Fate Therapeutics' (FATE) CEO Scott Wolchko on Q2 2016 Results - Earnings Call Transcript

| About: Fate Therapeutics, (FATE)

Fate Therapeutics, Inc. (NASDAQ:FATE)

Q2 2016 Earnings Conference Call

August 08, 2016, 17:00 ET

Executives

Scott Wolchko - President & CEO

Chris Storgard - Chief Medical Officer

Dan Shoemaker - Chief Scientific Officer

Analysts

Do Kim - BMO Capital Markets

Operator

Welcome to the Fate Therapeutics Second Quarter 2016 Financial Results Conference Call. [Operator Instructions]. I would now like to introduce Scott Wolchko, President and Chief Executive Officer Fate Therapeutics. Please go ahead.

Scott Wolchko

Thank you. Good morning and thanks everyone for joining us for the Fate Therapeutics second quarter 2016 earnings call. Shortly after 4 PM Eastern Time today we issued a press release with our second quarter 2016 financial results which can be found on the investors and media section of our website under press releases, In addition our second quarter 2016 10-Q was filed shortly thereafter and can be found on the investors and 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 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 quarter ended March 31, 2016 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 Scientific Officer. I will begin the call with a summary of key recent developments across our business. Chris will then provide an update on the execution of our Phase 1/2 clinical trial of ProTmune for the prevention of GvHD and CMV infection which is now open for patient enrollment.

Dan will summary recent progress and advancement of our novel and promising cellular immunotherapy product pipeline and I will conclude or corporate update with a review of our financial results for the second quarter of 2016 and a preview of the significant milestones that we expect to achieve in the second half of 2016 before opening the call up to questions and further discussion.

Fate Therapeutics is at the forefront of utilizing pharmacologic modulators such a small molecules to modulate the biological properties and therapeutic function of immune cells including T cells and K cells and CD34 positive cells. Based on this therapeutic strategy we have firmly established a leadership position in the development of programs cellular immunotherapies for cancer and immune disorders.

Over the past several months we have made key advancements across our entire cell therapy product pipeline positioning us for the achievement of multiple significant milestones during the second half of 2016 and early 2017. We have now opened enrollment in Phase 1/2 clinical trial of ProTmune for the prevention of acute GvHD and CMV infection both of which are life threatening immunological conditions that compromise the curative potential of allogeneic hematopoietic cell transplantation.

Recently we received fast track designation from the FDA for ProTmune for the reduction of incidence and severity of acute GvHD validating the severe nature of GvHD and the significant unmet need. Over the long term we intend to establish ProTmune as the next generation cell graft for the thousands of patients each year with hematologic malignancies and rare genetic disorders that seek curative outcomes. I'm especially pleased with our allogeneic memory like natural killer cell cancer immunotherapy or our adaptive NK a cell product candidate which is rapidly advancing toward clinical testing in collaboration with Dr. Jeff Miller at the University of Minnesota. It is important to recognize that our adaptive NK cell product candidate stands on the shoulder of Dr. Miller's decade long experience with NK cell therapy where he has shown complete response rates of 30% to 50% in refractory AML patients using conventional and NK cell therapies.

Our pre-clinical data has demonstrated that our adaptive NK cell cancer immunotherapy is highly differentiated from and offer significant enhancements compared to conventional NK cells therapies. Dr. Miller recently presented data demonstrating that in pre-clinical models or adaptive NK cell product candidate has enhanced tumor activity, improved persistence and increased resistance to immunosuppressive factors in the tumor micro-environment. Additionally our adaptive NK cell product candidate was shown to synergize with several different therapeutic anti-body in vivo in preclinical studies significantly improving antibody directed cellular toxicity against solids tumors. We believe our adaptive NK cell product candidate has the potential to become a cornerstone in cell based cancer therapy including as a monotherapy and in combination with monoclonal antibodies or bi and tri specifically engagers for the treatment of liquid and solid tumors.

In June, we took the opportunity to formally unveil ToleraCyte our immunoregulatory CD34 positive cell product candidate for auto-immune diseases. Our data in well-established mouse models of Type 1 diabetes support ToleraCyte's potential to both revert as well as delay the onsite of hyperglycemia. Additional preclinical studies in a humanized pre-clinical model of Type 1 diabetes also show that ToleraCyte preferentially traffics to the pancreas and regulates auto reactive T cells. These data suggest that a single administration of ToleraCyte may hold the potential to tolerize the immune system halting its attack on the body's own cells and tissue. We are currently exploring various avenues for accelerating ToleraCyte's clinical translation for the treatment of auto immune diseases.

Finally we have the honor of sharing the stage with doctors Dr. Rudolph Jaenisch, Dan Kaufman and Michelle [indiscernible] at the Annual Meeting of the International Society for Stem Cell Research in June to showcase breakthroughs in the development of off the shelf engineered and NK and T cell immunotherapies for fighting cancer. At ISSCR we highlighted our patent protected Pluripotent cell platform which we are applying to efficiently generate genetically engineer isolate and maintain Pluripotent cell lines. We are deriving clonal populations of effector cells with enhanced properties such as persistence, tumor targeting and resistance to tumor suppression using these Pluripotent cell lines .

Similar to master cell lines used for the manufacture of monoclonal antibodies engineered Pluripotent cell lines have the potential to serve as a renewal cell source for the consistent manufacture of homogeneous populations of NK and T cells. We have amassed nearly a decade of experience in induced Pluripotent cell biology and a dominant intellectual property portfolio consisting of over 60 issued patents and 90 pending applications covering compositions and methods critical for deriving, engineering maintaining and differentiating induced Pluripotent cells.

We believe renewable Pluripotent cells are now emerging as the epicenter for the development of off the shelf immunotherapies which have the potential to treat many thousands of patients across a wide range of diseases without requiring patient sourced cells. This past several months have been especially gratifying in that every member of our team has contributed to our progress. We successfully initiated our Phase 1/2 clinical trial of ProTmune, we achieved significant regulatory milestones for ProTmune to facilitate its expedited development.

We delivered key scientific pre-clinical and process development advancements across our product pipeline. We extended our formidable intellectual property position in the field of cellular immunotherapy including off the shelf immunotherapies to [indiscernible] from renewable Pluripotent cells. And some of you may have seen the announcement this morning over this past weekend we entered into a securities purchase agreement for the private placement of the company's common stock. Under the agreement funds managed by Franklin Advisers including the biotechnology discovery fund together with certain other institutional investors agreed to purchase 5.25 million shares of common stock at a $1.96 per share for gross proceeds of $10.3 million. The private placement transaction is expected to close on or about August 10, 2016 subject to customary closing conditions.

With the closing of the transaction, Franklin will become the company's largest shareholder with approximately 15% ownership. I would like to thank these investors for their commitment to our mission and their confidence in our ability to create value for our constituents.

And now it is my pleasure to introduce Dr. Chris Storgard, a new addition to the Fate Therapeutics team. Chris joined Fate as our Chief Medical Officer in May 2016 and comes to us with more than 20 years of experience in clinical drug development. Most recently Chris led a global clinical program to successful U.S. and European regulatory approvals. As our CMO Chris will lead the design and execution of our clinical trials for our program cellular [indiscernible] product candidates. Welcome Chris.

Chris Storgard

Thanks, Scott. I would like to first express my enthusiasm in becoming a part of Fate and it's leadership team. It's a place to be part of a team of talented and dedicated innovators, focus on developing new approaches for the treatment of serious life threatening diseases. As a the position I'm especially excited with the potential I see in the groundbreaking and diverse pipeline here at the company and the potential for our products to fundamentally transform the practice of medicine. I look forward to advancing our program cellular immunotherapy pipeline through clinical development and commercialization. Let me now share some key updates on our lead clinical program ProTmune.

I'm excited to announce that our Phase 1/2 trial ProTmune for the prevention of acute grafters as host disease and CMV infection is open for enrollment. We’re actively screening patients across multiple sites. The clinical trials being conducted in adult patients with hematologic malignancies undergoing mobilized peripheral blood allogeneic transplant. Mobilized peripheral blood is the donor cell source used in approximately 70% of the 30,000 allogeneic transplant procedures performed each year. Our clinical trial is a combination Phase 1/2 study. The Phase 1 stage is a safety focused non-randomized study involving up to 10 patients. The Phase 2 stage is a randomized controlled study involving up to 60 patients to evaluate ProTmune efficacy.

In the Phase 2 stage patients are randomized one to one to receive either ProTmune, the program cell graft or control, the non-program cell graft. We expect to have seven to eight U.S. sites open for enrollment in Phase 1 stage in the coming weeks. Importantly these sites are all available for participation in the Phase 2 stage of the study upon its initiation. We're also currently working with additional sites for participation in the Phase 2 stage of the study including multiple sites in the United Kingdom.

In total, we expect to activate 14 sites for participation in the Phase 2 stage. Overall we believe we are well positioned to conducting efficient and robust Phase 1/2 study. There's a lot of excitement among the transplant community in the study investigators regarding ProTmune. This level of interest and enthusiasm stems from the fact that we are addressing life threatening complications with the groundbreaking therapy. Acute GvHD and CMV infection are leading causes of morbidity and mortality in the immuno compromised transplant recipients and yet there are currently still no FDA approved therapies for the prevention of GvHD or CMV infections in patients undergoing allogeneic transplant.

These immunologic conditions remain significant unmet medical needs but this is incidence rates of 40% to 50% for acute GvHD and 50% to 55% for CMV infection. Over 90% of these incidences occur during the first 100 days following transplant. The fast track designation granted by the FDA in June for ProTmune underscores the importance of developing effective therapeutics to fill this need. Additionally [indiscernible] and investigators are drawn to our therapeutic approach where we seamlessly integrate into the transplant process and seek to improve the therapeutic function of the donor graph on the same day as a transplant procedure. The simplicity of our ex-vivo small molecule modulation approach is a distinct advantage over other approaches which are time consuming, labor intensive and often involve the isolation, engineering or manipulation and add back of donor T cells several days or weeks after the transplant procedure.

I'm most encouraged though by the reaction of sites and investigators to our pre-clinical data for ProTmune which has continued to impress. ProTmune has demonstrated compelling preclinical results in its ability to both reduce the incidence and severity of GvHD yet maintain a strong anti-tumor effect. This therapeutic value proposition is compelling and investigators are eager to offer ProTmune to their patients, given the level of investigator enthusiasm and engagements our Phase 1/2 clinical trial of ProTmune remains on track. We expect to complete the Phase 1 stage and to initiate the randomized controlled Phase 2 stage this year.

I will now turn the call over to Dan to discuss recent progress we have made in advancing our pre-clinical product candidates.

Dan Shoemaker

Thanks, Chris. This past quarter we highlighted that therapeutic value that can be delivered to our ex-vivo programming as well as our novel and promising immunotherapy product candidate that we're advancing based on this approach at several industry leading scientific conferences. Let me begin by discussing our natural killer cell product candidate. We believe the adaptive transfer [ph] NK cells can offer unique advantages over T cells immunotherapies. First NK cells are part of the inate immune system and have multiple mechanisms of attack. NK cells can recognize and kill stress cells including cancer cells without the need for the highly specific antigen receptors found on T cell. Additional because NK cells do not have the highly antigen receptors, donor NK cells can be administered without the risk of GvHD across specific [ph] compatibility barriers rather than requiring the use of a patient donor cells.

Finally NK cells can kill cancer cells coated with monoclonal antibodies enabling their use for the treatment of solid tumors. Since August 2015 we work closely with Dr. Jeffery Miller, Professor of Medicine and Deputy Director at the University of Minnesota Cancer Center on the development of an allogeneic memory like natural killer cancer immunotherapy which we refer to as adaptive NK cell product candidate. Our adaptive NK cell product candidate is a homogenous population of NK cells modulated with a proprietary combination of small molecules including FT1238 to express the maturation marker of CD57 and the memory like activated receptor NKG2C.

Our program in NK cells also express CD16 which enables them to attack cancer cells coated with monoclonal antibodies. On May 16, at the Innate Killers Summit Meeting in San Diego, Dr. Miller presented new data showing that in pre-clinical models our adopted NK cell product candidate exhibit enhanced persistence and multi-faceted tumor killing relative to conventional NK cell therapy. Additionally the preclinical data shows that our adaptive NK cell product candidate exhibits potent anti-tumor activity when used in combination with therapeutic antibodies utilizing the antibody dependent cell meditated cytotoxicity pathway. We plan to collaborate with the University of Minnesota and filed an IND later year and we’re eager to clinically investigate this product candidate for the treatment of liquid and solid tumors.

We also continue to make significant progress on the preclinical development of our ToleraCyte program for auto-immuno diseases. Since June 2015 we have worked closely with Dr. Paolo Fiorina, , Assistant Professor of Pediatrics at Boston Children's Hospital and Harvard Medical School developing program CD34 cells with potent immunoregulatory properties for the treatment of Type 1 diabetes. We identified a combination of small molecule modulators designed to enhance CD34 cells ability to traffic significant information into immunologically check autoreactive T cells which are directly response for the destruction of healthy tissue in certain autoimmune and inflammatory disorders.

In June, scientist from Fate Therapeutics and Boston Children's Hospital presented new preclinical data at the American Diabetes Association of 76th Scientific Sessions Meeting exploring the disease [indiscernible] potential of ToleraCyte in humanized and mouse model for Type 1 diabetes. In in vivo studies using hyperglycemic NOD mice a model designed to mimic new-onset type 1 diabetes. We demonstrated that a one-time administration of programmed cells resulted in the durable correction of disease, as compared to vehicle-treated cells. Additionally, in pre-hyperglycemic NOD mice, a one-time administration of programmed cells demonstrated a statistically-significant delay in the onset of disease.

Finally in a humanized model of type 1 diabetes, ToleraCyte showed enhanced trafficking to the pancreas and regulation of T-cell activation. These studies support the premise that ToleraCyte may serve as a disease-modifying immunotherapy for patients with type 1 diabetes and other auto-immune.

Based on recent conversations with key opinion leaders in the Type 1 diabetes community, we intend to discuss our preclinical data package and propose first in human clinical trial design in patients with Type 1 disease with the FDA later this year. Finally we hosted a focused session entitled Fighting Cancer with the off the shelf iPSC immunotherapies at the Annual Meeting of the International Society for Stem Cell Research in San Francisco in June. This focused session consisted of four presentations which highlighted recent advancements in the development of engineered, off the shelf NK and T cell cancer immunotherapies using renewable Pluripotent cell lines. The four session speakers which included Dr. Rudolph Jaenisch for MIT, Bob Valamehr from Fate Therapeutics, Dan Kaufman from UCSB and Michelle [indiscernible] covered basic research to clinical development and highlighted methods to genetically engineered Pluripotent cells to isolate, maintain and expand engineered Pluripotent cell lines and finally to generate off the shelf, NK and T cell therapies with enhanced effector functions from Pluripotent cells.

400 to 500 scientists attended the session reflecting the tremendous excitement in using renewable Pluripotent cells for off the shelf cancer immunotherapy. We believe these cells offer some tantalizing advantages as compared to patients specific approaches in the field of cell based cancer immunotherapy. These include first one-time engineering. Pluripotent cells can be precisely engineered and are capable of unlimited self-renewal avoiding the requirement of source, isolate and engineer cells on a patient by patient basis. The second is scalability. Engineered Pluripotent cell lines can be selected, qualified and [indiscernible] serving as a renewable source for off the shelf product generation and finally consistency. Using small molecule guided differentiation these engineered Pluripotent cell lines can be used to derive homogenous populations of NK and T cells with enhanced effector properties such as persistence, tumor targeting and controlled safety and histocompatibility.

Overall a renewable Pluripotent cell paradigm enables the efficient cost effective scalable and consistent production of off the shelf engineered effector cells. I will now turn the call back over to Scott for a review of our second quarter financial results.

Scott Wolchko

Thanks, Dan. Before I review our second quarter financial results, I would like to note that our cash, cash equivalents and short term investments as well as our shares outstanding are reported as of June 30, 2016. These amounts do not include $10.3 million in proceeds which the company expects to receive or 5.25 million common shares which the company expects to issue upon the closing of the private placement transaction which we entered into on August 6, 2016 and announced earlier today. For the second quarter ended June 30, 2016 Fate Therapeutics reported a net loss of $8.4 million or $0.29 per share as compared to a net loss of $7.8 million or $0.33 per share for the same period last year. Revenue was $1 million for the second quarter of 2016 compared to $300,000 for the same period last year.

Revenue in both periods was generated from our strategic research collaboration with Juno Therapeutics. Research and development expenses for the second quarter of 2016 were $6.8 million compared to $4.9 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 our research activities and an increase in personnel expenses resulting from additional employee headcount to support our research activities including activities under our collaboration with Juno. General and administrative expenses for the second quarter of 2016 were $2.2 million compared $2.7 million for the same period last year. This decrease was primarily related to a decrease in intellectual property related expenses.

After adjusting for research funding proceeds from Juno of $500,000 and for stock based compensation expense of approximately $800,000. Total operating expenses for the second quarter of 2016 were $7.7 million. At the end of the second quarter of 2016 cash, cash equivalents and short term investments were $45.9 million, debt outstanding under our facility with Silicon Valley Bank was $14.7 million and common stock outstanding was approximately 28.9 million shares.

Over the next six months we are now poised to achieve significant value creation milestones in our Phase 1/2 clinical trial of ProTmune, we expect to read out the Phase 1 stage and to initiate the Phase 2 stage this year. We have also applied for orphan drug designation in the U.S. and in the EU for ProTmune and we expect to receive responses from the regulatory authorities on our applications in the coming months.

Additionally we plan to collaborate with the University of Minnesota in filing an IND later this year for our adaptive NK cell product candidate. We plan to initiate clinical development first in patients with AML in early 2017 building human experience to support clinical investigation in solid tumors. To accelerate the clinical translation of ToleraCyte we have now decided to pursue a three IND meeting with the FDA for later this year to discuss our pre-clinical data package and a proposed first in-human clinical trial design in patients with Type 1 diabetes.

Finally we believe a tectonic shift towards the development of off the shelf engineered cellular immune therapy using renewable Pluripotent cell lines is now under way including for off the shelf CAR T cells. We have a decade long experience in Pluripotent cell biology, a proprietary patent protected Pluripotent cell platform proven expertise in generating clonal populations of effector cells from engineered Pluripotent cell lines and we are encumbered in the potential products we can develop from this platform. We believe we are explicitly positioned to lead this transformations to off the shelf cellular immunotherapies and we look forward to accelerate this coming wave including in collaboration with partners.

And with that I would like to turn the call over to the Operator for any questions. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions]. And our first question comes from Do Kim with BMO Capital Markets. Your line is open.

Do Kim

My first question is for Chris. Could you tell us exactly how many of the clinical sites for ProTmune have been opened and what factors in the opening of the other sites? And how quickly can you move into Phase 2 after getting the Phase 1 data?

Chris Storgard

We have multiple sites open for Phase 1 and we’re expecting more open the next few weeks. Regarding moving into the Phase 2, a protocol is designed to allow us to move into the Phase two within 30 days after the last patient being enrolled is Phase 1. So a rapid progress into the randomized roundabout portion of Phase 2.

Do Kim

Okay. And what other measures are you expecting to release when the Phase 1 data is available besides the crafting rate?

Chris Storgard

So we have a multiple efficacy and safety endpoints that we're looking at and when the data becomes available we'll be sharing that data with you.

Do Kim

First Scott and Chris, I was hoping to get your thoughts on the Juno Heart [ph] collaboration you have, does the occurrence of zero toxicity in their program change your enthusiasm for that partnership? Is it something that you think your platform could prevent or do you agree with their assessment that it's caused by the addition of [indiscernible]?

Chris Storgard

I apologize, I'm really not going to comment on Juno's therapeutic programs. Our collaboration with Juno is to enhance -- use small molecules to enhance their CAR T products. There are a whole host of biological mechanisms that I think we are able to improve through small molecule modulation but I'm not going to discuss the specifics of their particular programs.

Operator

And our next question goes to [indiscernible] with Roth Capital. Your line is open.

Unidentified Analyst

So let me also start with a question for Chris on the ProTmune trial. First of all are the sites that are open and are going to be opened are they the same sites that were used with the ProHema Phase 2 trial, are these new sites altogether?

Chris Storgard

So we have new sites as well as a few of the old sites.

Unidentified Analyst

And so given the Phase 1 portion is open label. Can you give us a sense for -- in addition to safety data, could we realistically see in any efficacy data by the end of this year? I know the end points are 100 days if I'm remembering correctly but might we see an analysis that’s shorter than 100s for the Phase 1 portion?

Chris Storgard

Yes we will be looking at that data and just so everyone realizes the endpoints that we’re looking at in the Phase 1 are similar to that in the Phase 2. Obviously the difference being that the Phase 2 is a randomized control study where we can really look at that efficacy but we will be evaluating those similar endpoints of efficacy that being GvHD the first 100 days, CMV reactivation, CMV infection. So the similar endpoints will be evaluating on this Phase 1 study obviously in the uncontrolled section. So we do anticipate to share the data with you.

Unidentified Analyst

Very quick question on that, ToleraCyte program, it sounds like this is heading into the clinic and we might see an IND filed later. When it does enter the clinical do you expect it to be in investigator sponsor trial or is it more likely to be a company sponsored trial?

Chris Storgard

I think the next step for us on that program is really to have the pre-IND discussion with the FDA and I think from that meeting we plan to craft our strategy from moving it forward into the clinic and in terms of both timeline and study design.

Unidentified Analyst

And maybe a question for Dan to wrap it up. At the Innate Killer Summit we saw some really nice invitro comparision between the program adaptive NK cells and I guess what you would call conventional overnight [indiscernible]. I was just wondering if we have or if we’re going to feature any similar comparisons between some of the other therapeutic candidate NK lines that are being advanced by other companies like NK92 cell line into that sort?

Dan Shoemaker

Yes to the extent possible, we’re doing excessive [ph] comparison internally and it's definitely part of how we do position this program and again move it towards the clinic. So in many clinics we have the closest observations on the cells that Jeff Miller has put in the clinic so that certainly serves as a potent competitor but again wherever possible we try and make comparison to our competitors as well.

Operator

Our next question comes from Reni Benjamin with Raymond James. Your line is open.

Unidentified Analyst

This is Bindo [ph] on for Ren. Sorry that we joined the call a little bit late so you might have already addressed some of our questions in your prepared remarks but I just to clarify firt for the upcoming NK AML study, so it's going to be -- NK cells are going to be used as a monotherapy right?

Chris Storgard

That’s correct. The AML study is a monotherapy not in combination with monoclonal antibody.

Unidentified Analyst

And then I assume after the mono therapy you would plant to evaluate a combination study with a monoclonal antibody is that sort of the plan right?

Chris Storgard

That is the plan. We’re evaluating and plan to move both into AML as well as in solid tumors. We do not necessarily expect to do that. Serially though as opposed to potentially in parallel. But certainly we will start in AML to gain initial human experience.

Unidentified Analyst

And what type of signal do you like effectively see from the first clinical study with NK cells and how do you think?

Chris Storgard

Yes, I think one of the things we’re really interested in seeing is first AML study. Jeff Miller has done a lot of work obviously historically with NK cell therapies. He has absolutely done correlative analysis that suggest not surprisingly persistence is very important and tied to patient outcomes. So one of the early biomarkers if you will that we will look at in the AML study is the persistence of our adaptive NK cells.

Unidentified Analyst

Okay, switching gears to your iPSC program, I think you mentioned that you may use this for the CAR T space as well. A little more thought on how you’re going to use this platform for the -- in the CAR T space and like little bit more detail on that.

Chris Storgard

I'm happy to give you a little bit more detail on that -- yes happy to do that. So I think our Pluripotent cell platform has potential both with respect to NK cells and T cells in the field of cancer immunuotherapy. Obviously multiple different types of engineering strategies can be utilized with Pluripotent cells. One of the beauties of Pluripotent cell that Dan alluded to unlike patients or cells where you’re engineering every time you need to essentially service a patient. With Pluripotent cells you engineer once bank the cells and potentially never have to engineer it again, consistently tapping that engineered Pluripotent cell line. I think from our perspective we have identified actually a high affinity CD16 and NK cell which we believe is potentially our first product candidate that we will move forward into late stage preclinical development and into clinical testing. That said we also think there is a tremendous opportunity in the CAR T space.

Operator

[Operator Instructions]. Our next question comes from Jim Birchenough with Wells Fargo. Your line is open.

Unidentified Analyst

It's Nick on for Jim this afternoon. So just going back to the ProTmune trial, when you get to Phase 2 what does the controller allow for it and I'm thinking transplators operate in a little bit in the wild west [ph] so they are allowed to use cyclophosphamide, even controlled cyclophosphamide. You’ve sites in the U.S., sites in Europe. It wouldn’t surprise me if the way they try and prevent GvHD differs. And then just keeping with GvHD I mean obviously this is not the reactive T cell. Have you tried ToleraCyte? Do you see that there is an opportunity to combine both products in ultra-high risk patients? Then I’ve a follow-up. Thanks.

Scott Wolchko

Sure. I will comment first regarding the standardization of the therapies involved in both the controlled as well as the ProTmune arm of the randomized Phase 2. Regarding the mild-[indiscernible] conditioning regime there are four of them are allowed just due to the differences of individual investigator preference but I think more important regarding the potential prevention of GvHD we are using the standard Tacrolimus/Methotrexate prevention which is standard across both arms in the Phase 2 so there should be no different between these two study arms regarding potential impact on GvHD.

Chris Storgard

And with respect to combining ProTmune and ToleraCyte I think mechanistically you might feel to explore that and we have looked into this a bit preclinically I think from a corporate strategy this is not in our immediate plans to combine these two programs.

Unidentified Analyst

And then in terms of the NK landscape, I mean couple of others have sort of asked about this as well but this adaptive NK phenotype, how unique do you think you have approaches and I know Sorento [ph] originally did a deal with a company also it had albeit a 30 day process for making Pluripotent and NK cells.

Chris Storgard

Yes, I think the approach number one is highly differentiated. I mean one of the things we discussed that Jeff has really been focused on is producing a cell-type that has multi-faceted killing potential so whether you look at direct general killing, whether you look at cytokine release, whether you look at ADC response through CD16 we believe our adaptive NK cell has clearly has multi-faceted killing potential which we think is unique when we look and compare that cell type and that phenotype to other types of NK cells including the NK cells that Jeff is currently treating patients with. So clearly we think this is a major step forward in the development of NK therapies.

Unidentified Analyst

And in your prepared comments you mentioned BiKEs, spliced and TriKEs, is that something to say could be interested in licensing or is this something that you allow the University of Minnesota to use alongside the NK cells?

Chris Storgard

Yes, I mean Nick, you probably are aware Jeff is developing BiKEs, spliced and TriKEs, he is developing them separately from Fate Therapeutics. We’re absolutely a cell therapy company, we’re focused on cell therapy but in terms of the corner stone strategy that we think we can in advance with respect to the adaptive NK cell we absolutely believe there is potentially use the NK cell as a monotherapy in combination with monoclonal antibodies as well as in-combination with other folks that are developing these novel BiKEs and TriKEs. I mean at some point in time I mean the mono clonal antibodies of the BiKEs and TriKEs are really dependent on the indigenous NK cell population of the patient. The indigenous NK cell population of the patient is often deficient and fails and therefore we think an exogenous NK cell if you will or adaptive NK cell which is donor sourced can be given to a lots of different patients we believe that can absolutely be a foundational approach both as a monotherapy and liquid tumors as well as in solid tumors.

Unidentified Analyst

And then final one for me, in terms of the iPSC derived off the shelf cells, is your idea that Fate will have some kind of Fate [ph] alone programs, they will have their own proprietary CAR T [ph] or do you see that you would partner with somebody who meets the iPSC but they have the war head expertise with the sort of 50:50 partnership kind of time.

Chris Storgard

Yes I think we’re absolutely pursuing both strategies for instance the product that I initially mentioned and is likely to be our first product candidate, the engineered CD16 and NK cell we’re absolutely planning to advance that on our own and think we’re well-positioned to do that. CD16, we do have intellectual property with respect to engineering CD16 into NK cells and we do think that is a product candidate that having experience with Jeff Miller we know a tremendous amount about. That said I absolutely believe there are going to be collaborative opportunities where we can combine our Pluripotent platform and the engineering we do on Pluripotent cells to incorporate targeting content like CAR Ts for example.

Unidentified Analyst

And just a follow-up, so is this something that you would collaborate in order for Fate to develop that program or you will allow somebody else to develop that or perhaps a mixture?

Chris Storgard

I think it could be a mixture but I would say with respect to off the shelf strategies, the Pluripotent cell is I would say very front and center and central to that strategy. I think most players that we would potentially partnership would partner with and most companies other than Fate Therapeutics do not have any experience with respect to Pluripotent cells, how to engineer them, how to isolate them, how to maintain them, how to differentiate them. So I think our role in any type of partnership including a partnership where we would look to bring in novel targeting content. I think Fate would play a significant and major role in that partnership.

Operator

And I'm showing no further questions at this time. I would like to turn the call back to Mr. Wolchko for any closing remarks.

Scott Wolchko

Thank you everyone for your participation in today's call. Absolutely look forward to updating you as we move through 2016 and reach for these significant milestones. Thank you very much.

Operator

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

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