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around, Weissman says, it has put its equity stake in the company on par with the other three big VCs—Arch, Venrock, and Polaris. “We wanted to participate at a higher level in the Series A,” he says.
While this deal doesn’t include any formal co-development partnership rights to Japan-based Astellas, Cambridge, MA-based Genzyme, or the third corporate investor, it does give these firms an up-close look at the technology as it is evolving, Wolchko says. Each of the three companies has strategic interests in stem cells, he adds, noting that Astellas is a leader in immunosuppressive drugs that are used in adult stem cell transplants, and Genzyme markets a product for mobilizing blood-forming stem cells so they can be effectively transplanted for cancer patients.
This latest round of financing gives Fate at least two years of operating capital in the bank, without factoring in any federal research grants or payments from pharmaceutical partners that it may receive in the future, Wolchko says. But even as its financial position gets stronger, the company is still going to watch its spending carefully. It has about 35 employees, and will look to hire just 8 to 10 more people over the next six months, in key scientific positions, Wolchko says. “We’re not going to double the size of the company,” he says.
By conserving cash like this, Fate hopes to be in a strong bargaining position with potential partners, and in a position to make a bigger contribution to a new collaboration than it otherwise would be with less resources, Wolchko says.
So what does Fate hope to accomplish in the coming year? The company is looking to complete enrollment in the initial clinical trial of FT-1050 by next spring, Wolchko says. It’s possible that if things go well in that study, Fate could begin a pivotal clinical trial as soon as the second half of 2010, he says.
The company has dropped a lot of hints that it could entice a pharmaceutical company to help support the emerging technology for making induced pluripotent stem cells, although Wolchko avoided making any specific promises when we spoke Friday. In a profile I did back in September, Fate spokeswoman Jessica Yingling cited one of Fate’s scientific co-founders, MIT biologist Rudolf Jaenisch, on the rationale for why a Big Pharma should open up its checkbook:
“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 said. She added, “We’re talking to everyone.”
The field is still in its earliest, nascent days, Fate acknowledges. Lots of scientific questions still need to be answered. One biggie is whether the induced cells really have embryonic-like properties in their ability to become any type of cell. Another is whether the induced pluripotent stem cells can in fact be differentiated to produce certain cell types of interest—like heart cells or neurons—that are the same as those made in nature. And can it all be reproduced at truly cost-effective industrial scale?
That will all take time and a lot of cash to answer. By raising this $30 million, Fate has bought itself a lot more time to show it can create something valuable with its stem cell technology. “Money is the lifeblood of a biotech company, and this really allows us to push forward,” Wolchko says.
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