Stem Cell IPO Fate Therapeutics

With a wealth of biotech IPOs in 2013, yet another company stepped to the plate this month. Fate Therapeutics focuses on the discovery and development of adult stem cell modulators alter the course of rare life-threatening diseases, sometimes known as orphan diseases. They have developed two separate platforms, which focus on activation and optimization of stem cells, hematopoietic and satellite stem cells, which are able to regenerate throughout the human life cycle.

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Founded in 2007, and headquartered in San Diego, California, Fate Therapeutics utilizes well understood pharmacologic modalities and biological mechanisms in two proprietary platforms that target the natural mechanisms that determine the fate of adult stem cells, in order to enhance their therapeutic potential. The company was formed in 2007 by the collaboration of stem cell leaders from Harvard University, Stanford University, The University of Washington and the Scripps Research Institute. The company was backed by several prominent VC firms, many of whom own large stakes in the company. As of June of 2013, the company had 33 employees.

Christian Weyer, M.D., M.A.S. was appointed a year ago as President and CEO, after completing a 12 year tenure at Amylin Pharmaceuticals, where he was Senior Vice President of Research and Development. Dr. Weyer was previously at the National Institutes of Health, NIDDK, where he conducted clinical research on the pathogenesis of obesity and Type 2 Diabetes Mellitus. Chairman of the Board of Directors is William H. Rastetter, a partner at Venrock.

Platform 1
Adult hematopoietic stem cells are important to growth, maintenance, and repair of blood cells and immune cells.  They have been studied for over 50 years, and animal studies have demonstrated that hematopoietic stem cells may be able to form other types of cells, including blood vessels, muscle, and bone. Because they self-regenerate, they hold the promise of repair of diseased or damaged tissues. They are currently used primarily to treat hematologic malignancies by replacing the diseased cells in the bone marrow with healthy cells. Stem cell transplant procedures have also been used to treat more than 50 rare disorders, including autoimmune diseases.

The primary product that they have developed, ProHema, is derived from umbilical cord blood, and through pharmacologic modulation and a proprietary process of ex- vivo cell modulation, rapid and supra-physiologic changes in key cell properties are able to enhance hematopoietic reconstitution. ProHema is in Phase 2 clinical development for treatment of hematologic malignancies. At the same time, Fate is pursuing optimized hematopoietic therapies for the treatment of certain diseases where the cells have shown the ability to reconstitute the hematopoietic system and engraft within the central nervous system, providing normal enzyme replacement. With a vast repository of knowledge within the company with respect to hematopoietic stem cells, Fate is certain that hematopoietic stem cells have not yet been fully optimized to improve therapeutic outcomes. Hematopoietic stem cells have not been able to proliferate or differentiate in vitro (in the test tube), but Fate Therapeutics has developed platforms that focus on the ex vivo pharmacologic optimization of hematopoietic stem cells. Current problems that Fate Therapeutics is addressing include the low number of hematopoietic stem cells in cryopreserved cord blood, a fast growing cell source of stem cells for transplant. This leads to graft failure, serious infection risk, and early mortality when compared to patients who receive transplants from standard donors.

 

Platform 2
Satellite stem cells are the target of Fate Therapeutics’ second platform. This type of adult stem cell regenerates muscle throughout a lifespan, but the capacity to do so diminishes with aging and with degenerative muscular diseases, such as the many variants of muscular dystrophies. Fate has created a protein analog that selectively expands the satellite stem cell population, and that is able to repair muscular tissue and drive growth in any degenerative muscular process. This approach for treating muscular dystrophies differs from other treatment approaches, which focus on prevention of muscular degeneration. With respect to satellite stem cells and their use in muscle regeneration, Fate Therapeutics has identified a protein, Wnt7a, as a natural enhancer of satellite stem cell activity driving muscle regeneration. Because Wnt-family proteins have been difficult to formulate, manufacture, and deliver, they have not been developed as drug candidates despite their therapeutic promise. Fate is focused on developing Wnt7a protein analogs, which have demonstrated proof of concept in animal models of degenerative muscular diseases. In trials, the Wnt7 analogs expanded the satellite stem cell population, and increased muscle strength and hypertrophy, balancing degeneration.

 Key Joint Venture
In October of 2010, Fate entered into a joint venture with Becton, Dickinson and Company (BD) to collaborate in the joint development and commercialization of unique induced pluripotent stem cell tools and technologies, which will be used for pharmaceutical development. They plan to develop specific stem cell reagent products, using Fate’s technology, commercialized by BD worldwide. These products will be available to researchers and pharmaceutical companies for use in drug discovery and development of cell-based therapies.

IPO
On October 4, 2013, Fate Therapeutics closed their IPO and announced the exercise of the underwriters’ option to purchase additional sales (NASDAQ:FATE). The IPO price was $6.00 per share, and 7,666,667 shares of common stock were purchased, including 1,000,000 shares issued upon the exercise by the underwriters of their option to purchase additional shares. The company’s initial target was 4 million shares at $14 to $16 per share, but revised its expectations for the deal immediately prior to the IPO. Fate Therapeutics has a current market capitalization of 128 million dollars. The current stock price is 6.76, down from a high of 9.19 shortly after the IPO.

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