Fate Therapeutics, Inc.

Welcome to the Faith Therapeutics 3rd Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. This call is being webcast live on the Investors section of Faith's website at faiththerapeutics.com. As a reminder, today's call is being recorded. I would now like to introduce Scott Walshko, President and CEO of Faith Therapeutics.

Thank you. Good afternoon, and thanks, everyone, for joining us for the Faith Therapeutics Third Quarter 2021 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 section of our website under Press Releases. In addition, our Form 10-Q for the quarter ended September 30, 2021, was filed shortly thereafter, and can be found on the Investors 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 included in our Form 10-Q for the quarter ended September 30, 2021 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, 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. Wayne Chu, our Senior Vice President of Clinical Development, Ed Duloc, our Chief Financial Officer, and Dr. Bob Valamere, our Chief Research and Development Officer. Today, we will highlight our clinical progress over the past several months with our off-the-shelf IPSC-derived NK-cell programs and discuss our plans to share clinical and preclinical data from certain of these programs in connection with the Society for Immunotherapy of Cancer annual meeting in mid-November and the American Society of Hematology annual meeting in mid-December. Beginning with our B-cell malignancy franchise. Autologous CAR T-cell therapies targeting CD19 have delivered remarkable results for patients with relapsed refractory B-cell lymphomas. However, there remains a significant need to develop off-the-shelf cell-based cancer immunotherapies that can bring transformative outcomes to more patients. Over the past several months, we have made significant clinical progress in advancing our FT516 and FT596 product candidates, including expanding clinical investigation of these off-the-shelf IPS-derived NK cell programs to broader patient populations. We continue to be very pleased with the early clinical data we have observed from our Phase I studies of FT516 and FT596 in relapsed refractory B-cell lymphoma, where interim clinical data have shown the potential to drive response rates that are comparable to those achieved with autologous CAR T-cell therapies. while maintaining a substantially differentiated safety profile that not only supports administration in outpatient setting without requiring hospitalization, but may also enable combination with standard of care treatment regimens used in earlier line community settings. FT596 is our off-the-shelf IPSC-derived CAR and K-cell product candidate, designed to target multiple B-cell antigens, both through its CD19-targeted chimeric antigen receptor and through its high-affinity, non-cleavable CD16-FC receptor in combination with tumor-targeting antibodies. In our dose-escalating Phase I study, FT596 is being assessed as monotherapy, as well as in combination with rituximab, a multi-antigen targeting approach that we believe may hold best-in-class potential in addressing tumor heterogeneity and antigen escape. In August, we announced that as of the data cutoff date of June 25, 2021, 10 of 14 patients treated with a single dose of FT596 achieved an objective response, including seven patients that achieved a complete response in the second and third dose cohorts of 90 million cells and 300 million cells, respectively. Importantly, four of these 14 patients had previously been treated with autologous CD19 CAR T-cell therapy, two of whom achieved a complete response with a single dose of FT596 in combination with rituximab. Treatment with FT596 was well tolerated and showed a differentiated safety profile to that commonly observed with CAR-T cell therapy, with only two reported low-grade adverse events of cytokine release syndrome and no reported adverse events of immune effector cell-associated neurotoxicity or graft-first host disease. We have now enrolled approximately 30 total patients in the second, third, and fourth single-dose cohorts of 90 million cells, 300 million cells, and 900 million cells, respectively. Earlier today, we announced that updated clinical data from our FT596 Phase I study will be featured in an oral presentation at ASHE on Monday, December 13. The presentation is expected to cover safety, tumor response, and duration of response for all patients treated through the third single-dose cohort of 300 million cells as monotherapy and in combination with rituximab. In addition, we plan to hold an investor event on Tuesday, December 14 to further supplement the ASH presentation where we expect to present safety and tumor response data for those patients treated in the fourth single-dose cohort of 900 million cells. We continue to believe that one significant advantage of off-the-shelf cell therapy is the potential to deliver multiple doses over multiple cycles, and that such a treatment paradigm will confer best-in-class outcomes for patients. To that end, having observed that a single dose treatment cycle of FT-596 was well tolerated with no dose-limiting toxicities, we have now increased the frequency of FT-596 dosing and initiated enrollment of a two-dose treatment cycle, with FT-596 administered on day one and day 15 at 300 million cells per dose with the potential to dose escalate to 900 million cells per dose. Patients showing clinical benefit following the first two-dose treatment cycle are eligible to receive a second two-dose treatment cycle. Additionally, based on the positive interim clinical data we have observed with FT596 and relapsed refractory B-cell lymphoma, we have broadened our clinical investigation of FT596 to include treatment of other B-cell malignancies in our ongoing phase one study. I'm pleased to announce that we have initiated enrollment of FT596 in combination with abinituzumab for the treatment of patients with relapsed refractory CLL and have treated the first patient at 30 million cells per dose. Turning to FT516, in August, We also announced positive interim clinical data as of the data cutoff date of July 7, 2021 from our dose escalating phase one study of FT516 in combination with rituximab for the treatment of relapsed refractory B cell lymphoma. Eight of 11 patients achieved an objective response, including six patients that achieved a complete response. in the second and third multi-dose cohorts of 90 million cells per dose and 300 million cells per dose on day 29 of the second FT516 treatment cycle. Five of the 11 patients maintained their response without further therapeutic intervention, with follow-up ongoing at between 4.6 and 9.5 months. indicating that FT516 has the potential to drive durable responses. The observed safety profile of FT516 was favorable and is differentiated from that of T-cell-based therapies. No FT516-related serious adverse events or FT516-related grade 3 or greater adverse events were observed. And no events of any grade of cytokine release syndrome, immune effector cell-associated neurotoxicity, or graft-first host disease were reported. We have now completed the dose escalation stage of our FT516 Phase I study, having enrolled seven patients in the fourth multi-dose cohort of 900 million cells per dose. Earlier today, we announced that updated clinical data, from our FT516 phase one study will be featured in a poster presentation at ASH on Monday, December 13. The presentation is expected to cover safety, tumor response, and duration of response for all 18 patients treated at the second, third, and fourth multi-dose cohorts. In addition, we plan to further supplement the ASH presentation with updated FT516 data at our investor event on Tuesday, December 14. Having completed dose escalation, we have now initiated dose expansion at 900 million cells per dose to further assess the clinical activity of FT516 and are intending to enroll patients into three disease-specific cohorts, including one third-line diffuse large B-cell lymphoma in patients that are naive to autologous CD19 CAR T-cell therapy. Number two, third-line follicular lymphoma in patients that are naive to autologous CD19 CAR T-cell therapy. And three, patients with relapsed refractory B-cell lymphomas whose disease has progressed following autologous CD19 CAR T-cell therapy. We believe assessing the clinical activity of FT516 in patients whose disease has progressed following autologous CD19 CAR T-cell therapy addresses a growing market segment with significant unmet need and may offer a potential fast-to-market development opportunity. In addition, because FT516 may be administered in the outpatient setting and given its favorable safety profile observed to date, we have also initiated dose expansion of FT516 in combination with bendamustine and rituximab and without CyFlu chemotherapy conditioning to explore its potential to combine with standard of care CD20-targeted regimens, that are used in earlier line community settings. Importantly, in these four dose expansion cohorts, we intend to include sites that serve patients in the community setting. Turning to our multiple myeloma disease franchise, I'm pleased to announce that we have treated the first patient in our dose escalating phase one study of FT538, in combination with CD38-targeted monoclonal antibody daratumumab. Our FT538 product candidate builds off of our FT516 backbone and is engineered with three functional components to optimize innate immunity. In addition to a novel high-affinity non-cleavable CD16FC receptor, FT538 incorporates an IL-15 receptor fusion and the deletion of the CD38 gene. In preclinical studies recently published in the peer-reviewed journal Cell Stem Cell, we showed that FT538 exhibits enhanced serial killing, antibody-dependent cellular cytotoxicity, and functional persistence compared to peripheral blood NK cells. The superior anti-tumor activity of FT538 was attributable to the biological effects of its novel IL-15 receptor fusion and CD38 knockout, which were shown to improve metabolic fitness, increase resistance to oxidative stress, and induces a protein expression program that enhanced NK cell activation and infector function. The phase one study of FT538 is designed to assess three once-weekly doses in combination with daratumab for the treatment of relapsed refractory multiple myeloma. The first patient was treated at 100 million cells per dose. Similar to our approach in lymphoma, where we are developing FT516 and FT596, we have further modified our FT538 product candidate to create FT576. Our off-the-shelf IPS-derived CAR-NK cell product candidate designed to target multiple antigens, both through its high-avidity BCMA-targeted chimeric antigen receptor and its high-affinity non-cleavable CD16-FC receptor. We have initiated enrollment in our dose-escalating Phase I study of FT576 to assess both single-dose and multi-dose treatment regimens as monotherapy, as well as in combination with daratumumab, an approach that enables targeting of both BCMA and CD38 antigens, which we believe may hold best-in-class potential for the treatment of multiple myeloma. Patient dosing will begin with FT576 as monotherapy in the single-dose treatment cohort at a dose of 100 million cells. Turning to our AML disease franchise, We continue to be excited about the potential of IPS-derived NK cell therapies to play a foundational role in the treatment of patients with AML. We are encouraged by our initial Phase I clinical data from our FT516 and FT538 programs, which have indicated that IPS-derived NK cells are well-tolerated and can induce objective responses with complete clearance of leukemic blasts from the bone marrow. Importantly, these clinical outcomes were achieved with IPS-derived NK cells administered off the shelf and in the outpatient setting. Over the past three months, we have made significant strides in opening our dose-escalating Phase I study of FT538 at additional clinical sites, and our rate of enrollment has accelerated accordingly. We have now enrolled approximately 10 patients with relapsed refractory AML, in the first and second multi-dose cohorts of 100 million cells per dose and 300 million cells per dose, respectively. No dose-limiting toxicities have been reported, and treatment with FT538 continues to be well-tolerated. We've also commenced enrollment in an investigator-initiated Phase I clinical trial of FT538 in combination with daratumumab in patients with relapsed refractory AML, a therapeutic strategy designed to exploit the product candidate's proprietary high-affinity non-cleavable CD16 receptor and CD38 knockout to recognize, bind, and kill leukemic blasts expressing CD38 through antibody-dependent cellular cytotoxicity. We have also completed the dose escalation stage of our FT516 phase one study in relapsed refractory AML, having enrolled seven patients in the third multi-dose cohort of 900 million cells per dose. The maximum tolerated dose of FT516 was not established, and treatment with FT516 was well tolerated. We will look to provide an update on our FT516 and FT538 programs in relapsed refractory AML as we generate additional dose escalation data with FT538, including duration of response, so we're able to fully compare the safety, anti-leukemic activity, and durability of response of both programs. Turning to our solid tumor franchise. We are looking forward to the CITSE conference next week, where our FT536 CAR NK cell program will be featured in an oral presentation. FT536 is our off-the-shelf, multiplexed engineered, IPS-derived NK cell product candidate that incorporates a novel CAR targeting the alpha-3 domain of the pan-tumor-associated stress antigens, MYC-A and MYC-B. IND enabling preclinical data for FT536 will be presented on Saturday, November 13, and will highlight the novel binding domain of FT536, which is specifically designed to overcome tumor escape mechanisms mediated by loss of MHC class 1 expression and by shedding of MCA and MCB. We expect to submit an IND application for FT536 in the fourth quarter of 2021 for the treatment of advanced solid tumors, including in combination with monoclonal antibody therapy to exploit multi-antigen targeting. In addition, on Monday, November 15, we intend to host a virtual 90-minute investor event to highlight our emerging pipeline of off-the-shelf, multiplexed engineered, IPS-derived NK and T-cell product candidates for solid tumors. During the investor event, we plan to discuss the following. Our multiplexed engineered preclinical candidates, for which we intend to submit IND applications during the next 18 months, the unique mechanisms of action, that our product candidates seek to exploit in attacking solid tumors, our proprietary multiplexed engineering and single IPSC selection platform, as well as new innovative features and functionality that we are currently assessing for integration into our solid tumor product candidates, our multi-arm phase one study of FT538 in solid tumors, where we have initiated enrollment of FT538 in combination with checkpoint inhibitor therapy in patients with resistance to checkpoint inhibitor, and in combination with tumor-targeting monoclonal antibody therapy, including those that target the tumor-associated antigens EGFR, HER2, and PD-L1. And we also plan to disclose clinical data from our first-generation product candidates for solid tumors in patients that have progressed or failed checkpoint inhibitor therapy. Our phase one study of FT500 has enrolled approximately 10 patients in dose expansion at 300 million cells per dose and includes heavily pretreated patients with non-small cell lung cancer or classical Hodgkin lymphoma that have progressed or failed PD-1, PD-L1 checkpoint inhibitor therapy. Our phase one study of FT516 has enrolled approximately 12 patients in dose escalation, ranging from 90 million cells per dose to 900 million cells per dose, and primarily includes heavily pretreated patients with stage four melanoma that have progressed or failed PD-1, PD-L1 checkpoint inhibitor therapy. I would now like to turn the call over to Ed to highlight our third quarter financial results.

Thank you, Scott. Turning to our financial results, revenue was $14.2 million for the third quarter of 2021, compared to $7.6 million for the same period last year. Revenue in the current quarter was derived from our collaborations with Janssen and Ono Pharmaceuticals. Research and development expenses for the third quarter of 2021 were $53.1 million, compared to $30.7 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 in expenses associated with third-party professional consultants and clinical trials. General and administrative expenses for the third quarter of 2021 were $15.7 million, compared to $8.3 million for the same period last year. The increase in our G&A expenses was attributable primarily to an increase in employee headcount and compensation, including share-based compensation, and in office and computer supplies, including software licenses. Total operating expenses for the third quarter of 2021 were $55.3 million, net of $13.5 million in non-cash share-based compensation expense. Note that in connection with the treatment of the first patient with our off-the-shelf IPSC-derived CAR T-cell product candidate FT819, we achieved the clinical milestone set forth in our amended license agreement with Memorial Sloan Kettering Cancer Center. This clinical milestone triggered a first milestone payment in the amount of $20 million to MSK, which we plan to pay in the fourth quarter. Up to two additional milestone payments may be owed to MSK based on subsequent trading values of the company's common stock, ranging from $100 to $150 per share. We assess the fair value of these contingent milestone payments currently valued at $24.6 million on a quarterly basis. In the third quarter, we recorded a non-cash $11 million non-operating benefit associated with the change in fair value. The company ended the third quarter with $804 million of cash, cash equivalents, and investments. Our common stock outstanding was 95 million shares, and preferred convertible stock outstanding was 2.8 million shares, each of which is convertible into five shares of common stock under certain conditions. I would now like to open the call to any questions.