| Item 1.02 | Termination of a Material Definitive Agreement. |
On January 3, 2023, Fate Therapeutics, Inc. (the “Company”) received notice of termination from Janssen Biotech, Inc. (“Janssen”) of the Collaboration and Option Agreement dated April 2, 2020 by and between the Company and Janssen (the “Collaboration Agreement”), pursuant to which Janssen and the Company had agreed to collaborate to develop iPSC-derived CAR NK- and CAR T-cell product candidates for the treatment of cancer. Janssen provided notice of termination after the Company declined a proposal from Janssen for continuation of the Collaboration Agreement on revised terms. The termination will take effect on April 3, 2023.
Under the terms of the Collaboration Agreement, in connection with the termination, (i) all licenses and other rights granted to either party pursuant to the Collaboration Agreement will terminate, subject to limited exceptions set forth in the Collaboration Agreement; (ii) both parties will wind down any development, commercialization and manufacturing activities under the Collaboration Agreement; (iii) neither party will have any right to continue to develop, manufacture or commercialize any collaboration candidate or collaboration product or use the other party’s materials; and (iv) neither party is restricted from independently developing, manufacturing, or commercializing any product, including any products directed to the same antigens as those of any collaboration candidate or collaboration product.
The foregoing summary is qualified in its entirety by reference to the Collaboration Agreement, a copy of which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.
| Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On January 5, 2023, the Company announced the prioritization of its current and near-term clinical programs and development plans, including advancement of a second-generation CD19-targeted chimeric antigen receptor (CAR) natural killer (NK) cell program for hematologic malignancies and severe autoimmune disorders, its FT576 CAR NK cell program for multiple myeloma, its FT819 CAR T-cell program for B-cell lymphoma, and its FT825/ONO-8250 CAR T-cell program for solid tumors under its collaboration with ONO Pharmaceutical Co., Ltd.; and discontinuation of its FT516, FT596, FT538, and FT536 NK cell programs. The restructuring plan will result in a reduction in the Company’s workforce to approximately 220 employees, and is expected to be completed during the first quarter of 2023. These changes are expected to extend the Company’s cash runway through 2025.
The Company estimates that it will incur charges of approximately $15 million for severance and other employee termination-related costs in the first quarter of 2023. The estimated charges that the Company expects to incur are subject to a number of assumptions, and actual results may differ materially from these estimates. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, its workforce reduction. If the Company subsequently determines that it will incur additional significant costs associated with its workforce reduction, it will amend this Current Report on Form 8-K to disclose such information.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(b)
In connection with the Company’s restructuring plan and reduction to its workforce, the employment of Mark Plavsic, Ph.D., D.V.M., the Company’s Chief Technical Officer, is expected to terminate effective as of March 6, 2023. In connection with the termination of his employment, Dr. Plavsic will be entitled under the Company’s Severance and Change in Control Policy to: (i) acceleration of vesting of his outstanding equity awards for an additional nine months following the date of termination, (ii) a lump-sum severance payment in the amount of nine months of his current base salary and (iii) subject to his election thereof, payment by the Company of up to nine months of COBRA health benefits continuation.
