Welcome to Fate Therapeutics’ First Quarter 2015 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 Web site at fatetherapeutics.com. This call is a property of Fate Therapeutics and recordings, reproduction or transmission of this call without the expressed written consent of Fate is strictly prohibited. As a reminder, today’s call is being recorded. I’d now like to introduce Scott Wolchko, Chief Operating and Financial Officer of Fate Therapeutics.

Thank you. Good afternoon and thanks everyone for joining us for the Fate Therapeutics first quarter 2015 earnings call. At 4:00 PM Eastern Time today, we issued a press release with our first quarter 2015 financial results, which can be found on the Investors and Media section of our Web site under press releases. In addition, our first quarter 2015 10-Q was filed shortly thereafter and can be found on the Investors and Media section of our Web site under Financial Information. Before we begin, I’d 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 10-Q for the quarter ended March 31 2015 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 obligations to update these forward-looking statements to reflect future information, events, or circumstances. Joining me on the call today is Dr. Christian Weyer, President and Chief Executive Officer. I’ll begin the call by reviewing our financial results for the first quarter of 2015. Christian will then provide a general corporate update and discuss some of the recent progress with our PROHEMA clinical program. And then…

Thank you Scott and good afternoon everyone. Since our founding we’ve been pioneering a novel therapeutic approach to cell therapy that allows us to program the function and optimize the therapeutic potential of hematopoietic cells. We believe that our cell programming platform holds tremendous potential and we are applying it to develop a robust pipeline of first-in-class program cellular therapeutics for the treatment of severe life-threatening diseases. On our last earnings call, we discussed the significant progress we had made in 2014 to demonstrate the therapeutic potential and broad applicability of our cell programming platform. This included the identification of modulators to program the therapeutic properties of T cells, the use of modulators in combinatorial fashion and the application of modulators to enhance multiple therapeutically relevant pathways. We reviewed our development stage programs PROHEMA and ProTmune, which represent first in kind program cellular therapeutics derived from cord blood and mobilized peripheral blood respectively that have the potential to improve outcomes in patients undergoing allergenic hematopoietic stem cell transplantation or HSCT. And that address approximately 80% of the steadily growing and concentrated market. We also highlighted progress on key research stage programs that are aimed at expanding our therapeutic franchise beyond the transplants heading including our PD-L1 programmed HSC candidate, entry pointed to the significant opportunities that exist for value creation through strategic partnerships. On today's call, we are pleased to discuss several recent corporate highlights that clearly exemplify and underscore the broad therapeutic potential of our cell programming platform. First off, we announced just yesterday that we’ve entered into a broad strategic alliance with Juno Therapeutics that will enable the application of our programming platform to the exciting area of cellular immuno-oncology. We're thrilled to partner with Juno, a leader in the field and a company that shares our deep…

Thank you, Christian. To expand our introductory remarks, since our founding we have identified and applied small molecule modulators to hematopoietic cells ex vivo to program the biological function of cells prior to their administration to a patient. Our ex vivo cell programming approach is designed to induce rapid and super physiologic activation or inhibition of therapeutically relevant genes and cell surface proteins, such as those involved in a homing proliferation and survival of CD 34 cells or those involved in the persistence, proliferation, and reactivity of T cells. We believe ex vivo cell programming can potentiate the biological activity of cells and can now profound effects on their therapeutic properties of cells in vivo upon their administration to a patient. On May 4, 2015, we entered into a research collaboration and license agreement with Juno Therapeutics. A leading biopharmaceutical company focused on reengaging the body’s immune system to revolutionize the treatment of cancer, to identifying and apply small molecule modulators for programming genetically engineered CAR T cell and T cell receptor immunotherapies. Pursuant to the terms of the agreement, Juno has agreed to pay the company an upfront fee of $5 million and agreed to purchase 1 million shares of the company's common stock at $8 per share for an aggregate purchase price of $8 million. Under the collaboration, Juno has agreed to fund all collaboration activities during an initial four-year research term. Additionally, Juno has the option to extend the initial research term for an additional two years, subject to the payment of an extension fee and the continued funding of all collaboration activities. If Juno exercises its option to extend the initial four-year research term, we have the option to sell and to cause Juno to purchase up to $10 million in additional shares of Fate common…

Thank you. [Operator Instructions] And our first question comes from David Nierengarten from Wedbush Securities. Your line is open.

Hi. Thanks for taking my question. So forgive me if I missed it, but you mentioned the cost savings associated with preventing or -- on a patient not having CMV reactivation. Did you mention the hospital day cost, because presumably he would be being discharged earlier, the patient to be discharged earlier than the comparison group?

Yes. Hi, David. This is Christian speaking. I'm happy to clarify this. So based on what's published in the literature which is an analysis from the hematology branch of NIH. Preemptive therapy of patients who actually have reactivated CMV, the overall incremental cost has been estimated in cord blood transplantations to be up to $74,000. And that is really a combination of the cost of the antiviral therapy itself as well as the prolonged hospitalization.

Okay.

In this specific paper, the extension of the hospital stay associated with preemptive therapy for viral CMV reactivation was between 12 and 14 days. And so, increased hospitalization is clearly one of the major contributors to this overall increase in cost for patient care.

Got you. And then one other question, the Phase 2 trial is powered to show, if I recall correctly, 70% of patients engrafting before the median time, correct?

That is correct.

And the interim observation you had 64% engrafting early?

Yes, that is correct.

If it is that -- I mean, if that were to carry forward, I suppose the question is would you meet your primary endpoint or is there other statistics to analysis as part of it?

You know absolutely happy to comment on this. So the powering assumed is 70%, its an 80% power, so this does not conclude that we were to hit significant results even with a proportion of patients sort of slightly below that, especially when you take into consideration that there is other neutrophil engraftment related outcomes that are really critical. And in addition to the effects of PROHEMA neutrophil engraftment, we obviously also will carefully locate a whole host of additional secondary endpoints, such as CMV reactivation. And then lastly, yes I think we had discussed previously in one of our calls, while the study is powered as a categorical endpoint, its really critical when you look at these trials, or look at the overall distribution and shape of the curve and look at the entire data set in that regard.

Okay, great. I wanted to double check on that. Thanks.

Sure.

Our next question comes from Reni Benjamin from HC Wainwright. Your line is open.

Hi. Good afternoon, guys. And thanks for taking the questions. I guess, just to go back to this engraftment grade question and I apologize if you said this during the prepared remarks. But can we talk about the 14 out of 18 that are engrafting versus the 11 out of 12 in the control arm with? Is there anything in particular that’s leading to that kind of discrepancy that might be more patient specific rather than therapeutic specific?

Yes, absolutely. So as you might recall, we did provide an update on the clinical data back in December 2014 after the IDMCs second preplanned interim review and at that point we had 9 out of 12 PROHEMA patients engraft. Two of the patients actually experienced early mortality prior to engraftment and those cases where both attributable to the toxicity of the conditioning regimen. And so when you step back and think about the patient population that we are studying here and the intensity of the actual intervention, I mean, these are very sick patients, they undergo a very harsh conditioning regimen, especially with myeloablative conditioning regimen. And so clearly there are going to be instances where patients adjust to the intensity of the conditioning regimen and have actually stand a chance to achieve neutrophil engraftment, and we did have two of those cases in the PROHEMA cohort.

Okay. Okay. And so, if you actually take out those two, I assume, you are well north of -- you are probably closer to 80%, 90% engraftment?

Yes. So Reni, you’re talking about 14 out of 16 patients, when you take into this -- this into account and then when you actually start the other thing, I think that's important to consider is the number of patients or the rate of patients who actually failed to engraft is well within the sort of what is expected in the double umbilical cord blood setting in adults and you can go through the literature and, I mean, again many of these patients have inferior [ph] or sort of fatal outcomes for a whole host of reasons. So yes, absolutely, the 14 out of 16% of patients actually that did not experience early mortality engrafted. And then overall the adverse events that we are seeing, we believer are very consistent with that has been reported in the setting.

Okay. And just kind of related to that, we were expecting, I guess, in our milestone chart, data that come out maybe little bit later to the middle of the year. Kind of question as to what prompted the data analysis now and when would we see the final data for the complete trial?

Yes, absolutely. So, we felt it important to actually share some of, especially when we laid off some of the additional observations beyond a neutrophil engraftment to provide an update on the study pretty much at midpoint with 30 -- data from 30 patients that are available. And as we have previously guided, we are moving aggressively ahead and completing enrollment of the study and with the target date of having data on the entire study by the end of this year.

Okay. Okay. Just switching gears real quick to the CAR T collaboration. I know that Scott mentioned that, look you can look at T cell, you’re hoping to modulator improved T cell persistence horning in the like. But the last time that we are at a conference call, we were talking more about immuno-oncology checkpoint, inhibitor expression on T cells. And so, do we have data already looking or showing that T cell horning is improved or is the collaboration right now going to establish these various points?

Yes, thanks, Reni. I mean, great question. So, I mean, first off, we’re not yet prepared to discuss actual sort of specifics on exactly the type of modulators we’d be actually and targets we would actually go after to improve the properties of CAR T and TCR. The checkpoint inhibitor pathway that we had previously talked about in our earnings call actually that was actually pertaining to our preclinical CD 34 cell therapy where we have to regulate in a very profound way cell surface expression of PD-L1 with a goal of mitigating an alloreactive T cells. So in essence we were using the well established and clinically validated PD-L1, PD-1 pathway and reverse sort of fashion to the checkpoint inhibitors. That is really distinct and different from the type of modulation that we’d be seeking to apply to genetically-engineered T cell immunotherapies. We have -- as we had also shared previously, we have seen that especially combinations of existing small molecules can have pretty profound effects on T cells and what point you to the preclinical data we presented at ASH last year with our ProTmune mobilized peripheral blood program were some of [indiscernible].

Okay. And these modulators that you will be testing, they are already part of your master bank. I'm assuming you are not necessarily going out and creating new ones, is that correct?

No, I mean, we’ve spend years obviously sort of setting up a platform and our screening capabilities are ready to go.

Got it. Just related to this, you also have of course the iPSC franchise and lot of talk as to how iPSCs could potentially be used in the T cell platform. Is Juno at all interested in that or does this collaboration just restricted to the modulators?

So the couple aberration that we announced yesterday is strictly confined to improving or programming the function of genetically-engineered T cells. It does not include iPSC derivation of T cells. That is separate and there is something that we are very excited about as well and as a previously disclosed and discussed we firmly believe that there was a tremendous opportunity in the future of hematopoietic cell therapy to apply iPSC reprogramming technology, because that really enables entirely new approaches and avenues for both genetic engineering and cost-effective manufacturing of these cells, many of these cells in the hematopoietic space such as NK cells, [indiscernible] leukocytes or the like. Some of the key limitations are that these are very rare cell populations and the manufacturing and expansion of the cells without unintended consequences such as extortion is really a very big unmet medical need. And so we are keenly interested and are applying our iPSC platform to derive therapeutically relevant and developable versions of hematopoietic cellular therapeutics. That is separate from the announcement, the strategical alliance we announced yesterday with Juno Therapeutics.

Okay. And just one last question, can you just give us an update, I may have missed this, on PROVIDE -- the PROVIDE study?

Yes, sure. We did not specifically comment on this in our prepared remarks. But I'm happy to say we’re making very significant progress there as well and activating the sites currently at several centers. And already actually have IRB approval to treat our first patient. So stay tuned on this. We should be able to provide an update on the study shortly.

Perfect. Thanks for taking the questions and good luck.

Of course, thank you.

Our next question comes from Jim Birchenough from BMO. Your line is open.

Hi. Thanks for taking my question and very, very good progress. I'm particularly interested -- and I should say this is Nick in for Jim. Sorry, [indiscernible]. I’m very interested in the infection data [ph]. I find that very striking and I wonder perhaps you can comment on the severity of the infections, pathogens or little bit bacterial or fungal or even other viruses and in response to the treatment. And that leads me on to a broader question of how are you looking at changes in innate and adaptive immunity and changes in T cell repertoire for example that are occurring in this 100 days post transplant? And I have a follow-up. Thank you.

Absolutely. Thanks for your question Nick. So first off, I mean, we completely agree. I mean, I think infection related mortality on serious infections are obviously whether viral, fungal or bacterial are obviously a major problem for many patients, and so we are obviously very engaged and excited to see these transcended from an adverse event reporting perspective. We are collecting these adverse events that are serious in nature, so we're talking about serious infections and when we actually looked at the data, there is a fairly broad type sort of -- sample of infections, various types of bacterial infections, various types of viral infections, and fungal infections that would be expected in the transplant setting. With respect to the actual mechanisms that might contribute to this, I mean, some of those might obviously be related to the effects that we might be having on T cells. But I think it's also important to recognize for instance that hematopoietic stem cells have the ability for instance to home to the inner lining of the gut and perhaps provide sort of repair of the damage to gastrointestinal mucosa. So there is a lot of potential mechanisms that could be applied to actually -- implicated in explaining these initial observations. We are going to have to look at this. We are -- in the PUMA study continually and thoroughly looking at that the T cell compartment. And so we will be doing additional analysis of temporal changes in the T cell compartment and PROHEMA treated patients.

Okay. And then the follow-up is just back to the CAR T. So I understand that for TCR and CAR T and the deal with Juno that that’s exclusive for a T cell. What about for the iPSC derived T cell? Is that a different T cell? I mean, do you have -- do you have freedom to develop TCR or CAR T based iPSC T cell independently of the Juno collaboration that uses the same small molecules?

Yes, absolutely. Again, the potential of iPSCs the future of genetically-engineered cancer immunotherapy we believe is bright. There as I said, a whole host of unmet medical needs that are potentially addressable with iPSC technology. And as I said, we're quite excited about this. There is actually scientific papers published in the literature that really speak to the potential of convergence to Scott’s earlier point of genetic engineering such as CAR T engineering and iPSC reprogramming technology. So this is clearly an area that is recognized as having a lot of potential. But to be very clear, the deal that was announced yesterday with Juno does not entail iPSC derived T cells including genetically engineered T cells. So to answer your question, we are absolutely able to pursue this ourselves at this point.

Great. Thank you very much and congrats on the progress.

Thanks, Nick.

[Operator Instructions] And we have a follow-up question from David Nierengarten from Wedbush Securities. Your line is open.

David?

Oh I’m sorry. There is a mute button on my phone. Anyway, thanks for taking the follow-up question. It's been a long day to echo [indiscernible]. In terms of the economic -- potential economic benefits for PROHEMA outside of the CMV case and just looking straight at time to engraftment six days earlier than median. What kind of cost savings does that entail for the transplant?

Yes, so I’m glad you have the points. As I said, I mean there is CMV preemptive treatment costs in [indiscernible] cells, already very, very significant of course and of course in addition to that, there is additional potential for pharmacoeconomic benefit just with the effect on neutrophil engraftment. So if as an example, we saw at the end of the study, it continue at six day acceleration of neutrophil engraftment, that on of itself will quickly get you into a pharmacoeconomic potential saving in that same ballpark of about $75,000, and it depends a little bit on who you speak to and what sort of transplant centers. But by our sort of intelligence the days in and per day in a hospital after a cord blood transplant can range anywhere from 15,000 and that number could potentially be even higher, the more complications you actually have. So the patients who actually undergo cord blood transplant and get out of the hospital quickly without complications have obviously far lower costs. So a six day acceleration of engraftment could easily be in the ballpark of $75,000 a day as well, depending on complications and the intensity of treatment, including obviously days in the intensive care unit.

Yes, I know it’s hard to tease apart the effect of a cord, kind of an uncomplicated transplant where you released early versus the other reasons why you might be [multiple speakers].

And that’s exactly to your point, David. You’re dealing with average costs and not all days in the hospital are equal obviously.

Yes, great. That’s a good add. Thanks for the ballpark figure, though that’s helpful. Thank you.

Of course.

And there are no further questions in the queue. I’ll now like to turn the call over to Christian Weyer, President and Chief Executive Officer for closing remarks. End of Q&A

Well, thank you very much. I think it's all preparing. This is very exciting time for us. We have made, we believe great progress throughout the year so far. So thank you very much for your participation in today's call. And as always we look forward to updating you again in the near future. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. Everyone have a great day.