Fate Therapeutics has begun 2023 with a big reset of its business. Having ended its collaboration with Johnson & Johnson, the cell therapy biotech has decided to slash its head count and stop multiple clinical development programs to stretch out its cash runway.
The update has multiple elements and will leave Fate looking distinctly different. First up, the end of that J&J deal. The Big Pharma paid Fate $50 million upfront, while also making a $50 million investment and putting $3 billion in milestones on the table, to create novel CAR NK and CAR T-cell product candidates in 2020. The partnership looked to be on track in the fourth quarter of 2022, when an IND application and exercising of a second commercial option triggered $13 million in milestone payments to Fate.
According to the biotech, J&J's R&D unit Janssen proposed continuing the collaboration and option agreement on revised terms and conditions. Fate turned down the proposal, triggering the winding down of the partnership and setting in motion a series of events, as Fate CEO Scott Wolchko, explained in a statement.
“We are disappointed that we were not able to align with Janssen on their proposal for continuation of our collaboration, where two product candidates targeting high-value, clinically-validated hematology antigens were set to enter clinical development in 2023,” Wolchko said. “As a consequence … we have prioritized our clinical programs and substantially reduced operating expenses, including taking the difficult and painful step of reducing our workforce, to ensure that we have a three-year cash runway.”
The prioritization of clinical programs goes well beyond minor pipeline pruning. Fate is stopping its FT516, FT596, FT538 and FT536 NK cell programs. The candidates formed the core of Fate’s clinical cell therapy pipeline. The changes represent a retreat from efforts to develop the cell therapies in indications including acute myeloid leukemia, B-cell lymphoma and solid tumors.
Under the new R&D strategy, Fate is prioritizing a CD19-targeted CAR NK cell program for blood cancers and severe autoimmune disorders, plus its FT576 CAR NK cell program for multiple myeloma, its FT819 CAR T-cell program for B-cell lymphoma and its Ono Pharmaceutical-allied FT825 CAR T-cell program for solid tumors.
Fate’s employees are bearing the brunt of the rethink. The biotech ended 2021 with 449 employees, a figure that reportedly rose to 545 last year. After the restructuring, Fate will employ 220 people. Mark Plavsic, Ph.D., the chief technical officer at Fate, is the most high-profile victim of the restructuring. Fate expects Plavsic to leave in March and to complete the head count reduction in the first quarter.
The changes are intended to buy Fate more time. The company ended the fourth quarter with the sizable sum of $475 million to its name. But with management wanting to maintain a three-year cash runway amid a tough funding environment, Fate has initiated mass layoffs to ensure it has the money to keep going through 2025.