Fate Therapeutics Inc
NASDAQ:FATE
Earnings Call Analysis
Q4-2023 Analysis
Fate Therapeutics Inc
Investors were presented with promising clinical milestones for Fate Therapeutics' off-the-shelf iPSC-derived CAR NK cell and CAR T-cell programs. The company highlighted its readiness to achieve significant progress in these areas in 2024. The strategic emphasis was on continuing to develop their iPSC product platform with a particular focus on autoimmunity. Financially, Fate Therapeutics appears disciplined, maintaining a robust cash balance to further invest in a diverse pipeline aimed at providing therapeutic benefits to cancer and autoimmune disease patients.
FT819, an innovatively engineered off-the-shelf CD19 targeted CAR T-cell program, gained recognition from the California Institute of Regenerative Medicine with a $7.9 million grant to support its Phase I trial for patients with moderate-to-severe SLE, highlighting its exceptional merit and potential as a novel therapeutic avenue. Patient enrollment was set to begin, fostering anticipation for the sharing of initial clinical data within 2024. Concurrently, the groundbreaking Phase I trial for relapsed refractory B-cell lymphoma was continuing. Here, the treatment demonstrated a favorable safety profile, meaningful antitumor activity, including complete responses in some patients, and promising translational data. Investors can expect an update with new clinical trial data from FT819 to be released in the second half of the year.
Fate Therapeutics, in partnership with Ono Pharmaceutical, began its Phase I clinical trial of FT825 for advanced solid tumors. This treatment seeks to leverage the capabilities of both innate and adaptive immunity, and carries an ingenious design which integrates multiple antitumor mechanisms to specifically address the complexities associated with solid tumor therapy. The trial, involving both monotherapy and combination regimens with monoclonal antibody therapy, aims at tackling cancers, including those sensitive to HER2-targeted therapies. The enrollment for the combination arm will initiate post clearance of dose-limiting toxicities observed in the monotherapy arm, providing a potentially broader spectrum of cancer therapy applications.
The Phase I clinical trial for the first-of-its-kind FT522—Fate Therapeutics' off-the-shelf, CD19 targeted CAR NK cell program—showcased their proprietary Alloimmune Defense Receptor technology. This innovation could revolutionize cancer immunotherapy by reducing or eliminating the need for intense chemotherapy conditioning. The trial, which includes two different regimens, may demonstrate that treatment can be effective without the traditionally required chemotherapy, presenting a less harsh option for patients and smoothing the path for integration with standard care in community settings. Clinical proof-of-concept for the ADR technology, as well as initial data from the FT522 trial, are expected in the second half of the year, setting a potential new standard in the realm of immunotherapy.
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Welcome to the Fate Therapeutics Fourth Quarter 2023 Financial Results Conference Call. [Operator Instructions] This call is being webcast live on the Investors section of Fate's website at fatetherapeutics.com. As a reminder, today's call is being recorded. I would now like to introduce Scott Wolchko, president and CEO of Fate Therapeutics.
Thank you. Good afternoon, and thanks, everyone, for joining us for the Fate Therapeutics Fourth Quarter 2023 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-K for the year ended December 31, 2023, 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 and 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-K for the year ended December 31, 2023, 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 are Ed Dulac, our Chief Financial Officer; and Dr. Bob Valamehr, our Chief Research and Development Officer. During today's discussion, we will highlight clinical milestones, that we are poised to achieve in 2024 across our off-the-shelf iPSC-derived CAR NK cell and CAR T-cell programs. In addition, we will discuss our ongoing initiatives to continue the clinical expansion of our iPSC product platform into autoimmunity. Finally, we will review our financial position where our operating discipline and strong cash balance have created the opportunity to continue our investment in developing a deep pipeline of highly differentiated preclinical and clinical product candidates with the potential to bring significant therapeutic benefit to patients with cancer and autoimmune diseases. Beginning with FT819, our off-the-shelf CD19 targeted CAR T-cell program. I am pleased to announce that the company has been awarded $7.9 million by the California Institute of Regenerative Medicine to support the conduct of our FT819 Phase I clinical trial for the treatment of patients with moderate-to-severe SLE. In its review of our application, CIRM scientific working group unanimously scored our application as having exceptional merit. Notably, FT819 was recognized as offering a novel therapeutic approach for the treatment of SLE with its ready-to-use supply which can be administered to patients without apheresis and without premature discontinuation of immunosuppressive therapy. We are currently conducting study startup activities at multiple U.S. clinical sites with patient enrollment set to commence at the first dose level of 360 million cells. The Phase I study for the treatment of SLE is designed to evaluate safety, pharmacokinetics and anti-B cell activity of a single dose of FT819 administered following a standard 3-day chemotherapy conditioning regimen, and we plan to share initial clinical data from the study in 2024. We also continue to enroll patients in our FT819 Phase I clinical trial for the treatment of relapsed refractory B-cell lymphoma. This landmark study is the first ever clinical investigation of a T-cell product candidate manufactured from a clonal master iPSC line. We are currently enrolling patients in single-dose treatment cohorts at 540 million cells and at 1 billion cells using a standard 3-day chemotherapy conditioning regimen. Clinical data previously presented by the company from the FT819 Phase I study in relapsed/refractory B-cell lymphoma showed a favorable safety profile and antitumor activity. Of the first 11 patients treated with a single dose of FT819 at up to 360 million cells, we observed no dose-limiting toxicities, no events of any grade of immune effector-cell associated neurotoxicity syndrome and mild cytokine release syndrome in only 2 patients. We observed antitumor activity in heavily pretreated patients, including 3 complete responses. And we observed translational data consistent with known T-cell biology with CAR T-cell expansion that peaked in the peripheral blood between days 8 and 11, and deep suppression of CD19 positive B cells in the peripheral blood through day 30. At the American Society of Gene and Cell Therapy Conference to be held in May, we expect to share new data from our FT819 Phase I clinical trial for the treatment of relapsed/refractory B-cell lymphoma at these higher dose cohorts as well as new clinical translational data that support the potential clinical benefit of FT819 for the treatment of B-cell mediated autoimmune diseases. Turning to our solid tumor clinical initiatives. I am pleased to announce that under our collaboration with Ono Pharmaceutical, we have now initiated our Phase I clinical trial of FT825 for the treatment of advanced solid tumors. Patient enrollment is currently ongoing at multiple clinical sites at the first dose level of 100 million cells. We believe FT825 represents an exciting new frontier in the field of cell-based cancer immunotherapy. The multiplexed engineered iPS-derived CAR T-cell program incorporates a constellation of antitumor mechanisms that are designed to harness the potential of both innate and adaptive immunity and to overcome the unique challenges in treating solid tumors. These novel synthetic controls include a CXCR2 receptor to promote cell trafficking, a chimeric TGF beta receptor to redirect immunosuppressive signals in the tumor microenvironment, a high affinity non-cleavable CD16 receptor to promote antibody-dependent cellular cytotoxicity, and a novel cancer specific HER2-targeted antigen binding domain, which has exhibited unique and differentiated activity from that of trastuzumab. In preclinical models, FT825 has exhibited similar potency with greater specificity toward HER2-expressing malignant cells compared to trastuzumab and has shown robust antitumor activity in vitro against HER2 low expressing tumor cells. The FT825 Phase I study is designed to assess the safety pharmakinetics and activity as monotherapy and in combination with monoclonal antibody therapy in patients with advanced solid tumors, including cancers where HER2-targeted therapies are approved as well as cancers where HER2 targeting has recently shown promising clinical activity such as endometrial, ovarian and cervical cancers. The dose escalation schema for the Phase I study includes 2 treatment regimens: Regimen A or the monotherapy arm, consists of a standard 3-day preconditioning regimen and a single dose of FT825 as monotherapy. Eligibility includes patients with advanced HER2 expressing solid tumors. Regimen B or the combination arm, consists of a standard 3-day preconditioning regimen and a single dose of FT825 in combination with cetuximab where we seek to additionally exploit innate immunity by leveraging the product candidate's high-affinity, non-cleavable CD16 receptor to target EGFR expressed on solid tumor cells. Enrollment into Regimen B will commence at the first dose level of 100 million cells upon clearance of dose-limiting toxicities at this first dose level of Regimen A. Turning to our NK cell programs. FT522 is our off-the-shelf CD19 targeted CAR NK cell program and is the first product candidate emerging from our iPSC product platform that incorporates our proprietary Alloimmune Defense Receptor technology, which is designed to reduce or eliminate the need for administration of intense chemotherapy conditioning to patients receiving cell therapies. Today, conditioning patients with intense chemotherapy is a necessary component of the treatment course for cell-based cancer immunotherapy, including for both autologous and allogeneic cell therapies, conditioning chemotherapy induces toxicities, limits patient access and prevents combination with standard of care immunotherapies widely used in the community-based settings. FT522 incorporates a synthetic engineered receptor targeting 4-1BB expressed on alloreactive immune cells. In preclinical studies, we have shown that the engagement of ADR-armed CAR NK cells with alloreactive immune cells mitigated rejection, promoted NK cell proliferation and increased antitumor activity. These preclinical data suggest that 522 has the potential to drive clinical responses without administration of intense conditioning chemotherapy to patients. Our ongoing multi-center Phase I clinical trial of FT522 in patients with relapsed/refractory B-cell lymphoma includes 2 regimens: Regimen A or the conditioning arm which consists of 3 days of standard conditioning chemotherapy, 1 dose of rituximab and 3 doses of FT522. Regimen B or the no conditioning arm consists of 1 dose of rituximab and 3 doses of FT522 without conditioning chemotherapy. Enrollment into Regimen A is ongoing at the first dose level of 300 million cells per dose and upon clearance of dose-limiting toxicities at this first dose level, enrollment into Regimen B or the no conditioning arm will commence at this first dose level of 300 million cells. Each regimen may proceed with dose escalation independently. We believe we have the opportunity to establish clinical proof-of-concept for our ADR technology and for our FT522 program without conditioning chemotherapy early in dose escalation. We will look to provide initial clinical data from our FT522 program in the second half of 2024. We also continue to enroll patients in our multi-center Phase I clinical trial of FT576, our BCMA-targeted CAR NK cell product candidate for the treatment of relapsed/refractory multiple myeloma. The study is currently accruing patients in 3-dose treatment cohorts as monotherapy as well as in combination with CD38-targeted monoclonal antibody. Using a standard 3-day chemotherapy conditioning regimen, the company has treated 6 patients at 1 billion cells per dose with no dose-limiting toxicities and no reports of any grade of CRS or ICANS. This study is currently enrolling patients at 2.5 billion cells per dose. Any further clinical development of FT576 for the treatment of multiple myeloma will be determined by the company based on safety and activity at these higher dose levels. As we advance these clinical programs, we remain committed to pursuing new therapeutic opportunities in autoimmunity or early clinical data with autologous CD19 targeted CAR T-cell therapy has shown profound clinical benefit. We believe there is a very strong value proposition for our iPSC product platform and off-the-shelf iPSC-derived cellular immunotherapies in autoimmunity, where a relatively short-lived cell can deeply eradicate an aberrant B-cell population and enable rapid reconstitution of a healthy immune system and where safety, patient convenience and accessibility, cost and scale will be key differentiating factors. We believe our FT819 CAR T-cell program and our FT522 CAR NK cell program have the potential to durably deplete a patient's pathogenic immune cells drive immune reset and meaningfully improve quality of life across a wide spectrum of autoimmune diseases. As we look forward into 2024, we expect to expand our clinical investigation of FT819 in autoimmunity to include treatment of additional diseases beyond SLE. Additionally, we also plan to submit an investigational new drug application for FT522 in autoimmunity, where we think the potential to reduce chemotherapy conditioning and to target and deplete B cells, plasma cells and autoreactive T cells offers a highly differentiated therapeutic profile across a broad range of autoimmune diseases. I would now like to turn the call over to Ed to review our financial results for the fourth quarter.
Thank you, Scott, and good afternoon. Fate Therapeutics is in a solid financial position to advance our pipeline. Our cash, cash equivalents and investments at the end of the fourth quarter were approximately $316 million. In the fourth quarter, our revenue declined to $1.7 million compared to $44.4 million for the same period last year. As described previously, our revenue is now derived exclusively from our collaboration with Ono Pharmaceutical and specifically reflects research funding associated with the development of a second product candidate against an undisclosed target in solid tumors. Research and development expenses for the quarter decreased more than 60% from the same period last year to $31.8 million. The decline in our R&D expenses was attributable primarily to a decrease in salaries and benefits, including share-based compensation expense following the company's restructuring in the first quarter of 2023 and from lower clinical trial costs and lower demand for R&D materials and equipment. We also benefited from $2 million of contra R&D expense in the quarter in connection with our clinical development of FT825 with Ono. As a reminder, after opting into a co-development and co-commercialization arrangement for FT825 in the U.S. and Europe with Ono in the fourth quarter of 2022. We account for that program's reimbursable expenses as an offset within our research and development costs. General and administrative expenses for the fourth quarter decreased by 17% from the same period last year, to $17.9 million. The decline in our G&A expenses was attributable primarily to a decrease in salaries and benefits, including share-based compensation expense. Total operating expenses for the fourth quarter declined 54% from the same period last year to $49.8 million, which includes $9.5 million in noncash share-based compensation expense. Note that in connection with the development of our off-the-shelf iPSC-derived CAR T-cell product candidate, FT819, we previously achieved the clinical milestones set forth in our amended license agreement with Memorial Sloan Kettering Cancer Center, which triggered a first milestone payment to MSK in 2021. Up to 2 additional milestone payments may be owed to MSK based on subsequent trading values of the company's common stock ranging from $100 to $150 per share. We assess the fair value of these contingent milestone payments currently valued at $700,000 on a quarterly basis. In the fourth quarter, we recorded a noncash $645,000 nonoperating loss associated with the change in fair value. Our net loss for the fourth quarter was $44.1 million or $0.45 per share. Finally, in what could be considered a challenging year in 2023 for the company, I wanted to recognize the resilience and collective efforts of our employees. Our cross-functional teams were able to respond to challenges, advance key clinical programs, and discover next-generation technologies and did so with efficiency. Our full year GAAP operating expenses of $254 million compared favorably to our guidance range of $265 million to $285 million, enabling us to finish the year with more than $300 million on our balance sheet. I would now like to open the call for questions.
[Operator Instructions] Our first question comes from the line of Michael Yee of Jefferies.
Thank you for all the update. I'm in your backyard in San Diego. Quick question for you. On 819 in your ongoing lupus program, can you affirm whether you're about to treat a patient, will treat a patient and whether you would have data on some of those patients by the end of the year or around there? And is there any doubt in your mind Scott, that those results should basically replicate autologous and how you expect -- or what you would expect there to differentiate it.
Sure. On the first point with respect to where exactly are we in this study. So we are working today with FT819 in the lupus study with multiple different sites on study start-up and I think we are well positioned to treat the first patient in the coming weeks based on interactions that we've had with multiple sites. As a company, we are committed to providing a clinical update with FT819 in lupus. While I certainly am not in the business of predicting patient outcomes, for novel therapies especially. I think we are encouraged based on what we've seen with respect to 819 and its resemblance to autologous CAR T-cell therapy, at least with respect to how the product performs in patients from a translational perspective. As we've sort of highlighted in the past with FT819, we've seen a really clean safety profile through multiple dose levels. We have seen what you would consider to be a traditional CAR T-cell expansion, where we've seen cells peak in the peripheral blood between days 8 and 11. We have seen persistence of a single dose of FT819, stretching out into the second and third week, day 15. And we've seen B-cell suppression that has extended out throughout the first 30-day cycle. So with respect to how 819 is behaving in patients in vivo, we're really excited about that and think we have the potential to replicate what's been seen in a relatively small number of patients with autologous CAR T-cell therapy.
Our next question comes from the line of Yigal Nochomovitz of Citigroup.
Yes. What evidence do you have so far with respect to 819 not only clearing the plasma cells, but also getting into the tissue component, specifically the germinal centers where there are tissue-resident B cells that perhaps they need to be wiped out as well. How do we -- how well do the iPSC fair there in terms of trafficking into that component.
Yes. I think while we can't necessarily speak to all secondary and tertiary tissues, I think it's important on this point to note that FT819 clearly has reached based on responses that we've generated in the hematologic malignancy setting, specifically B-cell lymphoma. We certainly have been able to reach tissues that are harboring CD19-positive cancer cells. So we've absolutely seen just based on responses and CT scans, we've seen FT819 traffic out of the blood, reach tumor cells that are outside of the blood and clears pockets of CD19 positive tumors. And so based on that, while we can't be certain that based on clinical data to date in oncology, that FT819 is reaching some of these -- all of the tissues that may be harboring bad acting B cells. We are enthused by what we've seen in the oncology study with FT819 ability to traffic outside of the blood and reach secondary and tertiary tissue where tumor cells have been located.
Okay. And then the other question is just sort of more strategic. I believe the IND for lupus has been open for about half a year, maybe 6 or 7 months. And as you know, it's obviously a super competitive space. In fact, there was 1 other company that decided to not pursue their CD19 in SLE. I'm just wondering -- just sticking with it, I'm just wondering to what extent you're going to look at other indications for 819 and whether you would accelerate those plans given the competitive nature of this lupus space?
Yes, fair question. Totally committed to FT819 in autoimmunity. I think one of the advantages that we have compared to others is that, keep in mind, we did have -- we do have a study up and running, obviously, with FT819 in oncology. So we've been able to work successfully with several different oncology centers that are running FT819 and partner essentially the oncologist with the rheumatologists to gain momentum in starting the study. So we do think we are in a unique position given that we have a tremendous amount of oncology experience with FT819, we have relationships with key PIs on the oncology side, and that has enabled us to, I think, successfully partner with the rheumatologists. We also keep in mind, I mean, one of the great things about an off-the-shelf cell therapy is that we have product and inventory. And so we are -- once we get these studies up and running, we don't have manufacturing risk. We have product that's already been manufactured and can rapidly begin to intervene and treat patients, which we're super excited about. I think thirdly, absolutely acknowledging very competitive space. And as I said in my prepared remarks, absolutely looking to expand the IND of 819 into additional indications in autoimmunity.
And just one more super quick on the dose for autoimmune. Is it -- how did you pick the dose? Is it -- are you going with the same at the oncology? Or did you make any adjustment?
So we start -- we've gone through dose escalation, and it's one of the reasons we continue to do a dose escalation on the oncology side is because we do think in the autoimmunity space, safety is absolutely going to be at a premium. At the time that we had submitted the IND to the FDA, we had cleared 360 million cells at that dose level in oncology. We have seen throughout the study in B-cell lymphoma. What appears to be dose-dependent expansion of FT819, including reaching peaks of expansion that continue to increase with dose level based on the safety profile that we've seen to date, which has been very clean. We're comfortable starting at 360 million cells. We clearly have the ability to continue to dose escalate in the autoimmunity study as well as dose deescalate, if that were necessary.
Our next question comes from the line of Tara Bancroft of TD Cowen.
So I was wondering if you could tell us more about what it would take for you to choose FT819 versus 522 for autoimmune disorders going forward or if you are planning on pursuing both for the long term?
Tara, it's best as we sit here today and as much as I can sort of speculate on the long term, I think we plan on pursuing both. I think one of the things we're really excited about with respect to 522 is the fact that, that cell has been engineered and includes ADR technology. I think while we're all excited about autoimmunity, the reality is that patients today in autoimmunity, at least to date, to my knowledge, have all been treated with intense chemotherapy conditioning. I think we might all agree that that's probably not the right way to maximize reach and treatment of patients with autoimmune diseases. And so one of the things we're really excited about is 522 is understanding whether or not we can deliver for instance, a cell therapy without chemotherapy conditioning. I think that would be a significant breakthrough in the field, especially in thinking about treating patients with autoimmunity, essentially being able to decouple the requirement to administer intense chemotherapy conditioning to a patient and being able to deliver a cell therapy that could be delivered off-the-shelf and could achieve the same level or similar levels of B-cell reset without the conditioning. So 522, we're super excited about that and the ADR technology. I think the other element that we're excited about with respect to 522, it's obviously an NK cell. There are regimens throughout autoimmunity, where monoclonal antibodies are utilized. It's a CD19 targeted program. We have the potential to combine with monoclonal antibody therapy, including monoclonal antibodies that have the ability to target more of a plasma cell. So reaching into the early B cells through CD19 as well as stretching into the plasma cell compartment, potentially in combination with a monoclonal antibody. I think it's potentially very differentiating for 522. So we're excited about both product candidates.
All right. Great. I agree. 522 is very exciting. Thanks, guys.
Thanks.
Our next question comes from the line of Tazeen Ahmad of Bank of America.
Just some simple ones on timing and maybe just a little bit on bar for efficacy. So for 576 in multiple myeloma, what level of data are you expecting to generate? And what level of efficacy should we be looking for there? And then I have a follow-up.
Sure. So obviously, the multiple myeloma space is very crowded, and we've seen remarkable results with the autologous programs. I think from our perspective, as we think about 576, I think 576 needs to have a therapeutic profile, which is similar to what's been achieved with T-cell engagers. So we are talking about high response rates and certainly complete response rates that are significant. So for us to continue the program with 576 I think it's really important that we see a relatively high response rates, including complete response rates. The durability profile will obviously take time to play out, but that's how we're thinking about 576 currently today.
Okay. And just to give a little bit more of a bracket, what type of response rate should we be thinking of in a range?
Yes. I think what we've seen with the T-cell engagers is the T-cell engagers response rates are probably north of 60% with respect to ORR and CR rates that are in the 40% range.
Okay. Got it. And then on...
Durability is obviously important, too, as T-cell engagers like cell therapies have seen longer-term progression for your survival that's certainly over a year.
Okay. And then quickly, when should we expect to see data for FT222 (sic) [ FT522 ] in relapse and refractory T cells?
Sorry, did you say FT522?
Yes.
Yes. FT522, I think we have the potential with 522 to show early proof of concept with the monotherapy arm -- or sorry, sorry, in the arm without conditioning chemotherapy. So the way the study works is the first 3 patients are treated with cy/flu in the 522 study. This is at a dose of 3x 300 million cells. As soon as we clear that dose level, two things can happen, we can dose escalate the cy/flu arm to 3x 900 million cells. Importantly, though, we also opened the no-conditioning arm. And so patient 4, for example, could be in the no-conditioning arm that would open at 3x 300 million cells. So we do believe that in short order, we have the potential to show proof of concept with 522, early clinical proof of concept with 522 without conditioning chemotherapy and we're looking to provide a data update in the second half of '24.
And will you say that you've confirmed no DLTs at the regimen allo just before you give us the update?
I think we'll probably give an update as we progress the study.
Our next question and comes from the line of Daina Graybosch of Leerink Partners.
I wanted -- in the intent of understanding when you and probably others will have a more substantial number of lupus treated patients. I wonder if you can talk through the challenges you faced in this last 6 months specifically getting these sites up and running. You already spoke about rheumatologists collaborating with oncologists. And are there any challenges that you expect to continue that will make just enrolling these lupus studies difficult? Or any challenges that you think are more of a study start-up challenge and you already see them overcoming. And then maybe to sort of sum it up, like when can we see a cohort to say with 819 or 522 of something like 15 or 20 patients?
Yes. So look, I think all of us need to take a step back and recognize, right? So most autoimmunity patients and most physicians that treat patients in the autoimmunity field are not familiar with cell therapies. So I mentioned, I think an advantage for us in study startup has been, although certainly, there are challenges in pioneering a brand-new field. And I mean that's just generally for the community here that's advancing cell therapies. We're all pioneering a brand-new field in autoimmunity. And yes, there's going to be challenges in study startup that we're all going to face and need to overcome. I think one of the advantages for us has been the fact that we are an oncology company. We do have good relationships with multiple centers NPIs that on the oncology side that have been conducting the 819 study. And they have been advocates and ambassadors for us in partnering with their rheumatologist cohorts. I think -- while it's always prudent to be cautious, we are dealing with CAR T-cell therapies. There are patient staggers that are mandated by the FDA. So all of us, the reality is, are only going to be able to go so fast in enrolling patients, and that includes based on the way I think most of the protocols are structured in autoimmunity that involve 28-day patient staggers oftentimes. So I think we're all excited about the potential in autoimmunity. We're all moving forward at a brisk pace. There are certainly, at least with respect to autologous CAR T-cell therapies some safety concerns that have been raised generally in the field by the FDA. You're well aware of what's occurred recently with respect to the concern specifically around T-cell malignancies. We don't think on the iPS-derived cell therapy side, we have that same risk profile that would come from an autologous program given the fact that we engineer a single iPSC fully characterize it and can understand exactly -- fully characterize all the integrity of engineering. So look, we're committed to providing an update on the 819 study in autoimmunity this year, but I think we're all going to have to be patient as the field begins to take off. We're all pioneering a brand-new field.
Yes. Maybe one follow-up. Once you get a center up and running and have rheumatologists on board and ready to enroll patients to the enrollment criteria do they set a new barrier for finding the right patient? Or how do you anticipate doing that?
I think the enrollment -- look, there are -- unfortunately, I mean, we're talking about in many instances where these autoimmune diseases are pretty severe and have had devastating consequences on patients' lives. And so I do think there is the enrollment criteria once up and running. I think the enrollment criteria is supportive of enrolling patients. The risk of -- the sort of the pace of enrollment though, to be clear, is governed a bit by these 28-day staggers that are often mandated by the FDA.
Our next question comes from the line of Mike Ulz of Morgan Stanley.
Maybe just a follow-up on 522, Scott. So you mentioned sharing the data potentially in the second half of this year. Just curious if you would expect to have Cohort B data at that time as well, which is without conditioning? And then maybe just secondly, assuming ADR technology is validated. Is that something you could easily add to 819 or are there notable challenges there?
Sure. Yes. The data update that we're looking to provide in the second half of 2024 would certainly include cohort of patients or cohorts of patients with no cy/flu conditioning. Obviously, we think that is a significant milestone for the field of cell therapy, being able to deliver a cell therapy and allow it to thrive without conditioning chemotherapy. So super excited about that. I'm pushing on that very hard and favoring actually Regimen B in terms of thinking about enrollment and the implications for that as we think about our platform and how to reach patients without conditioning. I think as we look at 522 building ADR technology into our platform, while we have not spent a lot of time talking about it publicly, we have ADR technology embedded into multiple different IPS cell lines, including on the T-cell side.
Our next question comes from the line of Peter Lawson of Barclays.
Great. Just a follow-up on 522 in autoimmune disorders kind of just firstly, what autoimmune disorders are you thinking about that could also include SLE? And would you start without conditioning with 522?
So with 522, I'm not going to get into the specific strategy that we're pursuing for the IND. But with respect to 522, we do think and are excited about a broader set of B cell-mediated autoimmune diseases. That certainly could include SLE or we're not, by any means, ruling SLE out. But there's certainly a whole host of autoimmune diseases that are B cell-mediated including autoimmune diseases, where the plasma cell compartment may play a more significant role and that we could potentially reach in combination with monoclonal antibody therapy. I suspect sitting here today we are absolutely going to be very excited about exploring FT522 in it -- in sort of a broad set of potential indications. And I think -- while I think we will learn quite a bit from the oncology study, it won't surprise me if we file the initial IND where there is multiple different conditioning regimens that we could look at. One of them may be cy/flu given the presence that exists, but there are certainly other regimens that we can think about adding on to that exists in autoimmunity. I think the real opportunity at the end of the day is to reach autoimmunity patients. Think about what regimens they're receiving today in their daily lives and whether or not adding a cell therapy without cy/flu could substantially change their lives by promoting an immune reset.
Got you. And then a quick question for Ed. Just on kind of any guidance around SG&A and R&D, just considering it declined significantly year-over-year. Just curious what the run rate is for the '24.
Yes, Peter, we're not providing guidance today. But I think if you look back at the last 2 quarters, and I tend to want to look at this on a cash operating expense basis. If you look at cash operating expenses in the third quarter, I think they were about $37 million, a very similar number, about $35 million in the fourth quarter. I think that's a reasonable baseline to carry into at least the first half of 2024. And as the prepared remarks have indicated, we obviously have essentially 5 ongoing programs, 819 in oncology, 819 emerging in autoimmunity, 522, 825 across a couple of different indications. So the second half run rate, I think, is a good indicator of what the first half of 2024. But as we have indicated, we are at the higher dose levels of both FT576 in myeloma and FT819 in oncology, and we'll have a go/no-go decision sometime later this year. So there may be some puts and takes to the extent our data allows us to continue later development. We'll provide the appropriate guidance at that time. But for the time being, that $35 million to $40 million per quarter is a reasonable run rate to assume in the first half of 2024.
Our next question comes from the line of Ben Burnett of Stifel.
This is Carolina Ibanez on for Ben Burnett. For 819 in autoimmune disease, this aspect that autoimmune disease patients have a stronger immune system than cancer patients, which may drive a more energetic rejection of the allogeneic CAR T cells. What's your perspective on this? And do you think a more intense lymphodepletion regimen may end up being required at least for 819 to ensure that a sufficient B-cell depletion can occur.
Yes. Based on the data that we've seen on the oncology side, I think we're very comfortable. And as you probably are aware, we've continued with the standard cy/flu conditioning regimen that's been used in treating patients with autoimmunity as well as the conditioning regimen that's used with autologous CAR T-cell therapy. Like I mentioned, based on the translational data that we have seen. We've seen FT819 behave similarly to their autologous counterparts. We've seen a dose-dependent expansion, we've seen peaks in expansion that are similar to the autologous counterparts. We've seen persistence that's lasted for several weeks with respect to the product candidate. And we've seen B-cell suppression that extends out to at least 30 days. So given all that, I think we're really comfortable with the profile that we've seen with FT819 on oncology and are very excited about its potential in autoimmunity, where at least the data that exists in patients treated to date, primarily out of the group in Germany has suggested that a short-lived cell, in their case, an autologous program, but that an autologous cell is acting very rapidly. The kinetics of depletion are occurring quickly and that is actually important at some level for the cell to ultimately clear the patient as opposed to being long-lived so that the B cell compartment can come back and trigger the immune reset. So in the setting of autoimmunity, we believe based on the autologous data that's been generated to date that a short-lived cell can have profound impact generate the necessary depletion, enable a relatively rapid immune reset, and we're very excited about that.
Our next question comes from the line of Andrea Tan of Goldman Sachs.
This is Tolani Uthman on for Andrew Tan. Firstly, could you please [indiscernible] to the considerations for FT819 and B-cell malignancies and then for 576 in multiple myeloma and the profile, you're looking to see at the higher doses to warrant further development relative to the autologous and allogeneic CAR T therapies?
Yes. I think I touched on that for multiple myeloma already. I think the profile for an allogeneic cell therapy where products are approved needs to be similar to the value proposition, therapeutic value proposition that's provided by engagers. So in lymphoma side as well as in the myeloma side, I think the appropriate benchmark is looking at the T-cell engagers that are approved and being developed.
Perfect. And then secondly, for FT522, just how are you thinking about the B-cell malignancies, that you'd be willing to give up to achieve better safety and tolerability through the exclusion of the chemotherapeutic conditioning?
I think that's something we're absolutely going to look at. I mean I think the reality of this is, as we look at the autoimmunity space, people can have an opinion on this, but I don't think the vast majority of autoimmunity patients are going to be treated or reached at specialized academic centers that treat oncology patients. So I think it's going to be absolutely critical in the field of autoimmunity, that we reach patients where they live and breathe in the community and that these patients are treated without intense chemotherapy conditioning. And I think that's going to be critical for the autoimmunity space.
Our next question comes from the line of Yanan Zhu of Wells Fargo Securities.
Great. So first, I was wondering -- this is a follow-up to the earlier question about the tissue specificity. I was just wondering whether treating SLE would require the CAR T cells to traffic to additional tissues compared with treating B-cell malignancies? Do you have any thoughts on that and whether iPSC-derived T cells could also traffic to those additional tissues if there is such a tissue. And my other question is about the patient population you plan to enroll in the SLE study. I was wondering whether these will be patient's refractory to biologics and other treatments? Or could milder patients be enrolled as well? And lastly, I was just wondering if there are any competitive dynamic for patient enrollment just given how many clinical trials will be ongoing at the same time in SLE, do you think it could be -- there could be some competition for enrolling patients?
Yes. So just -- let's start with patients, the patients to be treated, yes. So these are patients with active SLE moderate-to-severe disease will have had to have multiple lines of therapy already. So I think the criteria of patients that we're looking to enroll, I think is similar to those that have been treated to date out of the group in Germany with the autologous counterparts. So this moderate-to-severe active disease. I think certainly, it's a competitive landscape. There are over 10 autologous CAR T-cell programs that are beginning to move into autoimmunity. I think an off-the-shelf cell therapy program, even if at the same center as an autologous counterpart certainly has some unique and distinct advantages. We don't have to leukapheresis a patient. Certainly, we don't have to take a patient prematurely off immunosuppressive therapy. We have product that is in inventory and can rapidly sort of intervene and treat patients. As we begin to show -- continue to show safety and activity. I think with our off-the-shelf program, there is the potential to reach patients outside of the academic medical centers more into the community. You've certainly seen us do that with NK cells, where our protocols do not require hospitalization, patients can be treated outpatient in an infusion center, and we can reach into the community. I think ultimately, that will be a requirement to treat patients in autoimmunity and serve those patients well. And so we're excited about sort of the differentiation -- the differentiated profile of an off-the-shelf cell therapy, including indirect comparison to their autologous counterparts, which I think provide some -- there's some real constraints on how an autologous cell can be delivered to patients today with autoimmunity.
Very helpful. And the question about whether SLE might involve additional tissue specificity.
Yes. So without a doubt, I think there are bad acting B cells that are sitting within secondary and tertiary tissue. I guess my comment on that -- I made comments about that earlier with respect to, certainly, we've seen from a clinical setting, 819 rich tumor cells that are in the secondary, tertiary tissues and deplete CD19 positive tumor cells. I'd also note that we've done a significant amount of work with CAR NK versus CAR T cells preclinically. And we're very confident in essentially the homing and trafficking and infiltration potential of our T-cell programs, iPS-derived CAR T-cell programs. And again, that's based on some significant models we've done on the solid tumor side.
Our next question comes from the line of Gil Blum of Needham & Company.
This is Ethan on for Gil. Just wondering, in your view, if there are any clinical results, let's say, in B-cell lymphoma that would potentially gate FT522 for moving forward into autoimmune indications? And then for a second question, and I just missed this, but are you still expecting to have data for FT576 in multiple myeloma in the first half of this year.
Yes. For 576, we'll give an update when we complete the dose cohort at 2.5 billion cell x 3 doses. And so we're looking at both Regimen A as a monotherapy and Regimen B in combination with CD38 targeted mAb. When we complete that cohort with respect to responses, we'll give an update on the 1 billion cell cohort as well as the 2.5 billion cell cohort. I suspect that will be sometime in the middle of this year based on where we are currently in that study. As it relates to NK cells moving into autoimmunity or FT522 specifically, certainly excited by the potential for NK cells in autoimmunity. As I sort of mentioned before, we've seen, including with multi-dose regimens, super clean safety profiles across our entire class of NK cell therapies, whether that be in hematologic malignancies or solid tumors. We've been able to deliver NK cells in the outpatient setting in the community. And so I think that bodes very well for our potential to differentiate and reach patients with autoimmunity outside of the academic medical centers.
I would now like to turn the conference back to Scott Wolchko for closing remarks. Sir?
Thank you. And thank you, everyone, for all your great questions today. Look forward to seeing you in the near future. Be well.
This concludes today's conference call. Thank you for participating. You may now disconnect.