Fate Therapeutics: Using Cell Programming To Produce Better Cell Therapies – Seeking Alpha

Introduction

I have written about companies working on research and development of cell therapies as the next frontier in cancer treatment. Current approved treatments such as CAR Ts are autologous treatments and require complex personalised manufacturing and can't be scaled up, which, in turn, drive up costs and limit patient's accessibility. It has been well documented that the approved CAR Ts are facing manufacturing issues and underperformed commercially.

To circumvent this, companies such as Atara Biotherapeutics (ATRA) and Allogene Therapeutics (ALLO) are working on allogeneic T cell therapies, which are derived from healthy donors and are less costly to manufacture. Fate Therapeutics (FATE) is taking a novel approach by developing programmed cellular immunotherapies for cancer and immune disorders.

In this article, I introduce Fate Therapeutics and give an overview of their technology and clinical pipeline.

Fate Therapeutics is a clinical-stage company that is developing first-in-class cell therapy product candidates based on a therapeutic approach known as cell programming. Fate does this by using human induced pluripotent stem cells ("iPSCs") to generate a clonal master iPSC line with preferred biological properties. The clonal master iPSC line is then directed to create their cell therapy product candidate.

Similar to how biologics such as monoclonal antibodies are manufactured from master cell lines, Fate believes that clonal iPSC lines can be made and used as a renewable source for manufacturing cell therapy products which are well-defined and uniform in composition, which, in turn, can be mass-produced repeatedly at significant scale in a cost-effective manner and can be delivered off-the-shelf to increase patient's accessibility. Figure 1 lists the advantages of using renewable master cell lines over healthy donor cells in cell therapy.

Figure 1: Advantages of Renewable Master Cell Line as Cell Source in Immunotherapy (Source)

With this approach, Fate is programming blood and immune cells, including natural killer (NK) cells, T cells, and CD34+ cells to advance a clinical pipeline of programmed cellular immunotherapies in the therapeutics areas of immuno-oncology and immuno-regulation.

In other cases, Fate also uses pharmacologic modulators, such as small molecules, to enhance the biological properties and therapeutic function of healthy donor cells ex vivo before their product candidates are administered to a patient.

In 2012, the Nobel Prize in Physiology was awarded to John Gurdon and Shinya Yamanaka for their ground-breaking discovery that fully differentiated mature human cells can be induced to a pluripotent state. iPSCs, with their unique capacity to be indefinitely expanded and differentiated into any type of cell in the body, hold revolutionary potential for creating better cell therapies.

Fate believes that iPSCs can be used to overcome key limitations inherent in many of the cell therapy product candidates undergoing development today, such as the requirement to source, isolate, engineer and expand cells from an individual patient or healthy donor with each batch of production. These batch-to-batch manufacturing requirements are logistically complex and expensive and can result in variable cell product identity, purity, and potency as well as manufacturing failures.

Fate is targeting to utilize clonal master iPSC lines as a renewable source for manufacturing cell therapy products which are uniform in composition and can be repeatedly mass-produced at significant scale in a cost-effective manner, to increase patient's accessibility. Fate is applying their expertise in iPSC biology to genetically engineer, isolate, and select single cell iPSCs to be used as clonal master iPSC lines. Such master iPSC lines are subsequently directed to create immune cells such as NK cells, T cells, and CD34+ cells.

Beyond iPSCs, Fate is also working on programming hematopoietic cells ex vivo by using advanced molecular characterization tools and technologies to identify small molecule and biologic modulators that promote rapid and supra-physiologic activation or inhibition of therapeutically-relevant genes and cell-surface proteins, such as those involved in the homing, proliferation, and survival of CD34+ cells or those involved in the persistence, proliferation, and antitumor activity of NK cells and T cells. Fate believes this approach systematically and precisely program the biological properties and therapeutic function of cells ex vivo prior to adoptive transfer is a reproducible, scalable and cost-effective approach to maximize the safety and efficacy of cell therapies.

As discussed earlier, currently approved T cell therapies are autologous and rely on the use of a patient's own cells. Manufacturing such highly personalised treatments are complex and costly, which drives up costs and limits patient's accessibility. While companies are working on allogeneic platform which is derived from healthy donors, Fate is taking it one step further by working on renewable master iPSC cell lines. Fate believes that their approach has the potential to improve cell product consistency and potency, reduce manufacturing costs, shorten time to treatment and importantly, increase patient's accessibility.

Fate is advancing a series of programmed cellular immunotherapies from both iPSC derived and donor derived cell sources, in therapeutic areas of immuno-oncology and immuno-regulation. Figure 2 lists down Fate's clinical pipeline.

At the 62nd American Society of Haematology Annual Meeting & Exposition ("ASH 2019 meeting"), Fate provided updates to several of its clinical programs, which I will cover in more detail in the below sections.

Figure 2: Fate Therapeutics' Clinical Pipeline (Source)

Since 2014, checkpoint inhibitors such as Merck's (MRK) Keytruda and Bristol-Meyer Squibb's (BMY) Opdivo have been approved to treat several cancer indications. Unfortunately, more than 60% of patients treated with checkpoint inhibitors will not respond or will relapse. Consequently, there is a huge unmet need for therapeutic approaches to overcome resistance to checkpoint inhibitors. NK cells have shown some potential to overcome such resistance and as such Fate is developing FT500, which is an off-the-shelf- NK cell therapy derived from a clonal master iPSC line, for the treatment of advanced solid tumors, both as a monotherapy and in combination with checkpoint inhibitor. In November 2018, FT500 was cleared by the FDA to be the first-ever iPSC-derived cell therapy cleared for clinical investigation in the United States.

Fate believes that the use of a clonal master iPSC line to produce FT500 provides a large, homogenous population of NK cells that is well-defined and displays potent activity, while also being available for repeat clinical dosing. At the ASH 2019 meeting, Fate reported results from the ongoing Phase 1 trial of FT500. Out of 12 patients, no dose-limiting toxicities or FT500-related serious adverse events were reported.

CD16 mediates antibody-dependent cellular cytotoxicity ("ADCC") which is a potent anti-tumor mechanism by which NK cells recognize, bind and kill antibody-coated cancer cells. CD16 occurs in two variants, 158V or 158F, that elicit high or low binding affinity. Numerous clinical trials with FDA approved monoclonal antibodies have demonstrated that patients homozygous for the 158V variant, have improved clinical outcomes. However, this patient group only accounts for 15% of the population. In addition, ADCC is dependent on NK cells maintaining active levels of CD16 expression, which has been shown to be considerably downregulated in cancer patients, which can significantly inhibit anti-tumor activity.

To this end, Fate is developing FT516, a targeted NK cell product candidate created from a master clonal iPSC line engineering to express a high-affinity, non-cleavable CD16 receptor, as an off-the-shelf immunotherapy for the treatment of haematological malignancies.

In February 2019, FT516 was cleared by the FDA as the first-ever clinical investigation of a cell product derived from a clonal master engineered iPSC line. A phase 1 trial evaluating FT516 as a monotherapy for the treatment of acute myeloid leukemia ("AML") and in combination with CD20-directed monoclonal antibodies for the treatment of advanced B-cell lymphoma is ongoing.

At the ASH 2019 meeting, Fate reported encouraging interim results from the phase 1 study. The first AML patient treated showed no morphologic evidence of leukaemia at Day 42 following treatment and evidence of hematopoietic recovery.

In 2017, 2 autologous CD19 CAR T were approved - Kymirah by Novartis (NVS) and Yescarta by Gilead (GILD) to treat relapsed/refractory ("r/r") leukemias and lymphomas. While both treatments have been revolutionary, not all patients respond to therapy and even for patient who initially respond, they may experience a relapse. The downregulation of CD19 from the tumor cell surface has been clinically demonstrated to be an important mechanism of resistance.

To over CD19 antigen escape, FT596 expresses a novel modified receptor to augment ADCC to enable coincident targeting of CD19 and additional antigens such as CD20. On top of a CAR targeting CD19, FT 596 also expresses a cytokine complex that promotes survival of NK cells. Combined, these features are intended to maximize potency of FT596.

In September 2019, FT596 was cleared by the FDA for clinical investigation as the first cellular immunotherapy engineered with three active anti-tumor components. At the ASH 2019 meeting, Fate reported encouraging preclinical results for FT596 and that it has managed to produce GMP doses of FT596 at approximately $2,500 per dose. This will enable it to overcome the limitations of the current generations of autologous CAR T. Phase 1 trial of FT596 is expected to be initiated in early 2020.

FT538 is an off-the-shelf NK cell therapy created from a clonal master iPSC line engineering to prevent expression of the cell surface protein, CD38, which is highly and uniformly expressed on Multiple Myeloma ("MM") cells. CD38 is also broadly expressed on NK cells, and as a result, NK cells can be significantly depleted in patients treated with anti-CD38 antibodies. However, NK cells are important for the antitumor activity of anti-CD38 antibodies via the ADCC mechanism.

FT538 is developed for use in combination with anti-CD38 antibodies for enhanced ADCC. FT538 is designed to provide a robust population of NK cells resistant to depletion when used in combination with anti-CD38 antibodies, with the aim of improving patient outcomes in MM.

FT819 is an off-the-shelf first-of-kind CD19 CAR T manufactured from a clonal master iPSC line. The technology was licensed from Memorial Sloan Kettering ("MSK"), led by Michel Sadelain, scientific co-founder of Juno Therapeutics. FT819 is designed to overcome current limitations in approved autologous CD19 CAR Ts, including safety, costs, scalability and patient's accessibility.

At the ASH 2019 meeting, Fate reported encouraging preclinical data on FT819, with plans to submit application to start clinical trials in the first half of 2020.

Beyond iPSCs derived immunology-oncology programs, Fate is also developing NK100, which is donor-derived NK cell therapy. NK100 is produced through a feeder-free, 7-day manufacturing process during which NK cells sourced from a healthy donor are activated ex vivo with pharmacologic modulators, inducing the robust formation of adaptive memory NK cells. NK100 is currently being evaluated in 3 separate Phase 1 studies in r/r AML, ovarian cancer and advanced solid tumors which have progressed on or failed available approved therapies.

Additionally, Fate is also developing ProTmune as a programmed cellular immunotherapy as a next-generation allogeneic hematopoietic cell transplantation ("HCT") cell graft. Thousands of patients with hematologic malignancies and rare genetic disorders seek curative outcomes through HCT. HCT is limited by the occurrence of graft-versus-host disease (GvHD) and severe infections. Around 50% of patients undergoing HCT die or experience relapse within the first two years after HCT. ProTmune is designed to optimize the therapeutic properties of the graft prior to administration to patient and Fate believes that it can reduce GvHD, severe infection and disease relapse. There are no approved therapies for prevention of GvHD in patient undergoing allogeneic HCT and Fate believe ProTmune is well positioned to solve a significant unmet clinical need. ProTmune is currently investigated in an ongoing phase 2 study and has been granted Fast Track and Orphan Drug Designation by the FDA and Orphan Medicinal Product Designation by the European Medicines Agency.

As of 30 September 2019, Fate's cash on hand was US$302.8M compared to US$201.0M at 31 December 2018. This was largely driven by the net proceeds of US$162.4M from a round of public offering of its common stock in September 2019. I expect this amount to be able to fund their clinical programs way into 2021 at the very least.

In addition, Fate also announced recently the completion of its GMP facility dedicated for iPSCs - derived cell therapies. The importance of manufacturing in cell therapies cannot be understated and having its own dedicated manufacturing facility is a step in the right direction.

Fate has made huge progress in the past 12 months, with 3 programs - FT500, FT516, FT596 being cleared by the FDA to start clinical trials. The market has also reacted positively to the encouraging recent updates at the ASH 2019 meeting, with stock price rising 41% for the period 6 November to 10 December 2019, which is the period where abstracts were announced and the last day of ASH 2019 meeting.

Arguably though, the biggest show of faith in Fate's technology comes from their competitor, Allogene Therapeutics. Allogene recently announced a collaboration with Notch Therapeutics to research and develop iPSC-derived allogeneic cell therapies. This clearly marks the belief of the importance of using a renewable cell source for cell therapies, which Fate is currently the market leader.

Investing in clinical-stage biotechnology companies is generally risky as such companies have no approved products to generate revenue. Fate's clinical pipeline is also relatively early stage, with no ongoing pivotal trials. Any clinical trial failure may cause huge downward swing in its share price.

Even if the event that its product eventually gets approved, there is no guarantee of commercial success. Many of Fate's competitors working on autologous cell therapy treatment such as Novartis, Gilead, and BMS have more resources and a stronger balance sheet and Fate may not be able to compete with them in the long run.

Allogeneic players such as Atara are also working on their own platform and are currently running a pivotal trial, to be completed by the second half of 2020. As stated above, Allogene is also working on iPSC-derived therapies and will compete with Fate. While I believe Fate is the current market leader in this space, circumstances may change in the future.

As always, investors should conduct their own due diligence before taking up any position. They should also have a relatively long-time horizon and risk appetite before investing in clinical-stage biotechnology companies.

In this article, I covered an overview of Fate's cell programming approach as well as their clinical pipeline. With the limitations of current generations of cell therapies, including high cost and complex manufacturing, Fate's cell programming platform offers a refreshing and alternative approach for future generations of cell therapies.

While they have made huge progress in recent months, Fate's clinical pipeline is still relatively early stage, with no pivotal trials ongoing. Investors should consider their time horizon and risk appetite before taking up any positions. While I am optimistic about Fate's technology, I personally will be waiting for more catalyst in 2020 before taking up any positions.

For investors who wish to invest in cancer immunotherapy, they can consider the CNCR ETF which offers a diversified portfolio in the field, reducing risks in selecting individual stock ticker. I have covered companies working in cell therapies/immunotherapy and will continue to cover more companies in the coming weeks and months.

Disclosure: I am/we are long ATRA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Fate Therapeutics: Using Cell Programming To Produce Better Cell Therapies - Seeking Alpha