Fate Therapeutics, Inc.

Welcome to Faith Therapeutics' second quarter 2020 financial results conference call. At this time, all participants are in a listen-only mode. This call has been webcast live on the investor and media section of Faith's website at faiththerapeutics.com. As a reminder, today's call is being recorded. I would now like to introduce Scott Washko, President and CEO of Faith Therapeutics, you may begin.

Thank you. Good afternoon and thanks everyone for joining us for the Faith Therapeutics second quarter 2020 financial results call. Shortly after 4 p.m. Eastern time today, we issued a press release with these results, which can be found on the investors and media section of our website under press releases. In addition, our form 10Q for the quarter ended June 30, 2020 was filed shortly thereafter and and can be found on the Investors in Media section of our website under Financial Information. Before we begin, I'd like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this 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 Thank you very much. Thank you. 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, Faith Therapeutics disclaims any obligation to update these forward-looking statements to reflect future information, events, or circumstances. Joining me on today's call are Dr. Dan Shoemaker, our Chief Scientific Officer, Dr. Bob Valamehr, our Chief Development Officer, and Dr. Wayne Chu, our Senior Vice President of Clinical Development. Today, I will provide an update on our business operations as we continue to navigate through the COVID-19 pandemic and highlight certain key accomplishments we achieved over the past several months that underscore the unparalleled advantages afforded by our proprietary IPFC product platform and our unique ability to bring multiplexed engineered cell-based cancer immunotherapies to patients. In response to the COVID-19 pandemic, over the last several months, we have implemented and expanded numerous measures to protect the health and safety of our employees, their families, and the extended community while continuing to operate our business. Through the commitment, resilience, and compliance of our employees, we continue to maintain strong execution and a rapid pace of innovation. And we have achieved several important milestones, including treating the first patients with FT596, our off-the-shelf, multi-antigen-targeted CAR19 NK cell product candidate for B-cell malignancies, clearing our IND applications with the FDA for FT538, the first-ever CRISPR-edited IPS-derived cell therapy, as well as for FT819, the first ever IPS-derived CAR-T cell therapy. And we're informing and launching a transformative partnership with Janssen, bringing together our industry-leading IPSC product platform with Janssen's proprietary tumor-targeting antigen binders to develop novel off-the-shelf CAR-NK and CAR-T cell immunotherapies for both hematologic malignancies and solid tumors. We have also continued to leverage the significant advantages that come with controlling our own in-house GMP manufacturing operation, as we produced hundreds of cryopreserved, infusion-ready doses of our product candidates, which are now stored in inventory and are available off the shelf for use in our clinical studies. And although the COVID-19 pandemic has slowed the cadence of new clinical site initiation and patient enrollment, Introducing some uncertainty with respect to our projected timelines for study enrollment and data readouts. We have successfully opened new clinical sites and initiated enrollment at these new sites during the past quarter. In March, the first patient was treated on our multi-center phase one clinical trial of FT596, our off-the-shelf IPS-derived CAR-NK cell product candidate for patients with B-cell malignancies. FT596 is our first product candidate that fully leverages the unparalleled advantages afforded by our proprietary IPSC product platform. Made from a multiplexed engineered clonal master IPS cell line, FT596 is the industry's first cellular immunotherapy that incorporates three active anti-tumor modalities and is currently designed to target multiple tumor-associated antigens expressed on cancerous B cells for best-in-class potential. In addition to a proprietary CAR targeting CD19, FT596 expresses our novel, high-affinity, non-cleavable CD16-FC receptor enabling targeting of additional tumor-associated antigens such as CD20. FT596 also expresses a novel IL-15 receptor fusion, a potent cytokine complex that promotes survival, proliferation, and transactivation of NK cells and CD8 T cells, eliminating the need for systemic cytokine support. Early indications of best-in-class potential of FT596 were observed at the lowest dose level in our Phase I clinical study, where we reported the day 29 response assessments for the first two patients, each of which was treated with a single dose of FT596 as a monotherapy for relapsed refractory diffuse large B-cell lymphoma. Not unexpectedly, the first patient, who was most recently relapsed following treatment with an FDA-approved CD19-targeting CAR T-cell therapy, had progressive disease. The second patient, however, achieved a partial response following treatment with a single dose of FT596 as a monotherapy at the low-dose level of 30 million cells. The FT596 response assessment showed a greater than 70% reduction in metabolic activity and a greater than 50% reduction in tumor size as assessed by PET-CT scan. Notably, the responding patient was most recently refractory to an ex vivo expanded healthy donor derived peripheral blood NK cell therapy. Importantly, no dose-limiting toxicities, no FT596-related serious adverse events, and no events of cytokine release syndrome, neurotoxicity, or graft-first host disease were reported by investigators in either patient. I am pleased to announce that the third patient has been treated with FT596 at the lowest dose level in our phase one clinical study, and that the patient successfully cleared the dose-limiting toxicity assessment period. This event is significant as it enabled us to initiate enrollment of patients in a second treatment regimen of our phase one clinical study. The assessment of FT596 in combination with the anti-CD20 monoclonal antibody rituximab Recall that in the universe of CAR-19 cell-based cancer immunotherapies, FT596 offers unique therapeutic potential as the product candidate's engineered HNCD16-SC receptor is specifically designed to augment the anti-tumor activity of monoclonal antibody therapy. Therefore, FT596 not only has the potential to improve the therapeutic activity of rituximab, it enables dual antigen targeting of CD19 and CD20 expressed on cancerous B cells. We believe combining FT596 with rituximab is a highly differentiated therapeutic strategy, one that may lead to deeper, more durable responses for patients, and one that may enable FT596 to be positioned in early line therapy where rituximab-containing regimens are used as standard of care for the treatment of B-cell malignancies. Enrollment into this dose-escalating combination regimen of FT596 and rituximab has been initiated at 30 million cells for patients with relapsed refractory B-cell lymphoma. In addition, we are working with investigators from the Masonic Cancer Center University of Minnesota to initiate enrollment in a second phase one clinical trial of FT596 for relapse prevention in patients undergoing autologous hematopoietic stem cell transplant for the treatment of non-Hodgkin's lymphoma who are at high risk of early relapse. In the second quarter, we successfully expanded the clinical application of our proprietary iPSC product platform to multiple myeloma, where rates of relapse remain high and where clinical data suggests that deficiencies in NK cell-mediated immunity, which are evident even at the earliest stages of disease, continue to accumulate through disease progression. We submitted and cleared with the FDA our IND application for FT538, our off-the-shelf NK cell product candidate derived from a clonal master iPSC line engineered with three functional components to enhance innate immunity. A novel HNCD16 FC receptor, an IL-15 receptor fusion, and the elimination of CD38 expression to mitigate anti-CD38 antibody-mediated fratricide. We believe the administration of FT538 to patients can restore innate immunity and that the anti-cancer effect of certain standard of care treatments in multiple myeloma, including anti-CD38 monoclonal antibodies, can be more effective when combined with the engineered functionality of FT538. The multi-center dose escalation phase one clinical trial of FT538 is designed to assess the safety and efficacy of three once weekly doses of FT538 in up to four dose cohorts starting at 100 million cells per dose. The study will assess two treatment regimens, Regimen A as a monotherapy for patients with relapsed refractory AML, and Regimen B in combination with daratumumab, an FDA-approved anti-CD38 monoclonal antibody for patients with relapsed refractory multiple myeloma. We plan to initiate patient enrollment in the FT538 Phase I clinical trial in the fourth quarter of this year. To support clinical investigation, FT538 drug product was manufactured from a clonal master engineered IPS cell line, which is renewably used as starting material for routine manufacture of FT538. The clonal IPS cell line was made by sourcing cells originally from a healthy donor and reprogramming and engineering the cells to induce pluripotency using a proprietary non-integrating system and to integrate a bisistronic cassette containing HNCD16 and IL-15 receptor fusion into the CD38 locus, which resulted in complete disruption of the CD38 gene. The first batch of our manufacturing campaign which was conducted at small scale produced a total of three times 10 to the 11th FT538 NK cells which were filled into over 300 units of cryopreserved infusion-ready drug product. Notably, since we right-sized our fill-finish activities to successfully produce drug product for dose escalation only, The campaign was not designed to maximize drug product yield. We calculated, though, that the potential yield of the CGMP campaign was on the order of 4.5 times 10 to the 12th FT538 NK cells or approximately 15,000 unit doses at a dose of 300 million cells per unit. In the second quarter, we also achieved a groundbreaking milestone in the field of cell-based cancer immunotherapy, having filed and cleared with the FDA our IND application for FT819, the world's first off-the-shelf iPSC-derived CAR-T cell therapy. This achievement fulfilled an unprecedented journey we began four years ago under our partnership with Memorial Sloan Kettering, led by Dr. Michelle Satterline, to build upon the revolutionary success of patient-derived CAR T-cell therapy and to bring universal, off-the-shelf CAR T-cells to patients. We designed FT-819 to specifically address several limitations associated with the current generation of patient and donor-derived CAR T-cell therapies, incorporating several first-of-kind features into the FT-819 master engineered IPS cell line to improve safety and efficacy. These include a novel 1XX CAR signaling domain, which has been shown to extend T cell effector function without eliciting exhaustion. Also, insertion of the CAR transgene directly into the T cell receptor alpha constant locus which has been shown to promote uniform CAR expression and enhanced T cell potency. And of course, complete biallelic disruption of T-cell receptor expression for the prevention of graft-first host disease, a potentially life-threatening complication associated with allogeneic T-cell therapy. Our FT819 clinical trial design is robust and innovative. The multi-center phase one clinical trial is designed to assess the safety and activity of FT819 across three types of B-cell malignancies. Chronic Lymphocytic Leukemia, Acute Lymphoblastic Leukemia, and Non-Hodgkin Lymphoma. Notably, each indication will enroll independently and each indication will evaluate three dose escalating treatment regimens. Regimen A as a single dose starting at 90 million cells. Regimen B as a single dose and Regimen C as three fractionated doses starting at 30 million cells each. We plan to initiate patient enrollment in the FT819 Phase I clinical trial in the fourth quarter of this year. At the American Society of Gene and Cell Therapy virtual annual meeting in May, we highlighted one of the most profound advantages of our proprietary IPSC product platform, our ability to perform complex genetic engineering, including further engineering of an already established clonal master engineered IPSC line. Specifically, we demonstrated the use of an already established clonal master cell line, further engineering of that line to introduce additional functional elements, selection of a new engineered iPSC clone incorporating both the original and the additional functional elements, and the creation of a new clonal multiplexed engineered iPSC cell line. This is an unparalleled feat, one that is uniquely enabled by IPS cell technology and enables the building of multiplexed engineered cell products of increasing complexity on top of core engineered functionality. We are applying this approach to rapidly innovate and to efficiently create next generation product candidates such as FT576, as well as new product candidates such as FT536. Specifically for FT576, we presented preclinical data at ASGCT demonstrating the further engineering of our already established master cell line for FT538, which incorporates three functional elements to enhance innate immunity. We introduced a fourth functional element, a CAR, are off-the-shelf multi-antigen targeted CAR-BCMA and K-cell product candidate for multiple myeloma. Analogous to FT596 in lymphoma, FT576 is uniquely designed to target multiple tumor associated antigens expressed on multiple myeloma cells for best-in-class potential. We remain on track to submit our IND application for FT576 in the fourth quarter. At ASGCT, we also introduced a new product candidate, FT536, Built off of the clonal master engineered iPSC line for FT538, FT536 is engineered with a fourth functional element, a CAR targeting the stress-inducible cell surface proteins McA and McB, which are selectively expressed at high levels on many solid tumors. While the NK cell activating receptor NKG2D can recognize and engage stress ligands on tumor cells, the shedding of stress ligands is a common escape mechanism deployed by many tumors to avoid NK cell mediated immunity. To overcome tumor escape, our novel CAR design uniquely targets a specific region of MCA-MCB The Alpha-3 domain, which has been shown to remain on tumor cells post-shedding. In fact, a recent publication in cancer immunology research by investigators from Dana-Farber Cancer Institute demonstrated that cancers with loss of MHC Class I expression can be effectively targeted with Alpha-3 domain-specific antibodies to restore NK cell-mediated immunity. We believe the targeting of the Alpha-3 domain of MicA and MicB is a novel and exciting pan-tumor targeting strategy, including and especially for certain solid tumors resistant to cytotoxic T cells. We are also leveraging our unique ability to build multiplexed engineered cell products of increasing complexity, Using already established clonal master engineered iPSC lines with our collaboration partners, including under our newly formed collaboration with Janssen, which brings together Janssen's deep domain expertise in oncology and our industry-leading iPSL product platform. We have successfully launched this collaboration with strong momentum. Janssen has already contributed proprietary antigen binding domains against one hematologic malignancy target and one solid tumor target for which we are building novel CAR constructs. As a first step, we are incorporating these constructs into existing multiplexed engineered master IPS cell lines. which may enable an efficient and accelerated pathway to clinical development for the collaboration's initial product candidates. In parallel, we continue to drive innovation including toward the research and development of next generation features and functionalities and for the scaling of our GMP manufacturing processes to support commercial scale operations as we seek to bring Best in Class Off-the-Shelf CAR-NK, and CAR-T Cell Cancer Immunotherapies to Patients. Turning to our financial results, revenue was $5.5 million for the second quarter of 2020 compared to $2.8 million for the same period last year. Revenue in the current quarter was derived from our collaboration with Janssen and Ono Pharmaceutical. Research and development expenses for the second quarter of 2020 were $26.7 million compared to $21.6 million for the same period last year. The increase in our R&D expenses was attributable primarily to an increase in employee headcount and compensation, including share-based compensation, and expenses associated with the facility lease for our new corporate headquarters. G&A expenses for the second quarter of 2020 were $7.5 million compared to $5.3 million for the same period last year. The increase in our G&A expenses was attributable primarily to an increase in headcount and employee compensation including share-based compensation and in legal fees. Total operating expenses for the second quarter of 2020 were $26.9 million Thank you for joining us. into five shares of common stock under certain conditions. I would now like to open up the call to any questions. Thank you.

Ladies and gentlemen, as a reminder to ask the question, you will need to press star then one on your telephone. To withdraw your question, press the pound key. Again, that's star one to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Robin Konakas with Truist Security. Your line is open.