On November 3, 2015 Fate Therapeutics, Inc. (NASDAQ: FATE), a biopharmaceutical company dedicated to the development of programmed cellular immunotherapeutics for the treatment of cancer and immune disorders, reported business highlights and financial results for the third quarter ended September 30, 2015 (Filing, 8-K, Fate Therapeutics, NOV 3, 2015, View Source [SID:1234507925]).

"We have firmly established a leadership position in a unique and broadly applicable strategy for cancer immunotherapy — the production of T cells and NK cells from pluripotent cells, bringing an off-the-shelf approach to the field of cell-based immunotherapies," said Scott Wolchko, Chief Operating and Financial Officer of Fate Therapeutics. "Additionally, our clinical experience with PROHEMA, preclinical studies with PROTMUNE and research collaborations with Juno Therapeutics and the University of Minnesota all provide compelling support that the administration of programmed immune cells to patients fighting cancer will serve as a cornerstone treatment paradigm."

Recent Highlights & Upcoming Milestones

· Off-the-Shelf Cancer Immunotherapy Strategy to be Presented at ASH (Free ASH Whitepaper) 2015 Annual Meeting. The Company’s patent-protected pluripotent cell platform combines genetic engineering of pluripotent cells with rapid and efficient generation of immune cells, enabling production of off-the-shelf engineered T- and NK-cell-based therapeutics without requiring patient-sourced cells. Fate plans to present its novel strategy for developing off-the-shelf cancer immunotherapies using its pluripotent cell platform during two poster sessions at the American Society of Hematology (ASH) (Free ASH Whitepaper) 2015 Annual Meeting.

· NK-Cell Cancer Immunotherapeutic Undergoing Preclinical Development. In July 2015, Fate entered into a collaboration with the University of Minnesota to enable clinical development of a novel population of "adaptive" NK cells, which exhibit prolonged persistence and enhanced anti-tumor activity mediated through CD16 signaling in preclinical studies. The Company’s development strategy seeks to use "adaptive" NK cells in combination with solid tumor-targeting antibodies to induce potent killing of cancer cells.

· PROTMUNE IND Filing Planned. The Company expects to initiate a first-in-human clinical trial in 2016 to investigate the potential of PROTMUNE to prevent the life-threatening complications of acute graft-versus-host disease (GvHD) and severe infections in patients undergoing mobilized peripheral blood (mPB) transplantation. During an ASH (Free ASH Whitepaper) 2015 Annual Meeting poster session, Fate plans to present scientific findings showing that a single administration of programmed peripheral blood cells resulted in a statistically-significant reduction in GvHD score and improvement in survival as compared to vehicle-treated peripheral blood cells in preclinical models.

· PUMA Study Reaches 70% of Target Enrollment. Fate is currently preparing a second interim data-cut from its ongoing Phase 2 PUMA study of PROHEMA in adult patients undergoing double umbilical cord blood transplantation for the treatment of hematologic malignancies. The Company expects to report additional data on neutrophil engraftment and severe infection-related adverse events from the PUMA study during the 2015 ASH (Free ASH Whitepaper) Annual Meeting.

· Leadership Transition. On October 12, 2015, the Company announced that Scott Wolchko, a Fate founder and the Company’s Chief Operating & Financial Officer, will succeed Christian Weyer, M.D., M.A.S., as President and Chief Executive Officer, effective December 1. The Company also announced that Stewart Abbot, Ph.D. has been named Chief Development Officer after joining Fate earlier this year from Celgene Cellular Therapeutics, where he was instrumental in developing the company’s hematopoietic cell-based immuno-oncology programs and partnerships. Fate also announced the promotions of Daniel Shoemaker, Ph.D., who joined the Company in 2009, to Chief Scientific Officer, and Cindy Tahl, J.D., who joined the Company in 2009, to General Counsel.

Financial Results

· Cash Position: Cash and cash equivalents as of September 30, 2015 were $72.9 million, compared to $49.1 million as of December 31, 2014. The increase is primarily driven by net proceeds from the Company’s public offering of common stock in May 2015 and cash generated from entering into a research collaboration and license agreement with Juno Therapeutics in May 2015, offset by cash used to fund operating activities.

· Total Revenue: Revenue was $1.0 million for the third quarter of 2015, which was derived from the Company’s collaboration with Juno.

· Total Operating Expenses: Total operating expenses were $7.4 million for the third quarter of 2015, compared to $6.0 million for the third quarter of 2014. Operating expenses for the third quarter of 2015 include $0.6 million of stock compensation expense, compared to $0.5 million for the third quarter of 2014.

· R&D Expenses: Research and development expenses were $5.0 million for the third quarter of 2015, compared to $4.1 million for the third quarter of 2014. The increase in R&D expenses is primarily related to an increase in third-party professional consultant and service provider expenses to support the clinical development of PROHEMA, and an increase in personnel expense, including stock-based compensation expense, resulting from additional headcount to support the conduct of research activities.

· G&A Expenses: General and administrative expenses were $2.4 million for the third quarter of 2015, compared to $1.9 million during the third quarter of 2014. The increase in G&A expenses is primarily related to an increase in personnel expense, including stock-based compensation expense.

· Common Shares Outstanding: Common shares outstanding as of September 30, 2015 were 28.7 million compared to 20.6 million as of December 31, 2014. Common shares outstanding increased primarily as a result of the 6.9 million shares of the Company’s common stock issued pursuant to the May 2015 financing, and the 1.0 million shares of the Company’s common stock issued and sold to Juno pursuant to the collaboration.

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