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Fate Therapeutics Bolsters Academic Stem-Cell IP Portfolio with Whitehead Institute License

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Fate Therapeutics, a stem-cell therapeutics company founded in 2007 on technology licensed from several leading US academic institutions, last week said it has added to its portfolio foundational intellectual property from the Whitehead Institute of Biomedical Research.

Under the terms of the agreement, Fate has secured an exclusive license to IP related to mechanisms for reprogramming fully mature adult stem cells to a stem-like state. The IP is based on the work of Rudolf Jaenisch, one of the founding members of the Whitehead Institute and a biology professor at the Massachusetts Institute of Technology, of which the Whitehead Institute is an affiliate.

This technology, known as induced pluripotent stem cells, will bolster the IP amassed so far by Fate in support of its dual business model of developing therapeutics based on modulating cell fate in vivo using small molecules, and reprogramming cells ex vivo for use in drug discovery, pharmaceutical testing, and matched cell-replacement therapies, the company said.

Additional terms of the licensing agreement were not disclosed.

Jaenisch, whom Fate said is one of the earliest scientists to discover mechanisms for inducing pluripotent stem cells, will join five other stem-cell researchers as a scientific founder of the company.

The other founders, which Fate announced in December 2007, are Philip Beachy, professor at the Stanford University Institute for Stem Cell Biology and Regenerative Medicine; Sheng Ding, associate professor at the Scripps Research Institute; Randall Moon, chair and director of the Institute for Stem Cell and Regenerative Medicine at the University of Washington; David Scadden, professor at Harvard University and co-director and co-founder of the Harvard Stem Cell Institute and director of the Center for Regenerative Medicine at Massachusetts General Hospital; and Leonard Zon, professor at Harvard University and director of the Stem Cell Program at Children's Hospital Boston.

Fate has also negotiated licenses for stem-cell IP developed in each of its founder's labs, thereby accruing one of the more comprehensive patent portfolios in the burgeoning field of iPS cells, Fate CFO Scott Wolchko told BTW this week.

The company has also completed an agreement with at least one other undisclosed institution, and is in the process of negotiating "four or five more," Wolchko said.

Investors have taken note in the company's sturdy IP portfolio, as Fate has raised about $25 million in about 18 months.

"It speaks to the founding scientists and the commitment and track records they have, and also the work of the other founders," Wolchko told BTW. "Biotech companies sink or swim based on the science, and all the founders are cutting-edge visionaries when it comes to stem-cell biology."

The $25 million includes an initial $15 million Series A financing round shared by Arch Venture Partners, Polaris Venture Partners, and Venrock; as well as a subsequent convertible debt agreement with an undisclosed investor for approximately $7.5 million, and additional undisclosed venture debt, Wolchko said.

Inking so many licensing agreements over the course of a year and a half with myriad academic institutions is "a tremendous amount of negotiating," Wolchko said, but added that it is "pretty rewarding to … be in a position where Fate has been significantly well funded with great backers on the VC and scientific side so we can advance these technologies from a commercial standpoint. A lot of young companies can only license one or two pieces of IP."

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Fate has not disclosed details of any of its licensing deals. For his part, Wolchko said that "there really is no such thing as a cookie-cutter deal" with tech-transfer offices.

Part of the reason for that, he said, is that Fate has tried to be "a bit flexible and creative as to what the institutions want to do. Some are more interested in a larger up-front payment and some are interested in preserving more revenues downstream.

"We're in a position where we can be a little more flexible," Wolchko added. "There are certain things Fate is sensitive to in any type of tech transfer deal, and most institutions are sensitive to those points, as well." He declined to elaborate.

The early-stage financing has also allowed Fate to quickly ramp up its staffing. When it emerged from stealth mode in December 2007, Fate was basically a virtual company operating out of Arch Venture Partner's Seattle offices.

Since then, Wolchko said, Fate has leased space from an incubator in La Jolla, Calif., owned by Alexandria Real Estate Equities, and has hired approximately 20 people. Also, in a separate announcement this week, Fate said that it has hired a new chief technology officer: Dan Shoemaker, a former executive of ICx Biosystems, GHC Technologies, and Merck, among others.

"We have a biology and chemistry lab up and running, and a couple of administrative people," Wolchko said. "We've definitely gotten out of the VC incubation mode."

Despite the early strength of Fate's IP portfolio, it is by no means comprehensive. For instance, the same week during which Fate was founded, a San Diego company called Cascade LifeSciences unveiled plans to commercialize iPS cell technology developed at Oregon Health and Science University.

Specifically, OHSU researchers developed a method for creating pluripotent monkey embryonic stem cells using somatic cell nuclear transfer.

And earlier that December, separate scientific teams led by James Thomson of the University of Wisconsin-Madison and Shinya Yamanaka of Kyoto University published papers in Science and Cell, respectively, describing methods for creating iPSCs.

But Fate has maintained that what distinguishes its approach to inducing iPSCs from other methods is that it uses small molecules and biologics to modulate stem-cell fate in vivo. The IP licensed from the Whitehead Institute builds upon work done in this area by scientific co-founder Sheng Ding, Wolchko said.

Jaenisch has been "a pioneer in this area and has consistently gone out and pushed the frontier of biology," Wolchko said. "We feel that the IP is fairly foundational with respect to cell reprogramming; for turning [somatic cells] back into an embryonic-like state. If you look at publication dates, he was a very early pioneer.

"But the field itself is moving incredibly fast, and continuing to identify the areas of IP in academic labs is time consuming but an exciting endeavor," he added.

To aid in this process, Fate has inked sponsored research agreements with a number of undisclosed founding and non-founding academic institutions. Wolchko declined to provide details on its sponsored research, but said that it cannot forge research partnerships with some of its co-founders due to conflict of interest issues that might arise due to, for instance, their affiliation as Howard Hughes Medical Institute scientists.

The company's first product candidate, for which Fate hopes to enter clinical trials in two to three months, is based on the work of one of its scientific co-founders. The treatment would use small molecules as an adjunct therapy to a procedure called hematopoietic reconstitution, which involved knocking out the immune system of a patient with blood cancer and attempting to regenerate immune competency with stem cells.

"We have the ability to add a small molecule to the stem cells during the normal course of the transplant setting – not in a bioreactor setting – literally at the time of transplant, for a short incubation," Wolchko said. "That has a very beneficial effect ultimately on the time and durability of the engraftment."

Wolchko added that although this particular application works in conjunction with a therapy in which stem cells are added to the body, "it's a really terrific indication and proof of concept for what Fate's all about, which is adding small molecules" to affect the outcome of stem cells in vivo.

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