Fate Therapeutics Growing Fast on “Industrialized” Stem Cell Technology

9/30/09Follow @xconomy

Want to know how fast Fate Therapeutics is growing? When I toured the La Jolla, CA, company’s labs to get an update last week, one young scientist stood up from his desk, looked me in the eye, offered a firm handshake, and said “Welcome aboard.”

I understood why a visiting journalist in a button-down shirt and jeans might be mistaken as another new employee. Fate, the stem cell company founded by a band of leading scientists from Harvard University, the University of Washington, Stanford University, and The Scripps Research Institute, has grown from 10 employees a year ago to 34 as of last week. Now the biotech startup next to Xconomy’s San Diego office is getting ready to move to a new facility nearby that triples its current capacity.

This is a sign of some important steps forward Fate has taken over the past few months. Fate isn’t commenting on whether it has plans to raise any more more venture capital, according to CEO Paul Grayson, but it is in advanced talks with several large pharmaceutical companies about partnerships. No big partners have been named yet, but if Fate can close on one or more such deals, it would build on the $25 million it has raised to support technology that induces adult cells into a stem-cell like state so they can morph into other cell types, according to chief financial officer Scott Wolchko.

Fate unveiled a business collaborative to support this technology, called Catalyst, in April with Boston-based Stemgent, which also has operations in San Diego. The companies are using genetically engineered proteins and small molecule compounds to nudge ordinary adult cells into a more valuable form known as an “induced pluripotent stem cell” that has the potential to turn into any cell type. Fate has been working to show that this method can be done consistently, at high speed, and without altering cellular DNA as other methods have, says company spokeswoman Jessica Yingling.

Fate’s technique brings together research from MIT and Whitehead Institute biologist Rudolf Jaenisch and Scripps scientist Sheng Ding. The company hopes it can be useful in a number of ways. For starters, it will seek to grow new cells in the lab dish to see what goes wrong with them, through what it calls disease modeling. These cells can also be used for drug discovery.

This technology is still very much in its early days, and plenty needs to be done before Fate can say it has really industrialized a new model for drug experimentation.

“As Rudy Jaenisch has said, you can wait for it all to be figured out and miss the boat, or you can work on it now and help shape it,” Yingling says. She adds, “We’re talking to everyone.”

There are some fascinating scientific questions being asked as Fate seeks to industrialize this stem cell production process. It’s looking to many different kinds of cells—skin, hair, blood, or anything that might be easy to sample—and using its Catalyst technique to induce them into the stem-cell like state. Then it is seeking to turn them into the adult, differentiated cell that’s desired, like a neuron. The scientists then look to compare the newly induced neuron to an actual neuron from the brain to see if they are really the same.

If these newly grown cells are in fact the same, and they can be consistently reprogrammed in a matter of days instead of a matter of months, then the big drugmakers really get interested, Wolchko says. “If your reprogramming takes a couple months, and the differentiation takes a couple months, that’s not really practical,” Wolchko explains.

At least in the beginning, Fate is mostly interested is in creating models of disease in the lab and for toxicology testing to see which drug candidates have the best odds of success. There’s less interest in creating replacements cells that can be injected in the body as regenerative therapies of their own. “We’re not a cell therapy company. It’s more about the process of creating,” Wolchko says.

While part of the Fate business model relies on getting partners to help build up this industrial-scale stem cell production platform, the other part is about building up its own portfolio of drug candidates. There wasn’t as much to discuss about this side of the business when I visited last week. Fate started its first clinical trial in May, and seeks to use a conventional small-molecule chemical drug to spur growth of blood-forming stem cells that ought to help restore bone marrow function after leukemia and lymphoma patients undergo transplants.

The trial has so far enrolled three of the 12 patients it seeks to recruit at the Dana-Farber Cancer Institute in Boston, Yingling says. The company has since added a second clinical site at Massachusetts General Hospital, and it hopes to have pulled in enough patients to get results by the end of March, Wolchko says. If the drug is found safe in that study, he says it could be ready for a pivotal trial that would begin by the end of 2010.

Before I left, the conversation came back to the platform for industrialized production of induced pluripotent stem cells. That platform should be useful for creating such a wide array of cell types that it’s expected to give rise to more drug opportunities than any one company could pursue on its own. Some of those drug development opportunities will go to partners who help pay to develop the technology, and Fate will keep some of those opportunities for itself.

The intellectual property is being structured in a way that Fate and Stemgent won’t be entitled to royalties or “reach-throughs” if partners discover drugs using the platform technology, Wolchko says.

“We want to enable other companies with the platform, but it will also be for our own proprietary drugs,” Wolchko says.

By posting a comment, you agree to our terms and conditions.