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Fate Therapeutics Names Biotech Vet Bill Rastetter as Chairman, Interim CEO

Xconomy San Diego — 

Fate Therapeutics has been quiet during a down time for the stem cell business, but now it’s making news by luring a big name into its inner management circle.

Bill Rastetter, the CEO of Idec Pharmaceuticals during its long journey to develop the blockbuster lymphoma drug rituximab (Rituxan), has agreed to become the chairman and interim CEO at San Diego-based Fate Therapeutics. Besides being CEO of Fate, Rastetter will remain busy wearing his other hats as a partner at Venrock Associates (an investor in Fate), and through his work as chairman of Illumina (NASDAQ: ILMN), Neurocrine Biosciences (NASDAQ: NBIX), and Receptos.

But the new job at Fate, Rastetter says, will be “my major time commitment.” Fate’s executive chairman, John Mendlein, will now become the vice chairman of the board, and will oversee “scientific excellence” at the company as the chairman of the scientific advisory board, Rastetter says. Mendlein is also executive chairman and CEO of San Diego-based aTyr Pharma. Mendlein replaced Fate’s previous CEO, Paul Grayson, who left the company in February.

“We snagged an industry legend to take Fate that much closer to patient reality,” Mendlein said via e-mail. “Bill has done what few have done before – start and create a biotech to deliver one of the most important medicines today.”

Stem cells have excited scientists for years because of their ability to morph into virtually any type of cell in the body, raising the potential for regenerative medicines against a wide variety of today’s untreatable diseases. Still, no pharmaceutical company has brought forward an FDA-approved medicine based on embryonic stem cells, and drug companies haven’t shelled out big bucks to form alliances with startups working on these types of therapies, or to use the technology to improve the drug discovery process. Last month, a bellwether of the field, Menlo Park, CA-based Geron (NASDAQ: GERN) said it was getting out of the stem cell business altogether so it could focus on cancer drug development.

None of that seemed to deter Rastetter.

“Fate reminds me a lot of Idec back in the early antibody days,” Rastetter says. “I’ve always been very intrigued by new technologies deployed at the right time. I think stem cells are here to stay, and now is the time to invest in them. I’m very excited about the scientific and commercial opportunity here. There’s a passion and cohesion here with the team. I feel energized when I sit down with these guys.”

Bill Rastetter

Fate was founded in 2007 to capitalize on leading-edge stem cell science at Harvard University, Stanford University, the University of Washington, and The Scripps Research Institute. It has raised more than $50 million in venture capital from a group of VCs that includes Arch Venture Partners, Polaris Venture Partners, OVP Venture Partners, and Venrock, as well as Takeda Ventures, Astellas Venture Management, Genzyme Ventures, and one more unnamed company.

Fate announced the addition of Rastetter a day after it released some preliminary clinical trial results from its lead drug candidate, Prohema, formerly known as FT-1050. Instead of injecting embryonic stem cells into the body and hoping they will morph properly into a desired cell type, this program is designed to be much less risky, by operating in a controlled lab environment. The company uses a small molecule to treat umbilical cord blood in a laboratory, in order to coax it to produce more blood-forming stem cells that can then be transplanted into leukemia and lymphoma patients. Many patients with those blood cancers get intense chemotherapy or radiation that wipes out both their cancer and their blood cells, so researchers are constantly looking for safe and effective ways to reconstitute a patient’s bone marrow and immune system.

The data is from a small study, although it suggests that patients were able to have their infection-fighting white blood cells bounce back after transplant in 17.5 days. There’s no way to compare how the Fate drug did against a competing regimen, because the study had no control group, but past studies have suggested it takes 20 days for those key cells to bounce back, Fate has said.

Researchers want to see any new regimen that can help reduce the chance of transplant failure, a way to get transplants to engraft sooner, and a way to reduce the risk of a dangerous complication known as Graft-Versus-Host-Disease (GVHD), says Pratik Multani, Fate’s senior vice president of clinical development.

Fate saw enough from this mid-stage clinical study that it plans to move to the next step of clinical development in early 2012, which will include a trial from the second of three phases of clinical trials normally required for FDA approval. And while the process Fate is developing is confined to the small group of people who use umbilical cord blood for transplants, it is thought to be transferrable to the larger group of people who get more conventional bone marrow transplants from a matching donor, or get their transplant material from peripheral blood, Multani says.

The company has enough cash, Rastetter says, that it isn’t looking to raise additional money right away to finance the next steps. “We have a strong syndicate of investors around the board table, and we have no immediate plans for financing. We’ll do it as appropriate. We’re in good shape,” he says.

Fate did drop a couple of experimental drug programs earlier this year, and let go a small number of small-molecule chemists in February. The company has about 30 employees at the moment, says Scott Wolchko, the chief financial officer.

Rastetter didn’t say how long he intends to keep the “interim CEO” tag, although he did say one of his main jobs will be to recruit a full-time, permanent CEO to Fate.

“It depends on how long it will take to find a full-time CEO, but I can tell you we’re not going to compromise on quality of whoever the guy or gal is. I’m fully capable of doing this for a long time. But the beauty of Fate is that the guys around the table are all experienced, intelligent, strategic. It’s a dream team.”