Fate Therapeutics Inc (FATE) 2021 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Fate Therapeutics First Quarter 2021 Financial Results Conference Call. This call is being webcast live on the Investors section of Fate Therapeutics' website at fatetherapeutics.com. (Operator Instructions) As a reminder, this call will be recorded.

I will now turn the call over to Scott Wolchko, President and CEO of Fate Therapeutics. Scott, you may begin.

Thank you. Good afternoon, and thanks, everyone, for joining us for the Fate Therapeutics First Quarter 2021 Financial Results Call. Shortly after 4:00 p.m. Eastern Time today, we issued a press release with these results, which can be found on the Investors section of our website under Press Releases. In addition, our form 10-Q for the quarter ended March 31, 2021, was filed shortly thereafter and can be found on the Investors 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 included in our form 10-Q, for the quarter ended March 31, 2021, 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 facts and circumstances underlying these forward-looking statements may change. Except as 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. Wayne Chu, our Senior Vice President of Clinical Development; Ed Dulac, our Chief Financial Officer; and Bob Valamehr, our Chief Research and Development Officer. Today, we will highlight our clinical progress and plans for each of our disease franchises, including our plans to share interim clinical data for off-the-shelf, iPS-derived NK cell programs in acute myeloid leukemia and in B-cell malignancies.

We will also discuss the expansion of our FT538 program into solid tumors, where our IND application was recently allowed by the FDA for conduct of a multi-dose, multi-cycle, Phase I clinical trial, in combination with certain monoclonal antibodies targeting tumor-associated antigens, EGFR, HER2 and PD-L1. This marks the 12th IND allowed by the FDA for our iPSC product platform.

Alongside the 24th Annual American Society of Gene and Cell Therapy Meeting being held virtually next week, we plan to share interim Phase I clinical data for our FT516 and FT538 programs in relapsed/refractory AML. We believe this clinical update will be insightful on multiple fronts. For example, there is clinical precedent across numerous single-center, investigator-initiated academic studies that donor NK cells can drive anti-leukemic activity. However, these approaches rely on the use of NK cells that are matched to the patient, that are manufactured solely for that patient and that are delivered to that patient in a hospital setting following intensive conditioning therapy. FT516 and FT538 are iPSC-derived NK cell product candidates that are administered off the shelf, in the outpatient setting and without patient matching.

Additionally, these Phase I clinical studies of FT516 and FT538 are designed to assess the inherent capacity of the product candidate to target and kill leukemic blasts as a monotherapy. As we have shown encouraging Phase I clinical data of FT516 in combination with rituximab in relapsed/refractory B-cell lymphoma, we believe there's an opportunity to build off of this foundation and combine with ADCC competent monoclonal antibodies in relapsed/refractory AML. To this end, an investigator-initiated study of FT538 in combination with daratumumab designed to target CD38-positive leukemic blasts and further enhance anti-leukemic activity is expected to begin later this year.

Finally, although patients have been treated in the first dose cohort only with FT538, we are assessing early translational observations that might indicate whether FT538 with its additional engineered modalities has superior functionality compared to FT516.

Patients with relapsed/refractory AML often have high leukemic blast burden, prolonged impairment of hematopoietic function and exceptionally poor outcomes. Median overall survival rates are less than 6 months, and 5-year overall survival rates are 10% to 15%. The only proven curative therapy is allogeneic stem cell transplant. However, many patients are often ineligible due to their leukemic burden or not deemed fit to tolerate the procedure due to the intensity of chemotherapy conditioning. There is a significant need for therapies that can clear the bone marrow of leukemic blasts, which can enable patients to qualify for allogeneic transplant or can enable a durable response without further therapy.

For example, a recent study in relapsed/refractory AML showed that patients achieving an initial response per the 2017 ELN response criteria, defined as either achieving a complete response, CR; a complete response with incomplete hematologic recovery, CRI; or morphologic leukemia-free state, MLFS, had statistically significant improvement in overall survival.

Given the significant unmet need for patients with AML, several therapies have been approved in recent years based on single-arm studies demonstrating response rates of 20% to 30% with 8 to 12 months' median duration of response. These include therapies designed to target specific mutations that cause bone marrow dysfunction, such as IDH1, IDH2 and FLT3 inhibitors. Emerging therapies, including T-cell engagers and CAR-T cells, have also shown similar response rates in early-phase testing. However, significant toxicities have been reported, including rates of cytokine release syndrome in excess of 50%.

In many respects, our interest in off-the-shelf iPS-derived NK cell therapy dates back to a conversation in early 2015 with Dr. Jeff Miller, Professor of Medicine, University of Minnesota and Deputy Director of the Masonic Cancer Center; and Dr. Sarah Cooley, who was at the time a leading clinical investigator in the emerging field of NK cell therapy at the University of Minnesota and now the is Senior Vice President, Translational Medicine at Fate Therapeutics. Doctors Miller and Cooley were conducting studies using ex vivo cytokine-activated peripheral blood NK cells to treat patients with relapsed/refractory AML with the goal of bridging patients to transplant.

In single-center, investigator-initiated academic studies, ex vivo cytokine activated donor NK cell therapy has shown responses of 20% to 35%, including in studies run by Doctors Miller and Cooley. And while we believe these response rates are comparable to recently approved therapies, significant challenges have limited clinical advancement of donor NK cell therapy.

For example, the current paradigm of donor NK cell therapy resembles a transplant-like process. Patients are hospitalized, receive intense lymphodepleting chemotherapy and are administered NK cells from donors that are specifically manufactured for and matched to the patient. Additionally, very large numbers of NK cells, oftentimes in excess of several billion cells per dose, are required to be administered to patients to achieve responses. And production of such large numbers of NK cells often necessitates weeks of complex manufacture, while the patient remains untreated and is at high risk for disease progression.

In contrast, our FT516 and FT538 programs are off-the-shelf iPS-derived cell products, which are available on demand for administration in the outpatient setting without patient matching, and therefore, have the potential to efficiently and effectively treat many patients with AML.

The Phase I study of FT516 as a monotherapy has enrolled the first and second dose cohorts of 90 million and 300 million cells per dose. And dose escalation is ongoing with enrollment in the third dose cohort of 90 million cells per dose. The Phase I study of FT538 as a monotherapy is ongoing with enrollment in the first dose cohort of 100 million cells per dose.

As a reminder, AML is a very heterogeneous disease. And patient outcomes do vary, depending on cytogenetics, mutation status and leukemic burden. Key objectives in dose escalation are safety of our engineered iPS-derived NK cell products, tolerability of the off-the-shelf multi-dose treatment schedule and anti-leukemic activity, including, in consideration, of patient and disease baseline characteristics.

Certainly, we will consider objective responses in dose escalation based on the established 2017 ELN response criteria, which is broadly accepted as the gold standard for assessing AML patient outcomes, as encouraging evidence that our off-the-shelf, iPS-derived NK cell franchise may hold therapeutic promise for patients with AML.

We are also interested in early translational comparisons between FT516 and FT538. At a feature symposium at ASGCT, Dr. Miller is scheduled to highlight the unique properties of FT538 resulting from the deletion of the CD38 gene. In preclinical models, the engineered functionality of FT538 imparts metabolic, transcriptional and functional properties that are substantially similar to those of adaptive NK cells, a discrete subset of memory-like NK cells that exhibit increased cytokine production, enhanced persistence, resistance to oxidative stress and potent serial cytotoxicity. We look forward to reviewing early clinical data of our FT538 program that might indicate whether its engineered functionality confers superior therapeutic advantages.

At the 2021 American Society of Clinical Oncology Annual Meeting being held virtually from June 4 through 8, we plan to present new clinical data from our Phase I study of FT516 in combination with rituximab for the treatment of relapsed/refractory B-cell lymphoma. We believe the interim Phase I clinical data of FT516 in combination with rituximab previously presented at our investor event in December were compelling and suggests that FT516 can be administered in the outpatient setting. The high-affinity, non-cleavable CD16 receptor of FT516 can affectively synergize with rituximab in patients that have relapsed following or are refractory to rituximab-containing regimens.

FT516 may have a differentiated safety profile compared to T-cell-based therapies, including T-cell engagers and CAR-T cell therapies. And FT516 may confer rates of response in relapsed/refractory B-cell lymphoma that are similar to those of T-cell-based therapies.

The ASCO presentation will cover a total of 13 patients that have completed dose escalation at the first 3 dose levels of 300 million cells, 900 million cells and 300 million cells per dose. Note that the FT516 clinical protocol does allow for patient backfill in the event a dose level has cleared toxicity and shown activity so that more than 3 patients may be enrolled at a given dose level.

Dose escalation in our Phase I study is currently ongoing with enrollment at 900 million cells per dose. We are preparing to initiate multiple dose-expansion cohorts. We're also preparing to explore combinations of FT516 with standard-of-care regimens containing CD20 targeted therapy and without Cy/Flu chemotherapy conditioning to assess its therapeutic potential in earlier line therapy.

We continue to be pleased with the progress in our Phase I clinical trial of FT596, our off-the-shelf iPSC-derived CAR NK cell product candidate designed to target multiple antigens through its high-affinity, non-cleavable CD16 receptor and its CD19-targeted CAR, an approach that we believe may hold best-in-class potential for the treatment of B-cell malignancies.

Dose escalation in our Phase I study of FT596 is ongoing with enrollment in the third single-dose cohorts of 300 million cells as monotherapy and at 300 million cells in combination with rituximab for B-cell lymphoma as well as in the first single-dose cohort of 30 million cells as monotherapy for chronic lymphocytic leukemia. We plan to begin enrollment in combination with obinutuzumab upon clearance of this first monotherapy dose cohort in CLL.

In addition, since we believe that relapsed/refractory patients with aggressive cancers will be best served by administration of multiple doses during the first weeks of treatment, we have now submitted a protocol amendment to enable multi-dose treatment schedules for FT596 in addition to the current single-dose treatment schedule. We plan to introduce the multi-dose treatment schedule in each of the 4 regimens at the highest dose level cleared for the single-dose treatment schedule in that particular regimen.

In late July or early August, we plan to hold an investor event to feature our FT596 program, where we expect to share interim Phase I clinical data covering approximately 20 patients.

In the second quarter, we expect to initiate clinical investigation of our iPSC product platform in multiple myeloma. Similar to our approach in lymphoma, we are beginning clinical investigation in multiple myeloma by leveraging our high-affinity, non-cleavable CD16 receptor, and we're combining FT538 with daratumumab to maximize ADCC.

While daratumumab effectively targets CD38 expressed on myeloma cells and induces cell death, it also induces NK cell fratricide, which significantly impairs the effectiveness of ADCC. In addition, NK cell function is often impaired in patients with multiple myeloma, further reducing the potential therapeutic activity of daratumumab. Collectively, preclinical and clinical observations suggest a potential therapeutic benefit of maintaining NK cell numbers and function. Enrollment of FT538 in combination with daratumumab will commence at 100 million cells per dose.

We are also preparing to initiate a Phase I clinical trial of FT576, our off-the-shelf, iPSC-derived CAR NK cell product candidate designed to target multiple antigens through its high-affinity, non-cleavable CD16 receptor and its BCMA-targeted CAR, an approach that we believe may hold best-in-class potential for the treatment of multiple myeloma.

At the American Association for Cancer Research Annual Meeting in April, we presented preclinical data demonstrating that the multi-antigen targeting functionality of FT576 exhibits greater in vivo efficacy compared to the combination of BCMA-targeted CAR-T cells and a gamma secretase inhibitor.

The clinical protocol for a Phase I clinical trial of FT576 includes dose escalation both as monotherapy and in combination with daratumumab to enable dual-antigen targeting of BCMA and CD38 on myeloma cells. Additionally, the protocol includes assessment of both single-dose and multi-dose treatment regimens to maximize the therapeutic index during the first 30 days following infusion.

As I mentioned during our last quarterly update, we are enthusiastic about the potential of NK cells to treat a wide range of solid tumors, and we are pleased with the progress we're making in building our pipeline of off-the-shelf, multiplexed engineered product candidates. An initial therapeutic strategy of particular interest to us is exploiting ADCC, which is a potent anti-tumor mechanism by which NK cells recognize, bind and kill antibody-coated cancer cells and which has been shown to improve progression-free survival in patients with solid tumors. However, significant limitations in the functional capacity of a patient's NK cells, which are often depleted in number or impaired, including through CD16 shedding, can compromise the potency of ADCC in patients with solid tumors.

We believe off-the-shelf administration of an ADCC-optimized NK cell can augment the activity of monoclonal antibodies that are currently approved for the treatment of many solid tumors. To this end, we are currently enrolling patients in the third dose cohort of our Phase I study of FT516 in combination with avelumab, an ADCC-competent anti-PD-L1 checkpoint inhibitor therapy.

I am pleased to announce today that we are significantly expanding on this therapeutic strategy. Last month, the FDA allowed our IND application for clinical investigation of FT538 in combination with an array of monoclonal antibodies, including those that target the tumor-associated antigens, EGFR, HER2 and PD-L1. This marks the 12th IND allowed by the FDA for our iPSC product platform. Under the clinical protocol, each patient is eligible to receive up to 2 FT538 treatment cycles, with each cycle consisting of 3 days of outpatient lymphoconditioning, 3 once-weekly infusions of FT538, and monoclonal antibody therapy.

We intend to initiate clinical investigation of 3 independent regimens combining FT538 with EGFR-targeted cetuximab, HER2-targeted trastuzumab, and PD-L1-targeted avelumab, and we expect to initiate enrollment in the second half of 2021.

Finally, I would like to take a moment and sincerely thank the patients, caregivers and investigators who participated in the PROTECT study of ProTmune. While our full attention and resources are focused on our deep pipeline of off-the-shelf, iPS-derived cancer immunotherapies, we are disappointed to announce that the PROTECT study did not meet its primary end point of prevention of acute graft versus host disease following allogeneic stem cell transplant, and we will stop all further development of ProTmune. We intend to share the clinical results of the PROTECT study with our investigators and the broader transplant community to assist in their continuing efforts to improve the curative potential of allogeneic transplant for patients.

I would now like to turn the call over to Ed to highlight our first quarter financial results.

Thank you, Scott. Turning to our financial results. Revenue was $11.1 million for the first quarter of 2021 compared to $2.5 million for the same period last year. Revenue in the current quarter was derived from our collaborations with Janssen and Ono Pharmaceutical.

Research and development expenses for the first quarter of 2021 were $44.9 million compared to $29.3 million for the same period last year. The increase in our R&D expenses is attributable primarily to an increase in employee head count and compensation, including share-based compensation and in expenses associated with clinical trial costs.

General and administrative expenses for the first quarter of 2021 were $12.5 million compared to $7.7 million for the same period last year. The increase in our G&A expenses was attributable primarily to an increase in head count and employee compensation, including share-based compensation. Total operating expenses for the first quarter of 2021 were $44.4 million, net of $13 million in noncash share-based compensation expense.

In the first quarter, we recorded a noncash $0.7 million non-operating benefit associated with the fair value of contingent milestone payments under our iPSC-derived CAR-T cell collaboration with Memorial Sloan Kettering. In the event a certain clinical milestone is achieved with an iPSC-derived CAR-T cell product candidate, up to 3 milestone payments may be owed to MSK based on subsequent trading values of the company's common stock, ranging from $50 to $150 per share. These milestone payments in the aggregate total up to $75 million, and no amounts have been paid or are currently owed to MSK. We will remeasure this liability currently valued in the aggregate at $47 million on a quarterly basis, and changes in the fair value will be recorded in our earnings as a non-operating income or expense.

In January, we completed a public offering of common stock, whereby we issued 5.1 million common shares. In addition, in lieu of common stock, we issued 257,000 pre-funded warrants. The net proceeds from the financing were approximately $432 million. The company ended the first quarter of 2021 with $888 million of cash, cash equivalents and investments. Common stock outstanding was 94 million shares, and preferred convertible stock outstanding was 2.8 million shares, each of which is convertible into 5 shares of common stock under certain conditions.

I would now like to open the call up to any questions.

(Operator Instructions) And we do have our first question from Robyn from Truist Securities.

Robyn Karnauskas. So let's just start off with next week. I know you have a lot of data coming. You've talked about -- you've updated -- on the call, you talked about how you've updated on FT516 and FT538. Maybe you could give us some color about the patient baseline. How many patients will we see? How many doses will we see them treated with? And how should we think about your strategy in AML? Sort of big picture, how do we digest this data? And how do we set the expectations for it?

Sure. So Robyn, I mean we will have a fairly comprehensive event from now. I think it's next Thursday. So 7, 8 days from now, we'll have a fairly comprehensive event. We will walk through what has historically been done with respect to NK cell treatment in AML. We will provide some detail on the preclinical results that we have seen, for instance, with FT538, including comparing FT538 to FT516, and then Wayne will spend a significant amount of time walking through the history of patients that we've treated. You will see patients on a patient -- you'll see detail on a patient-by-patient basis.

So we plan on providing the detail for each and every patient, and you will see baseline characteristics. You will see whether that patient is relapsed or refractory. You will see most recent therapy. You will see the, for instance, risk profile associated with each and every patient. And then importantly, you will obviously see anti-leukemic activity and responses associated with each and every patient. So there will be a tremendous amount of detail. There will be -- it'll be very transparent on a patient-by-patient basis. And we expect to include in that about, in total, 12 patients.

And strategy in solid tumors? I mean going forward, that's a big one for you. Just more clarity there. I'm excited about that. So...

Yes, the strategy in solid tumors, absolutely. I mean clearly, we think there are multiple monoclonal antibodies that are improved in solid tumors, for instance, whether it be Herceptin, Erbitux, avelumab, others. And part of their mechanism of action is dependent on antibody-dependent cellular cytotoxicity, ADCC. And we think NK cells play a really important role there. We actually think there's plenty of evidence to suggest that ADCC today is not being optimized, that the NK cell compartment essentially that exists within patients is checked or compromised.

And that by coming in with a wave of NK cells that are designed to synergize with the monoclonal antibody, we think we can substantially augment responses. That's step one, and we are starting to initiate that, obviously, with FT516, but we're obviously increasing our investment based on our conviction in ADCC by moving FT538 now into solid tumors across a fairly broad set of monoclonal antibodies in solid tumors.

Ultimately, though, as you know, we think of that as a stepping stone. What we're doing, for instance, in lymphoma, what we're doing in myeloma, where we're utilizing, for instance, CD16 in addition to engineered CAR functionality, we're doing the same exact thing in solid tumors, where we have product candidates emerging in the second half of this year, building off of the FT538 backbone, engineering in CARs. For instance, our first IND will be engineering in a CAR against the MICA/MICB stress ligands. We recently presented data where we've engineered in a CAR into the FT538 backbone against B7-H3 as a solid tumor targeting strategy. And in addition, we expect that the first IND, actually, under the Janssen collaboration, will be a CAR NK cell product for solid tumors.

All right. Thanks, Scott. Again, you've mind-blown me about how many different products you have at this time. I'm writing them all down. I appreciate it.

Sure.

And we do have our next question from Ted Tenthoff from Piper Sandler.

I want to follow up a little bit, and I'm appreciating that we're going to have the event later this year and more datasets. With all these different approaches on the solid tumor side, how do you ultimately envision this playing out? Do you expect that there will be certain cell types that maybe play better in different kinds of cancers with different kinds of therapeutic combinations? Do you ultimately see a penultimate product like the MICA/MICB? Give us a little bit more color on sort of where your thinking is there.

Sure. I mean I think it's early for us to have a definitive strategy in solid tumors with multiplexed engineered cell therapy since we are breaking new ground. I do think generally, there are certain solid tumors that may actually be more amenable to an NK cell therapy. We've talked in the past, for instance, that there are various mechanisms of resistance that solid tumors utilize to escape recognition of the immune system whether it's T cells or NK cells.

One of the more significant mechanisms of resistance is actually where the tumor works to down-regulate MHC class I, and there is loss of antigen presentation through that downregulation of MHC class I. Because of that, T cells can no longer recognize those tumors. That's the exact cell type that an NK cell can, in fact, recognize. And oftentimes, the cells -- the tumor cells that down-regulate MHC class I are high expressors of stress ligands. Again, these are, for instance, cues for NK cells to recognize and attack.

So I think that is one area of solid tumor biology that we are really interested in with respect to NK cells and, in particular, the CAR-MICA/MICB product candidate since it's designed to key in on stress ligands and even overcome resistance that exists with downregulation of stress ligands or shedding of stress ligands. But in addition, I also think there is going to be a fundamental role for combination with monoclonal antibody.

I mean monoclonal antibodies are used early and often successfully to treat solid tumors. And part of their mechanism of action is ADCC and NK cell dependent. And so we're really excited, for instance, with respect to FT538 in being able to combine that with monoclonal antibody therapy against a broad array of solid tumors.

All right. Well, I'm excited to the events coming up and more data this year.

And we do have our next question from Alethia Young from Cantor.

Congrats on all the progress, and looking forward to next week, for sure. I guess I just wanted to -- maybe it's a philosophical and little bit practical question, just how important is durability after kind of a single dose or understanding that or having kind of a perception of that in like this data set and other upcoming data sets as well? And then also, can you just talk a little bit about -- is it the PD-L1 that's kind of the better target versus PD-1? I'm just curious about that as well.

Sure. I'll start with the last question. I mean we're obviously early in exploration with respect to combination of monoclonal antibodies and solid tumors. We started with avelumab. Doesn't mean it was the right place to start, but we started with avelumab because obviously, PD-L1 is up-regulated on the tumor itself. So we thought, at least, it provided a means by which the NK cell could target, in combination with avelumab, a target expressed on a tumor as opposed to PD-1.

With respect to durability of the doses, I mean, again, this is something that we are exploring, and we're experimenting with different treatment regimens and schedules to begin to tease out the differences that might exist between treatment schedules, whether that's one dose, whether that's, for instance, up to 6 doses. I think it's too early to know the answer to that question. I think fundamentally we believe 2 things that there is a period of time, especially for aggressive cancers where you need to hit the tumor hard. And that may be the first 2 weeks, maybe that's the first 4 weeks, maybe that's the first 6 weeks. But there's a period of time where we believe a therapy really needs to aggressively attack the tumor to lead to deep durable responses.

And I would also say our belief system today is that the best way to drive that deep durable kill during that window, again, whether it be 2, 4, or 6 weeks, is through multi-dosing. And the reason for that is because when you administer a cell into a patient, I think there's lots of data emerging that, that cell profoundly changes with respect to its function, properties, anti-tumor killing ability during that window of kill. And so our belief is that to really maximize activity and because the cells administered to patients do change within the patient, that a multi-dose strategy is likely going to be the best strategy. And I would say finally, we -- similar to that, we believe a multi-targeting strategy is going to be the most effective strategy.

And we do have our next question from Yigal Nochomovitz from Citi.

Scott, in your prepared remarks on AML, you mentioned that -- alluded to ORR being correlated with improved overall survival, and obviously some of the more recent approved therapies for AML targeted therapies, such as FLT3 and IDH inhibitors were approved based on the narrow measure of CR/CRh. So I was just wondering is there any specific reason with respect to cell therapies, the focus should be on ORR as opposed to a CR/CRh. This is the case for the targeted therapies. And have you had any discussions with the FDA on this nuance?

No, I have not had any discussions with the FDA at this point. We're using what we believe to be an updated criteria using 2017 ELN. We think it is the gold standard. We can have an interesting discussion and maybe Wayne can jump in with respect to CRh versus CRi. We actually believe under the 2017 ELN criteria, CRi is a higher bar than CRh. CRi requires either full recovery of neutrophils or platelets. CRh does not require full recovery of either. So under the 2007 ELN criteria, we actually believe CRi is a higher bar than CRh. And Wayne, I don't know, you may want to comment on that.

So just one comment. I mean I think -- yes. I mean we are certainly assessing our responses objectively based on the 2017 ELN criteria. We are very aware of some of the recent approvals, for example, with some of the IDH inhibitors where the approval was based on composite CR and CRh. And I think it's important to emphasize that as we're in -- because we're only in early Phase I study -- early part of a Phase I dose escalation, we're not holding fast to specific end points like CR/CRh as a path to registration. We look at the responses as early indicators of activity that might confer clinical benefit. So I would caution just a little bit about committing to a particular response criteria at this early stage of the game.

But certainly, as our data set matures and we get more data, then understanding some of the relationships between response and durability and even survival as we get enough patients will allow us the opportunity to further refine some of these relationships when we apply other criteria like CRh.

Okay. I just had one other question and maybe you've commented on this in the past, but if you could remind us. Could you just explain why the starting dose for 538 in myeloma is a 100 million cells, whereas for 516 and 596, it's threefold lower at 30 million cells? And also what is going to be the expected starting dose for 576?

Yes. The -- I wouldn't read too much into it other than just time and experience. If you go back, obviously the initial experiences with FT516, we're talking about an iPS-derived therapy, FT516 at the time that was engineered with CD16, very little clinical experience. And so we started and proposed to start at 30 million cells per dose. As we've gotten more advanced and built up clinical experience over time, we've gotten comfortable with the safety profile, quite honestly, of what we're seeing with our iPS-derived NK cell therapies, including at much higher doses.

And so when we submitted our protocol for FT538 as well as FT576, now given all the safety history we do have with our platform going back 2 years, we opted to start at a higher dose, 100 million cells per dose, and the FDA was comfortable with that.

And we do have our next question from Michael Yee from Jefferies.

Scott, congrats on all the progress. We had 2 questions. One was going back to expectations around AML. You've previously said a 20% to 30% CRh has been seen in literature. You've talked about the various, I guess, limitations with some of those programs. Is that the right bar to think about for 516 and how to put that into context with the fact that you will have some 538 data next week as well. So maybe just compare and contrast those programs versus the expectations you've laid out. And also, how important is durability? So that's question 1 is on AML.

And question 2 is similar, and that is with lymphoma in the summer. We know the data at ASH, and I think you had 2 prior CRs, durability seems to be a question that would be important. Can you just help us understand expectations around a durability given it's only 2 CRs, but CAR-T is 33% to 50% durable CR. So maybe make some comments around durability.

Sure. So yes, obviously, I think starting in AML, I think there's going to be a lot of interest in trying to compare, for instance, FT516 with -- or FT538 with the historical experience with donor-derived NK cell therapy. And I do think donor-derived NK cell therapy, as I've mentioned in these sort of single-center academic studies, have shown 20% to 30%, 35% response rates. I understand the natural desire to do that comparison. I think there are significant differences that have existed with donor-derived NK cell therapy versus the paradigm that we're pursuing. And I've touched on some of them. I -- we've talked about just right off the top, the lymphoconditioning regimen is significantly different. We have a lighter conditioning. We deliver the product outpatient. Historically, the paradigm for donor-derived NK cell therapy has been transplant-like, significant lymphodepletion such that patients are hospitalized.

So I do think -- I do understand the natural comparison. I think there's differences. That said, the reason I'm focused on 20% to 30% is not the comparison with donor-derived NK cell therapy, it is because I think that's the right bar to determine whether or not we actually potentially have a product.

Going back to my comments that I made on some recent approvals in AML, given the unmet need, there have been multiple approvals in the past 2 or 3 years, where the response rate has been about, let's call it, somewhere between the high teens and the mid-20%s. And so when I focus on response rate of the 20% to 30%, I'm not actually looking at that in the context of, gosh, donor-derived NK cell therapy. I'm looking at it in the context of do I actually think we have a product that can be advanced into a registration study. And that's how I'm thinking about that bar in AML.

We'll see. Obviously, we'll share the data with respect to FT516 and FT538. I've been pretty upfront about it when people have asked. Look, pre-clinically, FT538 is a better product. It just is pre-clinically. If you race them head to head, 10 out of 10 times in 10 different races, FT538 is always going to win. Whether that plays out in the clinic or not, it'll be interesting to see that.

With respect to ASCO and 516 in lymphoma, yes, we provided a little bit of data initially. There'll be a much more robust update at ASCO with respect to FT516, and we're encouraged to share that data. I think -- durability, I think, is a fair question. The durability of the response, I think, is a fair question. I think that is still a bit early to assess. We're not even at the -- we're not -- we haven't even advanced through the top dose level yet. And our patients are still, relatively speaking, only on study for a short period of time. I think by ASH, we will have a very clear view of durability of FT516 plus rituximab.

And we do have our next question from Peter Lawson from Barclays.

Scott, just, I guess, going back to Mike's question around the response rate or the bar for AML, are you focused on CRi or CRh? Has that response rate, that 20% to 35% response rate in AML? Or is that more of a -- just an overall number?

It's -- the number that I've described is a composite of CR, CRi, MLFS. There's just a very interesting paper that was released and published of venetoclax actually in relapsed/refractory AML, where the data that I referred to and the reference I made was a comparison of patients using the 2017 ELN criteria that achieved CR, CRi, MLFS versus patients that did not. There is a clear survival benefit between those 2 groups, CR, CRi, MLFS versus non-responders. Clear survival benefit, statistically significant that extends out over 30 months.

Got you. And would you be, I guess, more content with a high CRi versus a high CRh? I'm just trying to gauge...

CRh is not part of the 2007 ELN criteria. It's part of a criteria that originally existed in 2003. I agree there are paths forward where approvals have been achieved based on CR/CRh. There's also paths forward where products had been approved on CR/CRi. They're 2 different response criterias. Both of them are very viable.

Good. And then just your comment around not using a Cy/Flu that really appealing. Are you thinking of other ways to deplete the bone marrow through other methods or...

Yes. Yes. I think there are -- I think this comes down to a question -- the philosophical question and scientific question on what is the purpose of Cy/Flu. I think that's an open question. There's, I think, a lot of speculation around what the purpose of Cy/Flu is, but I don't think there's any magic to Cy/Flu and cell therapy where Cy/Flu has to be delivered with cell therapy. Cy/Flu has a biological effect. It is probably multifactorial.

One of those biological effects is, for instance, significantly increasing cytokines within patients as a result of the Cy/Flu. And so I do think as we look forward and think about what is the ultimate cell therapy paradigm for patients, I think looking at ways, for instance, where we can significantly reduce Cy/Flu, it is important. And we are very interested in exploring that. And it's actually one of the reasons why we're engineering in cytokine support into ourselves.

And we do have our next question from Tazeen Ahmad from Bank of America.

Tazeen, are you on mute?

Sorry. Can you hear me now?

I can, yes.

Excellent. Sorry about that.

No problem.

For 516 and 596, I just wanted to drill in a little bit into the pursuit of DLBCL as an indication. Over the last year, there's obviously been a number of companies that have had drugs approved in the space from Seattle Genetics to MorphoSys to most recently, ADC Therapeutics. They're all different mechanisms, obviously, from what you're pursuing but wanted to get your thoughts about how you view the opportunity overall in DLBCL and where you see NK cells potentially fitting into the treatment paradigm.

And then second question is more of, in general, what's your strategy for re-dosing NK cells? And how many doses could a patient potentially receive? Can you just remind us what's the highest number of doses any patient has received across your program so far?

Sure. So I'll tackle last question first. So the most doses that we have -- the maximum number of doses that we have administered to a patient is 6. And this goes back to -- first started with actually FT500 where we -- and it was actually the reason we sort of ran this experiment with FT500. We gave 2 days of outpatient lymphoconditioning, followed by doses of FT500 on day 1, day 7, day 14. Then the patient was off therapy for 2 weeks, and we did a safety assessment. And then we actually re-dosed the next month, day 1, 7 and 14 without lymphoconditioning. And so that was essentially, you could think about it as 6 doses over 45 days, following light outpatient lymphoconditioning. And the entire experiment at some level initially was set up to assess whether or not a patient could tolerate multi-dosing in that form.

For instance, would there be mechanisms of profound immune rejection that would arise? That was one of the very early things we were looking at. Would there be a, for instance, a form of CRS that would emerge? Because you would administer essentially a cell unmatched to a patient and that the patient would be building up alloreactivity to that cell? We did not see that with FT500, and we've not seen that with FT516. FT516 has been dosed up to 6 doses, and we've not seen that with any of our other product candidates to date.

Now FT596, we've given a single dose, and then they can repeat that single-dose cycle. But generally speaking, we feel really confident about our ability to re-dose and then certainly demonstrated our ability to re-dose safely with tolerability up to 6 doses over a 45-day period.

With respect to where we think NK cells fit within sort of the B-cell lymphoma, DLBCL landscape, I think there's lots of opportunity here. I mean clearly, we've started out in a position where we are -- you can think about it as sort of third line, where patients have failed multiple lines of rituximab. And we're really excited about what we've seen in that setting, where we've combined FT516, for instance, with rituximab in patients that have either relapsed or failed rituximab. We think there's a great opportunity there, given the response rates that we're seeing with FT516.

And additionally, like we discussed, we actually think if the product candidate really does synergize effectively with Rituxan and if it really does continue to show a differentiated safety profile compared to T-cell therapies whether it be engagers or CAR-T cells, we think we have a terrific opportunity to go very early line with FT516 or FT596.

And we do have our next question from Michael Schmidt from Guggenheim.

This is Kelsey on for Michael. First, I guess, how quickly can the protocol amendment for 596 be approved and implemented? And I guess, is there any chance you could provide some insight into maybe the number or proportion of patients to date that have gotten the second dose? In other words, I guess could we read into the fact that you're now at the point that you can file this amendment, that there's maybe more than just that single case study patient?

And then secondly, could you possibly provide an update on where you stand kind of in launch or in a Phase I trial prep for 819 and what maybe still needs to be done there before you start treating patients? That's it.

Sure. Sure. First question first. So with respect to the protocol amendment, the protocol amendment we believe can be IRB approved and active, let's call it, by the end of June. It's submitted. We're giving the FDA an opportunity to comment on that protocol, we're taking that protocol to multiple IRBs. And we think by the end of June, we may be in a position to begin to implement a multi-dose treatment schedule with respect to FT596.

I think one of the reasons, and I have alluded to this in the past, that we've taken some time to file that amendment, is we clearly wanted to get experience with administering more than one dose of FT596. And clearly, the patient that we disclosed at ASH of last year did go on to a second cycle. We've had lots of experience now with patients in lymphoma receiving multiple cycles of FT516. And yes, there have been other patients that have been retreated with FT596. That, I think, was your first question.

Your second question with respect to 819, we actually have just recently completed 2 additional manufacturing runs with 819. And we believe that those manufacturing runs will be released shortly, and we'll be in a position to treat patients with FT819 quickly upon release. And so yes, in the next, call it, weeks to months or next weeks, I think we'll be in a position to treat patients with 819.

And we do have our next question from Daina Graybosch from SVB.

Two from me. One's a follow-up on the moving away from Cy/Flu. I just wonder why you are starting with, I think you said FT516 cohort, given that it doesn't have the membrane-bound IL-13 that could reduce dependence on Cy/Flu impact on cytokines.

And then the second question is on durability of response. And you have many, many trials and cohorts. And I wonder which one do you think is most likely to first give the best opportunity to test durability of response, meaning it won't have the complexity of many patients going on to transplant after you get them in a CR or PR.

Yes. So your last question first. I think FT516 in lymphoma is a perfect example to test durability of response. I just don't know if we're far along with -- I don't think we're far along enough with respect to time on study or, we're certainly not clear, the entire dose escalation, to answer the question in an informative way with respect to durability of response. But I think the FT516 study is a really great study to judge durability of response.

I continue to believe FT596, given it is dual-antigen targeting, will show improvement over and above 516, but that remains to be seen. I think FT596 is the best-in-class product candidate. I'm super excited with what we're seeing with 516, but I do believe FT596 is the best-in-class product candidate. But I do think the first sort of benchmark with respect to durability of response can be assessed using FT516 plus Rituxan absolutely.

With respect to Cy/Flu and where we're starting with that and why 516, 516 is given -- being administered with IL-2. Keep that in mind. 538 is not, but 516 is. And so even though we may, for instance, significantly reduce Cy/Flu or move to a different form of conditioning, we will likely still administer with some degree of cytokine support for 516.

Got it. So I guess what's your opinion on that the depletion removes the IL-2 sink. I think that's the other idea, not that it just increases 5x but that all of those cells that you don't deplete then will suck up all the IL-2 you administer.

Yes. So that's why the experiment needs to be done. I think it's a fair question because I think that is one of the things that Cy/Flu may do as well, is while -- it provides a better field for competition for the adoptively transferred cells. And so I think that'll be an interesting observation with FT516 because there may be competition there. Obviously, with FT538, it doesn't need to fight that fight because it has its own cytokine support building.

And we do have our next question from Mara Goldstein from Mizuho.

Great. On FT538 in multiple myeloma, I think we've seen peripheral neuropathy emerge as a potential issue. Pfizer just announced a pause on its bispecific, and I believe Amgen's AMG 420 had a few reported grade 3 incidences. And of course, CAR-T studies targeting BCMA have reported this. So I understand that multiple myeloma patients are likely to have been treated with neurotoxic prior therapies. But I'm curious as to your thoughts in this setting for 538, what you would anticipate with respect for peripheral neuropathy for that work? And then also I'd like to just ask on the J&J payment, would that tie to any achievement of any specific milestone? Or was it just clinical R&D work?

So on the last question, that J&J is just revenue. We did not trigger any milestone with J&J this quarter that contributed to revenue. So the revenue contributors from J&J were sort of typical recognizing upfront -- the allocation of the upfront as well as J&J does fully fund all of the work under the collaboration. So we obviously get paid for the work that we do, and that gets recognized as revenue.

With respect to FT538 in myeloma, I mean I'll let Wayne comment on that. I mean the one thing I will say right off the bat, the initial experience with FT538 is obviously in combination with daratumumab. And daratumumab has a well-established history with respect to safety in its profile, but I'll let Wayne comment on that.

No. I mean I think that's a really good question, and we've been following the peripheral neuropathy as observed with some of these more T-cell-based therapies. I guess one hypothesis that we hope to address with the 538 study in myeloma is whether or not a different effector cell, i.e. an NK cell, even one that's combined with daratumumab, they have a different safety profile than what's been observed with some of the more T-cell-directed therapies like bispecifics and the CAR-Ts. But I mean I totally -- it's a clinical experiment that we obviously will need to conduct.

Right. But there's no exclusion criteria based on prior peripheral neuropathy in case those patients have been treated with...

No.

And do have our next question from Do Kim from BMO.

This is [Jameson] on for Do. Congrats on the progress. I guess it's a 2-part question. Given the MD Anderson data using NK cells combined with Affimed's NK cell engager in Hodgkin's lymphoma, how do you view that combo regimen versus your CAR-iNK cells? And do you think there's any merit in doing a preloaded iNK cell with an engager using something like your FT500?

I think today, our strategy has been to leverage our CD16 receptor in combination with a variety of well-established FDA-approved modalities. And I think that will continue to be our strategy. I think the idea of being able to promote ADCC with FT516 or FT538 and synergize with agents that are used early and often in both hematologic malignancies and solid tumors, I think it's an exciting opportunity to leverage CD16 and ADCC. And that's the strategy that we are pursuing.

People can have different belief systems around what they think is more productized or is -- has better patient reach. I personally believe in off-the-shelf cell therapy combined with a monoclonal antibody that is also delivered, if you will, off the shelf or in fact, engineering an NK cell to target, for instance, an antigen is a much better strategy than manufacturing a product patient by patient that requires essentially combinations, cryopreservations and construction of products through a manufacturing paradigm. That's a personal belief.

And we do have our next question from Nick Abbott from Wells Fargo.

I missed the beginning of the call, but first thing I'd like to say is that, obviously, [Darren], I don't know if you're on the call, but you will be missed going forward. And then a couple of questions. Scott, you've mentioned this sort of light outpatient lymphoconditioning regimen a few times. So can you compare for us the rates of regimen (inaudible) lymphoconditioning regimen related grade 3/4 tox and heme tox versus what has been reported as standard for conditioning regimens? And then I have a follow-up.

Yes, I -- honestly, I don't have those figures off the top of my head or fingertips, so I would not want to provide those. But I would say just generally, lymphoconditioning does have toxicity associated with it. And I do think where the field will go, and we have to recognize this, is that the better therapies will be therapies, and the better experience for patients will be therapies that have lighter conditioning regimens and, therefore, less toxicity as opposed to cranking up on the conditioning. And I think the field needs to recognize that. And I think it's one of the things that we're very focused on.

I mean if you want to -- for instance, if you want to go early-line therapy, whether it's hematologic malignancies or solid tumors, there's no way you're conditioning patients putting them in the hospital or significantly increasing their risk of, for instance, infection. I mean it's just not going to happen. I don't think that's the way to maximize patient reach or benefit.

Fair enough. And I noticed you recently listed a trial of enoblituzumab with 516. And so can you talk a little bit about the genesis of the trial and why 516 not 538? Is this de-risking for 573 or B7-H3 CAR T?

Oh, sorry about the -- are you talking -- are you referring to the ovarian study?

Yes. Yes. The Minnesota trial, yes.

Okay. Yes, okay. So -- yes, I wasn't aware it was public, to be honest with you. But okay. Yes, to be fair, we're starting with FT516 as a monotherapy. I suspect the trial will transition from FT516 to FT538 as a monotherapy. We will likely, with progress, begin to combine locally with a B7-H3 engager. However, as you know, we are developing a product candidate that is, in fact, engineered with a B7-H3.

And we do have the last question from Robert Burns from H.C. Wainwright.

This is [Chase] for Rob. I just have a couple of very quick questions. One is on FT538. And please, excuse me if you provided guidance in the past, but on clinicaltrials.gov, you also have elotuzumab as one of the potential combination arms. Are you still evaluating their arm? Or are you just focused on daratumumab? And the last one on FT500, can we still expect for the data sets in patients who are refractory to anti-PD1s in the tumor types like non-small cell lung cancer?

Yes. So your last question, we will be providing a solid tumor update likely in the second half of this year. Probably some time in the third quarter, we'll discuss what we're seeing in solid tumors with FT500, FT516 in combination with avelumab. And also, we'll be providing an update at that time with respect to our broader solid tumor strategy as it relates to, for instance, CAR-MICA/MICB. We just discussed B7-H3 as well as the J&J product, first IND under the J&J collaboration, which is solid tumor targeted. So in the second half of this year, we'll provide a fairly fulsome update on our solid tumor efforts. Sorry, what was your first question?

So on clinicaltrials.gov, you also have the SLAMF7...

Oh, yes, yes. Sorry. Yes -- no, we're very focused on combining with daratumumab. There are different regimens, and the regimen that we're focused on today is the combination with daratumumab.

And I'm showing that there are no more questions at this time.

Perfect. Thank you, everyone, for your time today. We look forward to providing a full update on our initial clinical observations with FT516 and FT538 next week.

Thank you, ladies and gentlemen. This concludes today's conference. You may now disconnect.