter 2016 Financial Results Conference Call. [Operator Instructions]. I would now like to introduce Scott Wolchko, President and Chief Executive Officer Fate Therapeutics. Please go ahead.

Thank you. Good morning and thanks everyone for joining us for the Fate Therapeutics second quarter 2016 earnings call. Shortly after 4 PM Eastern Time today we issued a press release with our second quarter 2016 financial results which can be found on the investors and media section of our website under press releases, In addition our second quarter 2016 10-Q was filed shortly thereafter and can be found on the investors and media section of our website under financial information. Before we begin, I’d like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Please see the forward-looking statement disclaimer on the Company’s earnings press release issued after the close of market today, as well as the risk factors in the Company’s SEC filings, included in our Form 10-Q for the quarter ended March 31, 2016 that was filed with the SEC today. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made, as the facts and circumstances underlying these forward-looking statements may change, except as required by law, Fate Therapeutics disclaims any obligation to update these forward-looking statements to reflect future information, events, or circumstances. Joining me on the call today are Dr. Chris Storgard, our Chief Medical Officer and Dr. Dan Shoemaker, our Scientific Officer. I will begin the call with a summary of key recent developments across our business. Chris will then provide an update on the execution of our Phase 1/2 clinical trial of ProTmune for…

Thanks, Scott. I would like to first express my enthusiasm in becoming a part of Fate and it's leadership team. It's a place to be part of a team of talented and dedicated innovators, focus on developing new approaches for the treatment of serious life threatening diseases. As a the position I'm especially excited with the potential I see in the groundbreaking and diverse pipeline here at the company and the potential for our products to fundamentally transform the practice of medicine. I look forward to advancing our program cellular immunotherapy pipeline through clinical development and commercialization. Let me now share some key updates on our lead clinical program ProTmune. I'm excited to announce that our Phase 1/2 trial ProTmune for the prevention of acute grafters as host disease and CMV infection is open for enrollment. We’re actively screening patients across multiple sites. The clinical trials being conducted in adult patients with hematologic malignancies undergoing mobilized peripheral blood allogeneic transplant. Mobilized peripheral blood is the donor cell source used in approximately 70% of the 30,000 allogeneic transplant procedures performed each year. Our clinical trial is a combination Phase 1/2 study. The Phase 1 stage is a safety focused non-randomized study involving up to 10 patients. The Phase 2 stage is a randomized controlled study involving up to 60 patients to evaluate ProTmune efficacy. In the Phase 2 stage patients are randomized one to one to receive either ProTmune, the program cell graft or control, the non-program cell graft. We expect to have seven to eight U.S. sites open for enrollment in Phase 1 stage in the coming weeks. Importantly these sites are all available for participation in the Phase 2 stage of the study upon its initiation. We're also currently working with additional sites for participation in the Phase 2…

Thanks, Chris. This past quarter we highlighted that therapeutic value that can be delivered to our ex-vivo programming as well as our novel and promising immunotherapy product candidate that we're advancing based on this approach at several industry leading scientific conferences. Let me begin by discussing our natural killer cell product candidate. We believe the adaptive transfer [ph] NK cells can offer unique advantages over T cells immunotherapies. First NK cells are part of the inate immune system and have multiple mechanisms of attack. NK cells can recognize and kill stress cells including cancer cells without the need for the highly specific antigen receptors found on T cell. Additional because NK cells do not have the highly antigen receptors, donor NK cells can be administered without the risk of GvHD across specific [ph] compatibility barriers rather than requiring the use of a patient donor cells. Finally NK cells can kill cancer cells coated with monoclonal antibodies enabling their use for the treatment of solid tumors. Since August 2015 we work closely with Dr. Jeffery Miller, Professor of Medicine and Deputy Director at the University of Minnesota Cancer Center on the development of an allogeneic memory like natural killer cancer immunotherapy which we refer to as adaptive NK cell product candidate. Our adaptive NK cell product candidate is a homogenous population of NK cells modulated with a proprietary combination of small molecules including FT1238 to express the maturation marker of CD57 and the memory like activated receptor NKG2C. Our program in NK cells also express CD16 which enables them to attack cancer cells coated with monoclonal antibodies. On May 16, at the Innate Killers Summit Meeting in San Diego, Dr. Miller presented new data showing that in pre-clinical models our adopted NK cell product candidate exhibit enhanced persistence and multi-faceted tumor…

Thanks, Dan. Before I review our second quarter financial results, I would like to note that our cash, cash equivalents and short term investments as well as our shares outstanding are reported as of June 30, 2016. These amounts do not include $10.3 million in proceeds which the company expects to receive or 5.25 million common shares which the company expects to issue upon the closing of the private placement transaction which we entered into on August 6, 2016 and announced earlier today. For the second quarter ended June 30, 2016 Fate Therapeutics reported a net loss of $8.4 million or $0.29 per share as compared to a net loss of $7.8 million or $0.33 per share for the same period last year. Revenue was $1 million for the second quarter of 2016 compared to $300,000 for the same period last year. Revenue in both periods was generated from our strategic research collaboration with Juno Therapeutics. Research and development expenses for the second quarter of 2016 were $6.8 million compared to $4.9 million for the same period last year. The increase was primarily related to an increase in third party service provider fees to support the clinical development of ProTmune and our research activities and an increase in personnel expenses resulting from additional employee headcount to support our research activities including activities under our collaboration with Juno. General and administrative expenses for the second quarter of 2016 were $2.2 million compared $2.7 million for the same period last year. This decrease was primarily related to a decrease in intellectual property related expenses. After adjusting for research funding proceeds from Juno of $500,000 and for stock based compensation expense of approximately $800,000. Total operating expenses for the second quarter of 2016 were $7.7 million. At the end of the second quarter…

[Operator Instructions]. And our first question comes from Do Kim with BMO Capital Markets. Your line is open.

My first question is for Chris. Could you tell us exactly how many of the clinical sites for ProTmune have been opened and what factors in the opening of the other sites? And how quickly can you move into Phase 2 after getting the Phase 1 data?

We have multiple sites open for Phase 1 and we’re expecting more open the next few weeks. Regarding moving into the Phase 2, a protocol is designed to allow us to move into the Phase two within 30 days after the last patient being enrolled is Phase 1. So a rapid progress into the randomized roundabout portion of Phase 2.

Okay. And what other measures are you expecting to release when the Phase 1 data is available besides the crafting rate?

So we have a multiple efficacy and safety endpoints that we're looking at and when the data becomes available we'll be sharing that data with you.

First Scott and Chris, I was hoping to get your thoughts on the Juno Heart [ph] collaboration you have, does the occurrence of zero toxicity in their program change your enthusiasm for that partnership? Is it something that you think your platform could prevent or do you agree with their assessment that it's caused by the addition of [indiscernible]?

I apologize, I'm really not going to comment on Juno's therapeutic programs. Our collaboration with Juno is to enhance -- use small molecules to enhance their CAR T products. There are a whole host of biological mechanisms that I think we are able to improve through small molecule modulation but I'm not going to discuss the specifics of their particular programs.

And our next question goes to [indiscernible] with Roth Capital. Your line is open.

So let me also start with a question for Chris on the ProTmune trial. First of all are the sites that are open and are going to be opened are they the same sites that were used with the ProHema Phase 2 trial, are these new sites altogether?

So we have new sites as well as a few of the old sites.

And so given the Phase 1 portion is open label. Can you give us a sense for -- in addition to safety data, could we realistically see in any efficacy data by the end of this year? I know the end points are 100 days if I'm remembering correctly but might we see an analysis that’s shorter than 100s for the Phase 1 portion?

Yes we will be looking at that data and just so everyone realizes the endpoints that we’re looking at in the Phase 1 are similar to that in the Phase 2. Obviously the difference being that the Phase 2 is a randomized control study where we can really look at that efficacy but we will be evaluating those similar endpoints of efficacy that being GvHD the first 100 days, CMV reactivation, CMV infection. So the similar endpoints will be evaluating on this Phase 1 study obviously in the uncontrolled section. So we do anticipate to share the data with you.

Very quick question on that, ToleraCyte program, it sounds like this is heading into the clinic and we might see an IND filed later. When it does enter the clinical do you expect it to be in investigator sponsor trial or is it more likely to be a company sponsored trial?

I think the next step for us on that program is really to have the pre-IND discussion with the FDA and I think from that meeting we plan to craft our strategy from moving it forward into the clinic and in terms of both timeline and study design.

And maybe a question for Dan to wrap it up. At the Innate Killer Summit we saw some really nice invitro comparision between the program adaptive NK cells and I guess what you would call conventional overnight [indiscernible]. I was just wondering if we have or if we’re going to feature any similar comparisons between some of the other therapeutic candidate NK lines that are being advanced by other companies like NK92 cell line into that sort?

Yes to the extent possible, we’re doing excessive [ph] comparison internally and it's definitely part of how we do position this program and again move it towards the clinic. So in many clinics we have the closest observations on the cells that Jeff Miller has put in the clinic so that certainly serves as a potent competitor but again wherever possible we try and make comparison to our competitors as well.

Our next question comes from Reni Benjamin with Raymond James. Your line is open.

This is Bindo [ph] on for Ren. Sorry that we joined the call a little bit late so you might have already addressed some of our questions in your prepared remarks but I just to clarify firt for the upcoming NK AML study, so it's going to be -- NK cells are going to be used as a monotherapy right?

That’s correct. The AML study is a monotherapy not in combination with monoclonal antibody.

And then I assume after the mono therapy you would plant to evaluate a combination study with a monoclonal antibody is that sort of the plan right?

That is the plan. We’re evaluating and plan to move both into AML as well as in solid tumors. We do not necessarily expect to do that. Serially though as opposed to potentially in parallel. But certainly we will start in AML to gain initial human experience.

And what type of signal do you like effectively see from the first clinical study with NK cells and how do you think?

Yes, I think one of the things we’re really interested in seeing is first AML study. Jeff Miller has done a lot of work obviously historically with NK cell therapies. He has absolutely done correlative analysis that suggest not surprisingly persistence is very important and tied to patient outcomes. So one of the early biomarkers if you will that we will look at in the AML study is the persistence of our adaptive NK cells.

Okay, switching gears to your iPSC program, I think you mentioned that you may use this for the CAR T space as well. A little more thought on how you’re going to use this platform for the -- in the CAR T space and like little bit more detail on that.

I'm happy to give you a little bit more detail on that -- yes happy to do that. So I think our Pluripotent cell platform has potential both with respect to NK cells and T cells in the field of cancer immunuotherapy. Obviously multiple different types of engineering strategies can be utilized with Pluripotent cells. One of the beauties of Pluripotent cell that Dan alluded to unlike patients or cells where you’re engineering every time you need to essentially service a patient. With Pluripotent cells you engineer once bank the cells and potentially never have to engineer it again, consistently tapping that engineered Pluripotent cell line. I think from our perspective we have identified actually a high affinity CD16 and NK cell which we believe is potentially our first product candidate that we will move forward into late stage preclinical development and into clinical testing. That said we also think there is a tremendous opportunity in the CAR T space.

[Operator Instructions]. Our next question comes from Jim Birchenough with Wells Fargo. Your line is open.

It's Nick on for Jim this afternoon. So just going back to the ProTmune trial, when you get to Phase 2 what does the controller allow for it and I'm thinking transplators operate in a little bit in the wild west [ph] so they are allowed to use cyclophosphamide, even controlled cyclophosphamide. You’ve sites in the U.S., sites in Europe. It wouldn’t surprise me if the way they try and prevent GvHD differs. And then just keeping with GvHD I mean obviously this is not the reactive T cell. Have you tried ToleraCyte? Do you see that there is an opportunity to combine both products in ultra-high risk patients? Then I’ve a follow-up. Thanks.

Sure. I will comment first regarding the standardization of the therapies involved in both the controlled as well as the ProTmune arm of the randomized Phase 2. Regarding the mild-[indiscernible] conditioning regime there are four of them are allowed just due to the differences of individual investigator preference but I think more important regarding the potential prevention of GvHD we are using the standard Tacrolimus/Methotrexate prevention which is standard across both arms in the Phase 2 so there should be no different between these two study arms regarding potential impact on GvHD.

And with respect to combining ProTmune and ToleraCyte I think mechanistically you might feel to explore that and we have looked into this a bit preclinically I think from a corporate strategy this is not in our immediate plans to combine these two programs.

And then in terms of the NK landscape, I mean couple of others have sort of asked about this as well but this adaptive NK phenotype, how unique do you think you have approaches and I know Sorento [ph] originally did a deal with a company also it had albeit a 30 day process for making Pluripotent and NK cells.

Yes, I think the approach number one is highly differentiated. I mean one of the things we discussed that Jeff has really been focused on is producing a cell-type that has multi-faceted killing potential so whether you look at direct general killing, whether you look at cytokine release, whether you look at ADC response through CD16 we believe our adaptive NK cell has clearly has multi-faceted killing potential which we think is unique when we look and compare that cell type and that phenotype to other types of NK cells including the NK cells that Jeff is currently treating patients with. So clearly we think this is a major step forward in the development of NK therapies.

And in your prepared comments you mentioned BiKEs, spliced and TriKEs, is that something to say could be interested in licensing or is this something that you allow the University of Minnesota to use alongside the NK cells?

Yes, I mean Nick, you probably are aware Jeff is developing BiKEs, spliced and TriKEs, he is developing them separately from Fate Therapeutics. We’re absolutely a cell therapy company, we’re focused on cell therapy but in terms of the corner stone strategy that we think we can in advance with respect to the adaptive NK cell we absolutely believe there is potentially use the NK cell as a monotherapy in combination with monoclonal antibodies as well as in-combination with other folks that are developing these novel BiKEs and TriKEs. I mean at some point in time I mean the mono clonal antibodies of the BiKEs and TriKEs are really dependent on the indigenous NK cell population of the patient. The indigenous NK cell population of the patient is often deficient and fails and therefore we think an exogenous NK cell if you will or adaptive NK cell which is donor sourced can be given to a lots of different patients we believe that can absolutely be a foundational approach both as a monotherapy and liquid tumors as well as in solid tumors.

And then final one for me, in terms of the iPSC derived off the shelf cells, is your idea that Fate will have some kind of Fate [ph] alone programs, they will have their own proprietary CAR T [ph] or do you see that you would partner with somebody who meets the iPSC but they have the war head expertise with the sort of 50:50 partnership kind of time.

Yes I think we’re absolutely pursuing both strategies for instance the product that I initially mentioned and is likely to be our first product candidate, the engineered CD16 and NK cell we’re absolutely planning to advance that on our own and think we’re well-positioned to do that. CD16, we do have intellectual property with respect to engineering CD16 into NK cells and we do think that is a product candidate that having experience with Jeff Miller we know a tremendous amount about. That said I absolutely believe there are going to be collaborative opportunities where we can combine our Pluripotent platform and the engineering we do on Pluripotent cells to incorporate targeting content like CAR Ts for example.

And just a follow-up, so is this something that you would collaborate in order for Fate to develop that program or you will allow somebody else to develop that or perhaps a mixture?

I think it could be a mixture but I would say with respect to off the shelf strategies, the Pluripotent cell is I would say very front and center and central to that strategy. I think most players that we would potentially partnership would partner with and most companies other than Fate Therapeutics do not have any experience with respect to Pluripotent cells, how to engineer them, how to isolate them, how to maintain them, how to differentiate them. So I think our role in any type of partnership including a partnership where we would look to bring in novel targeting content. I think Fate would play a significant and major role in that partnership.

And I'm showing no further questions at this time. I would like to turn the call back to Mr. Wolchko for any closing remarks.

Thank you everyone for your participation in today's call. Absolutely look forward to updating you as we move through 2016 and reach for these significant milestones. Thank you very much.

Ladies and gentlemen thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.