Fate Therapeutics, Inc. (FATE) Q2 2019 Earnings Call Transcript

Fate Therapeutics, Inc. (FATE -0.21%)
Q2 2019 Earnings Call
Aug. 6, 201, 3:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Fate Therapeutics Second Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investors and Media section of Fate's website at FateTherapeutics.com. As a reminder, today's call is being recorded. I would not like to introduce Scott Wolchko, President and CEO of Fate Therapeutics.

Scott Wolchko -- President and Chief Financial Officer

Thank you. Good afternoon and thanks, everyone, for joining us for the Fate Therapeutic's Second Quarter 2019 Financial Results Call. Shortly after 4:00 pm eastern time today, we issued a press release with these results, which can be found on the Investors and Media section of our website under press releases. In addition, our Form 10Q for the quarter ended June 30, 2019, was filed shortly thereafter and can be found on the Investors and Media 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 in the company's SEC filings included in our Form 10Q for the quarter ended June 30, 2019, 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 the 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 is Dr. Dan Shoemaker, our Chief Scientific Officer. In February 2019, Fate Therapeutics initiated the first ever clinical trial in the United States of a cell therapy derived from an induced pluripotent stem cell, or iPSC. The clinical trial is a landmark study in the field of cell therapy. It is the first to evaluate the safety and tolerability of a brand new class of iPSC-derived cell products and it is the first to investigate a novel treatment paradigm where an iPSC-derived cell product is administered to a patient in multiple multi-dose treatment cycles. FT500 is the first in this brand new class of cell products to begin clinical investigation in the United States. FT500 is a universal, off-the-shelf, end-case NK cell cancer immunotherapy derived from a clonal master iPSC line.

The use of a clonal master iPSC line for the manufacture of a cell product has the potential to overcome numerous limitations inherent in patient and donor-sourced cell therapy, which require the repeated sourcing and engineering of cells, batch-by-batch for manufacture. In contrast, clonal master iPSC lines are a renewable cell source for manufacturing cell products, which are well-defined and uniform in composition, can be mass-produced at significant scale in a cost-effective manner and can be delivered on demand to patients.

We believe the emerging class of iPS-derived cell products has the potential to revolutionize the field of cell therapy. In this first ever clinical trial, we are investigating the feasibility of administering FT500 on a multi-dose, multicycle treatment schedule. Most patient and donor-sourced cell therapies, including CAR T-cell therapies, are single-administration treatments and the therapeutic benefit conveyed to patients can too often be short-lived. Since iPS-derived cell products can be mass-produced at low cost per dose, cryo-preserved and delivered on-demand, the opportunity exists for repeat dosing. And such a multi-dose, multicycle treatment paradigm may uniquely provide patients with continuous therapeutic exposure over weeks and months to optimize cell products.

In the field of cell-based cancer immunotherapy, we believe such a multi-dose, multicycle treatment paradigm has the potential to convey more durable responses, including in combination with established therapeutic agents that have complementary and synergistic mechanisms of action.

The FT500 clinical trial is an open-label, dose-escalating, Phase 1 clinical trial for the treatment of advanced solid tumors in patients who have failed all approved therapies. The study is designed to assess the safety and activity of three once-weekly doses of FT500 as a monotherapy and as a combination with checkpoint inhibitor therapy in patients whose tumors failed to respond or progressed following initial response on checkpoint inhibitor therapy. Patients who were clinically stable following the first cycle of FT500 treatment are eligible to receive a second treatment cycle of three additional once-weekly doses.

In May, 2019, at the American Society of Gene and Cell Therapy, we announced that the first three patients were treated with FT500 at the first dose level of 100 million cells per dose in the study's monotherapy arm. All three patients each received three once-weekly doses of FT500 in an outpatient setting in the first treatment cycle, which was well-tolerated with no dose-limiting toxicities and no FT500-related serious adverse events. All three patients were eligible to receive a second multi-dose treatment cycle of FT500 at 100 million cells per dose.

I am pleased to announce that we have now treated six additional patients with FT500. Three of these patients were treated with FT500 at the second dose level of 300 million cells per dose in the studies monotherapy arm and three of these patients were treated with FT500 at the first dose level of 100 million cells per dose in the study's combination arm with immune checkpoint inhibitor. All six additional patients each received three once-weekly doses of FT500 in an outpatient setting in the first treatment cycle. In each of these six additional patients, FT500 was well-tolerated with no dose-limiting toxicities and no FT500-related serious adverse events. All six additional patients were eligible to receive a second multi-dose treatment cycle.

To date, no dose-limiting toxicities and no FT500-related serious adverse events have been reported by investigators in patients receiving FT500. We are very encouraged by these initial safety observations, given that FT500 is the first in a brand new class of iPS-derived cell products and FT500 is being administered on a multi-dose, multicycle treatment schedule.

To further demonstrate the potential of iPS-derived cell products administered on this cycle, we are conducting a robust assessment of the patients' immunological profile over the course of FT500 treatment as an integral part of our clinical development program. This assessment includes profiling the patient's immune cells, including activation of CD8-T-cells, NK cells, and regulatory T-cells, measuring changes in the patient's cytokine levels, and evaluating FT500 dose durability, including the potential for anti-cell immunogenicity, mediated by the patients T-cells or B-cells.

We expect to provide an update on the FT500 study, including safety, immunological activity, and efficacy data in the second half of 2019. I am also pleased to announce that we are now initiating clinical investigation of FT516, our universal, off-the-shelf, targeted NK cell product candidate derived from a clonal master iPSC line engineered to express a novel, high-affinity non-cleavable CD16 or hnCD16 Fc receptor.

FT516 is the first cell product in the world derived from a clonal master engineered iPSC line to be cleared for clinical investigation and is our second product candidate emerging from our proprietary iPSC product platform. We have completed CGMP production and final product release testing of FT516 for clinical initiation, starting with a single cryopreserved vial from a clonal master engineered iPSC bank, hundreds of doses of FT516 were manufactured in a single GMP campaign. The cell product was cryopreserved in an infusion-ready bag and the cryopreserved cell product was tested against stringent post-thaw specifications, including identity, purity, viability, and functional activity.

The FT516 clinical trial is an open-label, dose-escalating, Phase 1 clinical trial in which FT516 is being investigated as a monotherapy for the treatment of relapsed/refractory acute myeloid leukemia and as a combination with CD20-directed monoclonal antibody therapy for the treatment of relapsed/refractory B-cell lymphoma. The study is designed to assess the safety and activity of three once-weekly doses of FT516. Patients who are clinically stable following the first treatment cycle are eligible to receive a second treatment cycle of three additional once-weekly doses. Both arms of the study will enroll concurrently across three planned dose levels of 90 million, 300 million, and 900 million cells per dose.

Specific to combination with CD20 directed monoclonal antibody therapy, dose escalation will include an initial enrollment of a single patient at 30 million cells per dose. We are currently working with five clinical sites in the United States to initiate patient enrollment. We believe there is compelling clinical precedent to support the therapeutic benefit of FT516. Additionally, we believe there are well-established clinical benchmarks against which we can assess the safety and efficacy of FT516.

In the setting of relapsed/refractory AML, hundreds of patients have been treated with donor-derived NK cell therapy. Notably, donor-derived NK cells have not been associated with cytokine release syndrome or graft-versus-host disease. Additionally, leukemic blasts in the bone marrow have been shown to be particularly susceptible to direct NK cell mediated killing with complete remission rates ranging from 20 to 35% having been reported in investigator-initiated studies.

We plan to perform post-treatment bone marrow biopsies following the third dose of FT516 in the first treatment cycle to gain additional insights into FT516 activity. Additionally, numerous clinical studies of FDA-approved tumor-targeting monoclonal antibody therapy have demonstrated the importance of antibody-dependent cellular cytotoxicity or ADCC, a potent anti-tumor mechanism by which NK cells expressing CD16 recognize, bind, and kill antibody-coated cancer cells.

Clinical studies have also shown that patients homozygous for the CD16 high-affinity variant 158V, which is present only in about 15% of all patients have significantly improved clinical outcomes following treatment with monoclonal antibody therapy. Consequently, because FT516 incorporates a novel hnCD16 Fc receptor, which maintains active levels of surface expression of the CD16 high-affinity variant 158v, we expect FT516 to augment binding to tumor-targeted antibodies for enhanced ADCC. As a benchmark for enhanced ADCC in patients with relapsed/refractory B-cell lymphoma, CD20-directed monoclonal antibody therapies have demonstrated single agent complete response rates of approximately 5% and overall response rates of approximately 30%.

We expect to provide an update on the FT516 study, including safety, immunological activity, and efficacy data from the first patients in the second half of 2019.

The next wave of cell-based cancer immunotherapies that we are moving toward clinical development are specifically designed to engage multiple tumor associated antigens. Clinical experience with first-generation patient-derived CAR T-cells, both in the case of single antigen targeted CAR T-cells, again, CD19 in leukemia and lymphoma, and against BCMA and myeloma have clearly demonstrated that not all patients respond and even for those patients that initially respond, durability of response remains a significant limitation of therapy. Among the earliest identified mechanisms of relapse is down-regulation or loss of target antigen from the tumor cells.

To mitigate this limitation, next-generation cancer immunotherapies are incorporating strategies to simultaneously target more than one antigen and reduce the risk of disease relapse due to antigen escape.

I am pleased to announce that within the last 30 days, we submitted an investigational new drug application to the US Food and Drug Administration for FT596, the third product candidate emerging from our proprietary iPSC product platform. FT596 is the company's first universal off-the-shelf CAR NK cell product candidate and is derived from a clonal master iPSC line engineered with three distinct functional modalities, a potent CAR targeting CD19, a novel hnCD16 receptor for engagement of additional tumor-associated antigens in combination with monoclonal antibody therapy and a unique aisle 15 receptor fusion for improved NK cell proliferative capacity and functional avidity.

Moreover, FT596 naturally expresses other activating receptors, such as NKG2D, to convey additional innate immune function in recognizing and killing cancer cells. We believe FT596 has the potential to significantly disrupt the autologous and allogeneic CAR 19 T-cell landscape and to be a best in class cell-based cancer immunotherapy for the treatment of B-cell malignancies. FT596 is a universal off-the-shelf cell product candidate. It is specifically designed to engage multiple tumor-associated antigens and it has the potential to be delivered in multiple doses over multiple treatment cycles. Furthermore, supportive clinical data of CAR 19 NK cells have been reported by investigators from MD Anderson, which administered core blood-derived CAR 19 NK cells to patients with these cell malignancies and showed 30-day clinical response rates comparable to currently approved CAR 19 T-cell therapies with a substantially improved safety profile.

The clinical protocol submitted to the FDA for FT596 was developed in consultation with clinical investigators at several leading CAR T-cell medical centers. We intend to investigate FT596 as a monotherapy as a combination with CD20 directed monoclonal antibody therapy for the treatment for relapsed/refractory B-cell lymphomas and advanced chronic lymphocytic leukemia. We plan to administer FT596 using a multi-dose, multicycle treatment schedule and to conduct initial response assessments at the conclusion of each treatment cycle.

Alongside the clinical development of our iPS-derived NK cell cancer immunotherapy franchise. We continue to assert our leadership position in the research and development of off-the-shelf CAR T-cell therapy under our exclusive iPS-derived T-cell collaboration with Memorial Sloan Kettering led by Dr. Michelle Sadelain. Our first universal off-the-shelf CAR T-cell product candidate, FT819, is derived from a clonal master engineered iPSC line, having complete elimination of T-cell receptor expression and insertion of a CAR-targeting CD19 into the T-cell receptor alpha locus.

We believe FT819 incorporates best in class components and design attributes for CAR T-cell products, including the use of a novel 1XS CAR construct discovered by Dr. Sadelain. We have now initiated technology transfer of our GNP-compliant differentiation protocols to the production team at Memorial Sloan Kettering for initiation of pilot manufacturing in support of an investigational new drug application submission.

We have also renewed the company's exclusive collaboration with Dr. Sadelain for the research and development of iPS-derived T-cell product candidates for an additional three years. Additionally, I am pleased to note that the US Patent and Trademark Office recently granted to the company a patent foundational to off-the-shelf iPS-derived CAR T-cell therapy. US Patent Number 10287606 entitled, Genomic Engineering of Pluripotent Cells, covers compositions of iPSCs having a CAR construct encoded into the tract locus and an endogenous TCR alpha gene knocked out. The complete elimination of the endogenous TCR gene is critical in allogeneic CAR T-cell therapy to ensure the prevention of graft-versus-host disease, a life-threatening disease that occur when donor T-cells attack a patient's healthy tissue. Importantly, the CAR construct encoded into the tract locus is not limited to a specific tumor-associated antigen.

Finally, I want to thank the manufacturing regulatory and quality teams at Fate Therapeutics, which have expanded significantly over the past 12 months as our proprietary iPSC product platform has advanced into clinical development. In addition to their instrumental role in the on-time submission of our FT596 IND, the launch of our in-house GMP manufacturing facility remains on schedule, and we anticipate initiation of in-house GMP production in the fall of 2019 for clinical supply of our off-the-shelf iPS-derived cell product candidates.

Turning to our financial results, for the second quarter ended June 30, 2019, Fate Therapeutics incurred a net loss of $23.5 million, or $0.36 per common share as compared to a net loss of $19.7 million, or $0.37 per common share for the same period last year. Revenue was $2.8 million for the second quarter of 2019, compared to $1 million for the second quarter of 2018. Revenue was primarily derived from the company's collaboration with ONO Pharmaceutical.

Research and development expenses for the second quarter of 2019 were $21.6 million compared to $16.8 million for the same period last year. The increase in our R&D expenses was primarily attributable to an increase in employee compensation, including share-based compensation associated with the growth in headcount to support the advancement of the company's product pipeline, expenses associated with the clinical development and manufacture of the company's product candidates, and expenses associated with the conduct of our research activities under our collaboration with ONO Pharmaceutical.

GNA expenses for the second quarter of 2019 were $5.3 million compared to $3.8 million for the same period last year. The increase in our GNA expenses was primarily attributable to an increase in employee compensation, including share-based compensation. Our total operating expenses were $22.5 million for the second quarter of 2019, net of non-cash, stock-based compensation expense of approximately $4.4 million.

At the end of the second quarter of 2019, cash, cash equivalents, and short-term investments were $162 million. Common stock outstanding was 65.3 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. With that, I'd like to open the call up to any questions.

Questions and Answers:

Operator

At this time, I would like to remind everyone that if you would like to ask a question, to press *1 on your telephone keypad, now. We'll pause for just a moment to compile the Q&A roster.

The first question will come from Alethia Young with Cantor. Please go ahead.

Alethia Young -- Cantor -- Analyst

Hey, guys. Thanks for taking my question and congrats on all the progress throughout the quarter. I just wanted to talk a little bit more about, as we head into data readouts for FT500 and 516, you know how you guys think about what are the key core learnings there -- you talk a little bit about safety and immunologic learnings, but also just wanted to talk about is there any expectation that we should think about as far as any efficacy that could be seen in FT516? Thanks.

Scott Wolchko -- President and Chief Financial Officer

With respect to the questions, I'll answer with respect to FT500 versus FT516 because we have slightly different expectations with respect to the, at least, initial clinical readouts. FT500 is the first product candidate. Obviously, it's an un-engineered NK cell and we are studying FT500 in patients with advanced solid tumors in the salvaged setting. We are primarily looking at the FT500 study at this early stage of patient enrollment with respect to safety and looking at the immunological response of the patient receiving the cells. So we're really looking at the FT500 first patient experience, really, as safety.

With respect to FT516, FT516 now, obviously, has been engineered. It's an engineered product candidate and it's been engineered with a high affinity non-cleavable CD16 receptor. And importantly, we're taking FT516 into a clinical setting where we actually believe there is strong clinical proof of concept for an NK cell and, in particular, CD16 engagement. As I discussed in the AML setting, obviously, there's been hundreds of patients who have received donor-derived NK cell and there's been clinical responses that have been seen. Additionally, there's all kinds of clinical data with monoclonal antibody to underscore the importance of CD16 engagement and the roll of NK cell mediated killing.

So I would say in the 500 study with these first few patients through dose escalation, we're primarily looking at safety and proof of principle with respect to an iPS-derived cell therapy being given over multiple doses and multiple cycles. With FT516, we're now moving into the clinic with an engineered cell therapy where there is strong clinical precedent with respect to the indications that we are initially pursuing.

Alethia Young -- Cantor -- Analyst

And can I ask a follow-up? In 516, do you think that there is potential to see any kind of efficacy? Or do you think that you may need a dose higher or maybe use a different product?

Scott Wolchko -- President and Chief Financial Officer

No, I think, certainly, in the setting of the AML and in the setting of combination of monoclonal antibody therapy, there is absolutely opportunity to see efficacy with FT516.

Alethia Young -- Cantor -- Analyst

Great, thank you.

Operator

The next question is from Yigal Nochomovitz with Citigroup. Please go ahead.

Dick John -- Citigroup -- Analyst

Hi, this is Dick John for Yigal. Thanks for taking our question. I was wondering if you could comment further on the AAE profile, overall, on the FT500 monotherapy in combination arms? Thanks.

Scott Wolchko -- President and Chief Financial Officer

Sure, I think we've mentioned that, for instance, to date, there has been no dose-limiting toxicities that have been observed with FT500 both as a monotherapy, as well as in combination with checkpoint inhibitor. That includes patients that have been treated at the 300 million dose level in the monotherapy arm, as well as patients treated at the 100 million dose level in the combination arm. The AAE/SAE profiles in total, not related to FT500, have been quite modest.

Dick John -- Citigroup -- Analyst

Okay, thank you. And a follow-up from us, have the patients in the FT500 trial consented to the second treatment cycle yet?

Scott Wolchko -- President and Chief Financial Officer

Yes, as part of the clinical protocol, patients that are clinically stable at the end of the first treatment cycle are eligible to receive a second treatment cycle and we have several patients in both arms that are in flight. If you recall, in the first dose level, at 100 million cells in the monotherapy arm, all three patients progressed through the first, as well as the second treatment cycle with no DLTs and no SAEs.

Dick John -- Citigroup -- Analyst

Okay, great. Thanks. And one last one from us. Could you be more quantitative on the cost savings for the doses of FT516, which you've manufactured? Thanks.

Scott Wolchko -- President and Chief Financial Officer

Sure. I would say in our early clinical manufacturing runs, we are conducting these manufacturing runs to ensure success as opposed to drive for scale. I have said publicly, both for FT500 -- and this is also true of FT516 -- that our clinical manufacturing campaigns have cost less than $1 million per campaign and we have yielded doses of about 300 doses per campaign. So roughly, again driving for success, not necessarily for scale, we've been able to produce product for less than $5,000.00 per dose.

Dick John -- Citigroup -- Analyst

Okay. Thank you very much.

Operator

The next question is from Michael Schmidt with Guggenheim. Please go ahead.

Kelsey Goodwin -- Guggenheim -- Analyst

Hi, this is Kelsey Goodwin on for Michael. Thanks for taking our questions. Two from us. First, how has your partnership strategy evolved now that you're in clinical trials and may become more specifically, toward the ONO collaboration? Maybe, how are you thinking about maximizing that longer term? And then separately, in terms of the new manufacturing facility, can you just remind us of the capacity and the quality assurance and control burden associated with iPSC versus, maybe, allo and auto cell therapies. Thank you.

Scott Wolchko -- President and Chief Financial Officer

Sure. With respect to partnerships, quite frankly, the company's partnership strategy has not really changed. We think we have a terrific backbone with respect to the development of off-the-shelf cancer immunotherapies. We think it's unrivaled, with respect to our approach, as compared to patient or even donor-derived approaches to cell-based immunotherapies. I have said publicly that I think we are building the leading cell-based cancer immunotherapy company and I will stand by that.

I think where we are looking for help in developing product candidates is in partnering with companies that are leader in discovering and developing novel engagement strategies. So for instance, we think we have the best iPS cell backbone. We think we are developing the best technologies with respect to how those cell therapies perform in a human being. However, we are looking to partner with larger pharmaceutical companies that can bring and contribute to that novel targets for which we can direct our cell therapies against.

So the idea that there are pharmaceutical companies out there that are experts in developing monoclonal antibody therapies or discovering new antigens to target, where they have the capacity to contribute binding domains, which we can incorporate into our CAR product candidates, they are the type of partnerships we are very interested in doing and are actually driving forward.

With respect to our GNP manufacturing capabilities, we are in the process of getting final compliance with respect to launching the facility, final validation and compliance of the facility. We do, and we have done, based on the work that we've done to date and a differentiation protocols and looking at pilot manufacturing runs, we certainly believe that we have the opportunity to parallel process multiple product candidates and we think we have the capacity to produce anywhere between 500 to 1000 doses per month.

Kelsey Goodwin -- Guggenheim -- Analyst

Okay, great. Thank you.

Operator

The next question is from Ted Tenthoff with Piper Jaffray. Please go ahead.

Ted Tenthoff -- Piper Jaffray -- Analyst

Great, thanks, Scott. I'm still a little shocked at the $5,000.00 per dose number. I think that's a real wake-up call to the entire industry, so I'm excited to come visit and see the new facility. I guess, the question that I've, sort of, asked before and I'm just going to ask again and, kind of, see if there's any update in your thinking. As products become more sophisticated and there is iteration, at a high level, how should we think about these cell products ultimately being commercialized and ultimately fitting into the treatment paradigm?

I think there is a huge differentiation with iPSC treating and it really will change how cell therapy is being used. But I'm wondering how the different profiles of these products may fit in with different diseases. Thanks.

Scott Wolchko -- President and Chief Financial Officer

Sure, we have started with what some might consider an overly conservative approach where we started with an un-engineered product candidate, FT500. We've built in a single modality into 516. However, as you probably are aware from our pipeline and using FT596 as the third product candidate, we certainly believe engineering iPS cells gives you the unique capability to engineer in multiple different pieces of functional modalities into an iPS cell backbone. FT596, obviously, is a product candidate that has three different pieces of functionality engineered into it. We've talked about FT538 as a product candidate, which, again, now we'll have four different pieces of functionality engineered into it.

And so we do have a platform that lends itself to rapid innovation. And I think one of the things that we are very cognizant of is how we are innovating and pushing our product candidates forward in a fairly aggressive way. We think it's important to show safety and clinical proof of concept with our first-generation product candidates, like FT500, like FT516. But I certainly believe that the future does involve the delivery of highly engineered cell-based cancer immunotherapies in order to drive deep, durable responses and now that we have our first two product candidates in clinical studies, I think you will start to see us be very aggressive in how we're evolving our pipeline, including the number of edits that we are incorporating into our iPSC backbone.

Ted Tenthoff -- Piper Jaffray -- Analyst

Very cool. And I was appreciative of the safety update. That's really a nice start for FT500. Is there a limit to the number of edits that you can make? Obviously, there is an accuracy rate to each, and that's probably improving over time, but what is the limit to how many characteristics you can knock-in, knock-out in an engineered cell bank?

Scott Wolchko -- President and Chief Financial Officer

Yeah, I think one of the things -- we're sort of testing those limits today, quite frankly, under our ONO collaboration where we are looking at, certainly, five and six edits within an iPSC backbone and we're actively doing that today at a research level.

I think one of the unique things about an iPSC approach is that, for instance, you can start with a master cell bank. And that master cell bank may already be qualified. And it may already, for the sake of argument, have two or three edits incorporated into it. Right? And so that master cell bank can be tested. It can be validated. And quite frankly, now, if you want to make a new product candidate, instead of going back to ground zero and starting from the beginning and reprogramming and editing from scratch, you can actually take an existing master cell bank, which may have three edits in it, and then incorporate two or three more edits into that bank, and create, essentially, a new bank.

So there is the ability, not only just to go back to the beginning and then restart the process, if you will, and introduce four, five, six edits. But we can also build off of master cell banks that have already been edited to incorporate new features and functionality. And quite frankly, that is one of the really massive and exciting benefits associated with starting with clonal master iPS cell line. You can essentially validate and characterize the edits that are already made. The bank is already made and then you can build functionality on top of that.

Ted Tenthoff -- Piper Jaffray -- Analyst

Very cool. Great update. Thank you so much, Scott.

Operator

The next question is from Matthew Biegler with Oppenheimer. Please go ahead.

Matthew Biegler -- Oppenheimer -- Analyst

Hey, guys. Thanks for taking my questions. Congrats on the progress. I had two questions on dose. First, for FT500 and 516, these upper limits on the cell dose, 300 and 900 respectively, still quite a bit lower than what we've seen in other trials of adoptive NK cell therapies. I'm just wondering if there is a reason why you wouldn't want to explore higher doses in those trials. That's my first question and second one is on FT596. I think I heard you mention that you'd be exploring a multi-dose regiment, which is, obviously, different than what the cord blood drive NK product from MD Anderson is using. So I'm just curious the rationale behind that. Thanks.

Scott Wolchko -- President and Chief Financial Officer

I'll touch on answering both of your questions in my response. I think one of the things that we are excited about and that a limitation of donor-derived NK cell therapy in the past has essentially been a single-dose paradigm. And we've seen in the past, including, quite frankly, in work that's been done with some of our collaborators at the University of Minnesota, as well as the MD Anderson data that investigators have driven to a maximum dose because they're limited, for instance, in that they're only administering a single dose. Ultimately, what we're interested in creating is a PKPT profile, if you will, that extends, not just for a couple days, but can extend over weeks and, potentially, months. And we think that, potentially, that will require a different dosing schedule in terms of the absolute number of cells that are delivered.

I think from our perspective, again, someone may put forth that we're being a bit conservative on dose, but really, as we're thinking about this, we know we do have the ability to push dose. We know we have the ability, at least so far, we believe we have the ability to give multiple doses. So we certainly have the potential to scale dose.

I would also say, to be fair, most donor-derived NK cells have not been engineered and they've been given as a monotherapy. Clearly, part of the strategy we're pursuing with FT516 and FT596 is now to give multiple doses over multiple cycles in combination with other agents. And that's a paradigm that has not really been explored with donor-derived cell therapy and therefore lower doses, especially when given in multiple doses, may be much more appropriate in that setting.

Obviously, it's something that we will look at. We're doing dose escalation and we have the potential to push dose.

Operator

The next question will come from Biren Amin with Jefferies. Please go ahead.

Biren Amin -- Jefferies -- Analyst

Hi, Scott. Thanks for taking my question and apologies for the background noise. Scott, I just want to get your perspectives on your plans for 500 longer-term. Would you move this forward in certain solid tumors? And if so, when would we get a go/no-go decision? Or should we look at the 500 as a de-risking from platform sample in terms of safety?

Scott Wolchko -- President and Chief Financial Officer

I would look at it as a de-risking event in terms of safety. That said, I do think there is a subset of patients in this study which we could potentially enrich for that have the potential to lead to efficacy. We are not enriching for that subset yet, today, although I would expect us to begin to drive toward that in the near future.

The particular subset of patients that I am interested in, and I think NK cells, at least, pre-clinically, there's interesting proof of concept here, are patients that have failed checkpoint inhibitor, where for instance, the reason of failure is the tumor has mutated in such a way that there is very low to null expression of MHC class I. That occurs in about 30 to 40% of patients that fail checkpoint inhibitor therapy. The mechanism of resistance are certain mutations in the tumor whereby MHC class I is significantly downregulated. Those types of tumors will not be recognized by T-cells. There is no antigen presentation, however, those type of tumors can be exquisitely recognized and potentially killed by NK cells. And folks have shown that pre-clinically.

So that subset of patients with FT500, I am very interested in looking and exploring that particular subset of patients further. And I suspect we will begin to enrich for that subset of patients in the near future with FT500. Initially, the FT500 experience is a big basket study, both in the monotherapy arm and the checkpoint inhibitor therapy arm, where we're driving toward safety and proving the multi-dose, multicycle treatment paradigm.

Biren Amin -- Jefferies -- Analyst

Just a follow-up on your response, is there a diagnostic assay that you can enroll for patients with MHC I downregulation?

Scott Wolchko -- President and Chief Financial Officer

Yes, you can absolutely biopsy tumors in advance with respect to MHC class I expression levels. It's actually being done by certain investigators in the checkpoint inhibitor space to determine whether or not, actually, a checkpoint inhibitor should be administered to those patients.

Biren Amin -- Jefferies -- Analyst

Got it. And then just a question on 516. I think, previously, the company planned to evaluate, in combination with LL Tuzi map and multiple myeloma --

Scott Wolchko -- President and Chief Financial Officer

Yep.

Biren Amin -- Jefferies -- Analyst

So is that still on plan to enroll this cohort?

Scott Wolchko -- President and Chief Financial Officer

No, we decided not to enroll that cohort. And one of the reasons for that is, quite frankly, focusing on the resources and directing the product candidates and the portfolio of our product candidates in a way that we think is most efficient and efficacious. So for example, as you know, we are developing a product candidate called FT538. FT538 is a product candidate that we will likely file an IND on in the coming let's call it the next six months. FT538, in particular, has been designed for the myeloma space. FT538 we've actually knocked-out in a master cell line, the ability of an iPS-derived NK cells to express CD38. So therefore, we think FT538 can be given in combination and synergistically with daratumumab for the myeloma space.

So in analyzing our entire pipeline in thinking about how to be most efficient in development and thinking about how to target our product candidates into indications where we think that product candidate has the best chance of success from an efficacy standpoint, we looked at attacking the myeloma space with FT538.

Biren Amin -- Jefferies -- Analyst

Great, thank you.

Operator

The next question is from Mara Goldstein with Mizuho. Please go ahead.

Mara Goldstein -- Mizuho -- Analyst

Great, thank you. Hey, just a follow-up first on the downregulation of MHC. Is there a specific prevalence in tumor types for that in either specific tumors or organ systems or tissues that we should be aware of?

Scott Wolchko -- President and Chief Financial Officer

Sure, there is. I can send you some papers offline and we can look at it. But yes, in the lung cancer space, so when you look at the checkpoint inhibitor data that's coming out of both lung cancer and melanoma, anywhere between probably 20 to 35% of patients that, for instance, have failed checkpoint inhibitor, when they've looked at those particular patients and their particular tumors and they've looked at, for instance, MHC class I expression levels and mutations, for instance, B2M mutations, about 30% of the patients that fail therapy in those two settings for lung and melanoma have significant downregulation of MHC class I.

Mara Goldstein -- Mizuho -- Analyst

Okay. And if I could just ask on FT500, the checkpoint failures in the trial, how should we think about that in terms of percent of patients that you've enrolled so far and are checkpoint failures?

Scott Wolchko -- President and Chief Financial Officer

Yeah, so far, on the call, if I was not clear, we've enrolled patients in the checkpoint inhibitor combination arm. All three patients were enrolled and treated at the 100 million dose level. And those patients cleared the first treatment cycle with no DLT and so SAE and we those patients are in flight in the second treatment cycle.

Mara Goldstein -- Mizuho -- Analyst

Okay. And if I could just ask one other question. As it relates to the differences, obviously, between FT500, which is non-engineered, and FT516, which is engineered, are there any differences in safety protocol to be aware of between those two programs?

Scott Wolchko -- President and Chief Financial Officer

There are different indications, obviously. One is advanced solid tumors and one is in a hematologic malignancy setting. But in terms of safety, no. Generally, the safety profile that we are looking for with those product candidates is very similar.

Mara Goldstein -- Mizuho -- Analyst

Okay, all right. Thanks very much. I appreciate it.

Operator

The next question is from Jim Birchenough with Wells Fargo. Please go ahead.

Nick -- Wells Fargo -- Analyst

Good afternoon, it's Nick on for Jim this afternoon. Congratulations to you and your team on an outstanding quarter. This is a breakthrough therapy -- not a breakthrough therapy. It's a breakthrough paradigm, for sure. So on 500, now you have an experience of repeat dosing and repeat cycles. Can you comment on cell expansion? Is it similar to what you have reported for NK100?

Scott Wolchko -- President and Chief Financial Officer

Sure, yeah, absolutely. I made a comment about us looking very closely at the immunological profile that we are seeing in patients. We are going very deep with respect to our assessment of the FT500 product and we will do this for FT516, of the product, once it's delivered to the patient. And we are looking directly at tracking not just the cells that are administered, but obviously, the patient's response to those cells.

So we are looking at that across multiple different mechanisms of assessment, looking at for instance, cytokine levels, looking at whether, for instance, there is anti-cell immunogenicity raised against the cells that are being delivered.

One of the things that we are very focused on, obviously, is the durability of the dose and historically, donor-derived NK cells, when given, last about seven days. That's what you would normally expect for an NK cell. An NK cell has a very different behavior that, for instance, a T-cell. We would not, necessarily, expect an NK cell to rapidly expand in vivo, like a T-cell. It's, sort of, not what NK cells do. The half-life of an NK cell in vivo is typically different than a T-cell. Their turnover of endogenous NK cells is much shorter than what you would see with respect to T-cell.

It is one of the reasons that we, for instance, are getting NK cells in multi-doses and being separated by about seven days because we would expect the natural turnover of an NK cell, un-engineered, for their half-life to be about seven days. Therefore, we're giving a dose every seven days. One of the things that we're really interested, though, in looking at is, of course, we are giving -- this is what we intend to be a universal cell product and so we are looking, essentially, at what we believe to be is the durability of, for instance, the first dose versus the third dose versus the sixth dose with respect to the patient's response to those cells. Really, this idea of being able to promote a multi-dose, multicycle treatment paradigm, we think, is going to be super important in the cell-based cancer immunotherapy space to drive deep, durable responses.

The single administration paradigm, we just think is significantly limited. If you give a single dose, even if it's a persisting CAR T-cell for the sake of argument, if you give that dose and you go fish the cells out from the patient 14, 21, 30 days later, the functionality of that persisting cell is substantially different than the functionality on Day 1 when administered to the patient.

So we do believe a paradigm where you are giving, essentially, multiple Day 1 experiences is, ultimately, going to prove out as the preferred paradigm to drive deep, durable responses. And we want to demonstrate that that paradigm, in fact, is safe and well-tolerated, not just from a clinical perspective, but looking at the patient's response to those cell doses.

Nick -- Wells Fargo -- Analyst

Okay, thank you. So for NK100, you've reported that the second dose actually had greater expansion than the first dose. So I guess, do you have data in house now that tells you that your iPSC NK cells for repeat dosing are behaving similarly to the NK100 cells?

Scott Wolchko -- President and Chief Financial Officer

We're doing a lot of that analysis right now and it's part of what you should expect will be significant feature of our presentations in the second half of 2019, what I'll, essentially, call the immunological activity of our cells.

Nick -- Wells Fargo -- Analyst

Okay. And then as far as NK100 goes, are you drawing that to a close or are you going to continue those studies?

Scott Wolchko -- President and Chief Financial Officer

Yeah, and I've said this before, I think with respect to the AML and the ovarian studies of NK100, we will likely wind those down by the end of 2019. In the solid tumor study, we will continue to look to keep that going and potentially target enrollment of those NK100 patients toward the patient population that we've talked about with respect to MHC class I low expression levels to get the best read on how to read FT500 forward. We think NK100 in that particular setting is a good proxy and a good learning playground for FT500.

Nick -- Wells Fargo -- Analyst

Sure, that makes sense. And then just a last one, Scott. With NK100, you had different intensities of lymphoid depletion regiments and I can't recall whether you were doing repeated lymphoid depletion between the cycles, but given a competitor just reported some lymphoid depletion-related deaths, can you just quickly update us on lymphoid depletion as it varies, perhaps, between these different tumors you're studying and also whether you intend to give lymphoid depletion more than once? Thank you.

Scott Wolchko -- President and Chief Financial Officer

Sure, so I'll start with FT500. And I'll just be really precise with my language. We're not lymphoid-depleting any patients with FT500, FT516, or FT596. We are giving a conditioning regiment, but the conditioning regiment is, essentially, an outpatient conditioning regiment. It consists of CY FLU and it's a relatively low dose of CY FLU than what you would normally give to lympho-deplete a patient. In the NK100 setting, we had actually three different conditioning regiments. The AML setting of NK100, we in fact, did lympho-deplete. In the ovarian setting and in the advanced solid tumors setting, we used lympho-conditioning and the lympho-conditioning regiments we used are similar to the ones we're using with FT500 and FT516, as well as FT596.

So the paradigm that we are pursuing is a paradigm where conditioning can be given safely in an outpatient setting.

Nick -- Wells Fargo -- Analyst

And you can give that multiple times?

Scott Wolchko -- President and Chief Financial Officer

We're actually only planning on giving that at the beginning of a treatment cycle.

Nick -- Wells Fargo -- Analyst

Okay, thank you very much.

Operator

The final question is from Daina Graybosch with SVB Leerink. Please go ahead.

Daina Graybosch -- SVB Leerink -- Analyst

Hi, thank you. Thanks, Scott. I have two questions and I guess I'll ask them separately. The first is, you mentioned several times the investigator-initiated trials with NK cells and AML. In looking at that, they typically used haploidentical allogeneic NK cells and a lot of the authors concluded that cure mismatch was necessary for their efficacy. I wonder if you can talk more to the NK cell phenotype for FT516, specifically, to their cure ligands? If the cure ligands are educated in your process? And for what percentage of patients do you expect a cure mismatch are killing through the cure lack of self-action?

Scott Wolchko -- President and Chief Financial Officer

It's a great question and it's a lot of the work we're actually doing under our collaboration with Kaleigh Manberg is investigating the importance of cure mismatch and its role in killing. There has been a lot of work that's been done in this area and I would agree with you, some investigators have concluded that cure mismatch is important with respect to patient outcomes. There has been just as much work done by investigators that I think would challenge that assumption.

This is something that we're certainly looking at with respect to cure mismatch and the ability to drive patient responses. It's Kaleigh Manberg, one of our collaborators, is probably one of the most esteemed investigators with respect to looking at cure ligands and their importance in response. So it's something we're certainly looking at on a go-forward basis as part of our research and potentially to incorporate it into our clinical studies.

Daina Graybosch -- SVB Leerink -- Analyst

And the profile, the phenotype of your cells, do you have cure ligands on the cells?

Scott Wolchko -- President and Chief Financial Officer

No, we don't.

Daina Graybosch -- SVB Leerink -- Analyst

Okay, thank you. And then the second question, sort of on a different track, we've seen recent announcements of other induced pluripotent stem cell companies coming forward, I think Century Therapeutics out of Bayer, Inversant, Antisera, which was a step-up with Takeda. I wonder if you can speak to how your platform compares to these competitors.

Scott Wolchko -- President and Chief Financial Officer

I'll try and be kind. In all honesty, I can't speak to their platforms. I'm not aware of what their platforms are in much detail, at all. My understanding of their platforms and their approach to iPS cell technology, they're still very early in development compared to Fate Therapeutics. Obviously, we've just filed our third IND for an IPS-derived cell therapy. I will tell you, generally, I expect there to be multiple different approaches to IPS-derived cell therapy. I think one of the differentiating features of our platform will essentially be the clonality of, for instance, a master cell bank.

We fundamentally believe that getting down to a single cell level with respect to engineering, analysis, preclinical, essentially, competition of essentially racing clones against each other and selecting that single clone from which you create your master cell bank, that is very important. When we create a master cell bank, we commonly compare, for instance, 20, 30, 40 clones that have already been selected from starting populations of 500, 600, 700, clones. And so we systematically get down to a smaller set of clones that we actually think are advantaged. And then we take that a step further and we race those clones against each other. And I can tell you that that step where you race clones against each other is absolutely super critical in figuring out, essentially, what clone you want to use to create your master cell bank because that master cell bank is intended to serve as the basis for production throughout your lifecycle of your entire product.

So the knowhow, intellectual property, experience, human resources, technology that all goes into selecting that single clone is absolutely critical and I do actually believe, given we're pioneering this, that that will become a regulatory hurdle in advancing iPS cell technology.

Daina Graybosch -- SVB Leerink -- Analyst

Awesome. Great. Thank you very much.

Operator

And at this time, are there any closing comments?

Scott Wolchko -- President and Chief Financial Officer

Thank you, everyone, for attending today's call. Look forward to speaking with you shortly in the near future and giving you more updates on our iPS-derived NK and T-cell franchises. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference call. You may now disconnect.

Duration: 62 minutes

Call participants:

Scott Wolchko -- President and Chief Financial Officer

Alethia Young -- Cantor -- Analyst

Dick John -- Citigroup -- Analyst

Kelsey Goodwin -- Guggenheim -- Analyst

Ted Tenthoff -- Piper Jaffray -- Analyst

Matthew Biegler -- Oppenheimer -- Analyst

Biren Amin -- Jefferies -- Analyst

Mara Goldstein -- Mizuho -- Analyst

Nick -- Wells Fargo -- Analyst

Daina Graybosch -- SVB Leerink -- Analyst

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