Today, we will see why Fate Therapeutics (FATE) is an attractive pick in March 2020.

Fate Therapeutics is a clinical-stage biopharmaceutical company focused on the development of next-generation cellular immunotherapies for cancer and immune disorders. The company has pioneered proprietary iPSC (induced pluripotent stem cell) platform technology to develop off-the-shelf cell-based cancer immunotherapy products. Current patient-derived autologous and allogeneic cell therapies suffer from drawbacks such as high costs, manufacturing complexity, product heterogeneity, and high turnaround time. These methods, including patient and donor-derived approaches to cell therapy, also require batch-to-batch sourcing and engineering of millions of primary cells.

Fate Therapeutics aims to be the game-changer in cell-based cancer immunotherapy space by enabling the development of off-the-shelf cell products derived from master cell lines. The company aims to develop less costly, homogenous, and multi-dose or multi-cycle cell therapies with small turnaround time. The resultant cell therapy products are expected to be well-defined and uniform in the composition and can be mass-produced at a significant scale in a cost-effective manner and can be delivered off-the-shelf for broad patient accessibility.

The company's cell therapy pipeline comprises immune-oncology programs including off-the-shelf NK- and T-cell product candidates derived from master iPSC lines, and immuno-regulatory programs, including product candidates to prevent life-threatening complications in patients undergoing hematopoietic cell transplantation and to promote immune tolerance in patients with autoimmune disease.

Human-induced Pluripotent Stem cells are generated by reprogramming adult somatic cells to a pluripotent state. Fibroblasts are the most commonly used primary somatic cell type for the generation of induced pluripotent stem cells. They are reprogrammed using retroviruses. Pluripotent cells are capable of differentiating in all cell types that make up the body.

A single human iPSC can potentially differentiate into more than 200 cell types and provides a renewable source for making cells.

NK (natural killer) cells are the body's first line of defense against tumors and various pathogens. Fate Therapeutics is leveraging its iPSC platform to produce off-the-shelf NK cell therapy products.

FT500 is Fate Therapeutics' first off-the-shelf iPSC-derived NK-cell product candidate. The FT500 study is an open-label, multi-dose Phase 1 clinical trial designed to evaluate FT500 for the treatment of advanced solid tumors.

The dose-escalation stage of the study was originally designed to assess the safety and tolerability of three once-weekly doses of FT500, without IL-2 cytokine support, as a monotherapy and in combination with one of three FDA-approved ICI (immune checkpoint inhibitor) therapies in patients that have failed prior ICI therapy.

Data for the first 12 patients in the Phase 1 study has demonstrated clean safety for the iPSC platform. The cutoff date considered was November 28, 2019. It was seen that 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.

Further, the trial also involved the evaluation of a 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. Here, based on patients' T-cell and antibody repertoire, no anti-product immune responses against FT500 were evident over the multi-dose treatment course.

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

In December 2019, the company disclosed plans to amend the trial protocol by including IL-2 cytokine support with each dose of FT500 after completion of 300 million cells per dose cohort in the ICI combination arm. The company has commenced dose-expansion part of Phase 1 trial with 300 million cells per dose and is focusing on enrolling NSCLC patients who are refractory to or have relapsed following CBT. This tumor type is highly susceptible to NK-cell recognition and killing. The study is enrolling at three clinical sites in the U.S. Fate Therapeutics expects expansion data readout from the trial in the second half of 2020.

Fate Therapeutics is studying the second product candidate from iPSC product platform and off-the-shelf NK-cell cancer immunotherapy, FT516, in an open-label, multi-dose Phase 1 trial. This product has been engineered to augment antibody-dependent cellular cytotoxicity.

In December 2019, the company announced results for two patients dosed with FT516. FT516 was administered as a monotherapy to the first patient who was suffering from relapsed/refractory AML (acute myeloid leukemia). The company dosed FT516 in combination with rituximab to the second patient who was suffering from high-risk DLBCL (diffuse large B-cell lymphoma) and had relapsed after multiple rituximab combination regimens, autologous hematopoietic stem cell transplant, and CAR (chimeric antigen receptor) T-cell therapy. The patients 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.

Initial clinical data based on bone marrow biopsy at day 42 demonstrated no morphologic evidence of leukemia. There was even evidence of hematopoietic recovery following the completion of the first FT516 treatment cycle in the AML patient. There was also no circulating leukemia cells in the patient's peripheral blood. The patient even reported the recovery of neutrophils without growth factor support. The data did not demonstrate dose-limiting toxicities, although serious adverse events were seen. Initial dose escalation data may be read out in the second half of 2020.

This initial clinical evidence highlights the high probability of engineered iPSC-derived NK-cells demonstrating anti-tumor activity in AML indication. Besides, there is a body of data that has demonstrated clinical proof-of-concept for donor-derived NK-cell therapy in relapsed refractory AML and relapsed refractory DLBCL.

In December 2019, FDA accepted FT516's second IND application for studying the product in combination with PDL1, PD1, EGFR and HER2-targeting monoclonal antibody therapies in solid tumor indications. Initially, the company plans to prioritize the combination of FT516 and 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. The company plans to initiate enrollment in a clinical trial for FT516 and avelumab in mid-2020.

Fate Therapeutics is studying off-the-shelf multi-antigen targeted CAR NK-cell product candidate, FT596, in solid tumor indications.

In December 2019, Fate Therapeutics reported favorable in vivo preclinical data for FT596.

Here, in humanized mouse models of lymphoma and leukemia, FT596's efficacy was comparable to that of primary CAR T-cells in promoting tumor clearance and extending survival. FT596 combined with rituximab also showed the enhanced killing of lymphoma cells in vivo as compared to rituximab alone. FT596 can thus emerge to be best-in-class off-the-shelf treatment in B-cell malignancies. Fate Therapeutics has started enrolling patients in the open-label Phase I study. Initial dose escalation data readout on FT596 is expected in the second half of 2020.

Fate Therapeutics has high hopes for FT596, considering that initial clinical data from a donor-derived CAR19 NK-cell program at MD Anderson, demonstrated a 73% overall response rate in patients with relapsed refractory non-Hodgkin's lymphoma and chronic lymphocytic leukemia with no major toxicities. Hence, while the efficacy seemed similar to CAR T therapy, the safety profile was differentiated in favor of CAR NK-cell therapies.

Although early, this data has highlighted CAR NK-cells' capacity to confer a high level of efficacy without the CAR-T cell therapy-related toxicities. Fate Therapeutics expects FT596 to effectively replace patient-specific and allogeneic CAR19 T-cell immunotherapies. The latter single-antigen specific and hence pose a risk of disease relapse due to antigen escape as well as cause significant toxicities due to off-target activity. FT596, on the other hand, has been engineered with three active anti-tumoral functional components.

Fate Therapeutics aims to be the first company to introduce off-the-shelf iPSC-derived CAR T-cell therapy to patients, FT819, by submitting IND in the second quarter of 2020. The company expects to file an IND application for off-the-shelf CRISPR-edited, iPSC-derived NK-cell product candidate, FT538, by early May 2020. The company has also planned IND submission for FT576 in the second half of 2020.

Although Fate Therapeutics is pioneering a revolutionary approach for mass production of off-shelf cell therapy products, its pipeline is very early stage. There has not been sufficient data from its clinical programs to make an informed estimate about the success probability of these programs. In this backdrop, the company is exposed to significant R&D failure risks. In case data readouts from FT500 and FT596 clinical programs do not match expectations, the company may witness increased share price volatility.

At the end of 2019, the company had cash worth $261 million on its balance sheet. The company spent cash worth $83.2 million on operating activities in 2019. This is a proxy for the 2019 cash burn rate. We assume that the annual cash burn rate in 2020 will be around $120 million, considering that three assets have entered in-human trials. Hence, the company seems to have cash that can sustain operations until the end of 2021. However, if cash is needed at a faster pace, the company may land up requiring more funds. This can lead to equity dilution.

According to finviz, the 12-month consensus target price of Fate Therapeutics is $37.94. On March 4, Citi analyst Yigal Nochomovitz reiterated the "Buy" rating and increased target price from $26 to $41. On March 4, Barclays analyst Peter Lawson also initiated coverage of Fate Therapeutics with an Overweight rating and $40 price target.

On March 3, BMO Capital analyst Do Kim raised the firm's price target on Fate Therapeutics to $28 from $22 and reiterated the "Market Perform" rating. On March 3, Guggenheim analyst Michael Schmidt reiterated the "Buy" rating and increased target price from $25 to $41. On March 3, Roth Capital analyst Tony Butler reiterated the "Neutral" rating but increased the target price from $20 to $30. On March 3, BTIG analyst Amanda Murphy reiterated the "Buy" rating and increased target price from $27 to $42. The analyst has also raised the estimated value of the company's iPSC platform from $740 million to $2.0 billion.

On March 3, Oppenheimer analyst Matthew Biegler reiterated the "Outperform" rating and increased the target price from $27 to $36. Piper Sandler analyst, Edward Tenthoff also reiterated the "Overweight" rating and raised the target price from $28 to $57.

In September 2019, Fate Therapeutics launched in-house GMP (Good Manufacturing Practices) manufacturing facility at headquarters in San Diego, California. This 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. The company has already produced hundreds of cryopreserved, infusion-ready doses of FT500, FT516, and FT596 at a low cost per dose. Currently stored in inventory, these doses are immediately available for use in the clinical settings.

The full control of cGMP production and the technical expertise to genetically engineer iPSCs and create qualified clonal master lines for clinical use implies that the company has operational expertise and redundancies required for the consistent cost-effective manufacturing and clinical supply of off-the-shelf cell products.

I believe that the 12-month target price of $30 fairly reflects the growth potential as well as risks associated with early-stage Fate Therapeutics. I consider this company to be a good pick for aggressive biotech investors with an investment horizon of at least one year.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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: Potential Catalysts Ahead - Seeking Alpha

Limbal stem cell deficiency (LSCD) is an ocular surface disorder that results from decreases in the number and function of corneal epithelial stem and progenitor cells that results in the inability to maintain the normal homeostasis of the corneal epithelium.

LSCD signs include conjunctivalization and persistent epithelial defects with or without neovascularization, ocular surface inflammation, and scarring. The disease can be acquired non-immune-mediated, acquired primary immune-mediated, idiopathic, or inherited.

Related: Ocular surface inflammation: Vicious cycle of ocular surface disruption

Diagnosis can be tricky because the disease presentation varies greatly with the degrees of severity of the stem cell deficiency, according to Sophie X. Deng, MD, PhD. This can range from stippling staining in the very early stage to a vortex configuration in the late stage with loss of the palisades of Vogt and vortex keratopathy.

A problem with LSCD is the difficulty in differentiating it from severe dry eye disease, according to Dr. Deng, professor, Stein Eye Institute, University of California, Los Angeles. LSCD can present with staining patterns not generally associated with the disease.

Physicians have used impression cytology to detect corneal goblet cells in LSCD, but the sensitivity of the technique is too low to establish a definitive diagnosis and the degree of the stem cell deficiency cannot be quantified.

Related: Doing justice to corneal irregularities

Confocal microscopyConfocal microscopy using the Heidelberg Retina Tomograph III (HRT) is a more reliable and rapid way to diagnose LSCD that visualizes all of the corneal microstructures from the epithelium to the endothelium, Dr. Deng explained.

In vivo imaging using the HRT III has very high resolution, which facilitates visualization of individual cells, the nerve plexus, the conjunctiva/cornea junction, and the palisades of Vogt, she said.

The goal of microscopy is detection of the changes in the cell morphology that are evident even in early-stage disease. Dr. Deng demonstrated that the corneal cells appear to enlarge with disease progression and become more metaplastic followed subsequently by the absence of stem cells altogether in the corneal epithelium. In the limbus, some eyes exhibit an influx of inflammatory cells.

Related: Stem cell treatment: What could possibly go wrong with procedure?

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Confocal microscopy: Seeing what does not meet the eye - Ophthalmology Times

California and New York are two of the states that have seen the most cases. Officials in California say the "cat is out of the bag" when it comes to community spread, and it is focusing on mitigation strategies like canceling large events. In New York, Gov. Andrew Cuomo has created a one-mile containment zone to try to stop the spread in a community that was particularly hard hit.

Los Angeles Times:California Retreats From Containment, New York Sends In National GuardIn New York, Gov. Andrew Cuomo sent the National Guard to a suburban enclave northeast of New York City to prevent COVID-19 from infecting more people there, after 108 residents tested positive in recent days. In Santa Clara, where California is experiencing its largest outbreak of the virus with 45 positive cases confirmed, health officials continued to direct residents not to congregate, following a ban on large events earlier this week. (Chabria, Gutierrez, Baumgaertner and Karlamangla, 3/11)

The Washington Post:Coronavirus: Schools Close, National Guard Deployed To Help New York Suburb Stem Spread Of DiseaseNew York Gov. Andrew M. Cuomo took the country's most drastic steps to curb the spread of the coronavirus Tuesday, ordering the closure of schools and other gathering places within a one-mile radius in this New York suburb. The creation of what he called a "containment zone" for two weeks will keep about half the city's 10,500 students at home and will allow the National Guard to sanitize public spaces. (Guarino, Bailey, Meckler and Zezima, 3/10)

The New York Times:Coronavirus In N.Y.: Containment Area Is Ordered For New RochelleThe National Guard will move in. Schools, churches and synagogues will be shut down. Large indoor gatherings will be officially banned. The sights and rituals of life in this New York City suburb, which had already been altered, took an eerie turn on Tuesday when Gov. Andrew M. Cuomo announced a drastic new step to try to control the spread of the coronavirus in the largest cluster in the United States. (Nir and McKinley, 3/10)

Associated Press:National Guard Sent Into New York Suburb To Help Control VirusNew Yorks governor announced Tuesday he is sending the National Guard into a New York City suburb to help fight what is believed to be the nations biggest cluster of coronavirus cases one of the most dramatic actions yet to control the outbreak in the United States. The move came as health authorities contended with alarming bunches of infections on both sides of the country and scattered cases in between. (Villeneuve and Rodriguez, 3/10)

The Wall Street Journal:Containment Area Planned For New York Suburb To Stem Coronavirus SpreadNow this Westchester County suburb has become ground zero for one of the largest efforts in the country to contain the spread of the novel coronavirus. Many residents are in quarantine. Businesses are struggling to get customers in the door. And on Thursday, New York state plans to close schools for two weeks in a roughly three-square-mile area of New Rochelle and limit large public gatherings, officials said. People would be able to enter and exit the zone and move about within it. Restaurants and businesses would remain open, officials said, but facilities such as houses of worship and schools would be closed. (Vielkind, Brody and Paris, 3/10)

CBS News:New York Has 173 Cases Of Coronavirus Among The Highest In The U.S.As the total number of cases of coronavirus in the U.S. continues to rise, New York Governor Andrew Cuomo said New York now has at least 173 cases making it among one of the states with the largest number of confirmed cases in the country. In New York, 108 cases are in Westchester County, with New York City and Nassau County following with 36 and 19 cases, respectively, according to officials. Rockland county has six cases, Saratoga has two, Suffolk and Ulster each have one. (Lewis, 3/10)

The Wall Street Journal:New York City Eyes Measures To Stop Virus Spread To JailsNew York City correctional officials said Tuesday they were preparing measures to stop the coronavirus from infecting staff and prisoners at jails that experts said could become incubators for the rapidly-spreading disease. The Department of Correction is focused on keeping its jail cells and shared space clean, screening visitors for symptoms, raising awareness with posters about avoiding the disease and encouraging inmates to keep a physical distance from each other, officials said. (Paul, 3/10)

The Wall Street Journal:Coronavirus Could Sap New Yorks Tax Revenue, Cuomo SaysNew York lawmakers, facing a $6 billion budget deficit, began the month with an optimistic projection. Stock markets were doing well, Wall Street bonuses were coming in strong, and lawmakers could plug some of the gap by assuming another $700 million in revenue was coming. Also at the beginning of the month, the state confirmed its first case of novel coronavirus. (Vielkind, 3/10)

San Francisco Chronicle:Bay Area Counties Shift Coronavirus Stance: It Can Be Slowed, But Not ContainedCoronavirus cases have blown up across Northern California in the past week, and counties increasingly are refocusing from aggressive containment of the disease to acceptance that its in the community and their limited resources are better spent on slowing down its spread. On Tuesday, Sacramento County reported its first death, and the third in the state. The victim in their 90s with underlying health problems was a resident of an assisted living facility. The same day, the county announced it would no longer conduct extensive investigations on every new case of COVID-19 the disease caused by coronavirus and that people who have contact with a known case will no longer be asked to quarantine for two weeks. (Allday, 3/10)

Los Angeles Times:Why Bay Area Coronavirus Warnings Are Stricter Than L.A. Area'sUp to now, some Bay Area public health agencies have been more aggressive than those in Los Angeles and some other counties in issuing coronavirus-related restrictions. But that could be about to change. With the first case of the coronavirus believed to be transmitted within the community now reported in Los Angeles County, the experiences in the San Francisco Bay Area may offer a glimpse for what Southern California is in for. (Lin and Shalby, 3/10)

NPR:Coronavirus: Sacramento County Gives Up On Automatic 14-Day QuarantinesCalifornia's Sacramento County is calling off automatic 14-day quarantines that have been implemented for the coronavirus, saying it will focus instead on mitigating the impact of COVID-19. The change is an acknowledgement that the county cannot effectively manage the quarantines while its health system copes with coronavirus cases. It also reflects problems with the U.S. government's coronavirus testing program issues that slowed efforts to identify people with the deadly virus and to contain COVID-19. (Chappell, 3/10)

Los Angeles Times:Northern California Woman Dies Of Coronavirus In Senior FacilityAn elderly patient in a northern California assisted living facility has died of the novel coronavirus, sparking fears of an outbreak among other residents of the facility and renewing concerns about statewide availability of testing kits to detect the virus. Sacramento County health officials announced Tuesday that a patient in her 90s was the countys first fatality from COVID-19. The Sacramento Bee identified the facility as Carlton Senior Living. (Chabria, 3/10)

KQED:Coronavirus: As Cases In California Climb, Newsom Addresses Testing ConcernsIn a wide-ranging press conference, Gov. Gavin Newsom said that 157 people in California have now tested positive for the new coronavirus. The governor also detailed the latest steps California is taking to ramp up testing, implement social distancing guidance, and prepare for school closures, while processing passengers from the Grand Princess cruise 21 of whom are confirmed to have COVID-19. (Stark, 3/10)

Los Angeles Times:L.A. School Board Weighs Emergency Declaration For CoronavirusThe Los Angeles Board of Education on Tuesday declared a state of emergency, giving Supt. Austin Beutner the authority to take actions needed to close schools if necessary in response to the coronavirus outbreak. The action is seen as a precaution that would allow Beutner to act quickly as the need arises in the nations second-largest school district. As of Tuesday night, there were no plans to close schools and no individual diagnosed with COVID-19 had a connection to an L.A. Unified school, according to the district. (Blume and Kohli, 3/10)

Los Angeles Times:California Coronavirus: Silicon Valley Bans Gatherings Of 1,000 Or MoreWith Silicon Valley reporting a rapidly rising number of confirmed coronavirus cases, the health officer for Santa Clara County issued a rare legal order banning mass gatherings of 1,000 or more people. Santa Clara County, with 43 confirmed coronavirus cases and one death, has Californias largest number of confirmed infections. After declining an earlier recommendation to halt mass gatherings late last week, the San Jose Sharks said the team would abide by the countys new order at SAP Center in downtown San Jose, which is enforceable by the county sheriff and city police agencies. (Lin, 3/10)

The Hill:Three TSA Employees In California Test Positive For CoronavirusThree employees with the Transportation Security Administration (TSA) in California tested positive for the coronavirus, the agency confirmed Tuesday.The employees, who work at Mineta San Jose International Airport in Santa Clara County, and all other workers they came in contact with over the past two weeks are quarantined at home. (Axelrod, 3/11)

The New York Times:Coachella, Influential Music Festival, Is Postponed Amid Virus FearsCoachella is postponed. Organizers of the Coachella Valley Music and Arts Festival, the giant pop festival in the picturesque desert of Southern California, have delayed next months event to October over concerns about the coronavirus, the festival announced on Tuesday after days of speculation. (Sisario, 3/10)

Reuters:Passengers Plod Off Coronavirus-Stricken Cruise Ship In Face Masks In CaliforniaHundreds of travelers who boarded a cruise liner for Hawaii last month in sandals and sunglasses trudged off the coronavirus-stricken ship in face masks at the Port of Oakland, California, on Tuesday, headed to quarantine sites around the country. The tightly controlled disembarkation began on Monday, hours after the cruise ship Grand Princess arrived at a specially secured terminal across San Francisco Bay from its home port amid cheers from weary passengers who had spent days at sea confined to their staterooms. (3/10)

San Francisco Chronicle:SF Archdiocese Shutters 90 Schools After Student Tests Positive For The CoronavirusThe Archdiocese of San Francisco announced the closure of all its schools after a student tested positive for the coronavirus.The 90 schools in San Francisco, San Mateo and Marin counties will shut down Mar. 12 through Mar. 25, said Pamela Lyons, superintendent of schools in a letter to families Tuesday. The announcement did not identify the school the student attends, but the principal of Riordan High School in San Francisco confirmed that a student there tested positive for the virus Sunday. (Tucker, 3/10)

San Francisco Chronicle:Ro Khannas Bay Area District Is Being Hit By Coronavirus. He Says Congress Must Do MoreFremont Rep. Ro Khannas district has been one of the hardest hit in the country by the novel coronavirus.Santa Clara County, which covers much of Khannas 17th Congressional District, reported 43 cases as of Tuesday, the most in California. There are at least 153 cases across the state.Khanna says Congress isnt doing enough to stop the virus from spreading. The Chronicle spoke with him Monday about his push to increase emergency funding and quell racist sentiments during the outbreak. Here are highlights from the interview, which has been condensed for space purposes and clarity. (Gardiner, 3/10)

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A Tale Of Two States: California Shifts Towards Mitigation Over Containment While New York Sends In National Guard - Kaiser Health News