FATE THERAPEUTICS INC

Previous wording

In June 2022, we entered into an amendment with Ono to the Ono Agreement (the 2022 Ono Amendment). Pursuant to the 2022 Ono Amendment, the companies agreed to designate an additional antigen expressed on certain solid tumors for research and preclinical development, and Ono agreed to contribute proprietary antigen binding domains targeting such additional solid tumor antigen (Candidate 3). In addition, for both Candidate 2 and Candidate 3, the companies expanded the scope of the collaboration to include the research and development of iPSC-derived CAR NK cell product candidates (in addition to iPSC-derived CAR T-cell product candidates) targeting the designated solid tumor antigens. Similar to Candidate 2, we granted to Ono, during a specified period of time, a preclinical option to obtain an exclusive license under certain intellectual property rights, subject to payment of an option exercise fee to us by Ono, to develop and commercialize Candidate 3 in all territories of the world, where we retain rights to co-develop and co-commercialize Candidate 3 in the United States and Europe under a joint arrangement with Ono under which we are eligible to share at least 50% of the profits and losses. We maintained worldwide rights of manufacture for Candidate 3. The preclinical option expires upon the earlier of: (a) September 30, 2024, or (b) the achievement of the pre-defined preclinical milestone under the joint development plan for Candidate 3. Subject to payment of an extension fee by Ono, Ono may choose to defer its decision to exercise the preclinical option until no later than June 2026. Under the 2022 Ono Amendment, aggregate estimated research and development fees have been increased by approximately $9.3 million, for a total estimated $29.3 million in aggregate research and development fees over the course of the joint development plan.

Current wording

In June 2022, we entered into an amendment with Ono to the Ono Agreement (the 2022 Ono Amendment). Pursuant to the 2022 Ono Amendment, the companies agreed to designate an additional antigen expressed on certain solid tumors for research and preclinical development, and Ono agreed to contribute proprietary antigen binding domains targeting such additional solid tumor antigen (Candidate 3). In addition, for both Candidate 2 and Candidate 3, the companies expanded the scope of the collaboration to include the research and development of iPSC-derived CAR NK cell product candidates (in addition to iPSC-derived CAR T-cell product candidates) targeting the designated solid tumor antigens. Similar to Candidate 2, we granted to Ono, during a specified period of time, a preclinical option to obtain an exclusive license under certain intellectual property rights, subject to payment of an option exercise fee to us by Ono, to develop and commercialize Candidate 3 in all territories of the world, where we retain rights to co-develop and co-commercialize Candidate 3 in the United States and Europe under a joint arrangement with Ono under which we are eligible to share at least 50% of the profits and losses. We maintained worldwide rights of manufacture for Candidate 3. Under the

Previous wording

On November 30, 2023, we entered into an amendment with Ono to the Ono Agreement (the 2023 Ono Amendment). Under the 2023 Ono Amendment, aggregate estimated research and development fees payable to us by Ono have been increased by approximately $1.4 million, for a total estimated $30.7 million in aggregate research and development fees over the course of the joint development plan.

Current wording

In November 2023, we entered into an amendment with Ono to the Ono Agreement (the 2023 Ono Amendment). Under the 2023 Ono Amendment, aggregate estimated research and development fees payable to us by Ono were increased by approximately $1.4 million, for a total estimated $30.7 million in aggregate research and development fees over the course of the joint development plan.

Previous wording

We account for the Ono Agreement as a revenue contract under ASC 606. The initial transaction price as amended under the 2023 Ono Amendment was determined to be $48.0 million, consisting of the upfront, non-refundable and non-creditable payment of $10.0 million and the aggregate estimated research and development fees of $38.0 million. We identified our promised goods and services under the Ono Agreement to include our grant to Ono of a license to certain of our intellectual property subject to certain conditions, our conduct of research services, and our participation in a joint steering committee. We determined that the promised goods and services should be accounted for as one combined performance obligation. We recognize revenue for the combined performance obligation over time as the research services are performed.

Current wording

We account for the Ono Agreement, Ono Letter Agreement, and Ono Amendments (collectively, the Ono Arrangement) as a revenue contract under ASC 606. The amended transaction price under the Ono Arrangement was determined to be $54.5 million, consisting of the upfront, non-refundable and non-creditable payment of $10.0 million and the aggregate estimated research and development fees of $44.5 million. We identified our promised goods and services under the Ono Arrangement to include our grant to Ono of a license to certain of our intellectual property subject to certain conditions, our conduct of research services, and our participation in a joint steering committee. We determined that the promised goods and services should be accounted for as one combined performance obligation. We recognize revenue for the combined performance obligation over time as the research services are performed.

Previous wording

During the three months ended March 31, 2025, we recognized $1.6 million of collaboration revenue and $1.9 million of contra-research and development expense under the Ono Agreement. During the three months ended March 31, 2024, we recognized $1.9 million of collaboration revenue and $0.8 million of contra-research and development expense under the Ono Agreement.

Current wording

During the three and six months ended June 30, 2025, we recognized $1.9 million and $3.5 million of collaboration revenue, respectively, and $1.3 million and $3.3 million of contra-research and development expense, respectively, under the Ono Arrangement. During the three and six months ended June 30, 2024, we recognized $6.8 million and $8.7 million of collaboration revenue, respectively, and $1.1 million and $2.0 million of contra-research and development expense, respectively, under the Ono Arrangement.

Previous wording

We plan to continue to significantly invest in our current level of research and development activities for the foreseeable future as we continue the clinical and preclinical development and manufacture of our product candidates, research and develop our iPSC product platform, and perform our obligations under collaboration agreements including under our agreements with Ono, University of Minnesota and MSKCC. Our current planned research and development activities over the next twelve months consist primarily of the following:

Current wording

We plan to continue to significantly invest in our current level of research and development activities for the foreseeable future as we continue the clinical and preclinical development and manufacture of our product candidates, research and develop our iPSC product platform, and perform our obligations under collaboration agreements including under our agreements with Ono and University of Minnesota. Our current planned research and development activities over the next twelve months consist primarily of the following:

Previous wording

conducting GMP production, including through the use of CMOs for the conduct of some or all of the activities required for manufacturing our iPSC-derived cell product candidates, process and scale-up development and technology transfer activities for the manufacture of our product candidates, including those undergoing clinical investigation and IND-enabling preclinical development;

Current wording

conducting GMP production, process and scale-up development and technology transfer activities for the manufacture of our product candidates, including those undergoing clinical investigation and IND-enabling preclinical development;

Previous wording

Due to the inherently unpredictable nature of preclinical and clinical development and manufacture, and given our novel therapeutic approach and the current stage of development of our product candidates, we cannot determine and are unable to estimate with certainty the timelines we will require and the costs we will incur for the development and manufacture of our product candidates. Clinical and preclinical development and manufacturing timelines and costs, and the potential of development and manufacturing success, can differ materially from expectations. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development and manufacturing plans and capital requirements. We cannot predict the effects of the impact of global economic and market conditions, a continued and prolonged public health emergency such as the COVID-19 pandemic, and global geopolitical tensions, including wars and other armed conflicts on our business and operations, and our expenditures may be increased by delays or disruptions due to these or other factors, including as a result of actions we take in the near term to ensure business continuity and protect against possible supply chain shortages.

Current wording

Due to the inherently unpredictable nature of preclinical and clinical development and manufacture, and given our novel therapeutic approach and the current stage of development of our product candidates, we cannot determine and are unable to estimate with certainty the timelines we will require and the costs we will incur for the development and manufacture of our product candidates. Clinical and preclinical development and manufacturing timelines and costs, and the potential of development and manufacturing success, can differ materially from expectations. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development and manufacturing plans and capital requirements. We cannot predict the effects of the impact of global economic and market conditions, a continued and prolonged public health emergency, and global geopolitical tensions, including wars and other armed conflicts on our business and operations, and our expenditures may be increased by delays or disruptions due to these or other factors, including as a result of actions we take in the near term to ensure business continuity and protect against possible supply chain shortages.

Previous wording

The estimates and judgments involved in our accounting policies, as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, continue to be our critical accounting policies and there have been no other material changes to our critical accounting policies during the three months ended March 31, 2025.

Current wording

The estimates and judgments involved in our accounting policies, as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, continue to be our critical accounting policies and there have been no other material changes to our critical accounting policies during the six months ended June 30, 2025.

Previous wording

Collaboration Revenue. During the three months ended March 31, 2025 and 2024, we recognized revenue of $1.6 million and $1.9 million, respectively, under our collaboration agreement with Ono.

Current wording

Collaboration Revenue. During the three months ended June 30, 2025 and 2024, we recognized revenue of $1.9 million and $6.8 million, respectively, under our collaboration agreement with Ono. The decrease in collaboration revenue was primarily due to our achievement of a clinical development milestone during the three months ended June 30, 2024, resulting in the recognition of $5.0 million in revenue during that period.

Previous wording

Research and development expenses. Research and development expenses were $29.1 million for the three months ended March 31, 2025, compared to $32.1 million for the three months ended March 31, 2024. The decrease in research and development expenses was attributable primarily to the following:

Current wording

Research and development expenses. Research and development expenses were $27.4 million for the three months ended June 30, 2025, compared to $34.6 million for the three months ended June 30, 2024. The decrease in research and development expenses was attributable primarily to the following:

Previous wording

$2.1 million decrease in employee compensation and benefits expense, including a $1.8 million decrease in employee stock-based compensation expense; and

Current wording

$1.4 million decrease in employee stock-based compensation expense; and

Previous wording

General and administrative expenses. General and administrative expenses were $13.8 million for the three months ended March 31, 2025, compared to $20.9 million for the three months ended March 31, 2024. The decrease in general and administrative expenses was attributable primarily to a $5.4 million decrease in patent and legal expenses and a $2.1 million decrease in employee compensation and benefits expense, including a $1.8 million decrease in employee stock-based compensation expense.

Current wording

General and administrative expenses. General and administrative expenses were $11.4 million for the three months ended June 30, 2025, compared to $17.3 million for the three months ended June 30, 2024. The decrease in general and administrative expenses was attributable primarily to a $4.4 million decrease in patent and legal expenses and a $1.2 million decrease in employee compensation and benefits expense, including a $1.1 million decrease in employee stock-based compensation expense.

Previous wording

Other income (expense), net. Other income (expense), net was $3.7 million and $3.1 million for the three months ended March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025, we recorded $0.3 million in other income attributable to the change in fair value of the stock price appreciation milestones under the Amended MSKCC License. Other income (expense), net for the three months ended March 31, 2025 also consisted of interest income earned on cash and cash equivalents and interest income from investments (including the amortization of discounts and premiums).

Current wording

Other income (expense), net. Other income (expense), net was $2.9 million and $6.7 million for the three months ended June 30, 2025 and 2024, respectively. During the three months ended June 30, 2025, we recorded $0.1 million in other expense attributable to the change in fair value of the stock price appreciation milestones under the Amended MSKCC License. Other income (expense), net for the three months ended June 30, 2025 also consisted of interest income earned on cash and cash equivalents and interest income from investments (including the amortization of discounts and premiums).

Previous wording

We have incurred losses and negative cash flows from operations since inception. As of March 31, 2025, we had an accumulated deficit of $1.4 billion and we anticipate that we will continue to incur net losses for the foreseeable future.

Current wording

We have incurred losses and negative cash flows from operations since inception. As of June 30, 2025, we had an accumulated deficit of $1.5 billion and we anticipate that we will continue to incur net losses for the foreseeable future.

Previous wording

During the three months ended March 31, 2025, cash used in operating activities was $33.8 million and primarily consisted of a net loss of $37.6 million adjusted for non-cash items including stock-based compensation of $7.4 million and depreciation and amortization of $3.3 million.

Current wording

During the six months ended June 30, 2025, cash used in operating activities was $58.4 million and primarily consisted of a net loss of $71.2 million adjusted for non-cash items including stock-based compensation of $14.5 million and depreciation and amortization of $6.6 million.

Previous wording

During the three months ended March 31, 2024, cash used in operating activities was $33.4 million and primarily consisted of a net loss of $48.0 million adjusted for non-cash items including stock-based compensation of $11.0 million and depreciation and amortization of $4.8 million.

Current wording

During the six months ended June 30, 2024, cash used in operating activities was $65.7 million and primarily consisted of a net loss of $86.4 million adjusted for non-cash items including stock-based compensation of $20.6 million and depreciation and amortization of $9.5 million.

Previous wording

During the three months ended March 31, 2025, investing activities provided cash of $42.7 million compared to cash provided by investing activities of $17.3 million during the three months ended March 31, 2024. During the three months ended March 31, 2025, we purchased $48.6 million of investments, which were offset by $92.5 million in maturities of investments. During the three months ended March 31, 2024, we purchased $86.3 million of investments, which were offset by $103.8 million in maturities of investments. The remaining investing activities for the periods presented were primarily attributable to the purchase of property and equipment.

Current wording

During the six months ended June 30, 2025, investing activities provided cash of $62.3 million compared to cash used by investing activities of $36.1 million during the six months ended June 30, 2024. During the six months ended June 30, 2025, we purchased $99.4 million of investments, which were offset by $164.1 million in maturities of investments. During the six months ended June 30, 2024, we purchased $215.0 million of investments, which were offset by $179.1 million in maturities of investments. The remaining investing activities for the periods presented were primarily attributable to the purchase of property and equipment.

Previous wording

For the three months ended March 31, 2024, financing activities provided cash of $95.5 million, which primarily consisted of (i) the issuance of 14,545,454 shares of common stock at a purchase price of $5.50 per share in an underwritten offering of common stock in March 2024, (ii) the issuance of pre-funded warrants to purchase an aggregate of 3,636,364 shares of common stock at a purchase price of $5.499 per pre-funded warrant, which represents the offering price per share of common stock in the underwritten offering less the $0.001 exercise price per share of each pre-funded warrant, in a private placement concurrent with the underwritten offering and (iii) the issuance of common stock from equity incentive plans pursuant to the exercise of employee stock options.

Current wording

For the six months ended June 30, 2024, financing activities provided cash of $96.8 million, which primarily consisted of (i) the issuance of 14,545,454 shares of common stock at a purchase price of $5.50 per share in an underwritten offering of common stock in March 2024, (ii) the issuance of pre-funded warrants to purchase an aggregate of 3,636,364 shares of common stock at a purchase price of $5.499 per pre-funded warrant, which represents the offering price per share of common stock in the underwritten offering less the $0.001 exercise price per share of each pre-funded warrant, in a private placement concurrent with the underwritten offering and (iii) the issuance of common stock from equity incentive plans pursuant to the exercise of employee stock options.

Previous wording

From our inception through March 31, 2025, we have funded our consolidated operations primarily through the public and private sale of common stock, the issuance of warrants, the private placement of preferred stock and convertible notes, commercial bank debt and revenues from collaboration activities and grants. As of March 31, 2025, we had aggregate cash and cash equivalents and investments of $272.7 million.

Current wording

From our inception through June 30, 2025, we have funded our consolidated operations primarily through the public and private sale of common stock, the issuance of warrants, the private placement of preferred stock and convertible notes, commercial bank debt and revenues from collaboration activities and grants. As of June 30, 2025, we had aggregate cash and cash equivalents and investments of $248.9 million.

Previous wording

We will require additional capital for the research, manufacture and development of our product candidates and to perform our obligations under our collaboration agreements, and we may need to seek additional funds sooner than expected due to any changes in our business, operations, financial condition or prospects, including any impacts of inflation rates and global economic conditions, and wars or other armed conflicts. We expect to finance our capital requirements in the foreseeable future through the sale of public or private equity, debt securities, or through existing or future potential collaborations. However, additional capital may not be available to us on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the research, manufacture or development of one or more of our product candidates. If we do raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and the existence of securities with rights that may be senior to those of our common stock. Additionally, if we incur indebtedness, we may become subject to financial or other covenants that could adversely restrict, impair or affect our ability to conduct our business, such as requiring us to relinquish rights to certain of our product candidates or technologies or limiting our ability to acquire, sell or license intellectual property rights or incur additional debt. Any of these events could significantly harm our business, operations, financial condition and prospects. In addition, the full impact of inflation rates, global political and economic instability, a continued and prolonged public health emergency such as the COVID-19 pandemic, and wars and other armed conflicts, on our business, operations, financial condition and prospects, and on the global economy, are currently unknown and difficult to predict, and these events could materially and adversely affect our ability to raise capital through equity or debt financings in the future.

Current wording

We will require additional capital for the research, manufacture and development of our product candidates and to perform our obligations under our collaboration agreements, and we may need to seek additional funds sooner than expected due to any changes in our business, operations, financial condition or prospects, including any impacts of inflation rates and global economic conditions, and wars or other armed conflicts. We expect to finance our capital requirements in the foreseeable future through the sale of public or private equity, debt securities, or through existing or future potential collaborations. However, additional capital may not be available to us on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the research, manufacture or development of one or more of our product candidates. If we do raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and the existence of securities with rights that may be senior to those of our common stock. Additionally, if we incur indebtedness, we may become subject to financial or other covenants that could adversely restrict, impair or affect our ability to conduct our business, such as requiring us to relinquish rights to certain of our product candidates or technologies or limiting our ability to acquire, sell or license intellectual property rights or incur additional debt. Any of these events could significantly harm our business, operations, financial condition and prospects. In addition, the full impact of inflation rates, global political and economic instability, a continued and prolonged public health emergency, and wars and other armed conflicts, on our business, operations, financial condition and prospects, and on the global economy, are currently unknown and difficult to predict, and these events could materially and adversely affect our ability to raise capital through equity or debt financings in the future.