Welcome to Fate Therapeutics Second Quarter 2017 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. As a reminder, today’s call is being recorded. I would now like to introduce Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics.

Thank you. Good afternoon and thanks everyone for joining us for the Fate Therapeutics second quarter 2017 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-Q for the second quarter ended June 30, 2017 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-Q for the second quarter ended June 30, 2017 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 our clinical progress and development strategy for FATE-NK100, our first-in-class adaptive memory natural killer cell product for the treatment…

Thanks, Scott. As Scott mentioned, PROTECT is a two-stage clinical study. The Phase 1 stage of PROTECT is assessing the safety of ProTmune as measured by incidents of engraftment and survival by day 28 post-transplant. As a next generation cell graft, ProTmune is the sole source of cell for reconstitution of the patient’s blood in immune system. ProTmune is not an adjunctive therapy used in combination with allogeneic transplant. ProTmune is the cell graft. This is an important difference when compared to other approaches that are being explored for acute GVHD. As the cell graft, it is essential that ProTmune demonstrate high grades of engraftment without failure and early survival in the Phase 1 safety stage of PROTECT. Large registry base [ph] has shown that in patients undergoing matched unrelated donor transplant,. the day 30 engraftment rate is over 95% with a median time to engraftment of 16 days and the day 30 survival rate is over 90%. Six subjects have received ProTmune at four clinical sites in the Phase 1 safety stage of PROTECT. The underlying hematologic diseases include the three subjects with acute lymphoblastic leukemia, two with acute myeloid leukemia and one with myelodysplastic syndrome. As Scott mentioned, we are very encouraged by the safety profile to date. ProTmune has been well tolerated with no reported ProTmune-related serious adverse events. As per the Phase 1 stage of the clinical protocol, after six subjects have been dosed and evaluated for up to 28 days, and five or more of these six subjects have engrafted by day 28, then the enrollment in the Phase 2 stage of the study may proceed following review by the study’s Data Monitoring Committee. Now, in accordance with this, we have scheduled the study’s independent Data Monitoring Committee to review the Phase 1 data and…

Thanks, Chris. I’ll now provide an update on our NK cell cancer immunotherapy pipeline. First, we co-authored the manuscript with researchers at the University of Minnesota that was just published in the peer reviewed Journal of Cancer Research where we described the unique antitumor properties of FATE-NK100. The published data show that FATE-NK100 exhibits greater natural cytotoxicity, cytokine production and ADCC activity against the variety of cancer cell lines compared to conventional NK cells derived from peripheral blood. In addition, FATE-NK100 was shown to have enhanced antitumor activity xenogeneic model of ovarian cancer. These exciting preclinical findings have paved the way for our clinical investigation of FATE-NK100. Next, at the annual meeting of the International Society for Stem Cell Research in June, we hosted a Focus Session entitled Off-the-Shelf Natural Killer Cell Cancer Immunotherapy, which featured presentations by our collaborators including Jeff Miller from the University of Minnesota; Karl-Johan Malmberg from Oslo University; and Dan Kaufman from UCSD. The session highlighted our significant progress in advancing our pluripotent stem cell or iPSC product platform and our off-the-shelf cancer immunotherapy product candidates. Similar to master cell lines used for the manufacture of therapeutic antibodies, our platform enables the creation of master pluripotent cell lines which have the potential to serve as a renewable source for the consistent manufacture of clonal populations of effector cells that are homogeneous and well-defined, can be dose titrated and delivered in multi-dose regimens and can be readily distributed to thousands of patients in an off-the-shelf manner. We presented our preclinical findings for FT500i, our first NK cell product candidate derived from a master pluripotent cell line. FT500i is being developed as an off-the-shelf multi-dose cancer immunotherapy for use in combination with checkpoint inhibitors. Preclinical data indicates that FT500i has enhanced cytotoxicity and cytokine production against a…

Thanks Dan. Turning to our financial results for the second quarter ended June 30, 2017, Fate Therapeutics reported a net loss of $9.6 million or $0.23 per common share as compared to a net loss of $8.4 million or $0.29 per common share for the same period last year. Revenue was $1 million for the second quarter of 2017 as well as for the second quarter of 2016. Revenue in both periods was generated from our strategic research collaboration with Juno Therapeutics. Research and development expenses for the second quarter of 2017 were $7.9 million compared to $6.8 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 FATE-NK100 and a preclinical advancement of the Company’s off-the-shelf iPS derived cellular immunotherapy programs, and in facility costs associated with the expansion of the Company’s laboratory space. G&A expenses for the second quarter of 2017 were $2.7 million compared to $2.2 million for the same period last year. This increase was primarily related to an increase in intellectual property related expenses. After adjusting for research funding proceeds from Juno of $500,000 and for stock-based compensation expense of approximately $1 million, total operating expenses for the second quarter of 2017 were $9.1 million. At the end of the second quarter of 2017, cash, cash equivalents and short-term investments were $71 million. Including the $7.5 million in net cash proceeds from our July 2017 debt financing with Silicon Valley Bank, pro forma cash, cash equivalents and short-term investments were $78.5 million. Common stock outstanding was approximately 41.4 million and preferred convertible stock outstanding was approximately 2.8 million shares, each of which is convertible into five shares of common stock under certain conditions. Looking ahead, for FATE-NK100,…

Thank you [Operator Instructions] Our first question comes from the line of David Nierengarten of Wedbush Securities. Your question, please?

Hey, thanks for taking the question. First off on the PROTECT study and the Data Monitoring Committee. I mean, what additional data or patient data are they going over, since it seems that you of course are proceeding along with the next phase of the study, which seems that they have -- it would seem that they have already made the decision to be perfectly honest. So, what more needs to be done or when could you share perhaps some of the early data.

Sure. And Chris -- I’ll turn this over to Chris. We have convened the meeting; the meeting has not taken place yet. We’ve done a data cut on a data, which we provided on a preliminary basis to the committee. We will continue to provide data cuts to the committee up to the date of the meeting. The DMC though, while their purview is to primarily look at neutrophil engraftment and survival by day 28, they will look at all the data in the Phase 1 stage of the study to make their recommendation for advancement into the Phase 2 stage of the study. Chris, feel free to add anything to that.

Sure. Maybe, just one point of clarification as to wondering why hasn’t it just started, I think that was part of the question. And we are still waiting for that last subject to complete that formal 28-day window period. That’s why we are -- it hasn’t yet started. But, we are very encouraged by what we see.

Yes. That was going to be my next question is how many patients have actually gone through the 28 days. Just maybe one quick follow-up on NK100 and AML. What is -- there happens in previous efforts with NK cells, what is the bar do you think or your internal bar for persistence of the NK100 cells in patients?

Sure. I think it’s too early to say what our bar is. I mean, we do believe fundamentally that FATE NK100 is a very novel effector cell with some unique property that set it apart from NK cells that are being used in the clinic today. If you recall all the preclinical data, we have benchmarked against, for instance NK cell therapy that Jeff Miller has been delivering to patients -- is currently delivering to patients for the past couple of years. So, we feel very confident that FATE NK100 is unique, is different, and we will be able to see that early on with respect, at least [ph]an interesting biomarker that we are looking at, persistence of the NK100 at day 7 and 14. So we think that will be a very interesting indicator with respect to its therapeutic potential. Jeff in his clinical experience has certainly correlated day 7 and day 14 persistence with enhanced clinical outcomes.

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

It’s Nick [ph] in for Jim. Congrats on the progress gentlemen. First off, just on -- just following up on David’s question or rather an answer. Do you need -- it sounds like you need an official go ahead from the DMC but you feel comfortable enough that you don’t need that. I’m just not sure. So, when the six patients get to 28 days, you send that data out to the DMC, do they formally need to meet and give you the formal go ahead?

Per the protocol, there is a Phase 1 safety meeting, yes. That meeting can be triggered by a minimum of six patients. We believe per the protocol we are in a position based on a safety data that we have observed to date to support advancement into the Phase 2.

So, you are ready to go essentially when you get the okay from the DMC?

We are planning to move forward as soon as the Data Monitoring Committee completes its review of six patients. Yes.

Okay. And are you able to comment on what the maximum grade of GVHD as you’ve seen to date, acute GVHD?

Yes. We’re not going to comment on patient data at this point in time. The Data Monitoring Committee is doing their job. I really don’t want to be in a position where we’re front running that job with any type of data whether it would be safety or efficacy.

Sure, fare enough. And then moving to the NK100 trials. So, I believe that there is a dose escalation in the ovarian trial. I know in the gene therapy studies, I know FDA is making companies wait between dosing patients and then have DSMB between dose levels. Do you have any restrictions regarding sequential dosing of patients and then sequential dose levels?

We haven’t accelerated dose strategy and it’s very similar, it’s not exactly the same, but it’s very similar across all three studies whereby we’re exploring three different dose levels. Between moving from the first dose to the second dose level, the second dose to the third dose level, we have a short safety window where we need to clear to observe and clear any DLTs that we might observe. That said, there is no safety monitoring committee per se that is governing advancement from the first dose to the second dose or the second dose to the third dose level. Once we achieve the top level or at least demonstrate safety to get to the top dose level, we’re in an expansion stage where a number of patients can be treated in parallel during the expansion stage.

Okay, thank you. And then, just last one for me. And I think you indicated that you have a low intensity implication [ph] regimen. Is that compared to the cause or what are you comparing against, and perhaps what is that regimen you’re using?

So I’ll let Chris to answer that question.

Yes. So, what we’re using here, we recall this low-intensive, because it’s being able to be administered as an outpatient. For the DIMENSION study, we’re looking at cytoxan 300 milligrams, we used greater two doses of Fludarabine at 25 milligrams per meter squared. With that, this is being able to be administered in the outpatient setting.

Thank you. Our next question is from Do Kim of BMO Capital Markets. Your line is open.

Hi. Good afternoon. Thanks for taking my questions. First on ProTmune, I just think maybe it will be helpful, if you pose some potential reasons why the Data Monitoring Committee would require more patients to be kept in the Phase 1?

Sure. The Data Monitoring Committee is looking at all Phase 1 data. To be clear, that per the protocol, the hurdle to advance from a safety perspective into the Phase 2 efficacy stage is that analysis is done after the sixth patient has reached day 28. Per the protocol five of the six patients graft by day 28 without graft failure and survived at day 28. The intense per the protocol is to support advancement into the Phase 2. If Data Monitoring Committee though will look at and we are more than happen happy to provide them all data we have available to date.

And you’re saying based on the data that you’ve collected to-date on these five patients and going to sixth patients, you feel confident that all bases are covered to moving on to Phase 2 just on these six patients?

We would not have convened the meeting after six patients had been dosed, if we were not encouraged by the signals we were seeing with respect to safety.

Okay, great. And on NK100 and iPSC therapies, when we think about putting these therapies in our model, how do you look at future commercialization and potential partnering of these products.

The Company has made over the past, let’s call it, two years a significant shift to become one of the leaders, if not the leader in the NK cell therapy space. NK100 is a very important product to us, we intend to develop that product. We believe we’re pioneering iPS cell technology, both for NK cells as well as T cells and we’re completely committed to advancing FATE-NK100 as well as IPS derived NK cell and T cell therapies with or without partner. And we feel very comfortable given our expertise in the space, as well as our partnerships that we have in place with top medical investigators like Jeff Miler in the University of Minnesota and like Michel Sadelain at Memorial Sloan Kettering that we’re well-positioned to advance these products.

[Operator Instructions] Our next question comes from Ren Benjamin of Raymond James. Your line is open.

Hey, guys. Thanks for taking the questions and congrats on the progress. [Technical Difficulty] DSMB today. But, let me just ask [Technical Difficulty]. Typically when I’m looking at DSMB, it’s because you need them to look at blinded [ph] base, and here you don’t have that, in this Phase 1 portion. So, is there something that they could be looking at specifically that you haven’t? I guess the another way of asking is what [Technical Difficulty] make in the call to look forward to Phase 2, since you’re looking at all the data as well?

Ren, the protocol was set up over a year ago where as part of setting up and designing a combined Phase 1/2 study, the step to move from Phase 1 to Phase 2 was not to start a new study, not to go back to the FDA but to demonstrate safety where that safety would be determined by an independent third-party. That was the point of Data Monitoring Committee, that’s the roll of the Data Monitoring Committee.

Got it. And then, once the Phase 2 starts, then you guys are blinded completely and the DSMB is the only who kind of [multiple speakers] to the data?

That’s absolutely correct. So, once the Phase 2 starts, the Phase 2 is being conducted in way that you described is, are very familiar with. But in designing a Phase 1/2 combined study originally, we believed and we thought it was appropriate, before going into a blinded scenario that a third-party, again, first in human study was ProTmune that an independent third-party would assess safety.

Got it. Scott, was the original protocol for 10 patients, but…

The original protocol for minimum of 6 up to 10.

Got it. Okay. So, I guess that makes a lot more sense than because if you’re going in kind of with lesser patients, you want that additional kind of validation that this is the right path forward.

Correct.

I guess just switching gears real quick to NK100. The first patient to have got dose, but you’ve talked about data coming out in the second half of 2017, can you -- for I guess all the programs. How many patients worth of data do you think we’ll see? And I am assuming it’s at the Triple meeting or SITC, can you give us a little bit of guidance as to where you might locate that data?

Sure. I mean, there is obviously high profile conferences that are coming up in the second half of 2017 between SITC and ASH. The endpoints in these studies, I mean we’re looking at a biomarker with respect to day 7 and day 14 with respect to persistence. We believe that biomarker is important, as I mentioned that NK cell persistence historically has been correlated with complete responses. The first assessment of response with respect to anti-tumor activity across all studies is being assessed, certainly during the first 30 to 40 days. So, we do believe, across a number of patients, across all three studies, we will be in a position, more certainly, we will be able to look at persistence, and we will be in a position when we will be getting that first look with respect to efficacy.

Got it. And then, just one final question for iPSC. Obviously you put a slide on the ground regarding NKs and you guys want to be the leaders with NK technology. Is it -- just given how fast the cellular immunotherapy space has advanced, especially when it comes to T cells, does it make sense or are you guys considering potentially using iPSCs, the manufacturing of allogeneic T cells and just coming into that foray?

Absolutely, that is the intent of our entire collaboration with Michel Sadelain at Memorial Sloan Kettering is to use iPSCs to create off-the-shelf T cell strategies. Michel recently published a paper that involves essentially knocking out the TCR and inserting a CAR to provide more universality with respect to that T cell, given that the TCR is being knocked and the CAR being inserted, he showed better safety and efficacy with that approach at least in preclinical model. And so you should assume -- I think it’s fair to assume that that is a path and strategy that we’re aggressively running at with Michel.

Thank you. At this time, I would like to turn the call back over to Mr. Wolchko for any closing remarks. Sir?

Thank you. Thank you very much for everyone’s attention today and participation in the call. We look forward to speaking with you in a very near term as we move our programs forward. Thank you.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. You may disconnect your lines at this time.