Q2 2023 Fate Therapeutics Inc Earnings Call
Welcome to the state therapeutic second quarter, 2020th of your financial results Conference call at this time, all participants and listen only mode.
Call is being webcast lab named after session Ah States website at <unk> Dot com as reminds today's call is being recorded.
<unk>, President and C E O fate therapeutics.
Good afternoon, and thanks, everyone for joining us for the fate therapeutic second quarter 2023 financial results call.
Shortly after four P M. Eastern time today, we issued a press release with these results, which can be found on the investors section of our website under press releases.
In addition, our Form 10-Q for the quarter ended June 32023 was filed shortly thereafter and can be found on the investors 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 conference call are forward looking statements under the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
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 included in our Form 10-Q for the quarter ended June 32023 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 date therapeutics disclaims any obligation to update these forward looking statements to reflect future information.
<unk> or circumstances.
Joining me on today's call, our <unk>, our Chief Financial Officer, and Bob <unk>, Our Chief Research and development Officer.
During today's discussion we will cover the recent IMD allowance for our F. T 522, Caryn K sell program and B cell lymphoma.
Which is our first product candidate to incorporate our proprietary aloe defense receptor technology.
The phase one clinical trial is designed to assess F. T 522, with and without the administration of intensive conditioning chemotherapy to patients.
Study startup activities are ongoing and we plan to enroll the first patient and the second half of 2023.
We will also highlight are continued investment in our multiplexed engineered IPSA derive car T self franchise for solid tumors.
Where we are advancing R. F T eight to five her to targeted car T cell program in collaboration with one O pharmaceutical toward an ind's submission in the second half of 2023.
Finally will provide some additional guidance on our progress toward expanding the clinical reach of our Ipf's C product platform beyond oncology and into auto immunity.
Before we review our progress and the key milestones that we are striving to achieve in the second half of 2023 I.
I would like to turn the call over to Ed to elaborate further on our financial results were in the wake of our strategic pipeline prioritization and corporate restructuring in January we have controlled our cost structure posted a reduction in operating expenses and cashback <unk> and successfully created opera.
<unk> runway through multiple potential data readouts and into the second half of 2025.
Thank you Scott and good afternoon.
Therapeutics as in a solid financial position to advance our pipeline.
Cash cash equivalents and investments at the end of the second quarter or approximately $385 million.
In the second quarter of this year and consistent with our guidance revenue declined significantly to $900000 compared to $18.5 million for the same period last year.
As we indicated last quarter. Our revenue is now derived exclusively from our collaboration with Kono pharmaceutical.
And specifically reflects research funding associated with the development of a second product candidate against an undisclosed target in solid tumors.
We expect this amount to total about $800000 per quarter through the third quarter of 2024.
As a reminder.
Opting into a U S and European co development and co commercialization arrangement with Ono for F. T. Eight to five in the fourth quarter of last year. We now account for that programs reimburse of all expenses as an offset within our research and development costs.
Research and development expenses for the quarter decreased by 50% compared to the same period last year to $49 million.
The decrease in our R&D expenses was attributable primarily to a decrease in salaries and benefits.
Including sure based compensation expense following the company's restructuring the first quarter and from lower demand for R&D supplies materials and equipment.
General and administrative expenses for the second quarter increased by 11% compared to the same period last year to $22.6 million.
The increase in our G&A expenses was attributable primarily to an increase in legal related fees.
Total operating expenses for the second quarter declined 25% compared to the same period last year to $63.5 million, which includes $12.9 million in non-cash sure based compensation expense.
Note that in connection with the development of our off the shelf PFC derived carty sell product candidate F. T 819, we previously achieved the clinical milestones set forth and are amended license agreement with Memorial Sloan Kettering Cancer Center.
Which triggered a first milestone payment to M S K and 2021.
Up to two additional milestone payments may be O. Two m's K based on subsequent trading values of the company's common stock.
We assess the fair value of these contingent milestone payments currently valued at $1.7 million on a quarterly basis.
In the second quarter, we recorded a non-cash 390000 dollar non-operating benefit associated with the change in fair value.
Our net loss for the quarter was $52.8 million or 54 cents per share.
As we consider the remaining two quarters of the year are demonstrated ability to wind down costs associated with our discontinued programs and additional ongoing cost rationalization efforts position as well to manage our balance sheet and advance our product candidate portfolio.
As a result, we reiterate guidance for full year gap operating expenses to be in the range of $265 million to $285 million and expect that our year end cash and investments will exceed $300 million.
I will now turn the call back over to Scott to discuss our second half of 2023 program milestones.
Thanks, Ed.
While we have successfully reduced our operating expenses and controlled our cost structure. Our employees have shown great resilience and advancing are multiplexed engineered Itse drive Caryn K and court T cell programs.
In the second quarter, we submitted and the FDA loud or investigational new drug application for F. T 522.
Are off the shell CD 19 targeted caryn K sell program for B cell lymphoma.
Notably F. T 522 is the company's first product candidate to incorporate our proprietary aloe immune defense receptor or ADR technology.
Which is designed to engage for one BB expressing host immune cells.
And induce NK cell activation and functional persistence.
In preclinical studies, we have shown that ADR armed Ips derived car NK cells exhibit potent anti tumor activity.
In the presence of Alloreactive T cells.
These data suggests that 522 has the potential to drive clinical responses without administration of intense conditioning chemotherapy patients, which may enable 522 to be therapeutically differentiated and seamlessly combined with standard of care Immunotherapies.
Widely used in the community based settings.
We are currently conducting studies startup activities at multiple sites.
The study is designed to assess a three dose treatment schedule apply to to ink.
In combination with CD 20 targeted monoclonal antibody therapy.
Including within without administration of conditioning chemotherapy to patients.
This study includes two regiments.
Regimen, a which consists of three days of standard conditioning chemotherapy, one dose of <unk> and three doses of 522.
And regimen B.
Which consists of one dose of Rituxan, ma'am and three doses of F. T 522 without conditioning chemotherapy.
Each three dose treatment regimen will commence at 300 million cells per dose.
Patient enrollment in regimen, a will open first.
Subject to clearance of dose limiting toxicities patient enrollment into regimen D will then open at 300 million cells per dose.
Dose escalation of each regimen will proceed independently.
Each regimen permitted to dose escalate at up to three times.
<unk> current tolerated dose level.
The study's eligibility criteria allow for enrollment of patients with relapse refractory disease. Following at least one prior systemic regimen containing an anti C. D 20 monoclonal antibody.
And does not require that patients received prior treatment with a <unk>.
Or with autologous CD 19 targeted car T cell therapy.
That said, we expect to initially enrolled patients that are heavily pre treated including patients that have previously been treated with autologous <unk> 19 targeted car T cell therapy.
We remain on track to enroll the first patient and the second half of 2023.
We are also pleased with recent clinical progress and the conduct of our dose escalating phase one studies of F. T 576 in multiple myeloma and a F T 819, and B cell lymphoma.
And our dose escalating phase one study of F. T 576, we have now enrolled the first patient and the three dose treatment cohort at 1 billion cells per dose.
In combination with C. D 38 targeted monoclonal antibody therapy.
No dose limiting toxicities were observed in the two dose treatment cohort at 300 million cells per dose.
Similarly in our dose escalating phase one study of FTA 19, we did not observe any dose limiting toxicities and the single dose treatment cohort at 540 million cells.
And we have now expanded patient enrollment in that single dose cohort.
Each phase one study is now open for patient enrollment at over 10 sites.
During the second half of 2023, we believe we are well positioned to effectively drive patient enrollment with F. T 576, and the three dose treatment cohort at 1 billion cells per dose.
With F. T 819 in a single dose treatment cohort at 540 million cells.
We expect that the clinical and translational data from these cohorts will be sufficient to inform each programs therapeutic profile.
While the field of autologous Carty self therapy has delivered remarkable outcomes for patients with some that illogic malignancies.
Significant hurdles have stifled the safety and effectiveness of car T cell therapy in treating solid tumors.
We believe our multiplex engineered Ips C derived hearty sell product platform is uniquely suited to bring a constellation of anti tumor mechanisms to the fight against solid tumors.
Our first product candidate are emerging from our car T cell product platform for solid tumors is being co developed.
Our collaboration with Ono pharmaceutical.
F T. Two five incorporates seven novels synthetic controls designed to enhance effecter cell function.
Including a novel car targeting her too.
Hi, affinity non cleavable CD 16 FC receptor.
A synthetic TGF data signal redirect receptor.
Synthetic CX C R two receptor.
In preclinical studies F T eight to five demonstrated potent and preferential targeting of her to expressing tumors across a range of expression levels.
Additionally, FTA two five resisted TGF beta mediated suppression.
Maintaining robust activity across multiple rounds of tumor challenge and TGF beta exposure.
And also showed potent migration CX your two logins, which are often expressed on solid tumors.
Robust anti tumor efficacy in vivo has been observed in various subcutaneous her two positives geographic models.
Under our collaboration with Ono, we are currently conducting <unk>, enabling activities.
N G M P manufacturer.
And alongside the Ono clinical development team, we are jointly Finalising. The phase one study design for clinical investigation.
At this time, we plan to assess the safety and activity of eighth two five as a mono therapy.
In addition, while antibody dependent sellier cytotoxicity or ADC C is commonly associated with a neat annuity.
We also plan to clinically assess the safety and activity of FTA two five in combination with monoclonal antibody therapy <unk>.
<unk> the potential of the product candidates high affinity non cleavable C 16 receptor to exploit ADC C enabled dueling antigen targeting and overcome solid tumor heterogeneity.
We remain on track to submit an application in the second half of 2023 four F. T eight to five in patients with her to expressing solid tumors.
Finally, we continued to assess with keen interest the potential to bring off the shelf cell therapies to patients with severe auto immune diseases, where there is significant need for therapeutic solutions that can durably deplete of patients pathogenic immune cells drive immunologic reset and meaningful.
Improved quality of life.
We are continuing our preclinical assessment with F. T 819, as well as with F. T 522.
Including in combination with monoclonal antibody therapy.
To selectively target and Durably deplete pathogenic T cells plasma cells and auto reactive T cells.
As part of our ongoing assessment, we have now reviewed phase one clinical data from our F. T 819 car key sell N. R. F. T 596, Caryn K self studies in patients with B cell malignancies.
With the intent of assessing the kinetics and depth of B cell depletion observed in the clinical setting during the first 30 days following treatment.
We identified a cohort of six patients from our F. T 819 phase one study in a cohort of seven patients from our F. T 596 phase one study that had measurable b cells prior to treatment.
We were encouraged to observe through this translational analysis that most patients in these cohorts experienced rapid and complete b cell depletion following treatment with the durability of depletion extending out for at least three to four weeks.
We are in the process of reviewing these proof of concept clinical data with multiple key opinion leaders and potential investigators to support extending the clinical reach of our ICSC product platform into auto immunity.
Based on our conversations to date, we believe that the value proposition for an off the shelf cellular therapy and autoimmune diseases is compelling with a potential to afford a significant therapeutic advantage as compared to autologous car T cell therapy.
In closing we have made great strides during the first six months of this year and focusing our operations on our most innovative and differentiated programs, reducing our cost structure and extending our operational runway to keep to reach qui inflection points across our pipeline.
Main company and our belief that our proprietary IPSA product platform is uniquely suited to create highly differentiated multiplexed engineered product candidates that incorporate novel synthetic controls of cell function.
With the potential to deliver multiple mechanisms of action and therapeutic benefit to patients with cancer and autoimmune disorders.
I would now like to open the call up to any questions.
Thank you, ladies and gentlemen, if you like to ask a question. Please press star one one on your telephone again to ask a question. Please press star One line. We do ask that you. Please limit yourself to one question one moment for our first question.
First question comes from the line of.
The channel of it's a city your line is open.
Hi, This is oshawa bark on for your golf, Thanks for taking my questions I.
I guess first first 1522, congrats on getting that closer to.
Uttering the clinic.
How old are you thinking about the sort of the threshold for engraftment with or without <unk> flu. What do you think you would need to see sort of choose between either of those regimens for future advancement.
And then similar questions between regimen, a regiment B how are you thinking maybe dose escalation may diverge as you go higher and dose or just your expectation that they should remain relatively similar at least in the early Unix. Thanks.
Yeah, starting with the last question first both both arms.
<unk> escalate in parallel so assuming there is patients for enrollment I'd expect us to maximize enrollment slots.
To maximize the timeframe frame under under which we can enroll and and also compare the two arms. So sitting here today I would say that again pending patient availability, we're very excited to enroll both arms.
In parallel and would look to compare including both clinically and translation Holly the results from both arms to really inform the performance of the cells with them with outside flu.
Certainly do we have an entire battery of this translational assessments that we are going to conduct to inform us with respect to the activity of the cells and the influence of potential conditioning on how those cells per form.
Okay. Okay.
Thank you one moment please.
Our next question comes from the line of Michael E. Jaffray's. Your line is open.
Hey, guys can you hear me okay.
Yes.
Great. Thanks, Scott.
We want to ask on the new season 19.
N K program.
Can you talk a little bit about.
Two parts one is at what point do you feel like you would be convinced that efficacy and durability is I guess at least as good obviously better than the prior first and second generation programs I think that's something that we're we and investors are trying to understand at what point would you know that and then secondly is can you remind us your walk us through.
The wisdom without the conditioning.
How would that work in the phase one because obviously that without conditioning is an important part show the first <unk>.
Questions are calculated.
Sure.
Let me start with the first question and I'll try and answer your second question and if I don't feel free to sort of clarify.
So.
I think we can do.
Based on the data that's publicly disclosed I think we might agree.
That the data sets, we have seen historically with 516 and 596.
Have been more modest with respect to response.
And potentially durability a response.
In specifically aggressive lymphoma.
Conversely, I think we might agree that the response rates, we have seen in indolent lymphoma is including durability of responses with indolent lymphomas has been.
White and presses released from our standpoint.
And so I think part of our enrollment strategy and again, we have to balance this with navigating through dose escalation what part of our enrollment strategy is with Cy flu.
To understand the products therapeutic profile and aggressive lymphoma.
Are we seeing a different profile emerge with F. T 522, and aggressive lymphoma than we've seen historically.
With 516 and five nine.
Now without Cy flu.
I think it would be very interesting to observe.
Continued high rate of response and durability of response in as exam and as an example, indolent lymphoma.
We've historically seem very high response rates.
And I think it would be very compelling for us to continue to see high response rates and indolent lymphoma without Cy flu.
And so at some level I think we can have this conversation I think thats initially how we're looking at these datasets assuming we can.
Target enroll patients perfectly into those cohorts.
That's how we're initially looking at this with respect to Cy flu in an aggressive lymphoma setting to see if we have a differentiated product profile from potentially what we've seen in the past and with no side flu or was continuing to see very high rates of response and durability without.
<unk> lymphoma with outside flu I think both of those early sort of experiments and datasets with potentially indicate or lead to differentiating observations with respect to this product candidate versus 516 or 500 sex.
Perfect way of differentiating aggressively and the link and then we'd want to follow up durability, which would take some time to get our answer and compare Q by 16% by matrix.
Correct and obviously, we have a lot of historical data on both 516, and 596 with which we can make these comparisons both clinically as well as from a translational perspective.
Got it thank you I.
I think ultimately to be fair if we.
In the know Cy flew arm were able to substantially.
Change historical observations and have a competitive product profile with autologous psycholepsy cell therapy with respect to know Cy with no Cy flu I mean that is just obviously that's game changing across the entire lymphoma landscape, whether it's aggressive oriental.
Sorry can I have your second question real quick and hopefully I address at your second question, we will start out.
The very first cohort starts out regimen eh.
With Cy flu.
We will it's a standard three by three design. So we won't enroll the first three patients.
So assuming no DLP in.
In those first three patients two things happen.
We are able to dose escalate regimen with Cy flu and.
And we could go up to 900 million cells.
In addition, the other thing.
Thing that happens is after those first three patients.
Assuming no DLT regimen, B opens and we begin dosing without sizes flips. So for instance, the fourth patient as an example could be without Cy flu.
And then and then that Red and then that regimen, B wood dose escalate and deadly from regimen.
Thank you and next question is from Peter Barclays. Your line is okay.
Hi, This is Shannon for Peter Thanks for taking my question I apologize famous.
But I believe before we were thinking that we would see data for 819 at 576 at potentially not at Ash that maybe early 2024 is there any other guidance.
Getting a little bit closer to when we might see that after I posted fees and how substantial without updates might be thank you.
I think at this point in time, I think we'd reiterate that guidance I think with both 819 as well as 576.
Currently enroll opened and enrolled cohorts that we are most interested in to define.
<unk> profile of the product products and inform future development strategies, I think certainly we want to be able to assess responses.
These cohorts as well as a bit of durability of response. So I think we would reiterate our guidance with respect to data on those programs with.
<unk> next year in the first half of next year.
Perfect. Thank you so much.
Sure.
Thank you one moment please.
Our next question comes from the line of <unk>. Your line is open.
Hi, This is Jerry gagan from era, thanks for taking our questions looking at at five seven states and more broadly the broader caryn K cocky programs.
When do you.
Think you'll be done dosing and.
If a file doses not determined yet do you think you'll continue to increase the number of cells, given or give it a fourth dose as well. Thank you.
Sure. So with 576, we are now at a Joe Senate dose schedule.
And again just to be clear three doses of billion cells per dose with F. T 576.
And we were able to enroll mono therapy patients as well as patients in combination with Dr to map, we do believe that this dose and dose schedule is going to be sufficient to define the product candidates therapeutic profile based on data, we've seen with other encase old programs as well.
His preclinical data. So we are looking at this next cohort of patients.
At this dose dose schedule is defining the therapeutic profile.
Thank you.
Players.
Our next question comes from Isaiah Tan at Goldman Sachs. Your line is open.
Again, Andre a tan of Goldman Sachs on line is okay. Hi, This is Rachel.
Andrea what kind of an opportunity do you see in the post auto car teeth, heading and relapse refractory Bcl for 819 get infestation partner. They are asked that recently I have been praying for right the pivotal trial themselves.
Yeah, I think I'll <unk> I'll reserve my comments more generally I I tend to think whether it be 5228 19.
Cell therapy.
Post Autologous party cell therapy generally I continue to believe and this is based on conversations that fate has also had with the FDA I continue to believe that development post autologous car T cell therapy.
Is an exciting opportunity with significant unmet need and I would.
I would extend that obviously also to my Lama I tend to believe autologous tent car T cell therapy. There are multiple different autologous car T cell therapies that are approved both inland farmer and myeloma.
Tend to believe those programs will try and be utilized as early as possible I think they're absolutely are gonna be challenges and limitations to reaching into the community, but I do think.
Generally speaking that the availability of autologous car T cell therapy for patients won't generally increase.
Do think that that will have for a tremendous development opportunity and unmet need for patients post car T cell therapy.
And I think that's a very exciting area for development quite frankly.
Thank you.
Thank you one moment please.
Our next question comes from the line of Jack Allen, a bird again, Jack Allen a bird your line is open.
Great. Thank you so much for taking my question and congratulations on I'm Gonna progress quarter. It sounds like we're expecting F. T 819 data next year I was hoping you could talk a little bit about what we should expect is there a way through the size of the cohort and potential follow up and I guess should we assume that the the dose that you have here the single dose of 500 <unk>.
549000 is what you're gonna, claiming before potentially.
Yeah, I think I think right now with both with respect to both 576.
We're looking at three doses at 1 billion cells per dose as well as with F. T 819, where we are at 540 million cells single dose look I think our goal is to enroll.
Somewhere in the neighborhood of let's call it 10 patients.
The second half of this year and we like I sort of I've mentioned before I do think that that cohort of patients on both 5619 can really help define the therapeutic profile of the product candidates.
Thank you one moment please.
Our next question comes on the line of.
<unk> Morgan.
Oh Canaccord Genuity your line is okay.
Hi, Thanks, So if the ADR technology works exactly as intended in humans. How confident are you that that factor is sufficient to produce a clinically relevant duration of response.
From from five to two or I.
I guess steady differently <unk> what are the chances that there are some other limiting factors that are going to have to be addressed. Thank you.
Yeah sure. It's a great question and honestly, we don't know the answer to that question yet I think obviously, we have to see attractive response rates.
In order to have an opportunity to have an attractive durability of response.
I will turn it over to Bob and certainly he can give you a preclinical perspective with what we've seen with respect to durability of response when we've armed these cells with ADR, Yeah, I'll I'll, let Bob speak to it.
Mmm. Thanks, that's a really good question.
Start off by saying, replacing Cy flu has multiple factors obviously, the anti tumor factor associated with it and then there is the creation of space availability of cytokines.
As as well as avoidance of rejection by the hopeful compartment. So.
S. A D. R. Five point edited card 19 product overcome all those we hope so preclinical model says that the car 90.
The city 16 targeting anti <unk> R. C 20 positive sell a combination is is very robust 522 has a stronger chassis at 596. So we expect in both put in response from the car in the city 16.
Technology appears to protect itself against the Alloreactive attack, So we expect to sell to be to.
To be there and protect themselves. So that's that part of five who may not be necessary.
Uhm as your as your question as Great. As also has got mentioned hard to answer until we see some of the clinical data Preclinically B C and has potency enhanced protection and enhanced activity. So we're hopeful that we will seek responses, but we'll need to wait for clinical data.
Aw.
Great I appreciate the commentary thank you.
Thank you I'm showing no further questions at this time I was trying to call back over to Scott Lasco for any closing remarks great.
Great.
Thank you all for participating participating in today's call the well look forward to seeing you often.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all for participating you may now disconnect have a great day.
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