FATE THERAPEUTICS INC

Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission (SEC) before making investment decisions regarding our common stock.

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Our product candidates and programs represent novel therapeutic approaches to treating disease, and our product candidates may fail to demonstrate the safety, potency, durability, and efficacy necessary to support further development or commercialization, or may cause undesirable side effects or have other properties that could delay or halt their preclinical or clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences. If we fail to complete the preclinical or clinical development of, or to obtain regulatory approval for, our product candidates on a timely basis or at all, our business would be significantly harmed.

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Development of our product candidates will require substantial additional funding, which, if available, may cause dilution to our stockholders, and without which we will be unable to complete preclinical or clinical development of, or obtain regulatory approval for, our product candidates. Additionally, we may not be able to secure adequate funding on acceptable terms or on a timely basis.

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The regulatory approval process for novel product candidates such as ours is particularly uncertain, and our product candidates could fail to receive regulatory approval from the FDA or a comparable foreign regulatory authority for many reasons, including disagreement with applicable regulatory authorities on the design or conduct of our clinical studies, on our interpretation of data from clinical studies, or on the methodologies for, and assessment of, comparability of different versions of a product candidate used in non-pivotal studies, pivotal studies and for intended commercial use, and disagreement with applicable regulatory authorities, changes in approval policies or regulations, or changes in positions, guidance or feedback communicated by applicable regulatory authorities, that render our preclinical or clinical data insufficient to support approval or otherwise negatively impact the potential approval of a product candidate.

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Our proprietary induced pluripotent stem cell (iPSC) product platform enables the production of next-generation product candidates, and we have multiple iPSC-derived cell product candidates currently undergoing clinical and preclinical development. We may elect to deprioritize or discontinue the clinical development of one or more of our product candidates for any number of reasons, including due to our prioritization of product candidates, data or results from our ongoing clinical trials, and the competitive therapeutic landscape for which our product candidates are being developed. In addition, one or more of our product candidates undergoing clinical development may have therapeutic potential in more than one disease area, and we may elect to prioritize clinical development in one disease area over another disease area.

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We use iPSC technology and gene-editing technology in the creation of our product candidates. If we are unable to use these technologies in the creation of our product candidates, our business would be significantly harmed.

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We may face delays in initiating, conducting or completing our clinical trials, including difficulties recruiting appropriate clinical trial investigators, enrolling patients in our clinical trials, or manufacturing adequate clinical supplies, and we may not be able to initiate, conduct or complete our clinical trials at all.

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We face significant competition in an environment of rapid technological change from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively, including with respect to the recruitment of patients and investigative sites to participate in our clinical trials.

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Initial, interim and preliminary data from our preclinical studies or clinical trials may change as more data becomes available and are subject to audit and verification procedures that could result in material changes in the final data. Furthermore, results from our ongoing or future clinical trials involving our product candidates may differ materially from initial, interim and preliminary data as well as previous study results.

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The manufacture and distribution of our product candidates is complex and subject to a multitude of risks. Additionally, the U.S. Food and Drug Administration (FDA) or foreign regulatory authorities may impose additional requirements on our manufacturing operations. These risks and requirements could substantially limit our supply of our product candidates and increase our costs, and the development and commercialization of our product candidates could be significantly delayed or restricted.

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Inadequate funding for the FDA, SEC, the National Institutes of Health and other government agencies, as well as changes in personnel and policy priorities at these agencies, could disrupt such agencies’ operations and, in turn, hinder our ability to develop or commercialize new products in a timely manner or otherwise negatively impact our business.

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We have limited experience manufacturing our product candidates on a clinical scale, and no experience manufacturing on a commercial scale. Any failure to manufacture sufficient quantities of our product candidates consistently and at acceptable quality and costs may result in delays to our clinical development plans and impair our ability to obtain approval for, or commercialize, our product candidates and would materially and adversely affect our business.

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We depend on third-party suppliers, including sole source suppliers, for certain equipment and components used in the production of our product candidates, and the loss of suppliers could adversely impact our ability to conduct our clinical trials.

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We may face challenges recruiting and retaining key personnel due to labor market changes, availability of qualified candidates, and competition for employees from other companies.

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We may face cost fluctuations and inflationary pressures, including increases in prices of materials and costs of labor, which may adversely impact our operating performance, expenses, cash utilization and results.

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We depend on strategic partnerships and collaboration arrangements for the development and commercialization of certain of our product candidates in certain indications or geographic territories, and if these arrangements are unsuccessful or are terminated, this could result in delays and other obstacles in the development, manufacture or commercialization of any of our product candidates and materially harm our results of operations.

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We have a limited operating history, have incurred significant losses since our inception, and anticipate that we will continue to incur significant losses for the foreseeable future.

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If we are unable to protect our intellectual property or obtain and maintain patent protection for our technology and product candidates, other companies could develop products based on our technologies and discoveries, which may reduce demand for, or limit the commercial potential of, our products and harm our business.

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If we fail to comply with our obligations under our intellectual property license agreements, we could lose rights to our product candidates or key technologies.

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We may not be successful in obtaining or maintaining necessary rights to product components and processes for development or manufacture of our product candidates, which may cause us to operate our business in a more costly or otherwise adverse manner that was not anticipated.

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We may fail to obtain regulatory approval from the FDA or comparable foreign regulatory authorities for our product candidates, which would prevent or delay commercialization of our products.

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We do not have experience marketing any product candidates and do not have a sales force or distribution capabilities, and if our products are approved, we may be unable to commercialize them successfully.

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The commercial success of our product candidates will depend upon the degree of market acceptance by physicians, patients, third-party payers and others in the medical community and may require additional evidence to support the anticipated benefits, comparative risks, and costs.

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Security breaches, loss of data and other disruptions could compromise sensitive information related to our business and adversely impact our operations.

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Our principal stockholders and management own a significant percentage of our stock and may be able to exercise significant control over our company.

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Our stock price is subject to fluctuation based on a variety of factors.

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We currently qualify as a “smaller reporting company” and a “non-accelerated filer,” and any decision on our part to comply with only certain reduced reporting and disclosure requirements applicable to such companies could make our stock less attractive to investors.

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Global economic and market conditions, any continued and prolonged public health emergency, global geopolitical tensions, including wars and other armed conflicts, or significant political, trade, economic or regulatory developments in the jurisdictions in which we may develop or commercialize our product candidates or conduct our operations, could adversely impact various aspects of our business, results of operations and financial condition, and could cause disruptions to our supply chain and the development and manufacture of our product candidates.

The summary risk factors described above should be read together with the text of the full risk factors below, in the section titled “Risk Factors”, and the other information set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.