Earnings Labs

Fate Therapeutics, Inc. (FATE)

Q1 2018 Earnings Call· Thu, May 10, 2018

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Transcript

Operator

Operator

Welcome to Fate Therapeutics First Quarter 2018 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 webcast 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. You may begin sir.

Scott Wolchko

Management

Thank you. Good afternoon and thanks everyone for joining us for the Fate Therapeutics first quarter 2018 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 year ended March 31, 2018 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 year ended March 31, 2018 that was being 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. Today I will highlight progress against our key 2018 operational objectives and review our financial results for the first quarter, after which we will open the call…

Operator

Operator

[Operator Instructions] And our first question comes from the line of Tenthoff from Piper Jaffray. Your line is open.

Edward Tenthoff

Analyst

Thanks for thorough updated and Scott running through the financials reminded me that you were a CFO once you did it so effectively, you done such a good job as CEO I always forgot that certainly finance diagram it’s a great job on that. Quick question if I may, tell us a little bit more about what Michel is going to presenting. Is this really going to be more - overview of the platform and how iPSCs can used to develop therapeutics? Tell us just a little bit more of that and then also when should we be expecting additional clinical updates from the ongoing studies? Thanks for your time.

Dan Shoemaker

Analyst

So Michel is really going to give an overview of the work we've been doing over the last several years. He is developing the platform of how we create engineered iPSCs and then differentiate them through the 34 phase into CDA single positive alpha beta Car T cells and really going to highlight the recent advances we've made to refining the differentiation protocol which has been a major breakthrough in making really genuine alpha beta CD8 T Cells.

Chris Storgard

Analyst

Chris regarding the question on clinical updates, starting first with ProTmune. We expect to be able to provide the one year update on all of the Phase 1 subjects that asked this year that's the plans for that. As far as NK100 as those three studies continue to enroll, we’ll continue to provide updates scientific conferences that align with the availability of data.

Scott Wolchko

Management

Ted and I also like add back to Michel presentation we’re really going to highlight the advantages of removing the TCR completely and inserting the CAR into the TRAC locus and emerging some of the advantages that were described last year in Michel’s nature paper on. And so just to really tie everything together and how we are working towards a really great off-the-shelf CD19 T-cell product.

Operator

Operator

And our next question comes from the line of David Nierengarten from Wedbush Securities. Your line is open.

David Nierengarten

Analyst

I had a question you talked a little bit about obviously being the first in class - the NK 500 series being first in class for the FDA to take a look at. And think about with the IND meeting is there any items that are particular getting particular attention with the FDA or anything you can point to that as maybe a little bit of a concern or just things they are looking at in particular? Thanks.

Scott Wolchko

Management

So we've had two different pre-IND meetings with the FDA one for FT500 and a second one for FT516. We focused one of the IND meetings really on the nature of the iPS cell platform, how do you create clonal master IPS cell lines and what's involved in that. And the second IND meeting we have we really focused on how do you take clone and in an efficient manufacturing process turn that into our cells of interest, whether being NK cells or T cells. And so much we’ve had two different meetings, two different areas of focus. I think we've done a really thorough job here over the past couple of months in carefully dissecting the two different pre-IND meetings and ensuring as best we can that we’re addressing all the FDA's questions. Some of the things that we’ve talked about in the past that the FDA was concerned about obviously is are there any residual IPS cells for instance that remain in your final product. And we've developed internally at Fate Therapeutics multiple different ways to characterize our final product including our final product not having any residual IPS cell. So I'm being absent of any IPS cells in the final product. And so we feel really comfortable with all the work that we've done in terms of characterizing the final product. As I mentioned in one of the FDA meetings, we actually set forth different criteria for the final product with respect to potency and purity and how to identify the final product, as well as any residuals in the final product. And we've done I think a really thorough job now to get multiple different manufacturing runs in a GMP facility, producing a final product at clinical scale that actually met and/or exceeded our prespecified criteria. So I think we’re in a really good position as it relates to pioneering this, but as you mentioned as I've mentioned it is a first of kind and we expect it may be a little bit of a journey with the FDA to navigate through it. And we're very excited about it and totally up looking forward to it.

David Nierengarten

Analyst

And then just maybe a quick follow up. You mentioned leveraging the first in class nature to more rapidly bring next clinical candidates. Is that fair that the FDA will kind of say okay you made one iPSC, you made them all to not to joke about it but is that really what you’re hoping for then. And has the FDA indicated at least a willingness to treat subsequent candidates as I don't want to say - I don’t want to say easy but you know what I’m getting at as you know straightforward?

Scott Wolchko

Management

So the way we make and the way we select our IPS clone whether it's for FT500 or 516 is the same exact process. So that process of creating the clonal IPS cell line is the same exact process from product to product. Just as importantly once you create that clonal master IPS cell line, the manufacturing process on how you turn that into large quantities of homogeneous NK cells in this case is exactly the same. We are not expecting to change our manufacturing process from 500 to 516. So one of the things that we know is other than, it being a different essentially vial that we start with for manufacture of 500 versus 516, the process for all intents and purposes is exactly the same. So, much of the work that we’re going through right now in terms of establishing the way we create the master IPS cell line, how we characterize our cell lines, how we bank our cell lines, how we differentiate our cell lines to create NK cell product, how we characterize our NK cell products, all of that is completely leverageable.

David Nierengarten

Analyst

And then the real question…?

Scott Wolchko

Management

And it’s now leverageable over the third product and the fourth product with respect to the NK Cell.

David Nierengarten

Analyst

And then the real question and it sounds like you’ve answered that would be that on the - your purification side of thing for final product just having the specifications in place and then applying to every product on okay great.

Scott Wolchko

Management

Absolutely.

Operator

Operator

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

Unidentified Analyst

Analyst

Its Nick in for Jim this afternoon. Thanks, gosh lots of moving parts here, hard to know where to start it. Let me start with ProTmune. You said that NK cell recovery was robust does that mean accelerated back to - so an accelerated recovery back to normal levels. And then for the matched control was that including post-transplant cyclophosphamide as GVHD prophylaxis?

Dan Shoemaker

Analyst

So we saw both an acceleration, as well as a robust overall reconstitution of that NK compartment. The historical controls would match exactly to the types of conditioning regimens that were used in the ProTmune Phase 1 study. So we tried to - we aligned as many of the variables as possible to make an apples to apples comparison. And so yes, I would say the NK cells came back faster and ended up just - looking at the time points of the 30 days and 90 days it just ended up with a nice robust immune constitution. And we’re really excited as we link this towards the absence of relapse in this first seven patients and then we think that a lot of that can be tied to the robust immuno constitution.

Unidentified Analyst

Analyst

And then the post-transplant cyclophosphamide was that some of those controls receive that?

Dan Shoemaker

Analyst

I do not believe so.

Unidentified Analyst

Analyst

Okay.

Scott Wolchko

Management

The matched controls came from one of the centers that participated in the Phase 1 study. And it was direct comparison of matched unrelated donor transplant.

Unidentified Analyst

Analyst

And then for FT500 Scott you explained the design for the combination what about the monotherapy on what are those patient going to be

Chris Storgard

Analyst

So the monotherapy arm is going to be a Phase 1 salvage population of all solid tumors for the dose escalation portion and the expansion.

Unidentified Analyst

Analyst

That may or may not have received PD1?

Chris Storgard

Analyst

That is correct. They may or may not, not a requirement but certainly something we’re going to be looking for.

Unidentified Analyst

Analyst

And then on F516, CD16 is that do you put the human [normally] for CD16 into the CD16 gene or safe harbor location?

Scott Wolchko

Management

No we use a lengthy bio construct inserted it into the genome, but we did pick a clone that has a single insertion site and make sure that it inserted into a safe region of the genome not near any genes that were concerning to us. So we were able to extensively characterize the clone that was selected for the master cell bank and I think that’s a big advantage of this approach compared to other patient derived engineered cell therapy strategies.

Unidentified Analyst

Analyst

And then just I have a last one I’ll hop in the queue. I think your patient in terms of manufacturing it seems like you're very heavily reliant on Minnesota Memorial. I do have a plan to validate backup sites in case one of things floods or goes on fire or build your own?

Scott Wolchko

Management

Yes, I mean we actually do have backup plans and we’re in the process of bringing pieces of manufacturing in-house. I think it’s really important to remember and people struggle with this concept. We are going to do one manufacturing run over 45 days and get enough doses for the Phase 1 study. And then we will do a manufacturing run for FT516 and likely again get enough doses for our Phase 1 study. So this is not continuous patient by patient manufacturing. This is extremely leverageable where in a single manufacturing campaign we can produce large quantities of cells and significant doses of cells such that we can conduct meaningful studies. And that’s in one of the major advantages of what we do compared to a patient derived approach or even an allogeneic approach where allogeneic cell therapy literally has to find donors every time, engineer every time, and then manufacture their product every time. And maybe 60% of the cells are engineered successfully certainly every cell is not engineered the same way. And when you want to do another campaign and maybe you get I have seen research scale manufacturing from others that are doing allogeneic cell therapy and its gosh maybe I can get 50 doses, maybe I can get 100 doses and then I have to repeat again and go back to get new donors and engineer all again. This is a completely different paradigm. That said totally agree, we believe strategically it is important to control manufacturing absolutely, and we do have backup plans and we are in the process of bringing pieces of the manufacturing in-house.

Operator

Operator

[Operator Instructions] And our next question comes from the line of Do Kim from BMO Capital Markets. Your line is open.

Do Kim

Analyst

A question on the ovarian cancer APOLLO study. What drove the decision to give a second infusion for subject, two and is that an option that you’ll provide to the other dose cores as you go forward?

Scott Wolchko

Management

Yes, the protocol was written in a manner that if a subject was able to have stable disease with tumor shrinkage then they’re eligible for another dose. And we're looking to do that for a number of reasons. One obviously to provide potential - additional benefit to the participating subject, but also to answer some really important questions as to whether or not repeat dosing with an allogeneic product can result in persistent. And that we may able to address the second question we have had persistence of that second dose after 14 days so we’re very encouraged by that. We’re still waiting to see how that patient does and we’re looking forward to further clinical data on that as far as all of our other studies yes, we built in place that option in the solid tumor studies for repeat dosing with evidence of clinical benefit.

Do Kim

Analyst

And on ProTmune, could you tell us whether you saw CMV infections in the Phase 1 portion of the study and what that says compared to historical?

Scott Wolchko

Management

So let me just talk a little bit about the CMV infections and actually with the approval of ProTmune we've actually had to amend our protocol to allow that prophylaxis to be allowed. And as a result CMV infection is something we really can't look at from a meaningful perspective on whether or not ProTmune will have any impact on that. We have had CMV infections, but now with the allowance of the prophylactic therapy that is an end point has moved from a key endpoint now to an exploratory endpoint simply because it’s no longer something we can rigorously assess.

Operator

Operator

And we have a follow-up question from the line of Jim Birchenough from Wells Fargo. Your line is open.

Unidentified Analyst

Analyst

Hi thanks for follow up and still Nick. And just going back to NK100 have any of the trials reached the top dose or DLT?

Scott Wolchko

Management

So we’ve not had any DLTs observed so far in any of the studies. We're actually expecting to be dosing our top cohort next week in one of the studies so we are very close to talk for dose in all studies, but no DLTs have been observed.

Unidentified Analyst

Analyst

And then can you give us an update on PROTECT and when you think you’ll be able to complete enrollment?

Chris Storgard

Analyst

Certainly so as Scott mentioned the Phase 1 data has been very well received by investigators and enthusiasm is certainly on an upswing. So we do expect to continue enrollment through 2018 and we expect to have results available in 2019 on the randomized Phase 2. As I mentioned we do have expect the one year data on the Phase 1 subjects to be presented at ASH this year.

Operator

Operator

And speakers, I'm not showing any questions at this time. I would now like to turn the call back over to Scott Wolchko, President and Chief Executive Officer for any closing remarks.

Scott Wolchko

Management

Thank you. Thank you everyone for your participation in today’s call. We look forward to speaking with you again in the near future.

Operator

Operator

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