Fate Therapeutics, Inc. (NASDAQ:FATE) Q4 2017 Earnings Conference Call March 5, 2018 5:00 PM ET
Scott Wolchko - President and Chief Executive Officer
Chris Storgard - Chief Medical Officer
Dan Shoemaker - Chief Scientific Officer
Michael Schmidt - Leerink Partners
Edward Tenthoff - Piper Jaffray
Jim Birchenough - Wells Fargo Securities
David Nierengarten - Wedbush Securities
Ren Benjamin - Raymond James
Welcome to Fate Therapeutics Fourth Quarter 2017 Financial Results Conference Call. At this time all participants are in a listen-only mode. This call is being webcast live on the Investors & Media section of Fate webcast at fatetherapeutics.com As a reminder, today’s conference call is being recorded. I would now like to introduce Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics.
Thank you. Good afternoon and thanks everyone for joining us for the Fate Therapeutics fourth quarter 2017 financial results call. Shortly after 4 PM Eastern Time today, we issued a press release with these results, which can be found on the Investors & Media section of our website under Press Releases. In addition, our Form 10-K for the year ended December 31, 2017 is being filed shortly today and can be found on the Investors & Media section of our website under Financial Information.
Before we begin, I would like to remind everyone that except for statements of historical facts, the statements made by management and the responses to questions on this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements.
Please see the forward-looking statement disclaimer on the company’s earnings press release issued after the close of market today, as well as the risk factors in the company’s SEC filings, included in our Form 10-K for the year ended December 31, 2017 that is being filed with the SEC today.
Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made, as the facts and circumstances underlying these forward-looking statements may change. Except as required by law, Fate Therapeutics disclaims any obligation to update these forward-looking statements to reflect future information, events, or circumstances.
Joining me on the call today are Dr. Chris Storgard, our Chief Medical Officer; and Dr. Dan Shoemaker, our Chief Scientific Officer. I will begin today’s call by highlighting the key operational objectives for Fate Therapeutics during 2018 and our view on how these objectives will drive shareholder value creation.
Chris will then discuss early observations from the clinical investigation of ProTmune and FATE-NK100, as well as our initial clinical development plans for FT500, a first of kind Off-the-Shelf, iPSC-derived NK cell cancer immunotherapy for using combination with checkpoint inhibitor therapy.
Dan will then provide a brief update on our Off-the-Shelf iPSC-derived cancer immunotherapy pipeline, including some of the unique features that differentiate our Universal CAR T cell approach from other Autologous and Allogeneic CAR T cell therapies. I will conclude with a review of our financial results for the fourth quarter of 2017 before opening the call up to questions and further discussion.
Our early clinical success in 2017 with our two first-in-class Allogeneic donor derived cell therapies ProTmune and FATE-NK100, as well as the rapid translation towards clinic development of our iPSC product platform for Off-the-Shelf and K cell and T cell therapies have firmly established Fate Therapeutics as a leading innovator in the development of next generation cellular immunotherapies for patients with cancer.
2018 promises to be a break-through year for the company with several distinct value creating opportunities. At the 59th American Society of Hematology Annual Meeting in December, we presented Day 100 clinical data from the PROTECT Phase 1 Study of ProTmune. Our next generation donor cell graft for patients with hematologic malignancies undergoing allogeneic hematopoietic cell transplantation or HCT.
We are developing ProTmune as a preventative therapy to reduce the incidence and severity of acute graft-versus-host disease or GvHD and improve overall patient outcomes. Acute GvHD is the leading cause of early morbidity and mortality following allogeneic HCT and there are currently no therapies for the prevention of acute GvHD approved by the U.S. Food and Drug Administration.
The initial clinical data presented at ASH showed that all seven Phase 1 subjects receiving ProTmune remained alive and Relapse-free during the first 100 days following HCT. Three of the seven subjects experienced acute GvHD during the first 100 days following HCT, and each of the subjects promptly responded to standard of care steroid treatment. This response is clinically important as half of patients who develop acute GvHD are refractory to steroid treatment, and these refractory patients are at a significant increased risk of cancer relapse and mortality.
These initial clinical data suggest that ProTmune can provide the critical immunological balance necessary to reduce the incidence in severity of GvHD and maintain graft versus leukemia activity. We are continuing to follow these Phase 1 subjects. At the 44th annual meeting of the European Society for Blood and Marrow Transplantation, which is being held March 18 through 21 in Lisbon, Portugal, we expect to provide our next clinical update on the Phase 1 stage of the PROTECT Study. Currently, we are enrolling a randomized controlled and double blinded Phase 2 stage of PROTECT at 14 U.S. centers.
Over the past year, we also successfully launched our multi-pronged clinical development strategy for NK100. Our first-in-class allogeneic donor derived natural killer cell cancer immunotherapy. NK100 is comprised of adaptive memory NK cells, a highly specialized and functionally distinct subset of activated NK cells expressing the maturation marker CD57. CD57 is believed to be a key marker of NK cell potency.
In fact, high frequencies of CD57 positive NK cells in the peripheral blood or tumor microenvironment in cancer patients have been linked to less severe disease and better outcomes. We believe NK100 has broad therapeutic potential across the cancer immunotherapy field NK cells in cancer patients are often dysfunctional and reduced in numbers. And we believe that the administration of activated NK cells from a healthy donor can drive a multifaceted potent and durable immunological response against cancer through both direct and indirect tumor mechanisms.
NK cells can selectively identify stress ligands, commonly expressed on tumor cells and secrete cytotoxic granules, which can trigger rapid tumor cell death. NK cells can also release pro-inflammatory cytokines such as tumor necrosis factor alpha and interferon gamma, which can stimulate and recruit a robust long-lived polyclonal endogenous T-cell response. Additionally, NK cells naturally express CD16, a receptor that combine the FC region of a tumor targeting monoclonal antibody and can lyse antibody-coated tumor cells upon engagement.
Subjects are now receiving treatment with the NK100 in three ongoing clinical trials. VOYAGE, for the treatment of refractory or relapsed AML, APOLLO for the treatment of recurrent ovarian cancer; and DIMENSION for the treatment of advanced solid tumors, including in combination with FDA approved monoclonal antibody therapy. We have focused our development of NK100 towards settings where we believe the unique effector functions of NK100 can best be leveraged, proof-of-concept and therapeutic differentiation can be effectively demonstrated in small numbers of subjects and early clinical success can translate into rapid registration studies.
At the Society for Immunotherapy of Cancer 32nd Annual Meeting in November 2017 we presented promising early clinical data from the VOYAGE Study of NK100 for the treatment of Relapsed/Refractory AML. Anti-leukaemia activity was observed with NK100 in each of the first two dose cohorts. In fact, at the two weeks following a single intravenous infusion of NK100, the subject in the second dose cohort achieved a morphologic leukemia-free state based on bone marrow biopsy.
No dose limiting toxicities were reported and there were no reported NK100 related serious adverse events, including no reported events of GvHD, cytokine release syndrome or neurotoxicity. At the 3rd Annual Innate Killer Summit, which is being held March 27 through 29 in San Diego, we expect to release initial clinical data from the APOLLO Study for the treatment of women with recurrent ovarian cancer where there remains a critical need for novel therapeutic strategies as current rates of progression free survival are less than six months.
NK100 has advanced through the first two dose cohorts in the APOLLO study. No dose limiting toxicities where reported and there were no reported NK100 related serious adverse events. Including no reported events of GvHD cytokine release syndrome or neurotoxicity. We expect to continue to share clinical data from the VOYAGE, APOLLO, and DIMENSION studies of NK100 at scientific conferences throughout 2018. Most of today's cell-based cancer immunotherapies rely on the use of patient sourced cells.
Generally speaking the vein-to-vein manufacturing process takes weeks is expensive and generates therapies that are a heterogeneous. Additionally, the process most often yields only in upsells to support the delivery of a single dose to the patient from whom the cells resourced. In most respects, today's cell therapy is a personalized process. Alternative approaches are emerging that use donor cells.
However, in the case of allogeneic T-cell therapy complex editing in engineering is required, which lacks efficiency and homogeneity. For example, several leading developers of allogeneic T-cell therapy have recently published data suggesting that only 70% to 80% of cells are successfully modified upon 4 gene editing.
Furthermore, while more than one dose may be produced in a single manufacturing run, each additional manufacturing run requires new donors and another round of complex editing and engineering. This variability in manufacturing likely means that no two doses of a cell therapy are the same and no to patients receive the same cell therapy. Fate Therapeutics is striving to transform the quality, consistency, scalability, cost and effectiveness of cell-based cancer immunotherapies through the application of our revolutionary iPSC product platform.
Our platform uses master induced pluripotent stem cell lines as the starting material for the manufacture of NK cell and T-cell products. Using master IPS cell lines as the starting material for manufacturing cellular immunotherapies provides profound advantages. First, a master iPS cell line is clonal. Meaning it’s made from a single iPSC that is by definition uniformly engineered and homogeneous in nature.
Additionally, a master iPS cell line has unlimited capacity to cell for new. Meaning that once the line is made it never needs to be made again. Therefore, all cell engineering and characterization is done one-time at the creation of the master iPS line. This provides unprecedented uniformity and efficiency for manufacture of NK cell and T-cell products.
Second the master iPS cell line could be backed and renewably used as the starting material for manufacture of NK cell and T-cell products. In a single manufacturing campaign, hundreds to thousands of doses of NK cells or T-cells can be produced in a cost-effective manner. The use of a clonal starting material combined with the production of a large number of doses of product in a single reproducible manufacturing campaign, enables the generation of NK cell and T-cell products that are homogeneous and consistent towards manufacturing process that is cost-effective and scalable.
Third, the doses of NK cells or T-cells can be cryopreserved in an infusion media and provided to physicians and patients ahead of treatment alleviating any delays in cell product administration and expanding the reach of cellular immunotherapies beyond a limited number of specialized cancer centers. This is a true off-the-shelf product paradigm, where manufacture is cost-effective and scalable, cell products are uniformly engineered, and homogeneous in composition, and patients can be administered these cell products on demand with the potential to use repeat dosing strategies, including in combination with cycles of other cancer treatments to achieve more effective and durable responses.
Safe Therapeutics is unrivalled in developing IPS derived off-the-shelf NK and T-cell cancer immunotherapies. In the first half of 2018, we expect to file the first ever IND with the FDA for clinical investigation of an iPS derived cell therapy, an approach, which we believe has the potential to transform the field of cell therapy.
Our first iPS derived cell product is FT500 and off-the-shelf NK cell cancer immunotherapy for the treatment of advanced solid tumors both as a monotherapy and in combination with FDA approved checkpoint inhibitors. While checkpoint inhibitors are used early and often for the treatment of several solid tumors more than 60% of patients treated with checkpoint inhibitors do not respond or relapse.
As a result, there is a significant unmet need for novel therapeutic approaches to overcome resistance to checkpoint inhibitors. Our objective is to initiate subject enrolment and begin generating clinical data with hefty 500 in the second half of 2018. We expect to present new in vitro and in vivo preclinical data of FT500 demonstrating multiple protection mechanisms by which FT500 can synergize with checkpoint inhibitor therapy at the American Association of Cancer Research, which is being held April 14 through 18 in Chicago.
In addition, we are currently generating additional master iPS cell lines for manufacture of FT516 and FT538 and are advancing these off-the-shelf NK cell products towards IND filings. Similar to FT500, FT516 and FT538 are intended to be used in combination with FDA approved agents that are used early and often in the treatment of cancer. FT516 is an off-the-shelf NK cell cancer immunotherapy created from a master clonal IPS cell line, engineered to express a high affinity non-cleavable CD16 FC receptors.
NK cells express CD16, an activating receptor that combine to the FC portion of IgG antibodies and transmit immune response signals. Once activated through CD16, NK cells effectively allow [ph] antibody coated tumor cells and secrete cytokines to recruit adaptive immune cells including T-cells. This targeted anti-tumor mechanism of antibody dependent cellular cytotoxicity or ADCC has been proven critical to the treatment of a wide range of human tumor types.
Our novel CD16 Fc receptor incorporates two unique modifications designed to augment the receptor's binding affinity to IgG antibodies such as Herceptin, Erbitux and rituximab [ph] and enhances anti-tumor cytotoxicity by blocking the shedding of the receptor's expression upon activation.
We plan to develop FT516 for the treatment of liquid and solid tumors both as a monotherapy and in combination with tumor antigen targeting monoclonal antibody therapy. FT538 is an off-the-shelf NK cell cancer immunotherapy created from a master clonal iPS line engineered to prevent CD38 expression. Daratumumab is a human anti-CD38 IgG monoclonal antibody with demonstrated clinical activity in relapse refractory multiple myeloma.
CD38 is expressed at high levels of myeloma cells and on activated immune cells, including NK cells, which have been shown to be critical for the antibodies anti-tumor activity. In Daratumumab treated myeloma patients, total NK cell counts are reduced rapidly in peripheral blood after the first dose and remain low over the course of treatment. FT538 is designed to be resisted to depletion by Daratumumab and to be used in combination with Daratumumab to enhance the antibodies activities.
At the American Association of cancer research is in April, we will also present new preclinical data for FT819, our best-in-class off-the-shelf iPS derived CAR19 T-Cell product, which we are developing under our collaboration with Memorial Sloan Kettering led by Doctor Michel Sadelain.
The new preclinical results will characterize target specificity and anti-tumor activity of Car T cells generated from a clonal iPS master cell line engineered to express an anti-CD19 chimeric antigen receptor and to completely eliminate T-cell receptor expression across the population of cells comprising the immunotherapy. This groundbreaking achievement enables the renewable production of large quantities of universal Car T-cells that are uniformly engineered and are not patient restricted.
We are currently in the final stages of making the Car constructs for the creation of the master iPS cell line for FT819 and have now initiated technology transfer of our iPSC product platform to MSK for GMP manufacturer. We are targeting the first half of 2019 for IND filing of FT819.
I will now turn the call over to Doctor Chris Storgard, our Chief Medical Officer who will provide further details on our ongoing clinical trials of Fate NK100 and ProTmune and our IND preparation, and clinical development plans for FT500.
Thanks Scott. We have indeed made remarkable progress during this last quarter and we're looking forward to an exciting year ahead as we continue with groundbreaking advancements on all of our clinical programs. Let me update you on what we have achieved and where we're heading
First, the day 100 clinical data from the Phase 1 stage of the PROTECT Study of ProTmune was presented at the American Society of Hematology Annual Meeting in December 2017. We are developing ProTmune as the next-generation donor cell graft to reduce the incidence and severity of graft versus host disease or GvHD and improve overall outcomes for patients undergoing hematopoietic cell transplantation or HCT.
When successful HCT is a curative therapy for some of the most devastating cancers, including acute myeloid leukemia and acute lymphoblastic leukemia. Unfortunately, the mortality rate post-transplant is approximately 25% to 35% in six months and over 40% at one-year. The two-leading causes of morbidity and mortality are cancer relapse, which occurs in 25% to 35% of patients and acute GvHD, which occurs and 40% to 80% of patients.
To advance the curative potential of HCT we believe therapeutic solutions must address both severe GvHD and cancer relapse. The Phase 1 day 100 clinical data demonstrated the ProTmune was well tolerated. No ProTmune related serious adverse events were reported by investigators. All seven subjects receiving ProTmune achieved neutrophil engraftment within the expected timeframe and there were no reports of graft failure.
Additionally, there was no cancer relapse in any subject. And all seven subjects survived through Day 100. Three subjects experienced acute GvHD during the first 100 days. Importantly, each of these subjects responded rapidly to standard of care steroids. As Scott, mentioned this is significant as approximately half of patients who have developed acute GvHD are refractory to steroid treatment, and the economic and clinical consequence of steroid refractory GvHD is highly.
Over 75% of patients with steroid refractory GvHD are readmitted to the hospital and approximately 35% of these patients die during the first 100 days post-transplant. We are very encouraged by the safety and activity profile of ProTmune observed in the Phase 1 base one stage of PROTECT. ProTmune was successfully manufactured as a point-of-care and seamlessly integrated into standard HCT practice.
And the early clinical results suggest ProTmune may provide the critical immunological balance necessary to reduce the incidence and severity of graft versus host disease and maintain graft versus leukemia effects. The ongoing Phase 2 stage of PROTECT is a randomized, blinded, and controlled clinical study in adult subjects with hematologic malignancies including AML, ALL, and MDS undergoing hematopoietic cell therapy transplants.
60 subjects are being randomized in a one-to-one ratio to receive either ProTmune or conventional mobilized peripheral blood cell graft from a matched unrelated donor. Efficacy endpoints include incidence of acute GvHD Grade 2 through 4 and Grade 3 to 24 by Day 100, cancer relapse and survival.
Turning now to FATE-NK100. Our first-in-class adaptive memory natural killer or NK cell products that is undergoing clinical investigation in three ongoing Phase 1 clinical studies. The VOYAGE Study is an open-label accelerated dose escalation first in human Phase 1 study, designed to evaluate the safety and determine the maximum dose of a single intravenous infusion of NK100 as monotherapy.
In subjects with refractory or relapsed acute myelogenous leukemia. Initial clinical data from the first two of three dose cohorts from VOYAGE were presented at the Society for Immunotherapy of Cancer Annual Meeting in November last year. The subject in the first dose cohort of VOYAGE presented in primary induction failure with 87% leukemic blast in the bone marrow.
Two weeks following the single infusion of NK100 a bone marrow biopsy revealed a nearly 50% reduction in leukemic blast. In addition, approximately 76% of NK cells in the peripheral blood with NK100 origin. The subject in the second dose cohort achieved a more morphologic leukemia free state following a single intravenous infusion of NK100 as a monotherapy.
A Day 14 following treatment, a bone marrow biopsy showed clearance of leukemic blasts in the marrow with a significant number of NK100 cells in the peripheral blood. We were especially encouraged by this activity because prior to treatment with NK100, this subject was refractory to conventional NK cell therapy presenting in relapse with 50% leukemic blasts in the bone marrow.
While we’re looking to our first subjects in the dose escalation stages of the Phase 1 studies to demonstrate safety of NK100 and to gain initial clinical insights into the unique properties and enhance functionality of NK100 that we observed in preclinical studies, the significant reduction in leukemic blast in the bone marrow observed without any dose limiting toxicities in both subjects, both of whom who had very high leukemic blast burden is very promising.
In December 2017, the APOLLO Study of NK100 was initiated for the treatment of women with ovarian cancer that is resistant to or recurrent on platinum-based treatment. APOLLO was designed to evaluate the safety and determine the maximum dose of a single infusion of NK100 when administered with a lymphoconditioning regimen that allows for outpatient treatments.
In APOLLO NK100 is administered directly into the peritoneum, which is expected to provide an enhanced opportunity for NK cell persistence and NK cell contact with tumor cells. A second dose of NK100 is allowed for subjects’ evidence of tumor shrinkage. NK100 has advanced as a first two dose cohorts with no reports of dose limiting toxicities.
We expect to release initial clinical data from the ongoing APOLLO Study at the 3rd Innate Killer Summit March 27 through 29 in San Diego. Last month, we announced that the first subject has been treated in the dimension study of NK100 for the treatment of advanced solid tumors.
This study is intended to evaluate the safety and determine the maximum dose of NK100 when administered as a monotherapy and in combination with trastuzumab or cetuximab, two FDA-approved monoclonal antibody therapies that are widely used today to treat a number of different cancers.
It is well recognized that NK cells are the key vector cells mediating antibody-dependent cellular cytotoxicity or ADCC, which occurs when a patient’s endogenous NK cells selectively recognize and kill antibody-coated tumor cells.
However, patients with cancer often have deficient or dysfunctional natural killer cells and the co-administration of NK100 alongside a targeted monoclonal antibody therapy is a novel approach to restore a patient’s immune system despite cancer. We believe this new treatment paradigm holds great promise for cancer patients who have progressed on or failed monoclonal antibody therapy.
DIMENSION will enroll subjects with advanced solid tumors, with a focus on those that have progressed on or failed trastuzumab or cetuximab, including subjects with HER2 positive breast and gastric cancers and subjects with colorectal and head and neck cancers.
All three stages of NK100 VOYAGE, APOLLO and DIMENSION are open and enrolling subjects, and we are actively working to expand each of the three NK100 studies to multiple additional clinical sites. We will continue to provide clinical updates on our NK100 program at relevant scientific conferences throughout 2018 as these three studies progress.
Lastly, let me take a moment to begin to introduce some of the clinical aspects of our upcoming study with FT500, our off-the-shelf iPSC-derived NK cell product for use in combination with checkpoint inhibitors. We expect this groundbreaking study to be the first clinical trial in the U.S. of an iPSC-derived cell products. As such, the study has generated great interest amongst all our investigators and advisors.
As you know, checkpoint inhibitors have transformed the treatment landscape for cancer. Yet despite their impact up to two-thirds of patients fail to respond with an intrinsic resistant to checkpoint blockade and of those that do respond our third later progress having developed and acquired resistance to checkpoint blockade. The mechanisms underlying this resistance are not fully understood. However, results from emerging mechanistic studies suggest that NK cells may have the potential to overcome a number of intrinsic and acquired checkpoint resistance mechanisms.
For example, intrinsic checkpoint inhibitor resistance has been linked to impaired immune cell infiltrated to the tumor, impaired cytokine response and reduced number of neoantigens. NK cells can directly kill tumor cells to the release of programs exposing large amounts of tumor antigens for recognition by the adaptive immune system.
Additionally, upon tumor cells engagement, NK cells can secrete a number of cytokines, which can recruit and activate T-cells. As such, NK cells can stimulate the activation and recruitment of multiple specific T-cell clones creating a favorable environment for successful checkpoint therapy. In short, NK cells have the intrinsic ability to turn a cold tumor hot and thereby provide the potential to overcome a number of key mechanisms of intrinsic resistance to checkpoint blockade.
In addition, a common mechanism of acquired checkpoint inhibitor resistance is the development of beta2-microglobulin expression GTEx in tumor cells. Beta2-microglobulin, or B2M, is a component of the HLA-class I complex and GTEx in B2M result in impaired tumor antigen expression, and as a result impair T-cell response.
However, B2M defective cells are preferential targets for NK cells and are highly susceptible to NK cell mediated killing. As such, we believe that NK cell therapy may have the unique potential to overcome B2M defective resistance to checkpoint inhibitors.
The planned Phase 1 clinical trial is to our knowledge the first combination study of an allogeneic donor-derived NK cell therapy with checkpoint inhibitor therapy. The study will use the standard 3+3 dose escalation design and will consist of two arms: one, evaluating the safety and activity of FT500 as a monotherapy in an allcomer population of subjects with advanced solid tumors; and the second arm evaluating the safety and activity of FT500 in combination with checkpoint inhibitors, nivolumab, pembrolizumab or atezolizumab in subjects with advanced metastatic solid tumors that have tolerated, but progressed on a checkpoint inhibitor.
Importantly, because FT500 is an off-the-shelf cell product, the study will evaluate multiple doses of FT500, starting with three weekly doses per month, with the opportunity for a repeat treatment in subjects who demonstrate benefit.
I look forward to providing more details on the specifics of the study following the IND clearance.
I'll now turn the call over to Dan to provide an update on our proprietary iPSC product platform.
Thanks, Chris. I’ll now provide an update on our iPS off-the-shelf iPSC-derived cancer monotherapy platform, with a particular focus on the unique features that differentiate our universal CAR T-cell approach from other Autologous and Allogeneic CAR T cell therapies. This is than a transformative year [indiscernible] with FDA approvals for two Autologous CAR T cell therapies. These [indiscernible] Autologous products [indiscernible] clinical outcomes.
However, broad commercial adoption of the Autologous CAR T cell therapies is challenged by multiple factors. Production time is several weeks, there are high level of product variabilities that may [indiscernible] manufacturing complexity to significance, creating cost and scalability challenges. Moreover, the requirement of using a patient’s own T-cell with a starting material for the manufacturer with CAR T-cell therapy is certainly less than a yield, as the patient cells as [indiscernible] dysfunctional or present in insufficient numbers, due to prior treatments with chemo therapy in other agents.
To address these limitations, CAR T-cell therapies that use cells that use now [indiscernible] undergoing development. However, allogeneic approaches requires [indiscernible] genetic engineering to ensure that the T-cells are universal, safe and effective. One approach we are generating allogeneic Car T-cell s involves highly complex, multi-gene editing of large batches and primary T-cells isolated for [indiscernible].
However, genetic engineering of large batches of primary T-cell is spot with significant challenges. First, simultaneously performing multiple batches [indiscernible] to primary T-cells has the potential to generate a high degree of [indiscernible] and unwanted [indiscernible] which are known to occur with multiple [indiscernible] made in a cell.
Second, [indiscernible] concurrently puts us [indiscernible] T-cell receptors, which can cause [indiscernible]. Therefore, complete elimination of the T-cell receptor in genetic engineering is required to ensure the safety of the product. In fact, incomplete [indiscernible] in the T-cell receptor, [indiscernible] 1% of the primary T-cell has resulted in cases graft-versus-host disease.
Finally, these manufacturing contains generates a finite number of doses of allogeneic CAR T-cell [indiscernible] donor. Therefore, to meet [indiscernible] requirements, manufacturing campaigns will continuously need to be conducted. Each additional campaign will source primary T-cells for new donors and will require new rounds of genetic engineering leading to undesirable levels of statutory building.
We believe we have a best-in-class approach to allogeneic CAR T-cell therapy, and I’m encouraged, they delivered a true off-the-shelf paradigm to physicians and patients. Our proprietary iPSC product platform which we have developed, we have developed an efficient, cost-effective and scalable approach. We’re generating large quantities in Universal CAR T-cells that are homogenous [indiscernible] and immediately ready for off-the-shelf.
The key differentiator of our off-the-shelf cancer immunotherapies other platform is a complex multi-stat genetic engineering procedure [indiscernible] only the single times during the entire life cycle of products. It encompasses by performing all of the genetic engineering steps or [indiscernible] stem cells properties of unlimited [indiscernible] renewal and differentiation potential [indiscernible] bottom.
Our proprietary platforms allowed us to generate a single iPSC to create a [indiscernible] highly characterized [indiscernible]. This engineered iPSC cell bank [indiscernible] for all future manufacturing campaigns to that [indiscernible] where each campaign can generate hundreds of thousands of doses that [indiscernible] well characterized CAR T-cell products for off-the-shelf applications.
As Scott mentioned, we have launched development of three off-the-shelf iPSC-derived NK cell products, FT500, FT516 and FT538. We have now also launched developed of FT819 iPSC-derived anti-CD19 CAR T Cancer Immunotherapies or patients with T-cells [indiscernible] in collaboration with Dr. Michelle Sadelain, Director of the Center for Cell Line Engineering at the Memorial Sloan Kettering Cancer Center, we have successfully generated CDA alpha beta T-cell from the iPSC launch.
In fact, FT line was engineered to remove T-cell receptor session entering express a chimeric antigen receptor lead to the groundbreaking achievement. A best-in-class off-the-shelf CAR T-cell therapy requires complete elimination of TCR expression. Until our recent demonstration in collaboration with DR. Sadelain, it was not known whether one can eliminate TCR expression and iPSC and still generate CDA alpha beta T-cells, since [indiscernible].
We demonstrated using a CD19 mediated signaling [indiscernible] receptor robust and efficient differentiation of iPSC in that high-quality CDA alpha beta T-cell. Moreover, we precisely engineered the anti-CD19 Car construct [ph] in place of a T-cell receptor, which allows the endogenous TCR promoter to drive [indiscernible] expression of the CAR, which has been shown to enhance that potency and persisted of CAR T-cell.
We’re currently manufacturing at clinical grade [indiscernible] and have initiated technology transfer of our iPSC product platform for GMT facility with MSK. We plan to initiate [indiscernible] of the FT819 in the first-half of 2019. We believe our iPSC product platform will transform cell therapy that enables best-in-class off-the-shelf manufacturer and delivery of cell product in quantities that support the treatment of many thousands of patients in an off-the-shelf manner.
I will now turn the call back over to Scott for a review of our fourth quarter 2017 financial results.
Thanks, Dan. Turning to our financial results for the fourth quarter ended December 31, 2017, Fate Therapeutics reported a net loss of $12.5 million, or $0.29 per common share, as compared to a net loss of $7.9 million, or $0.21 per common share for the same period last year.
Revenue was $1 million for the fourth quarter, as well as for the fourth quarter of 2016. Revenue in both periods was generated from our strategic research collaboration with Juno Therapeutics.
Research and development expenses for the fourth quarter of 2017 were $9.9 million, compared to $6.2 million for the same period last year. The increase was attributable to increased third-party service provider fees for manufacture and clinical development of ProTmune and NK100 and for FT500 IND-enabling activities, as well as increased equipment in materials expenditures for the cheap advancement of the company’s IPS-derived cancer immunotherapy programs, increased headcount-related compensation expense and increased facility costs, due to the expansion of the company's laboratory space.
General and administrative expenses for the fourth quarter of 2017 were $3.4 million, compared to $2.5 million for the same period last year. This increase was attributable to increased intellectual property expenses and licensing costs. After adjusting for research funding proceeds from the Juno Therapeutics collaboration of $500,000 and for stock-based compensation expense of approximately $900,000, total operating expenses for the fourth quarter of 2017 were approximately $11.9 million.
At the end of the fourth quarter of 2017, cash, cash equivalents and short-term investments were approximately $101 million. Common stock outstanding was approximately 52.6 million shares and preferred convertible stock outstanding was approximately 2.8 million shares, each of which is convertible into five shares of common stock under certain conditions.
We have an exciting year ahead of us at Fate Therapeutics. We're very pleased with the clinical progress we've made with Fate NK100 and ProTmune, and we look forward to sharing clinical updates at scientific conferences throughout the year. Additionally, we're at the doorstep of filing the first ever IND with the FDA for an IPS-derived cancer immunotherapy, with a deep pipeline of off-the-shelf IPS-derived cell products to follow towards clinical development.
When we founded Fate Therapeutics about 10 years ago at the time IPS cell technology was just being invented, there was little understanding the field of how IPS cell technology would develop or even whether cell therapy applications would emerge through its use.
Throughout this period and to date, we at Fate Therapeutics have held fast to the vision that IPS cell technology could play a foundational role in revolutionizing medicine. It is truly amazing to see this new era of cell therapy come to realization.
I would like to express my sincere gratitude to those that have stood with Fate Therapeutics through this journey, sharing our faith and contributing over the years to enable the transformation that lies just ahead.
Thank you. And with that, I'd like to open up the call to any questions.
Thank you. [Operator Instructions] Our first question comes from Michael Schmidt of Leerink. Your line is open.
Hey, guys, thanks for taking my question and congrats on a good year. A couple of questions on FT500. I think in the past, you talk about IND filing in the first quarter and I was just wondering what the remaining activities that are left to be done before you can actually file the IND? And then I have a of couple follow-ups.
Yes, absolutely, happy to talk about it. So, we're just giving ourselves just a little bit of extra room here to file the IND. It is the first ever IPS-derived cell therapy IND to be filed with the FDA. We are actively preparing the IND. We are finishing our second and third pilot manufacturing runs. We will do comparability across our first three-month manufacturing runs.
The comparability assessment based on guidance from the FDA is necessary to file the IND. And so, with the completion of those activities and obviously a tremendous amount of rating and compilation of data, we expect to file the IND very shortly.
Great. Understood. And then I think, you did highlight on several occasions the potential advantages in terms of manufacturing cost and quality and timelines. And so, I was just wondering if you could help us understand what your expectations are for FT500 or other stem cell source immunotherapy in terms of cost of goods maybe compared to for additional product or even the - some of the gene-edited off-the-shelf product?
Yes. I think it’s too early to say exactly what the cost will be. I can tell you that at a research scale, which is essentially still what we're operating at with respect to manufacturing product for our clinical studies. At a research scale, we're able to produce hundreds of doses in a single manufacturing run. And so even at that type of level of expense or that level of yield with respect to manufacturing product, we are substantially below the costs associated with manufacturing autologous CAR T-cell therapy.
Okay. And then one question regarding your activities in terms of the CAR T-cell application for this technology, you mentioned potentially being able to file an IND in 2019 on the CD19 CAR product. I was just wondering long-term, what the philosophy is for developing this technology for the CAR T application. Is it something that you'd be comfortable to being - to doing in-house or is it an area that you could fuse off partnering this for teaching with a larger company. How do you think about this asset in a more strategic way longer-term?
Yes, absolutely. I think, today, we're very comfortable moving it forward on our own given the collaboration that we have with Memorial Sloan Kettering and specifically Dr. Sadelain. As you are well aware, he's one of the pioneers in developing CAR T-cell therapy. So, we believe the collaboration will be very productive in translating a first-of-kind off-the-shelf CAR T-cell therapy into clinical development.
It’s - our partnering strategy, generally, I have spoken about this, we are actively considering territorial partnerships. And so, we will consider those types of partnerships, where we can bring in a partner that will help us develop and expand development outside of the U.S. territory.
And so, our view on FT819 is, we're very excited about it. Dr. Sadelain is very excited about the product. We will aggressively be pushing that product forward at Memorial Sloan Kettering just as we will be aggressively pushing three IPS-derived NK cell products in collaboration with the University of Minnesota.
Okay, great. Thanks, and congrats on a progress.
Thank you. Our next question comes from what kind of Edward Tenthoff of Piper Jaffray. Your line is open.
Hey, thank you very much for taking the question and my congrats on some really exciting process - some really exciting progress. I guess, my question has to do with respect to the data updates that we’ll be getting in the first-half of this year, excited to see that coming out so soon. What - how many patients could we anticipate at AACR? And I apologize if AACR is primarily a preclinical result, but also at the conference in San Diego. How robust could that data presentation be? Thanks.
Thanks, Ed. I think we should see - expected similar types of disclosures that we provided at 61 in the first couple of patient experience. The discussion at the Innate Killer Summit will specifically be around the ovarian trial, the APOLLO study. So that's, I think, what you should expect at the Innate Killer Summit in a couple of weeks, and we are actively looking to - for similar types of conferences throughout the year to provide a first update on the DIMENSION study when that's available.
And as we get into the second-half of 2018, we will continue to provide additional data across all three studies as the trials mature. These - as you know, these are open label studies. So, we are in a position, where we can share the data with investigators, as well as with interested investors.
Excellent. I’m looking forward to the data updates, as well as the IND path to come [53:25].
Thank you. Our next question comes from Jim Birchenough of Wells Fargo Securities. Your line is open.
Hey, guys, thanks for taking the question and congrats on all the progress. A few questions. I guess, just on PROTECT in the Phase 2, what’s the right composite to think about? And when do you think you’ll get some FDA guidance on that? Number one.
The other question is just at a higher level maybe for Scott, if you've seen any change in the relationship with Juno now under Celgene, and if you anticipate that collaboration to go forward in a similar way?
And then I guess, a final thing, maybe a question for Dan, and that is just on the comparability runs that are being done, what - I guess, what gives you the confidence that you'll get comparability shown between the different runs and that it will support FDA criteria for your I'D filing? Thanks.
Sure. This is Scott. And Chris and Chris can jump in, but I'll take them in reverse order. Number one, with respect to comparability, I mean, we've run this manufacturing process of Fate Therapeutics probably 10s if not upwards of 50 times. We had a great deal of confidence in the manufacturing process being conducted when we conducted in our hands at Fate Therapeutics.
I will tell you, we have successfully completed a first pilot run at the University of Minnesota at MCT. Minnesota has also done research skill runs in their laboratories in a laboratory of Jeff Miller. So, we believe that, our manufacturing process can readily be tech transfer, which certainly manufacture the product lots of times at Fate Therapeutics. Jeff Miller has manufactured the product in his research laboratories and we've now successfully manufactured the product at MCT.
So, the manufacturer runs two and three are looking good at this time. And we believe we will be able to show comparability between the three pilot runs, which are required to file the IND. As it relates to our Juno collaboration, I think, it’s too early to provide any commentary on how I expect the collaboration to evolve if and when the acquisition is completed by Celgene. It's just too early to say.
As it relates to ProTmune and the data, I think, our expectation is that, we should view that - the PROTECT study. We’ll conduct the study throughout 2018. During that period of time and we've already started this discussion with investigators at ASH and then again at ASBMT and initiated discussions with the FDA. We are having discussions with respect to the right primary endpoint for ProTmune as a next-generation graft.
As we've seen the Phase 1 data, we are very excited about the totality of the outcomes that we're seeing in patients receiving ProTmune. We've seen low and modest GvHD that has been promptly treated with steroid and we've not seen cancer relapse. And so, when you talk to investigators, what they're excited about is, there's very little cancer - there's no cancer relapse. All patients survived at day 100 and the GvHD is transient model.
So, we believe we’re creating a better graft for patients. How we capture that in the right primary endpoint, we're having those discussions right now with investigators and the FDA.
And Scott, if you could allow me one more question, just one of the advantages seems to be of your off-the-shelf product [57:35] potential for repeat dosing. I guess, the question is, give a sense of what the optimal dose frequency will be? And when do you think you’ll get some insights into how best optimally equal at repeat dosing? Thanks.
Yes. I think, we’re going to learn through a lot through these Phase 1 studies. And I think we’re going to hopefully give you some information from our experience with NK100. I can tell you that what we propose is to provide three doses during the first two weeks, while checkpoint inhibitor therapy is on board. If safe at the end of the month, we have the ability to repeat again for month two if safe at the end of the second month, at least as we have the ability to repeat again for the third month. That is the clinical scheme that we intend to file with the FDA. We’ve discussed that scheme as part of our pre-IND meeting. And so, we believe we will get an essentially a multi-dose combination regimen in combination with checkpoint inhibitor therapy and that has the ability to extend over several months.
Great. Thanks for taking the questions and appreciate all the details.
Thank you. Our next question comes from David Nierengarten of Wedbush Securities. Your line is open.
Hi. Thanks for taking the question. I just had a quick one on, you know what, I know it is always tricky to answer this, but what kind of data we could expect at the Innate Killer Conference, may be some and anti-tumor effects or are we going to see some cytokine profiles of the patients, just kind of thinking about expectations and what you are able to percent over the next month or two? Thanks.
Sure. I think as I mentioned, I think it should be similar to what you saw with respect to the VOYAGE Study at SITC. We will certainly share our manufacturing data. We will share phenotype data with respect to NK100, and expression levels of 57. We are actively looking at the persistence of NK100, and certainly we're looking for and looking at anti-tumor activity. The other thing I would say that we’re excited about is, and we’ve discussed this, the potential of NK cells upon engaging tumor to recruit T-cells. So, we will also look at the ability of the NK cells upon engagement of the tumor, cytokine release, and T-cell recruitment.
Thank you. Our next question comes from Ren Benjamin of Raymond James. Your line is open.
Good afternoon guys, thanks for taking the questions and congratulations on all the progress. Maybe, just talking about the three ongoing clinical studies, can you talk a little bit about maybe internally what the bogey is that you are trying to hit for, kind of go, no go, decision going forward, should we be thinking about it in terms of just response rates or is it for something else that you are looking for as you try to evaluate, which indications and how you decide to proceed going forward?
Sure. With respect to NK100 to be clear?
Yes, I think right now we are obviously in the dose escalation period, so we are looking at, we are certainly looking at safety and we have been very encouraged by the safety profile so far as compared to what you typically see with the cells or you have the potential at least for a donor derived product to have GvHD. Even Autologous products have cytokine release in neurotox, so we're certainly not seeing that with NK100 and that’s providing us a lot of encouragement.
I think what we are looking at is obviously you have to start in patients that are very sick, given it’s a first product and it’s a first in-human experience. Our view generally with respect to NK cells is that NK cells have an exclusive potential to synergize with other agents that are given early and often in care of cancer patients. So, for instance, while we’re in refractory relapsed AML, right now, I wouldn't expect us to for instance remain in relapse refractory AML, as long as we are seeing some degrees of safety, and some anti-tumor activity.
There is plenty of opportunity in AML given a safe profile of NK100 to move upstream and combine earlier and often with other agents. It is our strategy for instance both in the monoclonal antibody, the dimension study. Certainly, we’ve started in patients that have progress or failed therapy, but obviously with safety and activity we have the ability to move upstream in care and synergize with those agents.
Got it. Okay. And then just related to, again just sticking with NK100, when you guys take a look at the patients that might not have responded even at these early doses, are there any learnings that you are - that you’ve picked up on that might help you from a bio-marker perspective or from a patient selection perspective as you move forward?
Yes, I think, I mean obviously we’re collecting all the data, I think it’s too early to comment on how we think about patient enrichment with respect to NK100, it really has to do with the underlying disease for instance looking at AML, there is a lot of heterogeneity in AML, but obviously as we think about for instance moving in combination with checkpoint inhibitors, you know B2M defects are tumor cells that express B2M or lack B2M expression. There is a perfect strategy for instance to think about patient enrichment for either NK100 going forward or for instance FT500.
Okay. And then just switching gears to PROTECT, I think I heard this right, but really 2018, we should be thinking about the second stage to primarily be enrolling, should we be thinking about the potential data update in 2019, or is that even too early?
No. I think, what you should expect in 2018 is for us to continue to file the seven patients in the Phase 1 stage of the study and obviously provide Day 1, 80 and for instance Day 3, 65 updates on those seven patients. The Phase 2 study is being conducted and our expectation is that it will take us some time to enroll that study, but 2019 I think is the right time frame for us to provide some type of clinical update on Phase 2 study given it is randomized blinded and controlled.
Excellent. And just one last one for me. The Car NK Cell, there are quite a few components here in the construct, and I was just hoping that you could just maybe go through each one - the NKG2D transmembrane domain, a 2B4 co-stimulatory domain, just provide us some color as to why those are chosen and how that’s going to move forward?
Right, I'm happy to send you the poster that we presented at ASH with respect to all the data around CAR NK products and specifically that construct. You should also expect an update in the next several weeks to months with respect to our CAR NK development efforts. So happy to send you a poster and we can take the question off-line, but this is something we will be talking about in the next weeks and months in particular.
Terrific. Thanks very much and congrats on the project.
Thank you. Our next question comes from Jim Birchenough from Wells Fargo Securities. Your line is open.
Hi, guys thanks for taking the follow-up. Just two quick ones. So, the first question is just MD Anderson has a cord blood derived NK Car T product and they are using IL-15 to really amp up the response I suppose, can you maybe compare and contrast your approach to a cord blood derived product and do you envision using IL-15 as well to get incremental response? And then, the second question is more a maintenance question, but what is the difference between a complete response and a morphologic leukemia-free state? Thanks.
Sure. With respect to MD Anderson’s program, I mean again, I actually don't view it any differently than editing that takes place for instance at the primary either NK or T-cell level. They are engineering at a CD-34 cell level and then differentiating into NK cells. So, again a tremendous amount of - as I understand the product a tremendous amount of heterogeneity with respect engineering, and then a differentiation process that again probably only yields a handful of doses at best. I would not view at least what I have seen of the MD Anderson program as an off-the-shelf strategy. As it relates to, I’m sorry, your other question was?
You know there was a [indiscernible].
Yes, sorry. Absolutely. The endpoint of the study as it relates to definition of complete remission in AML is typically a Day 42 with full immune reconstitution, reaching morphologic leukemia free-state is a necessary prerequisite for a complete response with this particular patient after only a single dose did relapse before Day 42.
Got it. Okay, thanks for the clarification and appreciate the detail again. Thanks a lot.
Thank you. I’m showing no further questions. I would like to turn the conference back over to Scott Wolchko for any closing remarks.
Thank you all for participating in today's call and we look forward to seeing you at upcoming conferences in the next couple of weeks and providing more update on both clinical stage programs, as well as our IPS derived cancer immunotherapy pipeline. Thank you.
Ladies and gentlemen this does conclude today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.