Fate Therapeutics, Inc. (FATE) CEO Scott Wolchko on Q4 2019 Results - Earnings Call Transcript

Fate Therapeutics, Inc. (NASDAQ:FATE) Q4 2019 Earnings Conference Call March 2, 2020 5:00 PM ET

Company Participants

Scott Wolchko - President and Chief Executive Officer

Daniel Shoemaker - Chief Scientific Officer

Wayne Chu - Senior Vice President of Clinical Development

Conference Call Participants

Mara Goldstein - Mizuho Securities USA LLC

Alethia Young - Cantor Fitzgerald & Co.

James Birchenough - Wells Fargo Securities, LLC

Edward Tenthoff - Piper Sandler & Co.

Benjamin Burnett - Stifel, Nicolaus & Company, Inc.

Kelsey Goodwin - Guggenheim Securities, LLC

Biren Amin - Jefferies LLC

Matthew Biegler - Oppenheimer & Co. Inc.

Amanda Murphy - BTIG, LLC

Operator

Welcome to the Fate Therapeutics' Fourth Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investors and Media section of Fate's website at fatetherapeutics.com. As a reminder, today's call is being recorded.

I would now like to introduce Scott Wolchko, President and CEO of Fate Therapeutics.

Scott Wolchko

Thank you. Good afternoon and thanks, everyone, for joining us for the Fate Therapeutics' fourth quarter 2019 financial results call. Shortly after 4:00 PM Eastern Time today, we issued a press release with these results which can be found on the Investors and Media section of our website under Press Releases. In addition, our Form 10-K for the year ended December 31, 2019, was filed shortly thereafter and can be found on the Investors and 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 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, 2019, 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 this required by law, Fate Therapeutics disclaims any obligation to update these forward-looking statements to reflect future information, events, or circumstances.

Joining me on today's call are Dr. Dan Shoemaker, our Chief Scientific Officer; and Dr. Wayne Chu, our Senior Vice President of Clinical Development.

Today, I will comment on key milestones we achieved during the fourth quarter of 2019, and I will discuss our outlook for 2020 in bringing off-the-shelf iPS-derived cellular immunotherapies to patients. Fate Therapeutics has successfully pioneered the clinical investigation of iPS-derived cell-based cancer immunotherapy.

We believe our unique therapeutic approach using master engineered iPSC lines as a renewable source for manufacturing cell therapy products which are well-defined and uniform in composition, can be mass produced at significant scale in a cost-effective manner, and can be delivered off-the-shelf for broad patient accessibility. It is highly differentiated from patient and donor-derived approaches to cell therapy, which required batch-to-batch sourcing and engineering of millions of primary cells.

Similar to monoclonal antibody therapy in the 1990s, we believe iPS-derived cell therapy is a highly disruptive therapeutic paradigm that can transform the treatment of cancer and we are excited to be at the forefront of this emerging field.

We are encouraged by the initial clinical data reported in December from the dose escalation stage of our Phase I study of FT500, the company's first off-the-shelf iPS-derived NK-cell product candidate.

Our FT500 Phase I study is the first-ever clinical trial in the United States of an iPS-derived cell product. Additionally, it is one of the first-ever clinical trials of a cell therapy to evaluate a novel multi-dose treatment course consisting of outpatient lympho-conditioning followed by three once-weekly doses of FT500 over up to two 30-day treatment cycles.

In the first 12 patients administered FT500 for the treatment of advanced solid tumors, as of November 28, 2019 data cutoff, there were no reported dose limiting toxicities, no FT500 related Grade 3 or greater adverse events or serious adverse events, and no incidents of cytokine release syndrome, neurotoxicity, or graft-versus-host disease. Additionally, based on assessments of the patients’ T-cell and antibody repertoire, no anti-product immune responses against FT500 were evident over the multi-dose treatment course.

In total, 62 doses of FT500 were administered to these 12 patients in a safe and well tolerated manner. These initial clinical data provides strong evidence that multiple doses of iPS-derived NK-cells can be delivered off-the-shelf without patient matching.

We believe this is a clinically significant first step for the field of iPS-derived cell-based cancer immunotherapy. We continue to be excited about the rapid advancement of our engineered iPS-derived NK-cell programs into clinical development and the therapeutic potential of our pipeline of engineered iPS-derived NK-cells for the treatment of hematologic malignancies and solid tumors.

In December, we reported on the first two patients treated in the open-label, multi-dose Phase I clinical trial of FT516, the company's off-the-shelf NK-cell cancer immunotherapy derived from a clonal master iPSC line engineered to express a novel high-affinity, non-cleavable CD16 Fc receptor, which has been modified to augment antibody-dependent cellular cytotoxicity.

FT516 is the second product candidate emerging from our iPSC product platform and it is the first engineered iPS-derived cell therapy in the world to undergo clinical investigation. Each patient, one administered FT516 as a monotherapy for the treatment of relapsed refractory AML and one administered FT516 in combination with rituximab for the treatment of diffuse large B-cell lymphoma had received a first treatment cycle consisting of outpatient lympho-conditioning, three once-weekly doses of FT516 and IL-2 to better promote NK-cell activity.

Once again, initial clinical data indicated that the multi-dose treatment course was safe and well tolerated. Additionally, in the first patient administered FT516 for the treatment of relapsed refractory AML, there was evidence of product chimerism in the bone marrow and a bone marrow biopsy obtained at day-42 showed no morphologic evidence of leukemia, with evidence of hematopoietic recovery, providing initial clinical evidence that engineered iPS-derived NK-cells may confer anti-tumor activity.

In December, the FDA allowed our second IND application for FT516 and we are now expanding its clinical investigation to solid tumors in combination with monoclonal antibody therapy.

At the American Society of Hematology meeting in December, our IND-enabling preclinical data of FT596 was selected for presentation at the organization's CAR-T and Beyond press program, which highlighted four promising next-generation cancer immunotherapy programs with the potential to overcome the key limitations of current generation CAR T-cell therapies.

FT596 is the company's off-the-shelf multi-antigen targeted CAR NK-cell product candidate derived from a clonal master engineered iPSC line and is the first-ever cellular immunotherapy engineered with three active anti-tumor components to be cleared for clinical investigation by the FDA.

In addition to a proprietary CAR targeting CD19, FT596 expresses our novel high-affinity, non-cleavable CD16 Fc receptor, enabling dual targeting of CD19 and additional tumor-associated antigens such as CD20. FT596 also expresses a novel IL-15 receptor fusion, a potent cytokine complex that promotes survival, proliferation and trans-activation of NK-cells and T-cells without the need for systemic cytokine support.

New in vivo preclinical data presented at ASH, showed that in a humanized mouse models of lymphoma and leukemia, FT596 administered as a monotherapy was comparable to primary CAR T-cells in promoting tumor clearance and extending survival.

Additionally, when combined with rituximab, FT596 showed enhanced killing of lymphoma cells in vivo as compared to rituximab alone. These data validate the unique multiantigen targeted functionality of FT596 and its potential to effectively overcome CD19 antigen escape and provide support that FT596 has best-in-class potential for the off-the-shelf treatment of B-cell malignancies.

We are pleased to announce that the open-label Phase I study of FT596 is now open to patient enrollment. We are also pleased with the launch of our in-house GMP manufacturing facility at our headquarters in San Diego, California that is custom designed to use clonal master iPSC lines as a renewable cell source for the consistent and scaled manufacture of off-the-shelf NK-cell and CAR T-cell products.

With the facilities launched in September, we successfully completed the production of hundreds of cryopreserved, infusion-ready doses of clinical product, at low cost per dose. At this time, for each of our three clinical stage programs, FT500, FT516 and FT596, hundreds of cryopreserved, infusion-ready doses have been qualified, released and stored in inventory and are immediately available for use in our clinical studies.

With our full control of cGMP production combined with our proven ability to genetically engineer iPSCs and creating qualified clonal master lines for clinical use, we believe we have established operational capabilities and redundancies unique to the industry for the consistent cost-effective manufacturing clinical supply of off-the-shelf cell products to patients.

As we exited 2019 with strong clinical momentum, we expect to achieve significant clinical milestones and generate decisive clinical data during 2020 across our iPS-derived cell-based cancer immunotherapy programs.

We have now amended the clinical protocol of our multidose FT500 Phase I study and advanced solid tumors to include IL-2 cytokine support. We are initiating dose expansion at 300 million cells per dose and patients who are refractory to or have relapsed following checkpoint inhibitor therapy.

We will focus enrollment on patients with non-small cell lung cancer, a tumor type amenable to NK-cell trafficking and targeting or up to 40% of patients with resistance to checkpoint inhibitor therapy exhibit partial or complete loss of MHC Class 1 expression, making these cancer cells highly susceptible to NK-cell recognition and killing.

The FT500 Phase I study is currently enrolling at three clinical sites in the U.S. and we plan to report dose expansion data in the second half of 2020. We are continuing to enroll the dose escalation stage of our multidose Phase I study of FT516 as a monotherapy for the treatment of AML and in combination with rituximab for the treatment of B-cell malignancies.

There exists clinical proof-of-concept for donor-derived NK-cell therapy for these indications and we believe there are established clinical benchmarks against which we can initially assess the safety and efficacy of FT516.

In the setting of relapsed refractory AML, donor-derived NK-cell therapy has shown anti-leukemia activity and complete response rates ranging from 20% to 35% have been reported in investigator initiated studies.

In the setting of relapsed refractory B-cell lymphoma, single agent activity of monoclonal antibody therapy is modest, with complete response rates of approximately 10% having been reported. We currently plan to report dose escalation data in the second half of 2020.

In addition to combination with rituximab and B-cell malignancies, our IND application for the clinical investigation of FT516 in combination with PDL1, PD1, EGFR and HER2-targeting monoclonal antibody therapies across a broad range of solid tumors has now been allowed by the FDA.

We initially intend to prioritize the combination of FT516 and the PDL1 targeting monoclonal antibody avelumab in patients with advanced solid tumors who are refractory to, or have relapsed following, at least one line of anti-PDL1 monoclonal antibody therapy.

Avelumab is an ADCC competent checkpoint inhibitor approved for the treatment of Merkel cell carcinoma having a single agent complete response rate of only 10%, and for advanced urothelial carcinoma having a single agent overall response rate of approximately 15%. We expect to initiate enrollment of FT516 in combination with avelumab in mid-2020.

We are particularly excited about our FT596 clinical trial, which I am pleased to announce it is now open for patient enrollment. We believe FT596, which incorporates three active anti-tumor modalities and is uniquely designed to target multiple tumor associated antigens expressed on cancers B-cells has best-in-class potential.

Our confidence in FT596 is bolstered by the initial clinical data from a donor-derived CAR19 NK-cell program, undergoing clinical investigation at MD Anderson, where initial clinical results recently published in the New England Journal of Medicine showed a 73% overall response rate in patients with relapsed refractory non-Hodgkin's lymphoma and chronic lymphocytic leukemia with no major toxicities.

While these data are early, these clinical results demonstrate that CAR NK-cells can potentially confer a high-level of efficacy without the significant toxicities that are commonly associated with current generation CAR T-cell therapies.

We believe FT596 has the potential to supplant patient-specific and allogeneic CAR19 T-cell immunotherapies that recognized only one antigen, fail to address the risk of relapse due to antigen escape and have significant toxicities. We currently plan to report initial dose escalation data at the 2020 ASH Annual Meeting.

We also expect to file an IND application in the next 60 days for FT538, our off-the-shelf CRISPR-edited, iPS-derived NK-cell product candidate. FT538 is derived from a clonal master iPSC line engineered with three functional elements; our novel high-affinity, non-cleavable CD16 Fc receptor, our novel IL-15 receptor fusion and a complete knockout of CD38. FT538 is designed to synergize with anti-CD38 monoclonal antibody therapy and promote enhanced antibody-dependent cellular cytotoxicity.

We intend to initiate clinical investigation of FT538 in combination with daratumumab for the treatment of multiple myeloma in the second half of 2020. Importantly, we believe the engineered functionality of FT538 may have very broad therapeutic applicability beyond multiple myeloma. As we presented at ASH, elimination of CD38 expression enhances NK-cell potency and persistence in preclinical studies.

Additionally, as the field of adoptive cell therapy explores non-toxic strategies to reduce or replace chemotherapy-based lympho-conditioning, it is well documented that anti-CD38 monoclonal antibody therapy significantly depletes a patient's activated immune system without adversely affecting the patient's hematopoietic stem cell compartment.

Since FT538 has been engineered to resist CD38 mediated depletion, we believe FT538 maybe combined with anti-CD38 monoclonal antibody and effectively administered without the use of toxic conditioning agents, including an indications beyond multiple myeloma.

Consequently, we are using the clonal master engineered iPSC line for FT538 as a foundational backbone for the building of our future iPS-derived NK-cell product candidates.

Finally, in 2020, we strive to be the first group in the world to bring off-the-shelf iPS-derived CAR T-cell therapy to patients. FT819 is the company's first off-the-shelf iPSC-derived CAR T-cell product candidate and is derived from a clonal master engineered iPSC line engineered with a novel 1XX CAR targeting CD19 inserted into the T-cell receptor alpha constant locus, and edited for complete elimination of T-cell receptor expression to mitigate any risk of graft-versus-host disease.

At ASH, we presented new in vivo preclinical data from a collaboration with Memorial Sloan-Kettering Cancer Center led by Dr. Michel Sadelain, demonstrating that in a xenograft model of lymphoblastic leukemia, FT819 enhanced tumor clearance and extended survival in a manner comparable to primary CAR19 T-cells.

At this time, we have generated and characterized the master engineered iPSC line for FT819 and we intend to submit an IND application to the FDA for clinical investigation of FT819 in the second quarter of 2020.

Turning to our financial results. Revenue was $2.8 million for the fourth quarter of 2019, compared to $1.7 million for the same period last year. Revenue in the current quarter was derived from the company's iPS-derived CAR T-cell collaboration with the Ono pharmaceutical.

Research and development expenses for the fourth quarter of 2019 were $25.2 million, compared to $14.1 million for the same period last year. The increase in our R&D expenses was attributed primarily to an increase in employee compensation, including share-based compensation associated with the growth in headcount to support the advancement of the company's product pipeline, internal and third-party expenses associated with the clinical development and manufacturer of the company's product candidates, and expenses associated with the conduct of research activities, including under our collaboration with Ono Pharmaceutical.

G&A expenses for the fourth quarter of 2019 were $6.7 million, compared to $4.3 million for the same period last year. The increase in our G&A expenses was attributable primarily to an increase in employee compensation, including share-based compensation.

Total operating expenses were $27.3 million for the fourth quarter of 2019 net of non-cash stock-based compensation expense of approximately $4.6 million. In November, the company repaid its $15 million term loan, retiring in full all of its debt obligations. Including such repayment, the company ended the fourth quarter of 2019 with $261 million of cash, cash equivalents and investments.

Common stock outstanding was 75.7 million shares and preferred convertible stock outstanding was 2.8 million shares, each of which is convertible into five shares of common stock under certain conditions.

And with that, I'd like to open the call up to any questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Mara Goldstein from Mizuho. Please go ahead.

Mara Goldstein

Great. Thank you. Can you hear me okay?

Scott Wolchko

Yes. We can hear you.

Mara Goldstein

Great. Thanks. So just a couple of questions. And the first is other than those first two initial patients treated from hematological conditions with FT516, will there be any others in that cohort? And then I'm just curious if you can speak to where FT538 would fit into the multiple myeloma world in a sort of anti-BCMA landscape? And also, given the fees from Ono this quarter, maybe you could just update us as to what's going on there?

Scott Wolchko

Sure. I'll let Wayne answer the first two questions and then Dan can talk about Ono.

Mara Goldstein

Thank you.

Wayne Chu

So regarding the FT516 Phase I study, we continue to dose escalate in patients with acute myeloid leukemia treated with FT516 monotherapy and we continued dose escalation with patients with B-cell lymphomas were treated with FT516 in combination with rituximab. So both arms are continuing dose escalation in accordance to a standard three plus three dose escalation scheme.

Scott Wolchko

And then myeloma with FT538…

Wayne Chu

Yes. And then with respect to FT538 in multiple myeloma, it is – the thing is still evolving, but certainly in combination with daratumumab and other anti-CD38 monoclonal antibodies as we know, is a clinically validated target. We believe that we do have a place where FT538 can fit in the context of a myeloma landscape even with BCMA targeting agents.

We know, for example, that there are examples where BCMA similar to CD19 in lymphomas is subject to antigen loss and alteration, which may render BCMA-targeting therapy as effective. And this is where our agents like FT538 in combination with anti-CD38 monoclonal antibodies or any other monoclonal antibodies for the treatment of myeloma may have a place in the treatment of [indiscernible].

Daniel Shoemaker

Hi, this is Dan. So the Ono collaboration, again a four-year, two-product deal. We're 1.5 years into the collaboration. And again, one of the product can be built off the 819 backbone, where we'll put additional pitching to just further improve that product to get a best-in-class heme malignancy product.

And then the second product, Ono provided a binder to a novel solid tumor target. And again, we're inserting that into our CAR T backbone and now adding additional edits to enhance the traffic in the persistence or recruitment in the tumor microenvironment.

And again, that product is, they're both in development, the heme malignancy product is about a year ahead. And then the solid tumor because it will acquire additional edits as to take a little bit longer, but the collaboration is going great and we're making good progress along those lines.

Mara Goldstein

All right. Thank you.

Operator

Thank you. Our next question comes from Alethia Young from Cantor Fitzgerald. Please go ahead.

Alethia Young

Hey, guys. Thanks for taking my questions. I guess, two for me. One, can you just talk about potential partnership and collaborations? And how you think about that over 2020? I guess just kind of specifically would you consider things outside of your current like assets there were in the clinic and how do you think about structuring that?

And then I just kind of wanted to get your perspective on FT819 and just some of the puts and takes around developing a CAR T-cell product? I mean, it's certainly not trivial science going on here. So I just wanted you to just kind of walk us through as we head into the second quarter for filing this IND things?

Scott Wolchko

Sure. I’d take both those questions and Wayne and Dan should feel free to jump in. With respect to partnerships, I mean we've discussed this before. Our intent certainly is to think about partnerships that have the potential to expand Fate's pipeline. We are not prioritizing for instance, the partnering of existing product candidates.

We think we have the potential to partner up with companies – large pharmaceutical companies that are absolutely experts in discovering, identifying and validating novel targets, including in the space of solid tumors. And we would certainly be excited about partnering with those folks and incorporating their binding domains against novel targets into some of our more advanced iPS-derived backbones.

So foreign cynics, an example could be, somebody has a novel target or a binding domain, which they have validated against target X and we could build a CAR construct and drop that CAR construct into the FT538 backbone. That would be something we're absolutely interested in exploring those types of partnerships where we have the potential to exploit our platform, bring that together with novel content and build product candidates together.

Wayne Chu

With respect to FT819, yes, FT819 has been an ongoing journey and has been a collaboration that has been in existence with Memorial Sloan-Kettering since middle of 2016. And as you've suggested, the development of an off-the-shelf iPS-derived CAR T-cell is certainly more complex than developing a – iPS-derived NK-cell for a variety of reasons.

But one reasons in particular is if you truly want to have a universal off-the-shelf CAR T-cell therapy, obviously the TCR that is inherent within a T-cell is [indiscernible] reactive and can cause very significant GvHD. And so in developing 819 and our off-the-shelf iPS-derived CAR T-cell platform, we were very interested in it. It was a requirement from our perspective to knock out the T-cell receptor.

And we had originally worked with Memorial Sloan-Kettering and Dr. Sadelain in developing differentiation protocols, at least initially as proof-of-concept where the T-cell receptor was present. When we knocked out the T-cell receptor, challenges emerged originally in developing highly effective iPS-derived CAR T-cells.

Over the past 18 months, there's been substantial breakthroughs in solving that problem. For instance, Michel has – Dr. Sadelain has discovered a 1XX CAR construct. We've been able to drop that 1XX CAR construct in place of the T-cell receptor. So effectively, we've now knocked out the T-cell receptor. We've replaced it by a CAR and we're using that CAR to drive differentiation and maturation of T-cells.

And so that culminated essentially in the presentation that we made at ASH, both at our Investor event as well as a poster presentation where we believe we are now developing highly efficacious iPS-derived CAR T-cells. And we've been benchmarking them over the past year against patient primary derived CAR T-cells and doing that in the model systems that Dr. Sadelain has been using over the past four, five, six years in developing primary CAR T-cell therapy. So we feel very confident about the model systems we're using and the data we're generating with respect to 819.

Alethia Young

Great. Thank you.

Daniel Shoemaker

And just one additional thing is having the CAR driven by the endogenous TCR promoter, drives a more natural expression pattern that results in more persistent and robust CAR T-cells. And so certainly, Michel described that beautifully in a nature paper, 1.5 year ago now, but we've been able to replicate a lot of those observations in our iPS-derived CAR T platform. So we think that's a really important step forward.

Alethia Young

Thanks guys.

Scott Wolchko

Thank you.

Operator

Thank you. Our next question comes from Yigal Nochomovitz from Citi. Please go ahead.

Unidentified Analyst

Hi. This is [indiscernible] on for Yigal. Thanks very much for taking our questions. I had a couple on FT516, specifically in solid tumors. First, could you just elaborate more on what's driving your decision to first test in combination with avelumab? And second, how should we think about which solid tumors you'll be enrolling? Is there going to be – or should we expect any overlap with the solid tumors you're currently targeting with FT500?

Scott Wolchko

So I can answer that question. As was mentioned our FT516 Phase I study in solid tumors will initially focus on combinations with FT516 plus avelumab. And the reason why we selected avelumab was the unique properties of this monoclonal antibody. Not only with respect to its abilities as a checkpoint inhibitor similar to other anti-PDL1 molecules like atezolizumab, but also because it differentiates from those molecules because it does have ADCC activity.

And so by combining avelumab with FT516, it is a possible to exploit both the checkpoint inhibitor mechanism of action of avelumab to its PDL1 inhibition as well as through its combination with NK-cells in terms of targeting NK-cells to tumors. And so the way that the study is designed, allows for patients who have PDL1 positive tumors, those patients would all be eligible for the combination of FT516 plus avelumab.

And then depending on the activity that's seen with FT516 plus avelumab that will in part drive the decision to open up other combinations of FT516 with monoclonal antibodies has already written in the protocol, for example, with trastuzumab and with cetuximab to target tumors that express both HER2 and EGFR.

Unidentified Analyst

Thank you for that. And just a clarifying question, can these patients also fail PD1 therapy or is it just PDL1 prior therapy?

Scott Wolchko

No, they can fail either PD1 or anti-PDL1 directed therapy.

Unidentified Analyst

Got it. Understood. And then just thinking about…

Scott Wolchko

Just to clarify, they will have to have failed at least one line of PDL1 therapy.

Unidentified Analyst

Okay. So they could have failed a prior PD1 and PDL1, but they need that PDL1 failure as well. Okay, understood. Thank you for that clarification. And then just thinking a little bit further, would you ever consider for FT516 or even 596 selecting for patients with low MHC1 expression? Or is that something that's sort of FT500 specific given those other assets are engineered? Or is it something to do with more about the tumor types they're targeting?

Daniel Shoemaker

I think this is the foundational aspect of NK biology. So I think we're going to absolutely pay attention to that as we explore our entire NK platform is one of the mechanisms. And one of the nice things about NK-cells is not only do we – can we take advantage of the functionality we're engineering in, but certainly that sort of innate ability of these NK-cells to recognize and eliminate Class I low or no cells is something that we could always take advantage of.

Scott Wolchko

Okay. Thanks.

Unidentified Analyst

Great. Thanks very much for taking the question.

Operator

Thank you. Our next question comes from Jim Birchenough from Wells Fargo. Please go ahead.

James Birchenough

Yes. Hi guys. Congratulations on all the progress. A few questions. I guess first on 596, there was a reference, and you guys have mentioned the stringent release criteria. Could you maybe talk about the measures of potency and CD19 expression? And I guess, what gives you confidence that those release criteria will be predictive of a highly effective cell therapy? And then I have a few follow-ups.

Scott Wolchko

Sure. Absolutely, when we look at the features and functionality of the released product, a criteria that we look at is absolutely the expression levels for instance, of both CD16 as well as CAR19. And those expression levels, while I won't disclose what the thresholds are. Those expression levels are both very high.

James Birchenough

Great. And then Scott maybe on 819, could you maybe talk about the process of tech transfer from Memorial Sloan-Kettering, when it will most happen? And I guess, what's left to do before filing IND there?

Scott Wolchko

Sure. So I wouldn't describe what we've done to-date necessarily as tech transfer with Memorial Sloan-Kettering. We've been working hand-in-hand on this collaboration, really almost in replicating labs for the past three years. Most of the process development has been done at Fate Therapeutics. The initial pilot manufacturing runs have been done at Fate Therapeutics and we fully expect that the GMP production run will also initially take place at Fate Therapeutics.

And so at this point in time we are completing pilot manufacturing and obviously – then GMP manufacturer to support the IND filing. But I think at this point in time given that we've fully generated and qualified the master cell line, it's a pretty straight forward path and it's a IND that we have confidence given our experience with INDs in the past. I think it's a pretty straight line to file the IND from this point. And to be clear, and to manufacturer product.

James Birchenough

Great. And just one final one, just back on FT596, have you identified the first patient to treat? When do you expect you'll treat that first patient? And from what you've learned from FT500 and 516? Do you think the two weekly dose is adequate to give full coverage?

Daniel Shoemaker

So I can answer that. So we anticipate that the first patient to be treated with FT596 will be enrolled probably within the next several weeks. The study as mentioned is open for enrollment. There are potential patients that have been identified. They're currently going through their screening process. So we should know within the next week or two, whether or not that first patient will come on to study.

Scott Wolchko

I would say one of the things that we're interested in, and we talked about this on our last call, is FT596 and obviously our platform allows for multiple dosing. And in these first patients we're giving one dose in a 30-day period. However, the FDA provided us an opportunity to approach them patient-by-patient, to repeat dose. And that's something that we fully expect to take advantage of beginning with the first patient.

And so very likely, when we provide a data update, certain numbers of our patients will absolutely be redosed. That's something that's a paradigm we're absolutely interested in exploring and we think we have a unique platform to allow for that.

James Birchenough

Great. Well thanks for all the detail.

Scott Wolchko

Thanks.

Operator

Thank you. Our next question comes from Robyn Karnauskas from SunTrust Robinson. Please go ahead.

Unidentified Analyst

Hey guys. This is [indiscernible] on for Robyn. Thank you so much for taking my question, and congrats on all the progress. So one of the questions I had was, you've mentioned that we can expect to see multiple data readouts later this year. I was hoping that you can maybe help set expectations about how many patients we can see from the FT500 trials, from the FT516? How many monotherapy? And it may be hard to do with any sort of bookends on how many patients' data we might see. And would it be closer to the front end of the second half or maybe later? Is there any conference that we should be thinking about? Any color would be helpful.

Scott Wolchko

Yes, absolutely. I think it's too early to say and get into specific patient numbers based on specific products. Obviously, we think ASH is going to be a big conference again for the company, just given the cadence of enrollment in the studies and the timing of initiating the FT596 study, ASH obviously lines up to be a big conference for us.

SITC is probably another conference that we are going to target especially with respect to FT500, given it's focused on solid tumors. I know that answer maybe somewhat unsatisfying. I will say that we will try and give as much transparency and provide as much updates as we can with respect to where and when we intend to present data as we get closer to the conferences.

Unidentified Analyst

Okay. That's very helpful. One small follow-up question. What sort of data can we expect or can we expect any preclinical data at AACR? Can you give us some clarity on that?

Scott Wolchko

Yes. So at AACR, I'm actually not sure that abstracts are published or I can even say this. But at AACR, yes, we will have preclinical data presented at AACR across multiple different product candidates. At AACR, we will very likely announce a new product candidate as well, which will be a CAR focused on a novel target.

Unidentified Analyst

Great. Thank you so much. I appreciate it. Thank you.

Scott Wolchko

Thank you.

Operator

Thank you. Our next question comes from Ted Tenthoff from Piper Sandler. Please go ahead.

Edward Tenthoff

Great. Thank you very much, guys. And just fantastic execution here [indiscernible] on the pipeline. Can you give a sense for scale at the new facility in San Diego? Will you be able to really produce all clinical supply for these plans, studies from that facility? How should we look longer term in terms of capacity? Thanks.

Scott Wolchko

Sure. So the existing facility, and I talk about our manufacturing process, it's a relatively small footprint, but you have to think of our manufacturing process very differently than I think you think about or folks think about most cell therapy manufacturer.

I mean in a single GMP suite in a 45-day period, we can manufacture hundreds of doses of product and we're already sitting on hundreds of doses of product for FT500, FT516 and FT596. So we feel really confident in our ability to supply out of our existing facility, what I'll call early stage clinical supply across our pipeline.

That said, in either late 2019 or early 2020, we did announce that we are planning to move our corporate headquarters within the San Diego area, and launch a new facility in mid-2021 and that new facility will actually include 40,000 square feet of GMP capability.

And so we certainly feel very comfortable in our ability to supply over the next 18 months and we're certainly planning for long-term registrational and potential commercial supply out of a facility that we expect to launch in the next 18 months.

Edward Tenthoff

Excellent. Thanks so much, Scott.

Scott Wolchko

Sure.

Operator

Thank you. Our next question comes from Ben Burnett from Stifel. Please go ahead.

Benjamin Burnett

Great. Thanks so much. I was wondering if you could talk about FT576 and the steps to move that into the clinic. And I guess really what I'm trying to get at is would you want to wait and see some clinical data for FT538 before making any decisions on 576?

Scott Wolchko

Sure. It's a great question. And we are I would say not waiting at all. We're aggressively building FT576. And while I don't think I mentioned it on the call, we intend to file an IND for FT576 in the second half of 2020. So that will be our third IND for the year. And so FT576 similar to FT596 just in terms of how you think about it philosophically, dual-antigen targeted certainly can hit BCMA, can hit CD38 in combined with a monoclonal antibody.

And so we think we're building a multiantigen targeted best-in-class product candidate for myeloma and we're aggressively moving forward with that development and we do not plan on waiting for any type of clinical results for FT538 to move FT576 into clinical development.

Wayne Chu

And as Scott mentioned earlier, 576 is actually being built on the 538 backbone. So I think this is an interesting and powerful example of how we could leverage one master cell bank to make additional products. That again will have four edits, which I think shows you what the direction that we're headed with this platform.

Benjamin Burnett

Okay, great. That's really helpful. If I could just ask one more. Just really about the design of the 516 study. Just remind me after patients receive a second course of therapy, is there an extension study that they can enroll on to? And if there is, I guess, has anyone enrolled on to it yet?

Daniel Shoemaker

So for FT516, there is a long-term follow-up extension study, it's termed FT004. It's for patients who have progressed while receiving FT516, but we continued – but require continued follow-up largely as based on requirements from FDA regarding a long-term safety follow-up as well as long-term safety follow up.

Benjamin Burnett

Got it. Okay. You're not disclosing at this point is whether anyone is enrolled on to that?

Daniel Shoemaker

No. I mean, we have a long-term follow-ups for all our studies. It's an FDA requirement.

Benjamin Burnett

Fair enough. Okay. Thanks very much. I appreciate it.

Operator

Thank you. Our next question comes from Michael Schmidt from Guggenheim Securities. Please go ahead.

Kelsey Goodwin

Hi. This is Kelsey on for Michael. Thanks for taking our questions. 2020 is shaping out to be a big year for the 596 and the 819 program. Maybe could you just help us understand how you view advancing both in anti-CD19 CAR NK-cell assets and also in anti-CD19 CAR T-cell assets? And then maybe more broadly how you see both the NK franchise and the CAR T-cell franchise kind of fitting into and synergizing in your longer-term corporate strategy? Thank you.

Scott Wolchko

So I think it's a great question. I think it's quite honestly a very important question. I think is a question that I don't think we're going to get into publicly yet at this point with respect to our long-term clinical development strategy with respect to FT596 versus FT819.

That said, I would say generally speaking, we don't know and I mean we, the field does not know yet the full potential for instance of CAR NK-cell therapies. And so we're super excited in understanding the initial clinical results for FT596. I would say while it's only a small number of patients, the 11 patients from MD Anderson, at least seem to indicate that CAR NK-cell therapy has similar types of efficacy as CAR T-cell therapy. But the toxicity profile at least in the 11 patients seems to be differentiated in favor of NK-cells.

It is early, don't get me wrong, but I do like the fact that we are developing both CAR NK, we are developing both CAR T, and I think we are exquisitely positioned to answer some of these really important questions with respect to the differences between an NK-cell, a T-cell and importantly how an NK-cell and a T-cell may synergize together to drive curable outcomes.

And I do think we are a company and we are pursuing pre-clinically and you should not be surprised if you see some interesting preclinical data from Fate Therapeutics this year that delves into the synergies between NK-cells and T-cells.

Kelsey Goodwin

Okay, great. Thank you so much.

Scott Wolchko

Sure.

Operator

Thank you. Our next question comes from Biren Amin from Jefferies. Please go ahead.

Biren Amin

Yes. Hi guys. Thanks for taking my questions. Maybe I'll start with 596. The MD Anderson paper came out in the New England Journal of Medicine, and when we look at it, it seems to allow the use of transplants in two of the patients after they receive CAR NK-cells, and I think another three patients receive subsequent pharmacotherapy. Are these therapies allowed in the 596 studies?

Daniel Shoemaker

Sorry, could you repeat the last part of your question? Sorry.

Biren Amin

So I was wondering with MD Anderson after the patients received the CAR NK-cells, two patients received transplant, another three had received, I think, one receivable and Rituxan, and another therapy, so I was just wondering if this is allowed in your 596 studies?

Daniel Shoemaker

So in general, yes, they are. I mean, especially now we're in the early stages when our dosing schedules are limited to single dose administration. As we get additional experience with multiple dosing of FT596, our intention is to treat with multiple doses. But if patients – if the investigators choose to do so, patients would be allowed to receive some of these post-treatment therapies that you described.

Scott Wolchko

I think, at least as we think about it, I mean this is very early dose escalation, and if a patient and a physician want to make a decision to go on to another maintenance therapy or if a potentially curative transplant is available, that is permitted under the protocol. And I think from early stage dose escalation study, I think it might be asking too much to restrict patients from exploring other therapies.

Daniel Shoemaker

But I would also add that as we get additional experience from the study if there is evidence that we're not only achieving deep responses with FT596, but getting durable responses with FT596, you can imagine that discussions with the investigators would involve whether or not to continue following these patients even after receiving multiple doses of FT596 rather than instinctively going on to other therapies.

Biren Amin

So I guess when does that conversation going to happen? Because I guess you've got dose range in the 596 trial from 30 million cell doses to 900 million cell dose?

Scott Wolchko

Yes. As you would say, I think that conversation to a certain extent is going to happen with the first patient because we are interested in exploring redosing of FT596. The FDA has provided us a window to have that conversation and it's certainly a conversation we're excited to have.

Biren Amin

Okay. And then on the – sorry, go ahead.

Daniel Shoemaker

I would just add that would probably dealt with on a patient-by-patient basis and discussing with the individual investigator as well.

Biren Amin

Okay. And then on 819, with IND going in, do you expect any concerns from FDA on manufacturing or should we expect that the agency is going to use similar criteria for 819 compared to 596?

Scott Wolchko

I don't necessarily want to predict what the FDA may or may not choose to do. I would just say generally, I think we have a really good handle historically on qualifying master iPS cell lines. That step, if you will, that stage of qualifying a master iPS cell line is independent of whether you're intending to make an NK-cell or a T-cell.

I would say that the manufacturing process in making an NK-cell or a T-cell from a master cell line is similar. It's not exactly the same by any stretch. But the first 15 days where you go from that master cell line to a CD34, that discrete stage of manufacture, is actually the same also whether you make an NK-cell or a T-cell, from there it differs. When you go from a CD34 to an NK or a CD34 to a T-cell that step of manufacture is different.

But in many respects, I mean there are a lot of similarities and we do think we will get a lot of leverage over what we've done historically in developing and clearing the IND for FT596, which is obviously a CAR NK-cell.

Biren Amin

Great. Thank you.

Operator

Thank you. Our next question comes from Matt Biegler from Oppenheimer. Please go ahead.

Matthew Biegler

Hey guys. Thanks for squeezing me in. Scott, I had a quick one on the first FT516 patient. Is it fair to classify this patient at this point as a complete response or was the best response considered morphological leukemia-free state?

Scott Wolchko

Yes. So when we talked about the patient and we talked about the patient at ASH, I mean we went to lengths to not qualify a response. The protocol has a formal assessment that is conducted at the end of the second treatment cycle.

And so what we have said is that both patients went on to receive a second treatment cycle and we simply made an observational note that we had seen persistence of FT516 in the patient's bone marrow. And that at day-42 through a bone marrow biopsy, at the end of cycle one, there was a morphologic leukemia-free state.

Matthew Biegler

Got it. That's helpful. And then turning to 596, you're starting dose at 30 million cells. It's a around an order of magnitude lower than traditional CAR T. But I'm just wondering if that's a fair comparison for us to make on a dose-to-dose basis since obviously you should have a much more homogenous final product. And then if there's any way that you can kind of quantify what you think your dose would be relative to a CAR T? That'd be helpful. Thanks.

Scott Wolchko

Yes, I think it's too early for us to speculate on what we ultimately think is going to be sort of the MTD with respect to 596. I'll note that the initial dose used in the MD Anderson product was effectively 10 million cells per dose. It was weighted adjusted per kg, but it was effectively 10 million cells per dose, and we're starting at 30 million cells per dose.

But I agree with you. 30 million cells per dose relative to what's been used in the CAR T-cell space is a low dose. Clearly though we believe we have a more homogeneous product. We think we have very high levels of expression of CAR, and we’re more excited and anxious to see how this plays out.

I will say, I mean, obviously the protocol that we submitted though has dose levels that escalate from 30 million cells to 90 million cells to 300 million cells to 900 million cells. And so we certainly have a protocol that encompasses what we think are more traditional dose levels that are seen with CAR T-cell therapy.

Matthew Biegler

Got it. Thanks.

Operator

Thank you. And our last question comes from Amanda Murphy from BTIG. Please go ahead.

Amanda Murphy

Hi, thanks. [Indiscernible] first on cryopreservation for NK-cells. So obviously you've spent a lot of time working on that and maybe if I recall, Dr. [indiscernible] product is still – it's just fresh, not frozen per se.

So I just wanted to get a sense of as you're adding more edits into the product, is that what the gating factor is where – I'm just trying to understand that the limiting factors around cryopreservation and kind of how much more you can ramp up in edits without having to redo prophecies, et cetera?

Daniel Shoemaker

Yes. Hi Amanda, this is Dan. So certainly this is one of the aspects of manufacturing that we've spent a lot of time understanding and optimizing. And one of the things I think about an iPS-derived NK-cells, they seem to just be inherently resilient to the cryopreservation process.

That was a good starting point that then went into a high degree of optimization in an infusion-ready media. Interestingly, as we've gone through the different product forms of whether it's 516 and 596, we've not seen a major difference in performance on viability and potency. And so that the base cryo process that we established for the platform really seems to be scaling well as we add additional edits.

And then I will say that T-cells just in general are generally easier and more resilient to cryopreservation, so that's something that is less challenging compared to the NK side. But to answer your question, this sort of the base platform that we've established seems to really be adapting well to these edit product forms with additional edits.

Amanda Murphy

Okay. Got it. And then my last one is probably impossible to answer, but I'll try to ask it anyway. I mean, there's been a lot of competitive movement in the space around iPSC in general, and one of the things that you talk a lot about is IP and that you've generated and licensed and et cetera. So just kind of sort through that all in my mind or our minds as you get, I think there is a lot of interest in iPSC-derived therapies, et cetera. I'm not sure if you can talk specifically about your IP strategy or whatnot, but just trying to understand, like, do you think you have blocking IP? How may you approach that?

Scott Wolchko

So I'll just say this. We have over 250 patents and 150 open applications that cover iPS cell technology, including iPS-derived NK-cells and T-cells and including engineered features and functionality that you would embed within those cell products.

Wayne Chu

That's one of the advantages for having been doing this for 10 or 12 years.

Amanda Murphy

Right, exactly. Okay. Thank you all.

Operator

Thank you. I show no further questions in the queue. At this time, I'd like to turn the call over to Scott Wolchko, President and CEO for closing remarks.

Scott Wolchko

Thank you all for your participation in today's call and your continued support of Fate. Certainly, there is an exciting year ahead for the field of allogeneic cell-based cancer immunotherapy, and we look forward to achieving significant clinical milestones and generating decisive clinical data across multiple programs this year. Thank you.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.