On August 5, 2015 Fate Therapeutics, Inc. (NASDAQ: FATE), a biopharmaceutical company engaged in the development of programmed cellular immunotherapeutics for the treatment of severe, life-threatening diseases, reported its financial results for the second quarter ended June 30, 2015, and recent corporate and clinical highlights (Filing, 8-K, Fate Therapeutics, AUG 5, 2015, View Source [SID:1234507034]).

"The interim data from our Phase 2 PUMA study indicate that the therapeutic value proposition of PROHEMA may include the prevention of severe life-threatening infections across a broad spectrum of bacterial, fungal and viral pathogens through a one-time administration at the time of hematopoietic cell transplantation (HCT). This would alleviate a significant cause of morbidity and mortality in patients undergoing HCT and also reduce the need for costly anti-infective treatment regimens following HCT," said Christian Weyer, M.D., M.A.S., President and Chief Executive Officer of Fate Therapeutics. "During the second half of 2015, we look forward to sharing additional clinical data from our adult and pediatric clinical development initiatives for PROHEMA. Additionally, we are aggressively moving to extend the promising observations from our PROHEMA clinical experience to other cell sources used in HCT including mobilized peripheral blood, where severe infections and graft-versus-host disease represent significant unmet medical needs. We remain on track to file an IND by the end of 2015 for PROTMUNE, a programmed mobilized peripheral blood immunotherapeutic designed to enhance the therapeutic properties of donor T cells."

Recent Corporate & Clinical Highlights

· Encouraging Immunoprotection Data from Ongoing PUMA Study Observed. On May 6, 2015, the Company reported interim data from an initial 30 subjects in its ongoing Phase 2 PUMA study of PROHEMA, a programmed hematopoietic cell-based immunotherapeutic derived from umbilical cord blood. Immunocompromised subjects administered PROHEMA had a 54% reduction in the rate of infection-related adverse events, including severe bacterial, fungal and viral infections following HCT. Specifically, subjects administered PROHEMA experienced 0.7 total events per subject (13 total events in 18 subjects) as compared to 1.6 total events per subject in the control cohort (19 total events in 12 subjects). Importantly, the event rate for cytomegalovirus (CMV) infection was 0.0 in subjects administered PROHEMA (0 total events in 18 subjects) as compared to 0.3 in the control cohort (4 total events in 12 subjects); and the event rate for bacterial infections was 0.3 in subjects administered PROHEMA (6 total events in 18 subjects) as compared to 0.6 in the control cohort (7 total events in 12 subjects). The ongoing PUMA study, which is designed to investigate several key measures of hematopoietic reconstitution and immunoprotection in adult subjects undergoing double umbilical cord blood transplantation, is expected to enroll approximately 60 total subjects, randomized at a ratio of 2:1.

· First Subject Treated in Pediatric PROVIDE Study Assessing CNS Cellular Replacement Potential of PROHEMA. The first subject in the Company’s Phase 1b PROVIDE study, an open-label clinical study of PROHEMA designed to enroll 12 pediatric subjects undergoing single umbilical cord blood transplantation for the treatment of inherited metabolic disorders, has been treated. The study’s design includes serial neuro-imaging and neuro-cognitive assessments to explore the potential of programmed hematopoietic cells to durably reconstitute in the brain and deliver enzymes which are otherwise missing to the central nervous system. Multiple inherited metabolic disorders, including lysosomal and peroxisomal storage diseases such as Hurler and Hunter syndromes, Krabbe disease and other leukodystrophies, qualify for treatment under the PROVIDE study.

· IND for Programmed Mobilized Peripheral Blood Immunotherapeutic to be Filed in 2H15. The Company expects to file an Investigational New Drug application in the second half of 2015 to conduct a first-in-human clinical assessment of PROTMUNE, a programmed hematopoietic cell-based immunotherapeutic derived from mobilized peripheral blood. In preclinical models of acute graft-versus-host disease (GvHD), host mice that received programmed mobilized peripheral blood cells from a mismatched donor showed a statistically-significant (p<0.0001) reduction in GvHD score and a statistically-significant (p=0.0005) improvement in survival, as compared to mice that received vehicle treated cells. The Company plans to evaluate the potential of PROTMUNE to reduce life-threatening complications of allogeneic HCT, such as acute GvHD, in adult subjects undergoing mobilized peripheral blood HCT.

· Strategic Research Collaboration Formed with Juno Therapeutics to Program CAR T and TCR Immunotherapeutics. On May 4, 2015, the Company entered into a research collaboration and license agreement with Juno to identify and apply small molecule modulators to program genetically-engineered chimeric antigen receptor (CAR) T-cell and T-cell receptor (TCR) immunotherapeutics. Under the collaboration, Juno paid the Company an upfront fee of $5.0 million, purchased one million shares of the Company’s common stock at $8.00 per share, and agreed to fund all of the Company’s collaboration activities during the four-year research term. For each product developed by Juno that incorporates modulators identified through the collaboration, the Company is eligible to receive clinical, regulatory and commercial milestones, plus royalties on net sales.

· Natural Killer Cell-based "Off-the-Shelf" Cancer Immunotherapeutic Programs Launched in Collaboration with University of Minnesota. In July 2015, the Company entered into a collaboration with the University of Minnesota to clinically translate two distinct NK cell-based cancer immunotherapeutic programs, both of which seek to overcome key limitations of adoptive T-cell immunotherapy including the requirement to isolate and engineer cells for each individual patient. In the first program the Company intends to accelerate the development of an "adaptive" NK cell phenotype, which has been shown to have an epigenetic profile similar to that of cytotoxic T lymphocytes and to exhibit long-term persistence in vivo. The second program leverages the Company’s proprietary induced pluripotent stem cell (iPSC) technology, which has the potential to enable the efficient and precise engineering of single pluripotent cells and the large-scale clonal expansion of such cells, in the development of iPSC-derived NK cell-based targeted cancer immunotherapeutics.

Financial Results

· Cash Position: Cash and cash equivalents as of June 30, 2015 were $81.2 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 the strategic research collaboration with Juno, offset by cash used to fund operating activities.

· Total Revenue: Revenue was $0.3 million for the second quarter of 2015, which was derived from the Company’s strategic research collaboration with Juno.

· Total Operating Expenses: Total operating expenses were $7.5 million for the second quarter of 2015, compared to $6.0 million for the second quarter of 2014. Operating expenses for the second quarter of 2015 includes $0.7 million of stock compensation expense, compared to $0.4 million for the second quarter of 2014.

· R&D Expenses: Research and development expenses were $4.9 million for the second quarter of 2015, compared to $4.0 million for the second quarter of 2014. The increase in R&D expenses is primarily related to an increase in personnel expense, including stock-based compensation expense, resulting from additional headcount to support the clinical development of PROHEMA and the preclinical evaluation of the Company’s other product candidates.

· G&A Expenses: General and administrative expenses were $2.7 million for the second quarter of 2015, compared to $2.1 million during the second quarter of 2014. The increase in G&A expenses is primarily related to an increase in personnel expense, including stock-based compensation expense, and an increase in intellectual property expenses.

· Common Shares Outstanding: Common shares outstanding as of June 30, 2015 were 28.6 million compared to 20.6 million in 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 strategic research collaboration.

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