Good day, ladies and gentlemen. Welcome to the Fate Therapeutics Fourth Quarter and Year-End 2016 Financial Results Conference Call. At this time, all participants are in a listen only mode. This call is being webcast live on the Investors & Media section of Fate’s website at fatetherapeutics.com that’s www.fatetherapeutics.com. As a reminder, today’s conference call is being recorded. I would now like to introduce Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics. You have the floor, sir.

Thank you. Good afternoon and thanks everyone for joining us for the Fate Therapeutics fourth quarter and year-end 2016 financial results call. Shortly after 4 pm Eastern Time today, we issued a press release with these results, which can be found on the Investors & Media section of our website under Press Releases. In addition, our Form 10-K for the year-ended December 31, 2016 was filed shortly thereafter and can be found on the Investors & Media section of our website under Financial Information. Before we begin, I would like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference 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-K for the year-ended December 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 Chief Scientific Officer. I will begin the call by highlighting the significant progress we have made over the past three months and the key milestones we expect to achieve during 2017.…

Thanks, Scott. These are indeed exciting times. And it’s gratifying to see the level of enthusiasm and engagement we continue to receive from the medical community as we partner with the leading experts to rapidly advance our innovative pipeline into the clinic to bring new options to patients with serious life-threatening disease. Let me expand a bit on what Scott has already mentioned regarding ProTmune. ProTmune offers a truly unique approach to improving the curative potential of allogeneic hematopoietic cell transplantation. Our therapeutic approach utilizes a peripheral blood stem cell graft obtained from an unrelated HLA matched donor. The graft is created with small molecules to enhance its biologic properties and therapeutic function, and then these programmed cells are administered to the patient. The patient’s outcome including his or her survival is dependent on the function of the graft. Following administration, neutrophil engraftment is the first critical milestone toward a curative outcome. And without neutrophil engraftment, the patient will very likely die. With this in mind, it is clear to see how precious this graft is to the patient and to the physician. And what is still encouraging about this to me is the excitement I see some investigators to participate in our PROTECT study. [Indiscernible] Fate Therapeutics for the potential of ProTmune. As Scott mentioned, we announced into January treatment of the first patient with ProTmune in the PROTECT study. After the six subject in Phase 1 complete 30 days of follow-up, an independent data monitoring committee or DMC will meet to review and evaluate all of the available safety data. Based on the DMC’s assessments, the PROTECT Phase 2 stage could start after review of these first six subjects. However, if the DMC feels that experience [ph] with the few more subjects is warranted, the DMC can request…

Thanks, Chris. As Scott mentioned, our Company is committed to advancing a one cell many patients approach to cellular immunotherapy. We believe the use of human induced pluripotent cells as master cell line is central to this new era of off the shelf cell therapies and will enable the treatment of many thousands of patients across a wide range of diseases without requiring patient’s source cells. As a reminder, induced pluripotent cells possess the unique dual properties of self renewal and differentiation potential into all cell types of the body. One of the main advantages of working with pluripotent cell lines is the relative ease of creating immunotherapies that are precisely engineered. Our revolutionary platform enables us to generate and engineer induced pluripotent present cells and select and extend a single engineered pluripotent cell for the generation of a master engineered pluripotent cell line. We are using these cell lines in a proprietary differentiation protocols to create our product candidates which we believe have the potential to treatment many patients in an off the shelf manner. Our first product candidate emerging from our iPSC platform is a targeted NK cell cancer immunotherapy. The NK cells product candidate which we refer to as hnCD16-iNK is created from a master iPSC line engineered to express a novel, high-affinity, non-cleavable CD16 Fc receptor. This novel CD16 Fc receptor contains two unique modifications. The first, result in increased and continuous expression of CD16 by preventing activation induced shedding and the second increases the binding affinity of CD16 to therapeutic antibodies. Our recent preclinical studies have demonstrated that our hnCD16-iNK cell product candidate exhibits potent and persistent anti-tumor activity. Specifically, hnCD16-iNK cells exhibit superior antibody dependent cellular cytotoxicity in vitro when combined with rituximab in ovarian cancer and lung carcinoma cell lines that are positive…

Thanks, Dan. Turning to our financial results, for the fourth quarter ended December 31, 2016 Fate Therapeutics reported a net loss of $7.9 million or $0.21 per common share as compared to a net loss of $7.4 million or $0.26 per common share for the same period last year. Revenue was $1 million for the fourth quarter of 2016 compared to $1.1 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 fourth quarter of 2016 were $6.2 million compared to $5.4 million for the same period last year. The increase was primarily related to an increase in clinical development costs including third-party service provider fees in connection with the conduct of our ProTmune PROTECT study. General and administrative expenses for the fourth quarter of 2016 were $2.5 million compared to $2.6 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 fourth quarter of 2016 were $7.4 million. At the end of the fourth quarter of 2016, cash, cash equivalents and short-term investments were $92.1 million; debt outstanding under our facility with Silicon Valley Bank was $10.8 million; common stock outstanding was approximately 41.4 million shares; and preferred, convertible stock outstanding was approximately 2.8 million shares. Note that one share of preferred stock is convertible into five shares of common stock under certain conditions. In conclusion, the past 12 months has been a period of significant progress for Fate Therapeutics including advancing two first-in-class product candidates to clinical development and launching our revolutionary induced pluripotent cell platform to enable our one cell many patients approach to cancer immunotherapy. With over $90 million in cash, and cash equivalents, we’re in a position of financial strength as we look forward to a data-rich 2017 across our two first-in-class clinical programs and continue our drive to become the first company to advance a cancer immunotherapy created from master pluripotent cell line to clinical development. I would like to thank our employees, collaborators and investigators for their commitment to our mission and to embracing the uncertainty that comes with being first. And with that, I’d like to turn the call over to the operator for any questions.

Ladies and gentlemen, the question-and-answer session is now open. [Operator Instructions] We’ll be taking our first question from the line of Ren Benjamin from Raymond James. Your line is open.

Scott, do you think maybe you can -- maybe we can just start off with the PROTECT study update. Can you give us a sense of how enrollment is now? I think you mentioned that there’re 10 sites that are opened. How many sites do you figure need to opened once the randomized part of the trial begins? And then, maybe as a third question for PROTECT. You mentioned that the DSMB will look at the first six patients and if they want could ask for another four. What goes into triggering that decision?

Sure. I’ll start off and Chris should feel free to jump in. So, with respect to enrollment, I mean we’re not going to get into subject-by-subject enrollment or the clinical data at this time. As Chris mentioned, I think we believe the strong enthusiasm for PROTECT is supported by our conversations with investigators that we met with at ASH, that was again [indiscernible] key and there are 10 sites open. I think the one thing that the investigators reminded us is that while we do clearly fit in the standard of care, we’re pioneering a brand new therapeutic paradigm. We’re modulating the cells of the entire graft including the CD34 cell compartment. And those are the cells that essentially represent life and death of the patient, since the 34 is responsible for reconstituting the entire blood immune system. So, our belief is this is fundamentally why there is a data monitoring committee and it’s why they’re looking at, to one of your questions, what are they looking at. They are looking at neutrophil engraftment and they are looking at survival at day 30, and that’s fundamentally their purview, when they are making the assessment as to whether we stop at six patients or continue forward with respect to 10 patients. That’s what the DMC is going to fundamentally base their decision on. With respect to the number of sites. I think I mentioned we are open at 10 sites right now; we are continuing to aggressively open sites based on the meetings we’ve had at ASH, at ASENT with other potential investigators, there is a lot focus in the study and we will keep enrolling -- we will keep opening sites. I think we will open potentially as many as 16 to 20 sites for the randomized controlled blinded portion of the study.

Got it. And just switching gears to FATE-NK100. Can you talk a little bit about maybe just the basic biology question but what percentage of the endogenous cells are adaptive memory NK cells? And I think you mentioned in the prepared remarks that there is a pre-treatment regimen and then a low dose IL-2 that will be co-administered with the cells. Was IL-2 ever previously evaluated in the previous studies with the heterogeneous mix, what’s your thoughts behind that?

Sure, absolutely. I’ll let Dan and Chris both jump in on that. But on short on the IL-2 that -- the IL-2 is used today in most NK cell protocols, following NK cell administration to promote NK cell survival. So, it’s absolutely been used today. But I’ll pass it off to Dan and Chris.

And regarding the frequency of this population of NK cells, it’s in the low single digits. And so, we believe that this population has not been therapeutically tested to-date, and we are excited about this idea of a highly enriched population of homogenous adaptive memory NK cells.

And regarding the pre-treatment, is there a fludarabine, cyclophosphamide pre-treatment that’s happening here?

Yes, it is. And actually the preparative regimen as well as the IL-2 is exactly what was used in the prior studies at University of Minnesota where they had observed their 30% complete response rate with over that time to population, which does not as Dan mentioned has a very low percentage of these adaptive memory NK cells. So, what we are trying to do is as best as we can an apples-to-apples comparison, although not in the same trial, to see what the activity of our enriched NK100 product is.

Thank you. Our next question is from the line of, pardon me if I mispronounce this, Mark Breidenbach from Roth Capital Partners. Your line is open.

Hey, guys. It’s Mark Breidenbach from Roth Capital. Thanks for taking the questions. I also have a question on the PROTECT study and specifically the Phase 1 portion and the DMC review coming on in the first should we say 6 to 10 patients. With that 30-day review period, are we only going to be assessing neutrophil engraftment or also going to be looking at other adverse events like infection rate or any [indiscernible] diseases that arises in that first 30-day period?

Yes. So, the DMC will look at all the safety data available. The primary safety concern here as mentioned here is neutrophil engraftment. So that’s the one that we’re highlighting here, but they’ll also look at all safety, all potential SAEs and that’s why there’s that potential option to enroll few more patients even if we meet the engraftment rate that we’re expecting.

And we would see a readout from that Phase 1 portion at the time that the Company decides to pursue randomized Phase 2 portion?

We will report the safety assessment which the safety assessment is judged primarily by neutrophil engraftment and survival at day 30 when we progress to the Phase 2; when all patients in the Phase 1 progressed to day 100, we will report out on GvHD and infections.

And the second question on FATE-NK100, specifically the study you’re planning to do combining it with therapeutic antibodies, does that IND process depend on the availability of results from either of the FATE-NK100 monotherapy studies you discussed earlier in the call?

No.

And maybe a final iPSC platform question for Dan. So, as I’m sure you’re aware, certain methods for inducing pluripotency are associated with -- unfortunately associated with increased genomic chromosomal instability. Can you give us a sense for what this process -- how this process is different and why we’re confident -- it’s not going to lead to any of these problems, and maybe give us a sense for what insurance is the FDA looking for in terms of guaranteeing safety in an induced pluripotent cell policy for putting it in the humans?

So, we’ve extensively studied this over the past eight years really since founding the Fate, we have several manuscripts that we published specifically on this topic. But in the context of that, I would just say that we’ve spent special attention to characterizing GM integrity as a function of the generation of iPSCs as well as the expansion phase and the generation of master cell bank. So, this is something that we pride ourselves on and we’ve invested heavily in over the years. And we think this is going to be a big part of our preclinical package that we’re going to bring to the FDA that will hopefully instill a significant degree of confidence in them.

Thank you. Our next question comes from the line of David Nierengarten from Wedbush Securities. Your line is open.

I just had a quick one on technology or maybe not so quick, but I’m sure you’re of efforts to add the CD16 coming to T-cells and go about it or go about cell therapy [indiscernible] and oncology. Are there any preclinical or other studies you can point to that show that your approach is likely to be better?

I wouldn’t say that -- we’re fond of using CD16 and its natural context and specifically this high affinity non-cleavable form of CD16. We’ve done extensive preclinical characterizations with our engineered NK products in the context of normal NK in the context of CD16. I’ve not had the opportunity to do direct head-to-head comparisons to some of the chimeric receptors that involve portions of the CD16 receptor machinery. So, I can’t specifically speak to that other than, I think we have a high degree of confidence that this specific form of CD16 in the context of NK cells was very encouraging in our preclinical models?

Obviously. As I mentioned, we’ll be presenting that data at a AACR.

Our next question comes from the line of Do Kim from BMO Capital Markets. Your line is open.

I wanted to know have you gotten any feedback from the FDA on hnCD16-iNK?

Yes. So, this is Scott. So, sure, we’re engaged in discussions right now with both, the FDA as well as the agencies outside the U.S. As I mentioned in my prepared remarks and I guess it’s just too early to comment on those discussions at this point when -- obviously when a plan to move forward becomes more definitive, we will provide more detail. I did mentioned that I feel very confident in our ability within the next 12 months to move A induced pluripotent cell derived product to clinical development.

And switching to NK100 for the Phase 1 trials. Based on the previous trials with NK cells, what those cohort do you expect to have as an active dose?

I think it’s too early to tell that at this point. I mean, we’re starting it onetime, [indiscernible] essentially NK cells per kg and we can go as high as up to one times 10 to 8. I think Jeff typically gave somewhere on the order of two to three times 10 to 7 cells per kg. So, I think what were looking for and the reason I think the FDA was comfortable with an accelerated dose schedule was essentially based on the safety just seen in the past with NK cells, not the specific cell type, but with NK cells at similar dose levels.

And then also speaking more about safety too, is there any potential safety risk for having a non-cleavable CD16 on the NK cell?

So, it’s something that obviously we are looking at pre-clinically but to date so far we have not seen any particular safety risks associated with the non-cleavable form of CD16.

And obviously we think there is a tremendous therapeutic benefit associated with the non-cleavable version of the receptor.

Thank you. Our next question comes from the line of Jim Birchenough from Wells Fargo. Your line is open.

This is Nick [ph] for Jim. Congrats on progress, guys. It’s hard to know where to bring. So, starting with NK100, in terms of donor selection, I know you mentioned answer to an early question apples-to-apples but I think recall from ASH that you were going to be selecting CMV positive patients. Just taking into account any clear mismatch, are the donors that you are expecting to be NK cells, are they going to be the same donors that would be used in the transplant? And then I have a follow-up?

Sure, absolutely. The donors that we are selecting for the FATE-NK100 studies are CMV seropositive donors, but we’re not selecting based on cure mismatch.

And then, I think I recall it was a question about cryo preservation at the ASH presentation and this is challenging in the NK cell world. Can you just come cryo preservation and what the steps would be to expand that beyond Minnesota?

We’re exploring this extensively pre-clinically right now, not in a position to give any specific details other than, this is something that we’re working on. And we’re obviously building up all the work that Jeff and his colleagues have done over the past decade.

And then just moving onto the monoclonal antibody, why don’t you exacerbate toxicity, and is this just a numbers game in terms of the number of antibody molecules versus the number of NK cells/CD16 molecules on those NK cells?

So, that could very well play out, that it could be a numbers game, we’re going to find that out when we get to the clinic. There has been combination studies with an NK cell product, autologous [ph] product with trastuzumab in blood cancer patients and that was very well tolerated with no toxicities. So that gives us confidence that we should be able to safely combine the monoclonals but obviously the Phase 1 is what we’re looking at for the safety and tolerability as we move forward.

And then have you done a survey of all of the approved monoclonal antibodies with either the induced pluripotent or just the active memory NK cells, and any sort of lessons that are coming out from that as you’ve done a comprehensive survey?

I wouldn’t say we’ve done a comprehensive survey but we’ve certainly tested probably up to five different FDA approved monoclonal antibodies. And at least to-date all the data that we see suggests that whether it’d FATE-NK100 or our high-affinity, non-cleavable engineered CD16 iNK cell that we see very encouraging efficacy data across the different classes of monoclonal antibodies.

Thank you. Our next question comes from the line of from Ren Benjamin from Raymond James. Your line is open.

Just on the NK100 study, can you just help us determine or think about what a go, no go decision would look like? And I think in the past you’ve mentioned a 30% rate is what you’re showing for?

Yes. I mean that’s exactly what we would look for. It would certainly have to meet the benchmark that Jeff has seen today. I think we absolutely believe that is achievable. If you recall all the preclinical data that we’ve generated with respect to FATE-NK100 has been benchmarked directly against the product that Jeff uses today in the clinic. And obviously the data package for FATE-NK100 is out there publicly in different presentations, and we think it has demonstrated significantly enhanced cytotoxicity across multiple different elements of killing.

And when we think about the number of patients, is it pretty much as the once the dose is determined and expansion of about 10s or about 30% CR and about 10 patients, 10-15 patients?

Yes. It’s relatively small study I think we expect that we will rapidly accelerate the dose curve. And then at that top dose we expand the term.

Okay, and then just one final one from me and that is more of a high level question. Because you have the FATE-NK100 product and then behind it, call it the 12 months behind it the induced for stem cell product. And how you envision both existing in the marketplace or does one cannibalize the other? Have you guys started thinking about that or is it really just going to be dependent on kind of the data as it comes out?

I think it’s too early to tell. I mean, we’re going to learn a lot with FATE-NK100. I think we fundamentally believe FATE-NK100 can be a standalone product based on all the preclinical data we’ve seen to-date as well as our discussions with Jeff and others in the NK cell field. I think one of the advantages of using a pluripotent cell obviously is -- and you understand this obviously is that just putting a high affinity non-cleavable CD16 receptor into it a iPSC backbone is just the first step that you can take with that iPSC backbone in terms of developing NK and T-cell products. So, I think you should think about our iPSC platform as truly a platform where lots of different NK and T-cell products can emerge. But, given what iPSCs represent, they do truly represent the potential to deliver cells in a way that can match traditional pharmacology. You can do dose titration, you can get multiple dose regiment. So, I think the paradigm ultimately is going to be very different with -- that is enabled by an iPSC approach.

Okay, and we have been talking about the NKs the whole time but obviously as you mentioned this could be expanded to T-cells. What’s kind of the status of the Sloan Kettering relationship and maybe with the Juno relationship as well?

Sure. We’ve spent a lot of time talking about the Sloan Kettering relationship today. It’s progressing really nicely. I suspect we will provide an update on that collaboration probably in the let’s just called the summer time frame. But, we are really excited by the data that we’re seeing very early on in the collaboration with respect to now being able to take iPSCs and generate both CD4 and CD8 T-cells in a pretty efficient differentiation protocol. And with respect to Juno, I’m a little sensitive about just commenting on Juno generally. I mean, we believe we’re doing – we’re making tremendous progress under the relationship. We’re generating data packages with respect to small molecule modulators that we think are important, certainly for CAR T-cells, Juno’s CAR T-cells but were obviously interested with respect to using those NK cells as well as our IPS derived NK cells and T-cells. But fundamentally Juno is the driver of that collaboration and it is up to Juno to select small molecules to incorporate into their products.

[Operator Instructions] I’m see no other questions in the queue at this time. So I’d like to turn the call back over to management for closing remarks.

Perfect. Thank you, everyone for hanging in there with us today. It was little bit longer than our normal call, so much appreciate it, look forward to speaking with you again in the near future. Thank you.

Ladies and gentlemen, thank you again for your participation in today’s conference. This does conclude the program. You may now disconnect at this time. Everyone have a great day.