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Item 7. Management’s Discussion and Analysis

2025-03-05 compared with 2024-02-26 · 461 added, 277 removed, 1020 unchanged (42% of the section changed)

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Risk Factors.”

We are a clinical-stage biopharmaceutical company dedicated to bringing a first-in-class pipeline of programmed cellular immunotherapies to patients with cancer and autoimmune diseases.

Our development of programmed cellular immunotherapies is based on a simple notion:

we believe that better cell therapies start with better cells.

We are a clinical-stage biopharmaceutical company dedicated to bringing a first-in-class pipeline of programmed cellular immunotherapies to patients.

To create better cell therapies, we have pioneered a therapeutic approach that we generally refer to as cell programming:

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we generate a clonal master iPSC line for use as a renewable source of cell manufacture;

and we direct the fate of the clonal master iPSC line to produce our cell therapy product candidate.

Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, we believe clonal master iPSC lines can be used to mass produce multiplexed-engineered cellular immunotherapies which are well-defined and uniform in composition, can be stored in inventory for off-the-shelf availability, can be combined and administered with other therapies, and can have broader patient reach.

Utilizing our proprietary iPSC product platform, we are advancing off-the-shelf, multiplexed-engineered natural killer (NK) and T-cell product candidates which are selectively designed to incorporate novel synthetic controls of cell function, and are intended to deliver multiple therapeutic mechanisms to patients for the treatment of cancer and autoimmune diseases.

We have a deep pipeline of iPSC-derived, chimeric antigen receptor (CAR)-targeted NK and T-cell product candidates currently under development with multiple clinical trials ongoing.

In addition, we have entered into research collaborations and license agreements with academic institutes to support the development of our iPSC product platform and our off-the-shelf product candidates, including, among others, the Regents of the University of Minnesota and Memorial Sloan Kettering Cancer Center (MSKCC).

We have also entered into collaborations with pharmaceutical companies to research, develop and commercialize off-the-shelf, multiplexed-engineered, iPSC-derived NK and T-cell product candidates for the treatment of cancer.

and we direct the fate of the clonal master iPSC line to produce our cell therapy product candidates.

Analogous to master cell lines used to manufacture biopharmaceutical drug products such as monoclonal antibodies, we believe our proprietary clonal master iPSC lines can be used to mass produce multiplexed-engineered.

cellular immunotherapies which have off-the-shelf availability, can be combined and administered alone or with standard-of-care therapies, and enable significant patient reach.

Utilizing our proprietary iPSC product platform, we are developing off-the-shelf, multiplexed-engineered T-cell and natural killer (NK) cell product candidates which are selectively designed, incorporate novel synthetic controls of cell function, and intended to deliver multiple therapeutic mechanisms to patients.

We have a pipeline of iPSC-derived, chimeric antigen receptor (CAR)-targeted T-cell and NK cell product candidates currently under development.

In addition, we have entered into research collaborations and license agreements with academic institutions to support the development of our iPSC product platform and our off-the-shelf product candidates.

We have also entered into collaborations with pharmaceutical companies to research, develop and commercialize off-the-shelf, multiplexed-engineered, iPSC-derived CAR T-cell CAR NK cell product candidates for the treatment of cancer.

In September 2018, we entered into a collaboration and option agreement (Ono Agreement) with Ono Pharmaceutical Co., Ltd.

(Ono), under which we are currently researching and developing iPSC-derived CAR NK and CAR T-cell product candidates for the treatment of solid tumors.

(Ono), under which we are currently researching and developing iPSC-derived CAR T-cell and CAR NK cell product candidates for the treatment of solid tumors.

In April 2020, we entered into a collaboration and option agreement (Janssen Agreement) with Janssen Biotech, Inc.

(Janssen), part of the Janssen Pharmaceutical Companies of Johnson & Johnson, for the research, development and commercialization of iPSC-derived CAR NK and CAR T-cell product candidates for the treatment of cancer.

(Janssen), part of the Janssen Pharmaceutical Companies of Johnson & Johnson, for the research, development and commercialization of iPSC-derived CAR T-cell and CAR NK cell product candidates for the treatment of cancer.

On January 3, 2023, we received notice of termination of the Janssen Agreement from Janssen, which took effect on April 3, 2023.

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• conduct our ongoing and planned preclinical studies and clinical trials of our product candidates, which may include higher clinical trial expenses associated with arrangements we may enter into with clinical research organizations (CROs) for the execution and management of certain clinical trials, including trials outside of the United States;

• conduct Good Manufacturing Practice (GMP) production, including through the use of contract manufacturing organizations (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 application-enabling preclinical development;

• procure laboratory equipment, materials and supplies for the manufacture of our product candidates and the conduct of our research activities;

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Financial Operations Overview

We conduct substantially all of our activities through Fate Therapeutics, Inc., a Delaware corporation, at our facilities headquartered in San Diego, California.

Our results of operations include the operations of the Company and its subsidiaries.

To date, the aggregate operations of our subsidiaries have not been significant, and all intercompany transactions and balances have been eliminated in consolidation.

Collaboration Revenue

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Pursuant to the terms of the Ono Agreement, we received an upfront, non-refundable and non-creditable payment of $10.0 million.

Additionally, we are entitled to receive fees for the conduct of research and development under a joint development plan, which fees were estimated to be $20.0 million in aggregate.

In December 2020, we entered into a letter agreement with Ono pursuant to which Ono delivered proprietary antigen binding domains targeting an antigen expressed on certain solid tumors for incorporation into Candidate 2 and paid the Company a milestone fee of $10.0 million for further research and development of Candidate 2.

In addition, Ono terminated all further research and development with respect to Candidate 1, and we retained all rights to research, develop and commercialize Candidate 1 throughout the world without any obligation to Ono.

In June 2022, we entered into the 2022 Ono Amendment.

Additionally, we are entitled to receive funding for the conduct of research and preclinical development under a joint research plan, which fees were estimated to be $20.0 million in aggregate.

In December 2020, we entered into a letter agreement with Ono (the Ono Letter Agreement) pursuant to which Ono delivered proprietary antigen binding domains targeting an antigen expressed on certain solid tumors for incorporation into Candidate 2 and paid the Company a milestone fee of $10.0 million for further research and preclinical development of Candidate 2.

In addition, Ono terminated all further research and preclinical development with respect to Candidate 1, and we retained all rights to research, develop and commercialize Candidate 1 throughout the world without any obligation to Ono.

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.

In November 2022, Ono exercised its preclinical option to Candidate 2, and we exercised our preclinical option to co-develop and co-commercialize (CDCC Option) in the United States and Europe under a joint arrangement with Ono.

As a result, we recognized an option exercise fee of $12.5 million from Ono during the year ended December 31, 2022.

We received the option exercise fee payment during the year ended December 31, 2023.

On November 30, 2023, we entered into the 2023 Ono Amendment.

Under the 2023 Ono Amendment, aggregate estimated research and development fees 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.

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 $40.7 million, consisting of the upfront, non-refundable and non-creditable payment of $10.0 million and the aggregate estimated research and development fees of $30.7 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.

In addition, for both Candidate 2 and Candidate 3, the companies expanded the scope of the collaboration to include the research and preclinical 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 (Candidate 3 Development Option) to obtain an exclusive license under certain intellectual property rights, subject to payment of an option exercise fee to us by Ono, to further 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 pursuant to which we are eligible to share at least 50% of the profits and losses.

The Candidate 3 Development Option represents an option with no material right.

Under the 2022 Ono Amendment, aggregate estimated research and preclinical development fees have been increased by approximately $9.3 million, for a total estimated $29.3 million in aggregate research and preclinical development fees over the course of the joint research plan.

In November 2022, Ono exercised its option to obtain a license to develop and commercialize Candidate 2 (the Candidate 2 Development Option), and we exercised our option to co-develop and co-commercialize Candidate 2 in the United States and Europe.

As a result, we received and recognized an option exercise fee of $12.5 million from Ono during the year ended December 31, 2022.

We and Ono are proceeding under a joint development plan for the ongoing development of Candidate 2, and, as such, we have initiated clinical studies for Candidate 2.

The costs of this joint development plan are accounted for in accordance with ASC 808, and cost sharing payments to us from Ono are recorded as contra-research and development expenses.

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 preclinical development fees payable to us by Ono for Candidate 3 have been increased by approximately $1.4 million, for a total estimated $30.7 million in aggregate research and preclinical development fees over the course of the joint research plan.

In May 2024, following Ono’s exercise of the Candidate 2 Development Option and grant of the development and commercialization license, we achieved a $5.0 million clinical development milestone for Candidate 2.

We determined that we had completed our performance obligation with respect to such milestone during the year ended December 31, 2024 and accordingly, recognized such amount as revenue during the period.

In August 2024, we entered into an amendment with Ono to the Ono Agreement (the 2024 Ono Amendment and collectively with the 2023 Ono Amendment and 2022 Ono Amendment, the Ono Amendments).

Under the 2024 Ono Amendment, aggregate estimated research and preclinical development fees payable to us by Ono for Candidate 3 have been increased by approximately $7.3 million, for a total estimated $38.0 million in aggregate research and preclinical development fees over the course of the joint research plan.

We will continue to receive committed funding from Ono through June 2025.

The Candidate 3 Development Option expires upon the earlier of:

(a) June 30, 2025 or (b) the achievement of the pre-defined preclinical milestone under the joint research plan for Candidate 3.

Subject to payment of an extension fee by Ono, Ono may choose to defer its decision to exercise the Candidate 3 Development Option until no later than June 2026.

We account for the Ono Agreement, Ono Letter Agreement, and Ono Amendments (collectively, the Ono Arrangement) under ASC 808.

We concluded that certain units of account, specifically the grant of a research license to certain intellectual property and the performance of research and preclinical development, within the Ono Arrangement represented a customer relationship and applied relevant guidance from ASC 606 to evaluate the appropriate accounting for those units of account.

The initial transaction price under the Ono Arrangement was determined to be $48.0 million, consisting of the upfront, non-refundable and non-creditable payment of $10.0 million, the aggregate estimated research and preclinical development fees of $38.0 million.

We also concluded that the Candidate 2 milestone fee of $10.0 million for further research and preclinical development of Candidate 2 represented a variable consideration that was previously constrained.

We identified our promised goods and services under the Ono Arrangement to include our grant to Ono of a research license to certain of our intellectual property subject to certain conditions, our conduct of research and preclinical development 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.

During the years ended December 31, 2023 and 2022, we recognized $11.2 million and $16.6 million, respectively, of collaboration revenue under the Ono Agreement.

We recognize revenue for the combined performance obligation over time as the research and preclinical development services are performed.

During the years ended December 31, 2024 and 2023, we recognized $13.6 million and $11.2 million, respectively, of collaboration revenue under the Ono Arrangement.

During the years ended December 31, 2024 and 2023, we recognized $5.1 million and $8.0 million, respectively, of contra-research and development expense under the Ono Arrangement.

As of December 31, 2024, aggregate deferred revenue related to the Ono Agreement, Ono Letter Agreement, and Ono Amendments was $0.4 million.

Agreement with Janssen Biotech, Inc.

On April 2, 2020, we entered into the Janssen Agreement as well as a Stock Purchase Agreement (the Stock Purchase Agreement) with Johnson & Johnson Innovation - JJDC, Inc.

On January 3, 2023, we received notice of termination from Janssen of the Janssen Agreement.

The termination took effect on April 3, 2023, and during the three months ending March 31, 2023, we performed wind down activities, including discontinuing development of all collaboration product candidates under the Janssen Agreement.

We were reimbursed for all wind down activities associated with the termination of the Janssen Agreement during the second quarter of this year.

On April 2, 2020 (the Janssen Agreement Effective Date), we entered into the Janssen Agreement.

Additionally, on the Janssen Agreement Effective Date, we entered into a Stock Purchase Agreement (the Stock Purchase Agreement) with Johnson & Johnson Innovation - JJDC, Inc.

Under the terms of the Janssen Agreement and the Stock Purchase Agreement taken together, we received $100.0 million, of which $50.0 million was an upfront cash payment and $50.0 million was in the form of an equity investment by JJDC.

We determined the common stock purchase by JJDC represented a premium of $9.93 per share, or $16.0 million in aggregate (the Equity Premium), and the remaining $34.0 million was recorded as issuance of common stock in shareholders’ equity.

Additionally, prior to termination of the Janssen Agreement, we received fees from Janssen for the conduct of all research, preclinical development and IND-enabling activities performed by us under the Janssen Agreement.

In addition, Janssen had exercised a commercial option for two collaboration candidates:

an iPSC-derived, CAR NK cell product candidate for the treatment of B-cell lymphoma, for which the U.S.

Food and Drug Administration (FDA) allowed an Investigational New Drug (IND) application in December 2022;

and an iPSC-derived, CAR NK cell product candidate for the treatment of multiple myeloma, for which the companies were preparing to submit an IND application to the FDA in early 2023.

On January 3, 2023, we received notice of termination from Janssen of the Janssen Agreement.

The termination took effect on April 3, 2023, and during the three months ending March 31, 2023, we performed wind-down activities, including discontinuing development of all collaboration product candidates under the Janssen Agreement.

We were reimbursed for all wind-down activities associated with the termination of the Janssen Agreement during the second quarter of 2023.

During the year ended December 31, 2023, we recognized $52.3 million of collaboration revenue under the Janssen Agreement, of which $41.2 million was deferred as of December 31, 2022.

Research and Development Expenses

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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 wars and other armed conflicts, such as the ongoing wars between Russia and Ukraine and between Israel and Hamas, 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.

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 wars and other armed conflicts, such as the ongoing wars between Russia and Ukraine and in the Middle East, 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.

General and Administrative Expenses

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and other costs and fees, including director and officer insurance premiums, to support our operations as a public company.

We anticipate that our general and administrative expenses will remain significant in the future as we maintain our focus on innovation, and research and development activities, maintain compliance with exchange listing and SEC requirements, protect and enforce our intellectual property, and continue to operate as a public company.

Other Income (Expense)

Other income (expense) consists of changes in the fair value of stock price appreciation milestones associated with the Amended and Restated Exclusive License Agreement dated May 15, 2018 (Amended MSKCC License) with MSKCC, interest income earned on cash and cash equivalents and interest income from investments (including the amortization of discounts and premiums).

We anticipate that our general and

administrative expenses will remain significant in the future as we maintain our focus on innovation, and research and development activities, maintain compliance with exchange listing and SEC requirements, protect and enforce our intellectual property, and continue to operate as a public company.

Other income consists of proceeds from a settlement agreement and changes in the fair value of stock price appreciation milestones associated with the Amended and Restated Exclusive License Agreement dated May 15, 2018 (Amended MSKCC License) with MSKCC, interest income earned on cash, cash equivalents, and investments (including the amortization of discounts and premiums).

California Institute for Regenerative Medicine Award

On April 5, 2018, we executed an award agreement with the California Institute for Regenerative Medicine (CIRM) pursuant to which CIRM awarded us $4.0 million to advance our FT516 product candidate into a first-in-human clinical trial (the Award).

In November 2019, we submitted an IND application for FT516 in advanced solid tumors.

Pursuant to the terms of the Award, we, in our sole discretion, have the option to treat the Award either as a loan or as a grant.

During the first quarter of 2023, we elected to treat the Award as a grant and derecognized the liability associated with the Award and recorded such amount in other income during the year ended December 31, 2023.

FT819 CIRM Award

In February 2024, we were awarded $7.9 million from the California Institute for Regenerative Medicine (CIRM) to support the conduct of the Company’s Phase 1 study of FT819 in patients with systemic lupus erythematosus and, in April 2024, we executed an award agreement with CIRM (the FT819 CIRM Award).

Pursuant to the terms of the FT819 CIRM Award, we are eligible to receive five disbursements in varying amounts from CIRM, with one disbursement receivable upon the execution of the award and four disbursements receivable based upon the completion of certain development milestones throughout the period of the award, which is estimated to be from April 1, 2024 to March 31, 2028 (the Award Period).

Under the FT819 CIRM Award, we have certain obligations of co-funding and are required to provide CIRM progress and financial update reports throughout the Award Period.

Following the conclusion of the Award Period, we, in our sole discretion, have the option to treat the FT819 CIRM Award either as a loan or as a grant.

If we do not elect to treat the FT819 CIRM Award as a loan within 10 years of the award date, the award will be considered a grant and we will be obligated to pay CIRM, on a quarterly basis, a low single-digit royalty on commercial sales of FT819 until such aggregate royalty payments equal nine times the total amount awarded to us under the FT819 CIRM Award.

Since we may, at our election, repay some or all of the FT819 CIRM Award, we account for the award as a liability until the time of election.

During the year ended December 31, 2024, we received two disbursements under the award in the aggregate amount of $5.1 million, which is recorded as a liability on the accompanying consolidated balance sheets.

As of December 31, 2024, the entire balance is classified as non-current as we do not expect any amount to be payable within the next 12 months.

FT516 CIRM Award

In April 2018, we executed an award agreement with CIRM pursuant to which CIRM awarded us $4.0 million to advance our FT516 product candidate into a first-in-human clinical trial for the treatment of subjects with advanced solid tumors (the FT516 CIRM Award).

Under the FT516 CIRM Award, we have certain obligations of co-funding and are required to provide CIRM with progress and financial update reports.

Pursuant to the terms of the FT516 CIRM Award, we, in our sole discretion, have the option to treat the FT516 CIRM Award either as a loan or as a grant.

During the first quarter of 2023, we elected to treat the FT516 CIRM Award as a grant.

As such, the liability associated with the FT516 CIRM Award was reversed and such amount was recorded as other income during the first quarter of 2023.

Employee Retention Credit

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In connection with the CARES Act, we adopted a policy to recognize an ERC when it is reasonably assumed we will comply with the conditions and the grant will be received and include in other income in the statement of operations.

The Company received a cash payment and recorded $5.1 million and $0.5 million of other income during the years ended December 31, 2023 and 2022, respectively.

The Company received a cash payment and recorded $5.1 million of other income during the year ended December 31, 2023.

No such amount was received or recognized as other income during the year ended December 31, 2024.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with United States generally accepted accounting principles.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our financial statements.

The preparation of

these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to the fair value of the stock price appreciation milestones for the Amended MSKCC License, contracts containing leases, accrued expenses, stock-based compensation, and the estimated total costs expected to be incurred under our collaboration agreements.

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If a promise to transfer a product or a service is not separately identifiable from other promises in the contract, such promises should be combined into a single performance obligation.

We determined that the promised goods and services for our collaboration agreements should be accounted

for as one combined performance obligation.

We determined that the promised goods and services for our collaboration agreements 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.

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We achieved the specified clinical milestone in July 2021 and met the first milestone during fiscal 2021.

Accordingly, we remitted a payment to MSKCC of $20.0 million in the year ended December 31, 2021.

Accordingly, we remitted a payment to MSKCC of $20.0 million during the year ended December 31, 2021.

We remeasure the fair value of the remaining stock price appreciation milestones at each balance sheet date, with changes in fair value recorded in earnings as a non-operating income or expense.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The long-lived asset evaluation is performed at the asset group level (i.e., the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities).

Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition.

If the carrying amount is not recoverable, the carrying amount of such assets is reduced to fair value.

During 2024, we identified an indicator of impairment of its long-lived assets due to a sustained decline in the trading price of the Company’s common stock over the preceding year, resulting in our market capitalization being below our net asset value.

Although there have been no changes in the intended use of our long-lived assets.

We utilized observed market lease rates for comparable properties to estimate the fair value of the right-of-use asset and leasehold improvements.

We utilized trend factors applied to historical costs, estimates of economic depreciation, normal useful lives, and benchmark values for orderly liquidations of the assets in secondary markets to estimate the fair value of our property and equipment.

As a result of the fair value analysis, we recorded a $13.4 million impairment charge against property and equipment and a $1.3 million impairment charge against the right-of-use asset in the statement of operations during the year ended December 31, 2024.

No impairment was recorded during the year ended December 31, 2023.

Accrued Research and Development Expenses

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General and administrative expenses

Total other income, net

During the year ended December 31, 2023, we recognized revenue of $63.5 million under our collaboration agreements with Janssen and Ono.

Impairment loss

Total other income

During the year ended December 31, 2024, we recognized revenue of $13.6 million under our collaboration agreement with Ono.

During the year ended December 31, 2023, we recognized revenue of $63.5 million under our collaboration agreements with Janssen and Ono.

The decrease in revenue was attributable primarily to the termination of our collaboration with Janssen in April 2023.

The decrease in revenue was attributable to the termination of our collaboration with Janssen in April 2023.

The following table summarizes the revenue recognized with respect to each collaboration partner for the years ended December 31, 2024 and 2023:

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Research and development expenses were $135.0 million for the year ended December 31, 2024, compared to $172.6 million for the year ended December 31, 2023.

The decrease in research and development expenses includes the impact of the termination of our collaboration with Janssen in April 2023 and was attributable primarily to the following:

• $63.6 million decrease in employee compensation and benefits expense, which includes a $30.3 million decrease in employee-stock based compensation expense;

• $48.4 million decrease in expenditures for laboratory materials and supplies relating to the manufacture of our product candidates and the conduct of our research activities, including under our collaboration agreements;

The decrease in research and development expenses was attributable primarily to the following:

• $18.8 million decrease in third-party professional consultant and clinical trial related expense;

• $16.1 million decrease in employee compensation and benefits expense, partially offset by a $1.7 million increase in employee-stock based compensation expense;

• $6.2 million decrease in sublicense consideration owed to existing licensors.

General and administrative expenses.

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• $7.3 million decrease in employee compensation and benefits expense, which includes a $3.6 million decrease in employee stock-based compensation expense;

• $1.8 million decrease in office and computer supplies;

• $1.7 million decrease in third-party professional consultant expense;

• $4.7 million increase in patent and legal expense.

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Other income was $24.0 million and $29.6 million for the years ended December 31, 2024 and 2023, respectively.

During the year ended December 31, 2023, we recorded $4.0 million in income attributable to the CIRM Award, $5.1 million in income attributable to the ERC, and $2.5 million in other income attributable to the change in fair value of the stock price appreciation milestone under the Amended MSKCC License.

Other income for the year ended December 31, 2023 also consisted of $17.2 million interest income earned on cash and cash equivalents and interest income from investments (including the amortization of discounts and premiums).

During the year ended December 31, 2022, we recorded $20.3 million in other income attributable to the fair value of the stock price appreciation milestones under the Amended MSKCC License.

Other income for the year ended December 31, 2022 also consisted of interest income earned on cash and cash equivalents and interest income from investments (including the amortization of discounts and premiums).

During the year ended December 31, 2024, we recorded proceeds from a settlement agreement, and $0.8 million in other income attributable to the decrease in fair value of the stock price appreciation milestone under the Amended MSKCC License.

Other income for the year ended December 31, 2024 also consisted of $17.3 million interest income earned on cash, cash equivalents, and investments (including the amortization of discounts and premiums).

During the year ended December 31, 2023, we recorded $4.0 million in income attributable to the CIRM Award, $5.1 million in income attributable to the ERC, and $2.5 million in other income attributable to the decrease in fair value of the stock price appreciation milestone under the Amended MSKCC License.

Other income for the year ended December 31, 2023 also consisted of $17.2 million of interest income earned on cash, cash equivalents, and investments (including the amortization of discounts and premiums).

Liquidity and Capital Resources

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Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Operating Activities

Cash used in operating activities decreased from $248.2 million for the year ended December 31, 2022 to $132.3 million for the year ended December 31, 2023.

The primary drivers of this change in cash used in operating activities was our decrease of $120.8 million in net loss primarily due to the termination of the Janssen agreement, restructuring activities and discontinuation of programs implemented in January 2023.

The net cash used in operating activities was $122.9 million for the year ended December 31, 2024 and primarily consisted of a net loss of $186.3 million adjusted for non-cash items including stock-based compensation of $41.5 million and depreciation and amortization of $19.0 million.

Operating cash inflows were primarily from cash receipts under the Ono Arrangement - see section Agreement with Ono Pharmaceutical Co., Ltd.

above and Note 2 of the consolidated financial statements for additional detail.

The net cash used in operating activities was $132.3 million for the year ended December 31, 2023 and primarily consisted of a net loss of $160.9 million adjusted for non-cash items including stock based compensation of $43.5 million, $41.5 million change in deferred revenue, and depreciation and amortization of $18.3 million.

During the year ended December 31, 2023, we experienced a termination of the Janssen agreement, restructuring activities and discontinuation of programs implemented in January 2023.

Investing Activities

During the years ended December 31, 2024 and 2023, investing activities provided cash of $12.2 million and $112.7 million, respectively.

During the year ended December 31, 2023 we purchased $358.8 million of investments, which were partially offset by $477.6 million in maturities of investments.

During the year ended December 31, 2024, we purchased $317.8 million of investments, which were partially offset by

$330.7 million in maturities of investments.

During the year ended December 31, 2023, we purchased $358.8 million of investments, which were partially offset by $477.6 million in maturities of investments.

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Financing Activities

Financing activities provided cash of $0.1 million for the year ended December 31, 2023, which consisted of $0.1 million received from the issuance of common stock from equity incentive plans pursuant to the exercise of employee stock options.

Financing activities provided cash of $99.9 million for the year ended December 31, 2024, 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 public 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 public offering less the $0.001 exercise price per share of each pre-funded warrant, in a private placement concurrent with the underwritten public offering in March 2024, and (iii) the issuance of common stock from equity incentive plans pursuant to the exercise of employee stock options.

From our inception through December 31, 2023 we have funded our consolidated operations primarily through the public and private sale of common stock, the private placement of preferred stock and convertible notes, commercial bank debt and revenues from collaboration activities and grants.

As of December 31, 2023, we had aggregate cash and cash equivalents and investments of $316.2 million.

From our inception through December 31, 2024, we have funded our consolidated operations primarily through the public and private sale of common stock and pre-funded warrants, the private placement of preferred stock and convertible notes, commercial bank debt and revenues from collaboration activities and grants.

As of December 31, 2024, we had aggregate cash, cash equivalents, and investments of $306.7 million.

Registration Statements on Form S-3

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Additionally, we entered into a sales agreement with Jefferies Group LLC (Jefferies) with respect to an at-the-market offering program, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $100.0 million (which is included in the $300.0 million registered under the shelf registration statement) through Jefferies as the sales agent.

To date, we have not sold any securities pursuant to the sales agreement with Jefferies or the shelf registration statement.

In March 2024, we entered into an underwriting agreement with BofA Securities, Inc., Jefferies, and Leerink Partners LLC with respect to an underwritten public offering, under which we sold 14,545,454 shares of our common stock at a purchase price of $5.50 per share pursuant to the shelf registration statement.

To date, we have not sold any securities pursuant to the sales agreement with Jefferies and are eligible to issue an aggregate of approximately $220.0 million under the shelf registration statement (including the $100.0 million issuable pursuant to the sales agreement with Jefferies).

In March 2024, concurrent with the underwritten public offering, we entered into a securities purchase agreement with a fund affiliated with Redmile Group, LLC under which we sold pre-funded warrants to purchase up to 3,636,364 shares of our common stock, at a purchase price of $5.499 per pre-funded warrant, in a private placement exempt from the registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities Act).

Pursuant to the terms of the purchase agreement, we agreed to register for resale the shares of common stock issuable upon the exercise of the pre-funded warrants (Warrant Shares).

On April 18, 2024, we filed a resale registration statement on Form S-3 (File No.

333-278792), registering the Warrant Shares.

The resale registration statement on Form S-3 was declared effective on April 29, 2024.

Operating Capital Requirements

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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.

Our forecast of the period of time through which our existing cash and cash equivalents and investments will be adequate to support our operations is a forward-looking statement and involves significant risks and uncertainties.

Our forecast of the period of time through which our existing cash, cash equivalents, and investments will be adequate to support our operations is a forward-looking statement and involves significant risks and uncertainties.

We have based this forecast on assumptions that may prove to be wrong, and actual results could vary materially from our expectations, which may adversely affect our capital resources and liquidity.

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• the extent to which milestones are achieved under our collaboration agreement with Ono, and any other strategic partnership or collaboration agreements that we may enter into in the future, and the time to achievement of such milestones and our receipt of any associated milestone payments;

• the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, including in our ongoing lawsuits against Shoreline Biosciences, Inc.

(Shoreline) and Dr.

Kaufman (Kaufman), and the cost of enforcing any of our other contractual rights;

• the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, and the cost of enforcing any of our other contractual rights;

• the cost of our research and development activities, including our need and ability to hire additional employees and procure additional equipment, materials and supplies;

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• the cost of establishing sales, marketing, manufacturing and distribution capabilities for, and the pricing and reimbursement of, any products for which we may receive regulatory approval.

In addition, we are closely monitoring inflation rates and global political and economic conditions, including the ongoing wars between Russia and Ukraine and between Israel and Hamas, and evaluating adjustments to our business and operations, which may negatively impact our financial condition and prospects and our operating results.

In addition, we are closely monitoring inflation rates and global political and economic conditions, including the ongoing wars between Russia and Ukraine and in the Middle East, and evaluating adjustments to our business and operations, which may negatively impact our financial condition and prospects and our operating results.

We will continue to assess our operating capital requirements and may make adjustments to our business and operations if circumstances warrant.

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See Note 2 of the consolidated financial statements for additional detail.

As of December 31, 2023, we recorded a liability of $1.3 million associated with the remaining stock price appreciation milestones for the Amended MSKCC License.

We have no material contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to the financial statements.

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We have the right to sublicense our rights under these agreements, and we will be required to pay a percentage of any sublicense income.

• Under a license agreement with Max Delbruck Center for Molecular Medicine (MDC), pursuant to which we license certain patents relating to novel humanized antibody fragments, antigen-binding domains and CAR constructs that uniquely target and specifically bind B-cell Maturation Antigen, w e are required to make annual maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property.

• Under a license agreement with Baylor College of Medicine, pursuant to which we license certain patents relating to the composition and use of a novel allo-immune defense receptor (ADR), we are required to make annual maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property.

The maximum aggregate milestone payments we may be obligated to make per product are $7.0 million.

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We have the right to sublicense our rights under this agreement, and we will be required to pay a percentage of any sublicense income.

The maximum aggregate milestone payments we may be obligated to make per product are $11.0 million.

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Financial Stateme nts and Supplementary Data

Report of Independent Regist ered Public Accounting Firm

The Board of Directors and Stockholders of Fate Therapeutics, Inc.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Fate Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fate Therapeutics, Inc.

as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S.

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the account or disclosure to which they relate.

Accrued research and development expenses – clinical trials

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Auditing the Company’s research and development expenses and related accruals was challenging due to the complex nature of evaluating the completeness and accuracy of the expenses and accruals.

Research and development expenses are recognized as the services are being performed by the vendors, which requires management to accurately estimate the time period over which services will be performed and the level of effort to be expended in each period.

Research and development expenses are recognized as the services are being performed by the vendors, which requires management to accurately reflect the cost of services performed by vendors, such as patient enrollment and treatment at several investigative sites.

How We Addressed the Matter in Our Audit

To test the clinical trial expenses and related accruals, our audit procedures included, among others, confirming with a sample of vendors the progress of activities under research and development contracts at period end, testing a sample of cash disbursements after period end to assess the completeness of the expense recognition, and testing a sample of research and development expenses recorded during the period and evaluating the timing and amount of the expense recognition.

To test the clinical trial expenses and related accruals, our audit procedures included, among others, confirming with a sample of vendors the progress of activities under research and development contracts at period end, testing a sample of invoices from vendors providing clinical services, testing a sample of cash disbursements after period end to assess the completeness of the expense recognition, and testing a sample of research and development expenses recorded during the period and evaluating the timing and amount of the expense recognition.

Impairment of long-lived assets

Description of the Matter

As discussed in Note 1 of the consolidated financial statements, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable.

The long-lived asset evaluation is performed at the asset group level, i.e., the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition.

If such review indicates that the carrying amount of the long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value.

During the year ended December 31, 2024, the Company recorded an impairment of $14.7 million, consisting of $1.3 million related to right-of-use assets and $13.4 million related to property and equipment.

Auditing the valuation of the Company’s impairment of its long-lived assets was complex and required a high degree of auditor judgment when performing procedures due to the significant estimation uncertainty in determining the fair value of its property and equipment.

Management used observed market lease rates for comparable properties to perform the impairment test for its leasehold improvements and the right-of-use lease assets.

To establish an estimate of fair value of the remaining property and equipment, primarily consisting of scientific equipment, management utilized trend factors applied to historical costs, estimates of economic depreciation, normal useful lives, and benchmark values for orderly liquidations of assets in secondary markets.

How We Addressed the Matter in Our Audit

Our audit procedures included, among others, evaluating the methodology and valuation models used and testing the key inputs and significant assumptions made by management.

We evaluated the significant assumptions used by management related to the valuation of the leasehold improvements and right-of-use lease assets by obtaining observable lease rates for comparable properties and recalculating the impairment charge.

We evaluated the significant assumptions for the valuation of other property and equipment by testing a sample of observable market data and comparable executed transactions and listings for scientific equipment.

/s/ Ernst & Young, LLP

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San Diego, California

February 26, 2024

March 5, 2025

Fate Therapeutics, Inc.

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Restricted cash

Collaboration contract assets

Liabilities and Stockholders’ Equity

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Accrued expenses

CIRM award liability

Deferred revenue

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Total current liabilities

CIRM award liability

Operating lease liabilities, net of current portion

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Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

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General and administrative

Impairment loss

Total operating expenses

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Total other income

Other comprehensive gain (loss):

Unrealized gain (loss) on available-for-sale securities, net

Other comprehensive gain:

Unrealized gain on available-for-sale securities, net

Comprehensive loss

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Issuance of common stock upon vesting of restricted stock units

Conversion of preferred shares to common stock

Stock–based compensation

Unrealized loss on investments, net

Unrealized gain on investments, net

Balance at December 31, 2023

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Stock–based compensation

Public offering of common stock and issuance of pre-funded warrants, net of offering costs

Private placement of pre-funded warrants

Unrealized gain on investments, net

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Accretion and amortization of premiums and discounts on investments, net

Amortization of collaboration contract asset

Amortization of collaboration contract costs

Deferred revenue

Change in fair value of stock price appreciation milestones

Grant income from CIRM award

Impairment of long-lived assets

Loss on disposal of property and equipment

Grant income from FT516 CIRM award

Changes in assets and liabilities:

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Issuance of common stock from equity incentive plans, net of issuance costs

Proceeds from public offering of common stock, net of issuance costs

Proceeds from issuance of pre-funded warrants, net of issuance costs

Proceeds from FT819 CIRM award

Net cash provided by financing activities

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Purchases of property and equipment in accounts payable

Right-of-use assets obtained in exchange for lease obligations

See accompanying notes.

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(the Company) was incorporated in the state of Delaware on April 27, 2007 and has its principal operations in San Diego, California.

The Company is a clinical-stage biopharmaceutical company dedicated to bringing off-the-shelf, multiplexed-engineered, iPSC-derived cellular immunotherapies to patients for the treatment of cancer and autoimmune diseases.

The Company is a clinical-stage biopharmaceutical company dedicated to bringing off-the-shelf, multiplexed-engineered, iPSC-derived cellular immunotherapies to patients.

As of December 31, 2024, the Company has devoted substantially all of its efforts to product development, raising capital and building infrastructure and has not generated any revenues from any sales of its therapeutic products.

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To date, the aggregate operations of these subsidiaries have not been significant and all intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.

The Company views its operations and manages its business in one operating and reportable segment.

Fair Value of Financial Instruments

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Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows

For the years ended December 31, 2023 and 2022 , the restricted cash balance includes cash-collateralized irrevocable standby letters of credit for $ 15.2 million associated with the Company’s facilities leases .

For the years ended December 31, 2024 and 2023, the restricted cash balance includes cash-collateralized irrevocable standby letters of credit for $ 10.2 mill io n and $ 15.2 million, respectively, associate d with the Company’s facilities leases .

Investments are accounted for as available-for-sale securities and are carried at fair value on the consolidated balance sheets.

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Concentration of Credit Risk

Financial instruments, which potentially subject the Company to a significant concentration of credit risk, consist primarily of cash and cash equivalents and investments.

Financial instruments, which potentially subject the Company to a significant concentration of credit risk, consist primarily of cash, cash equivalents, and investments.

The Company maintains deposits in federally insured financial institutions in excess of federally insured limits.

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Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

An impairment loss is recorded if and when events and circumstances indicate that assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets.

If the carrying amount is not recoverable, the Company measures the amount of any impairment by comparing the carrying value of the asset to the present value of the expected future cash flows associated with the use of the asset.

While the Company’s current and historical operating losses and negative cash flows are indicators of impairment, management believes that future cash flows to be

received support the carrying value of its long-lived assets and, accordingly, has not recognized any impairment losses since the Company’ s inception.

Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition.

If the carrying amount is not recoverable, the carrying amount of such assets is reduced to fair value.

During 2024, the Company identified an indicator of impairment of its long-lived assets due to a sustained decline in the trading price of the Company’s common stock over the preceding year, resulting in the Company’s market capitalization being below its net asset value.

The Company utilized observed market lease rates for comparable properties to estimate the fair value of the right-of-use asset and leasehold improvements.

The Company utilized trend factors applied to historical costs, estimates of economic depreciation, normal useful lives, and benchmark values for orderly liquidations of the assets in secondary markets to estimate the fair value of the property and equipment.

As a result of its fair value analysis, the Company recorde d a $ 13.4 million impairment charge on its property

and equipment a nd a $ 1.3 m illion impairment charge on its right-of-use asset in the statement of operations during the year ended December 31, 2024 .

No impairment was recorded during the year ended December 31, 2023 .

The Company determines if a contract contains a lease at the inception of the contract.

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T he Company received a cash

payment and recorded $ 5.1 million and $ 0.5 million of other income during the years ended December 31, 2023 and 2022, respectively .

payment and recorded $ 5.1 million of other income during the year ended December 31, 2023 .

No such amount was received or recorded during the year ended December 31, 2024.

Comprehensive Loss

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Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents.

The Pre-Funded Warrants associated with the January 2021 public equity offering (see Note 9) are considered outstanding shares in the basic earnings per share calculation given their nominal exercise price.

The Pre-Funded Warrants associated with the January 2021 public equity offering and the private placement concurrent with the March 2024 public equity offering (see Note 9) are considered outstanding shares in the basic earnings per share calculation given their nominal exercise price.

Dilutive common stock equivalents comprise convertible preferred stock, warrants for the purchase of common stock, and common stock options and restricted stock units outstanding under the Company’s stock option plans.

For all periods presented, there is no difference in the number of common shares used to calculate basic and diluted common shares outstanding due to the Company’s net loss position.

Basic and diluted net loss per share attributable to stockholders for the years ended December 31, 2024 and 2023 are calculated as follows (in thousands, except share and per share data):

For the Years Ended December 31,

Shares used to compute net loss per share, basic and diluted

Weighted-average common shares outstanding

Weighted-average pre-funded warrants

Weighted-average common shares outstanding used to

compute basic and diluted net loss per share

Net loss per share, basic and diluted

Basic and diluted

Potentially dilutive securities that are not included in the calculation of diluted net loss per common share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

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The Company determined that there are no conditions or events that raise substantial doubt about its ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements .

Restructuring

In January 2023, the Company implemented a corporate restructuring to streamline operations, reduce operating expenses, extend cash runway and focus resources on the Company’s most promising programs.

In connection with the restructuring, the Company reduced its workforce by 60 %.

Affected employees were informed on January 5, 2023.

The restructuring was completed by March 31, 2023.

The Company incurred charges of $ 12.9 million during the year ended December 31, 2023 for severance and other employee termination-related costs, of which $ 10.9 million were related to research and development expenses and $ 2.0 million were related to general and administrative expenses.

All restructuring and related expenses have been fully recognized by the Company.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, which requires public entities to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280, Segment Reporting .

The ASU does not change how a public

entity identifies its operating segments, aggregates them or applies the quantitative thresholds to determine its reportable segments.

The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted.

The guidance should be applied retrospectively to all periods presented in the financial statements, unless it is impracticable.

The segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company adopted ASU No.

2023-07 during the year ended December 31, 2024 and have included required disclosures in Note 11.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

This new standard will be effective for the annual periods beginning the year ended December 31, 2025.

The new standard permits early adoption and can be applied prospectively or retrospectively.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement:

Reporting Comprehensive Income- Expense Disaggregation Disclosures , which requires detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses.

This ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.

Collaboration and License Agreements

Ono Collaboration and Option Agreement

On September 14, 2018, the Company entered into a Collaboration and Option Agreement (the Ono Agreement) with Ono Pharmaceutical Co., Ltd.

On September 14, 2018, the Company entered into a Collaboration and Option Agreement (the Ono Agreement) with Ono Phar maceutical Co., Ltd.

(Ono) for the joint development and commercialization of two off-the-shelf, iPSC-derived CAR T-cell product candidates (Candidate 1 and Candidate 2).

Pursuant to the terms of the Ono Agreement, the Company received an upfront, non-refundable and non-creditable payment of $ 10.0 million.

Additionally, the Company is entitled to receive funding for the conduct of research and development under a joint development plan, which fees were estimated to be $ 20.0 million in aggregate.

In December 2020, the Company entered into a letter agreement with Ono pursuant to which Ono delivered proprietary antigen binding domains targeting an antigen expressed on certain solid tumors for incorporation into Candidate 2 and paid the Company a milestone fee of $ 10.0 million for further research and development of Candidate 2.

In addition, Ono terminated all further research

and development with respect to Candidate 1, and the Company retained all rights to research, develop and commercialize Candidate 1 throughout the world without any obligation to Ono.

Additionally, the Company was entitled to receive funding for the conduct of research and preclinical development under a joint research plan, which fees were estimated to be $ 20.0 million in aggregate.

In December 2020, the Company entered into a letter agreement with Ono (the Ono Letter Agreement) pursuant to which Ono delivered proprietary antigen binding domains targeting an antigen expressed on certain solid tumors for incorporation into Candidate 2 and paid the Company a milestone fee of $ 10.0 million for further research and preclinical development of Candidate 2.

In addition, Ono terminated all further research and preclinical development with respect to Candidate 1, and the Company retained all rights to research, develop and commercialize Candidate 1 throughout the world without any obligation to Ono.

In June 2022, the Company entered into an amendment with Ono to the Ono Agreement (the 2022 Ono Amendment).

In addition, for both Candidate 2 and Candidate 3, Ono and the Company 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, the Company 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 the Company by Ono, to develop and commercialize Candidate 3 in all territories of the world, where the Company retains rights to co-develop and co-commercialize Candidate 3 in the United States and Europe under a joint arrangement with Ono under which the Company is eligible to share at least 50 % of the profits and losses.

The Company will continue to receive committed funding from Ono through September 2024 and has 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.

On November 7, 2022, Ono exercised its option for continued development of Candidate 2.

Upon Ono’ s exercise, the Company granted Ono a license to develop and commercialize Candidate 2.

The Company elected its preclinical option to co-develop and co-commercialize Candidate 2.

As a result, the Company received an Option Exercise Payment (as defined under the Ono Agreement) of $ 12.5 million.

The Company determined the exercise represented an option with no material right under the Ono Agreement.

The Company has completed its performance obligations with respect to the exercise of the option and accordingly, recognized the Option Exercise Payment as revenue for the year ended December 31, 2022.

The Company and Ono will proceed with a joint development plan for the ongoing development of Candidate 2.

The costs of this development plan are accounted for in accordance with ASC 808, and cost sharing payments to the Company from Ono are recorded net into r esearch and development expenses.

During the year ended December 31, 2023 , the Company recognized contra-research and development expense of $ 8.0 million.

There were no such amounts recognized during the year ended December 31, 2022 As of December 31, 2023 , the Company has received $ 6.2 million in aggregate cost-sharing payments from Ono.

On November 30, 2023, the Company 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 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.

Under the terms of the Ono Agreement (as amended by the 2022 Ono Amendment), for Candidate 2 and for Candidate 3 (subject to exercise by Ono of its preclinical option to Candidate 3), the Company is eligible to receive additional payments upon the achievement of certain clinical, regulatory and commercial milestones (the Ono Milestones) with respect to each Candidate in an amount up to $ 843.0 million in aggregate, with the applicable milestone payments for the United States and Europe subject to reduction by 50 % if the Company elects to co-develop and co-commercialize the Candidate in the United States and Europe as described above.

In addition, for both Candidate 2 and Candidate 3, Ono and the Company expanded the scope of the collaboration to include the research and preclinical 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, the Company granted to Ono, during a specified period of time, a preclinical option (Candidate 3 Development Option) to obtain an exclusive license under certain intellectual property rights, subject to payment of an option exercise fee to the Company by Ono, to further develop and commercialize Candidate 3 in all territories of the world, where the Company retains rights to co-develop and co-commercialize Candidate 3 in the United States and Europe under a joint arrangement with Ono pursuant to which the Company is eligible to share at least 50 % of the profits and losses.

The Candidate 3 Development Option represents an option with no material right.

Under the 2022 Ono Amendment, aggregate estimated research and preclinical development fees have been increased by approximately $ 9.3 million, for a total estimated $ 29.3 million in aggregate research and preclinical development fees over the course of the joint research plan.

In November 2022, Ono exercised its option to obtain a license to develop and commercialize Candidate 2 (the Candidate 2 Development Option).

The Company exercised its option (the CDCC Option) to co-develop and co-commercialize Candidate 2 in the United States and Europe.

As a result, the Company received an Option Exercise Payment (as defined under the Ono Agreement) of

$ 12.5 million.

The Company and Ono are proceeding under a joint development plan for the ongoing development of Candidate 2.

At the inception of the Ono Agreement, the Company determined the Candidate 2 Development Option represented an option with no material right that is distinct and separable from the ongoing development of Candidate 2 being performed by the parties.

As such, the option exercise was treated as a separate contract with a single performance obligation of granting and delivering Ono a license to further develop and commercialize Candidate 2.

The Company has completed its performance obligation with respect to the Candidate 2 Development Option and accordingly, recognized the Option Exercise Payment as revenue for the year ended December 31, 2022.

The costs of this joint development plan are accounted for in accordance with ASC 808, and cost sharing payments to the Company from Ono are recorded net into research and development expenses.

In addition, in connection with the ongoing joint development of Candidate 2, the Company is eligible to receive additional payments upon the achievement of certain clinical, regulatory, and commercial milestones (as further described below).

In November 2023, the Company entered into an amendment with Ono to the Ono Agreement (the 2023 Ono Amendment).

Under the 2023 Ono Amendment, aggregate estimated research and preclinical development fees payable by Ono to the Company for Candidate 3 have been increased by approximately $ 1.4 million, for a total estimated $ 30.7 million in aggregate research and preclinical development fees over the course of the joint research plan.

In May 2024, following Ono’ s exercise of the Candidate 2 Development Option and grant of the development and commercialization license, the Company achieved a $ 5.0 million clinical development milestone for Candidate 2 and the Company recognized such amount as revenue during the period.

In August 2024, the Company entered into an amendment with Ono to the Ono Agreement (the 2024 Ono Amendment and collectively with the 2023 Ono Amendment and 2022 Ono Amendment, the Ono Amendments).

Under the 2024 Ono Amendment, aggregate estimated research and preclinical development fees payable by Ono to the Company for Candidate 3 have been increased by approximately $ 7.3 million, for a total estimated $ 38.0 million in aggregate research and preclinical development fees over the course of the joint research plan.

The Company will continue to receive committed funding under the joint research plan from Ono through June 2025.

The Candidate 3 Development Option expires upon the earlier of:

(a) June 30, 2025 or (b) the achievement of the pre-defined preclinical milestone under the joint research plan for Candidate 3.

Subject to payment of an extension fee by Ono, Ono may choose to defer its decision to exercise the Candidate 3 Development Option until no later than June 2026.

Under the terms of the Ono Agreement (as amended by the Ono Amendments), for Candidate 2 and for Candidate 3 (subject to exercise by Ono of its Candidate 3 Development Option), the Company is eligible to receive additional payments upon the achievement of certain clinical, regulatory and commercial milestones (the Ono Milestones) with respect to each Candidate in an amount up to $ 843.0 million in aggregate, with the applicable milestone payments for the United States and Europe subject to reduction by 50 % if the Company elects to co-develop and co-commercialize the Candidate in the United States and Europe as described above.

In addition, in those territories where Ono has exclusive rights of commercialization, the Company is eligible to receive tiered royalties (Royalties) ranging from the mid-single digits to the low-double digits based on annual net sales by Ono for each Candidate in such territories, with the Royalties subject to certain reductions.

The Ono Agreement will terminate with respect to a Candidate if Ono does not exercise its option for a candidate within the option period, or in its entirety if Ono does not exercise any of its options for the candidates within their respective option periods.

The Ono Agreement will terminate with respect to a Candidate if Ono does not exercise its development option for a candidate within the option period, or in its entirety if Ono does not exercise any of its development options for the candidates within their respective option periods.

In addition, either party may terminate the Ono Agreement in the event of breach, insolvency or patent challenges by the other party;

provided, that Ono may terminate the Ono Agreement in its sole discretion (x) on a Candidate-by-Candidate basis at any time after the second anniversary of the effective date of the Ono Agreement or (y) on a Candidate-by-Candidate or country-by-country basis at any time after the expiration of the option period, subject to certain limitations.

The Ono Agreement will expire on a Candidate-by-Candidate and country-by-country basis upon the expiration of the applicable royalty term, or in its entirety upon the expiration of all applicable payment obligations under the agreement.

The Company determined that the Ono Agreement, Ono Letter Agreement, and Ono Amendments were within the scope of ASC 808 and applicable to such guidance.

The Company concluded that certain units of account within the Ono Agreement and Ono Amendments represented a customer and applied relevant guidance from ASC 606 to evaluate the appropriate accounting for those units of account.

In accordance with this guidance, the Company identified its performance obligations, including its grant of a license to Ono to certain of its intellectual property subject to certain conditions, its conduct of research services, and its participation in a joint steering committee.

The Company determined that its grant of a license to Ono to certain of its intellectual property subject to certain conditions was not distinct from other performance obligations because such grant is dependent on the conduct and results of

the research services.

Additionally, the Company determined that its conduct of research services was not distinct from other performance obligations since such conduct is dependent on the guidance of the joint steering committee.

Accordingly, the Company determined that all performance obligations should be accounted for as one combined performance obligation, and that the combined performance obligation is transferred over the expected term of the conduct of the research services.

The Company determined that the Ono Agreement, Ono Letter Agreement, and Ono Amendments (collectively, the Ono Arrangement) were within the scope of ASC 808 and applicable to such guidance.

The Company concluded that certain units of account, specifically the grant of a research license to certain intellectual property and the performance of research and preclinical development, within the Ono Arrangement represented a customer relationship and applied relevant guidance from ASC 606 to evaluate the appropriate accounting for those units of account.

In accordance with this guidance, the Company identified its promised goods and services, including its grant of a research license to Ono to certain of its intellectual property subject to certain conditions, its conduct of research and preclinical development services, and its participation in a joint steering committee.

The Company determined that its grant of a research license to Ono to certain of its intellectual property was not distinct from its conduct of research and preclinical development services and participation in a joint steering committee.

Accordingly, the Company determined that the research license, the research and preclinical development services, and the participation in a joint steering committee during the development option period, should be accounted for as one combined performance obligation, and that the combined performance obligation is transferred over the expected term of the conduct of the research and preclinical development services.

The Company also determined that, subject to the guidance of ASC 606, the license to develop and commercialize Candidate 2 upon exercise of the Candidate 2 Development Option was distinct and separable from the development and commercialization activities, which are accounted for under ASC 808.

The termination of the Ono Agreement with respect to Candidate 1 did not impact this assessment.

In accordance with ASC 606, the Company determined that the initial transaction price under the 2023 Ono Amendment equaled $ 40.7 million, consisting of the upfront, non-refundable and non-creditable payment of $ 10.0 million and the aggregate estimated research and development fees of $ 30.7 million.

The upfront payment of $ 10.0 million was recorded as deferred revenue and was recognized as revenue over time in conjunction with the Company’s conduct of research services as the research services are the primary component of the combined performance obligations.

Revenue associated with the upfront payment was recognized based on actual costs incurred as a percentage of the estimated total costs expected to be incurred over the expected term of conduct of the research services.

The Company recorded the $ 5.0 million prepayment of the first-year research and development fees as deferred revenue, and such fees were recognized as revenue as the research services were delivered.

As a direct result of the Company’s entry into the Ono Agreement and the Ono Letter Agreement, the Company incurred an aggregate of $ 7.8 million in sublicense consideration to existing licensors of the Company.

The $ 7.8 million in sublicense consideration represents an asset under ASC 340 and is being amortized to research and development expense ratably with the Company’s revenue recognition under the Ono Agreement.

During the years ended December 31, 2022, the Company recognized $ 4.1 million of such expense.

During the year ended December 31, 2023, the Company recognized no such expense.

The Company recognized revenue of $ 11.2 million and $ 16.6 million under the Ono Agreement and Ono Letter Agreement during the years ended December 31, 2023 and 2022, respectively.

Such revenue comprised $ 11.2 million associated with research services during the year ended December 31, 2023.

Suc h revenue comprised $ 2.5 million associated with research services and $ 1.6 million associated with the upfront payment, and $ 12.5 million associated with the option exercise during the year ended December 31, 2022.

As of December 31, 2023, aggregate deferred revenue related to the Ono Agreement and Ono Letter Agreement was $ 0.7 million, all of which is classified as current.

As of December 31, 2023, the Company has received $ 32.7 million in cash of aggregate research and development fees from Ono.

In accordance with ASC 606, the Company determined that the initial transaction price for research and preclinical development under the Ono Arrangement equaled $ 48.0 million, consisting of the upfront, non-refundable and non-creditable payment of $ 10.0 million and the aggregate estimated research and preclinical development fees of $ 38.0 million.

The Company also concluded that the milestone fee of $ 10.0 million paid by Ono to the Company for further research and preclinical development of Candidate 2 represented a variable consideration that was previously constrained.

Both the upfront payment of $ 10.0 million and the Candidate 2 milestone fee of $ 10.0 million were recorded as deferred revenue and were recognized as revenue over time in conjunction with the Company’s conduct of research and preclinical development services based on actual costs incurred as a percentage of the estimated total costs expected to be incurred over the expected term of conduct of the research and preclinical development services.

The Company recorded the $ 5.0 million prepayment of the first-year research and preclinical development fees as deferred revenue, and such fees were recognized as revenue as the research and preclinical development services were delivered.

The Company recognized revenue of $ 13.6 million and $ 11.2 million under the Ono Arrangement during the years ended December 31, 2024 and 2023, respectively.

Such revenue consisted of $ 8.6 million associated with research and preclinical development services, and $ 5.0 million associated with the achievement of a clinical development milestone for the year ended December 31, 2024.

During the year ended December 31, 2023 , such revenue comprised $ 11.2 million associated with research and preclinical development services.

The Company recognized contra-research and development expense of $ 5.1 million associated with the joint development of Candidate 2 under the Ono Arrangement for the year ended December 31, 2024.

During the year ended December 31, 2023 , the Company recognized contra-research and development expense of $ 8.0 million.

As a direct result of the Company’s entry into the Ono Arrangement, the Company incurred an aggregate of $ 9.0 million in sublicense consideration to existing licensors.

The Company recognized $ 1.2 million of such expense during the year ended December 31, 2024 .

The Company recognized no such expense during the year ended December 31, 2023.

Janssen Collaboration and Option Agreement

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Additionally, the Company received full funding for the conduct of all research, preclinical development and Investigational New Drug Application (IND)-enabling activities performed by the Company under the Janssen Agreement.

As a direct result of the Company’s entry into the Janssen Agreement, the Company incurred $ 17.1 million in sublicense fees to certain of its existing licensors.

The $ 17.1 million in sublicense consideration represents an asset under ASC 340, Other Assets and Deferred Costs (ASC 340) and is amortized to research and development expense ratably with the Company’s revenue recognition under the Janssen Agreement.

During the years ended December 31, 2023 and 2022 , the Company recognized $ 7.2 million and $ 4.3 million of such expense, respectively.

As of December 31, 2023, there was no remaining balance on the Janssen Agreement contract asset.

The Company recognized revenue of $ 52.3 million under the Janssen Agreement for the year ended December 31, 2023 , of which $ 41.2 million was previously deferred.

Such revenue comprised $ 11.1 million associated with research and development services, $ 31.2 m illion associated with the upfront fee and Equity Premium, and $ 10.0 million associated with a commercial option exercise for the year ended December 31, 2023 .

The Company recognized revenue of $ 79.7 million under the Janssen Agreement for the year ended December 31, 2022 .

Such revenue comprised $ 42.3 million associated with research and development services and $ 23.1 million associated with the upfront fee and Equity Premium, $ 13.0 million associated with a commercial option exercise and milestone achievements, and $ 1.3 million associated with collaboration services for the year ended December 31, 2022.

The Company recognized revenue of $ 52.3 million under the Janssen Agreement for the year ended December 31, 2023 , of which $ 41.2 million was deferred as of December 31, 2022.

Such revenue consisted of $ 11.1 million associated with research and development services, $ 31.2 million associated with the upfront fee and Equity Premium, and $ 10.0 million associated with a commercial option exercise.

In connection with the Janssen Agreement, the Company incurred $ 17.1 million in sublicense fees to certain of its existing licensors.

The $ 17.1 million in sublicense consideration represents an asset under ASC 340, and was amortized to research and development expense ratably with the Company’s revenue recognition under the Janssen Agreement.

During the year ended December 31, 2023 , the Company recognized $ 7.2 million of such expense.

As of December 31, 2024, there was no remaining balance on the Janssen Agreement.

Memorial Sloan Kettering Cancer Center License Agreement

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California Institute for Regenerative Medicine Award

On April 5, 2018 , the Company executed an award agreement with the California Institute for Regenerative Medicine (CIRM) pursuant to which CIRM awarded the Company $ 4.0 million to advance the Company’s FT516 product candidate into a first-in-human clinical trial for the treatment of subjects with advanced solid tumors, including in combination with monoclonal antibody therapy (the Award).

The Award is subject to certain co-funding requirements by the Company, and the Company is required to provide CIRM progress and financial update reports under the Award.

Pursuant to the terms of the Award, the Company, in its sole discretion, has the option to treat the Award either as a loan or as a grant.

During the first quarter of 2023, the Company elected to treat the Award as a grant and derecognized the liability associated with the Award and recorded such amount in other income during the year ended December 31, 2023.

FT819 CIRM Award

In February 2024, the Company was awarded $ 7.9 million from the California Institute for Regenerative Medicine (CIRM) to support the conduct of the Company’s Phase 1 study of FT819 in patients with systemic lupus erythematosus and, in April 2024, the Company executed an award agreement with CIRM (the FT819 CIRM Award).

Pursuant to the terms of the FT819 CIRM Award, the Company is eligible to receive five disbursements in varying amounts from CIRM, with one disbursement receivable upon the execution of the award and four disbursements receivable based upon the completion of certain development milestones throughout the period of the award, which is estimated to be from April 1, 2024 to March 31, 2028 (the Award Period).

Under the FT819 CIRM Award, the Company has certain obligations of co-funding and is required to provide CIRM progress and financial update reports throughout the Award Period.

Following the conclusion of the Award Period, the Company, in its sole discretion, has the option to treat the FT819 CIRM Award either as a loan or as a grant.

If the Company does not elect to treat the FT819 CIRM Award as a loan within 10 years of the award date, the award will be considered a grant and the Company will be obligated to pay CIRM, on a quarterly basis, a low single-digit royalty on commercial sales of FT819 until such aggregate royalty payments equal nine times the total amount awarded to the Company under the FT819 CIRM Award.

Since the Company may, at its election, repay some or all of the FT819 CIRM Award, the Company accounts for the award as a liability until the time of election.

During the year ended December 31, 2024, the Company received two disbursements under the FT819 CIRM Award in the aggregate amount of $ 5.1 million, which amount is recorded as a liability on the accompanying consolidated balance sheets.

As of December 31, 2024 , the entire balance is classified as non-current as the Company does no t expect any amount to be payable within the next 12 months.

FT516 CIRM Award

In April 2018, the Company executed an award agreement with CIRM pursuant to which CIRM awarded the Company $ 4.0 million to advance the Company’s FT516 product candidate into a first-in-human clinical trial for the treatment of subjects with advanced solid tumors (the FT516 CIRM Award).

Under the FT516 CIRM Award, the Company has certain obligations of co-funding and is required to provide CIRM progress and financial update reports.

Pursuant to the terms of the FT516 CIRM Award, the Company, in its sole discretion, has the option to treat the FT516 CIRM Award either as a loan or as a grant.

During the first quarter of 2023, the Company elected to treat the FT516 CIRM Award as a grant.

As such, the liability associated with the FT516 CIRM Award was derecognized and such amount was recorded as other income during the year ended December 31, 2023 .

The Company invests portions of excess cash in United States treasuries, commercial paper, non-U.S.

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Classified as non-current assets:

Treasury debt securities

Greater than 1

Corporate debt securities

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Classified as non-current assets:

Municipal securities

Corporate debt securities

Greater than 1

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The Company also evaluates its investment holdings for impairment using a variety of factors including the Company’s intent to sell the underlying securities prior to maturity and whether it is more likely than not that the Company would be required to sell the securities before the recovery of their amortized basis.

During the years ended December 31, 2023 and 2022 , the Company did no t recognize any impairment or realized gains or losses on sales of investments, and the Company did not record an allowance for, or recognize, any expected credit losses.

During the years ended December 31, 2024 and 2023 , the Company did no t recognize any impairment or realized gains or losses on sales of investments, and the Company did no t record an allowance for, or recognize, any expected credit losses.

Fair Value Measurements

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Total property and equipment, net

The Company recognized an impairment charge of $ 13.4 million of long-lived asset impairment described in Note 1 above for the year ended December 31, 2024, which was calculated as the difference between the fair value of the assets and its carrying value.

The cost basis for these assets was updated to fair value.

The fair value was based on a cost approach which utilized Level 3 non-recurring fair value inputs and assumptions.

Depreciation expense related to property and equipment was $ 19.0 million and $ 18.3 million, for the years ended December 31, 2024 and 2023 , respectively.

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Extension and termination options are included in the total lease term when the Company is reasonably certain to exercise them.

The leases are subject to additional variable charges, including common area maintenance, property taxes, property insurance and other variable costs.

The leases are subject to additional variable charges, including common area

maintenance, property taxes, property insurance and other variable costs.

Given the variable nature of such costs, they are recognized as expense as incurred.

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The Company has elected to combine and account for lease and non-lease components as a single-lease component for purposes of determining the total future lease payments.

In October 2024, the Company exercised its right of early termination for its Torrey Pines operating lease, which consists of 72,000 square feet of office, laboratory, and Good Manufacturing Practice (GMP) space.

In connection with such exercise, the Company paid $ 2.5 million to its landlord.

Termination of the lease, which previously extended through December 31, 2028, will now take effect on October 31, 2025.

The Company accounted for this transaction as a modification to the lease agreement, which reduced the ROU asset and corresponding lease liability balances as of December 31, 2024 in connection with such transaction.

As of December 31, 2024, future undiscounted minimum contractual payments under the Company’s operating leases were $ 133.7 million, which will be paid over a remaining weighted-average lease term of 10.6 years.

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Total lease liability

In April 2023, the Company entered into an agreement to sublease approximately 18,913 square feet of space, which sublease agreement commenced in April 2023 and expires in December 2028 with no option to extend the sublease term.

Under the sublease agreement, rent is subject to scheduled annual increases and the subtenant is responsible for certain operating expenses and taxes throughout the term of the sublease.

Sublease income is recognized in other income.

Sublease income for the years ended December 31, 2023 and 2022 was as follows (in thousands):

Sublease income

As described in Note 1 above, the Company incurre d a $ 1.3 mill ion impairment charge against its right-of-use asset during the year ended Decem ber 31, 2024.

The Company applied a discounted cash flow method to estimate the fair value of the right-of-use asset, which represents Level 3 non-recurring fair value measurements.

The estimated fair value of the was determined by discounting the estimated rental rates using market participant assumptions.

The Company’s estimates and assumptions used to determine the estimated fair value of the asset group is subject to risks, uncertainties, and changes in circumstances that may result in adjustments and material changes to the estimated fair values in future periods.

Convertible Preferred Stock and Stockholders’ Equity

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In November 2016, the Company completed a private placement of stock in which investors, including investors affiliated with the directors and officers of the Company, purchased convertible preferred stock and common stock of the Company (the November 2016 Placement).

The Company issued 2,819,549 shares of Class A Convertible Preferred Stock, $ 0.001 par value per share (the Class A Preferred), at $ 13.30 per share, each of which is convertible into five shares of common stock upon certain conditions defined in the Certificate of Designation of Preferences, Rights and Limitations of the Class A Preferred filed with the Delaware Secretary of State on November 22, 2016 (the CoD).

on November 22, 2016 (the CoD).

The Class A Preferred were purchased exclusively by entities affiliated with Redmile Group, LLC (collectively, Redmile).

The terms of the CoD prohibited Redmile from converting the Class A Preferred into shares of the Company’s common stock if, as a result of conversion, Redmile, together with its affiliates, would own more than 9.99 % of the Company’s common stock then issued and outstanding (the Redmile Percentage Limitation), which percentage could change at Redmile’s election upon 61 days’ notice to the Company to (i) any other number less than or equal to 19.99 % or (ii) subject to approval of the Company’s

stockholders to the extent required in accordance with the NASDAQ Global Market rules, any number in excess of 19.99 %.

On May 2, 2017, the Company’s stockholders approved the issuance of up to an aggregate of 14,097,745 shares of common stock upon the conversion of the outstanding shares of Class A Preferred.

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In April 2023, the Company filed with the office of the Secretary of State of the State of Delaware a Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitations of Class A Convertible Preferred Stock which amends the definition of Beneficial Ownership Limitation to be 14.99 % of the number of shares of the Company ’s common stock outstanding immediately after giving effect to the issuance of shares of common stock pursuant to a Notice of Conversion.

In April 2023, 33,441 shares of the Company’s Class A Preferred were converted into 167,205 shares of the Company’s common stock.

In April 2023, 33,441 shares of Class A Preferred were converted into 167,205 shares of the Company’s common stock.

In December 202 4, 6,022 shares of the Class A Preferred were converted into 30,110 shares of the Company’s common stock.

The Class A Preferred are non-voting shares and are convertible into five shares of the Company’s common stock at a conversion price of $ 2.66 per share, which was the fair value of the Company’s common stock on the date of issuance.

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On June 9, 2022, the Company adopted the 2022 Stock Option and Incentive Plan (the 2022 Plan).

The 2022 Plan authorizes 9.5 million shares of common stock for issuance and allows for the grant of stock options, stock appreciation rights, restricted stock awards, performance-based awards, and other awards to individuals who are then employees, officers, directors or consultants of the Company.

The 2022 Plan initially authorized 9.5 million shares, and in June 2024, stockholders approved an additional 8,000,000 shares, of common stock for issuance and allows for the grant of stock options, stock appreciation rights, restricted stock awards, performance-based awards, and other awards to individuals who are then employees, officers, directors or consultants of the Company.

The shares of common stock underlying any awards from the 2022 Plan and a previously existing equity plan from 2013 or 2007 that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without any issuance of common stock, expire or are otherwise terminated (other than by exercise) are added back to the shares of common stock available for issuance under the 2022 Plan.

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Pre-Funded Warrants

In January 2021, in conjunction with a public offering, the Company issued Pre-Funded Warrants, in lieu of common stock to certain investors, to purchase 257,310 shares of the Company’s common stock.

The purchase price for the 2021 Pre-Funded Warrants was $ 85.499 per pre-funded warrant, which equals the per share public offering price for the shares of common stock less the $ 0.001 exercise price for each such pre-funded warrant.

Given that the 2021 Pre-Funded Warrants are indexed to the Company’s own shares of common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the warrants as additional paid-in capital on the Company’s consolidated balance sheets.

In March 2024, in conjunction with a public offering, the Company issued in a private placement, in lieu of common stock to certain investors, pre-funded warrants to purchase 3,636,364 shares of the Company’s common stock (2024 Pre-Funded Warrants, and collectively with the 2021 Pre-Funded Warrants, the Pre-Funded Warrants).

The purchase price for the 2024 Pre-Funded Warrants was $ 5.499 per pre-funded warrant, which equals the per share public offering price for the shares of common stock issued in the March 2024 public offering, less the $ 0.001 exercise price for each such pre-funded warrant.

Given that the 2024 Pre-Funded Warrants are indexed to the Company’s own shares of common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the warrants as additional paid-in capital on the Company’s unaudited condensed consolidated balance sheets.

The Pre-Funded Warrants are exercisable at any time after the date of issuance.

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A holder of Pre-Funded Warrants may increase or decrease this percentage not in excess of 19.99 % by providing at least 61 days’ prior notice to the Company.

As of December 31, 2023 , there were 257,310 Pre-Funded Warrants outstanding.

As of December 31, 2024, there w ere 3,893,674 Pre-Fu nded Warrants outstanding.

Stock Options and Restricted Stock Unit Awards

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As of December 31, 2024 and 2023, the unrecognized compensation cost related to outstanding options was $ 15.4 million and $ 23.0 million, respectively, which was expected to be recognized as expense over approximately 1.6 years and 1.9 years, respectively.

The total intrinsic value, which is the amount by which the exercise price was exceeded by the price of the Company’s common stock on the date of exercise, of stock options exercised during the years ended December 31, 2023 and 2022, was $ 0.3 million and $ 23.8 million, respectively.

As of December 31, 2024, all outstanding options had an exercise price above the Company's common stock price and therefore no intrinsic value.

Total cash received upon the exercise of stock options was $ 0.1 million for the year ended December 31, 2024.

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During the year ended December 31, 2021, 1,997,377 performance-based restricted stock units (PRSUs) were granted, none of which have vested.

No PRSUs were granted during the years ended December 31, 2023 and 2022.

During the year ended December 31, 2024, the Company granted 300,000 performance-based restricted stock units with a total grant date fair value of approximately $ 1.6 million, none of which have vested.

There were 1,062,607 and 1,020,617 PRSUs outstanding at December 31, 2024 and 2023, respectively.

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Awards available under the Inducement Plan

Employee stock purchase plan

The following is a reconciliation of the Company’s expected federal income tax provision (benefit) to the actual income tax provision (in thousands):

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A valuation allowance of $ 362.1 million and $ 324.0 million at December 31, 2024 and 2023, respectively, has been established to offset the deferred tax assets, as realization of such assets is uncertain.

At December 31, 2023, the Company had federal and California net operating loss (NOL) carryforwards of $ 526.4 million and $ 522.1 million, respectively, which may be available to offset future taxable income.

At December 31, 2024, the Company had federal and state net operating loss (NOL) carryforwards of $ 689.2 million and $ 644.2 million, respectively, which may be available to offset future taxable income.

The federal and California NOL carryforwards begin to expire in 2027 and 2028 , respectively, unless previously utilized.

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Due to the valuation allowance recorded against the Company’s deferred tax assets, no ne of the total unrecognized tax benefits as of December 31, 2024 would reduce the effective tax rate if recognized.

The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense.

The Company has not recognized interest or penalties related to income tax matters in its consolidated statements of operations and comprehensive loss since inception.

Segment Reporting

The Company has one reportable segment relating to its operations.

The segment derives its current revenues from research and development collaborations.

The Company’s Chief Operating Decision Maker (the CODM), its Chief Executive Officer, manages the Company’s operations on an integrated basis for the purposes of allocating resources.

When evaluating the Company’s financial performance, the CODM reviews total revenues, total expenses and expenses by certain categories and makes decisions using this information.

The table below is a summary of the segment profit or loss, including significant segment expenses (in thousands):

Years Ended December 31,

Collaboration revenue

Personnel costs

Clinical programs

Research activities

Facilities costs

Other segment expenses (1)

Total operating expenses

Loss from operations

Other income (expense):

Interest income

Change in fair value of stock price appreciation milestones

Total other income

(1) Other segment expenses include stock compensation expense, depreciation, legal fees, general & administrative expenses, and corporate expenses.

Employee Benefits

3 unchanged sentences

The Company makes discretionary contributions to the 401(k) Plan equal to 100 percent of each employee’s pretax contributions up to 20 percent of the IRS Standard Limit.

The Company ’ s total contributions to the 401(k) Plan were $ 1.9 million and $ 1.3 million for the years ended December 31, 2023 and 2022 , respectively.

The Company ’s total contributions to the 401(k) Plan were $ 0.7 mill ion and $ 1.9 million for the years ended December 31, 2024 and 2023 , respectively.

Commitments and Contingencies

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See Note 2 for additional information on certain licenses.

During the reporting period, the Company pursued claims in two lawsuits that were filed in 2022 against Shoreline Biosciences, Inc.

(Shoreline) and certain of its founders and officers (collectively, the Shoreline litigations).

The first suit, filed on May 13, 2022, was pending in San Diego Superior Court against Shoreline and four of its founders, Drs.

Kaufman (Kaufman), Kleanthis G.

Xanthopoulos, and Messrs.

William Sandborn and Steven Holtzman.

The Company's claims included actions for breach of contract, breach of implied covenant of good faith and fair dealing, fraud and deceit, tortious interference, restitution and unfair competition.

On August 9, 2024, the court denied the defendants’ motions for summary judgment preserving for trial all of the Company’s claims against the defendants, with the exception of defendants’ motions with respect to certain theories under the Company’s tortious interference claim (which claim by Fate was otherwise preserved for trial).

On September 19, 2024, the court denied defendants’ motion for reconsideration of its summary judgment ruling.

Trial began on October 21, 2024, with a jury selected on October 24, 2024.

On October 28, 2024, the parties entered a settlement agreement resolving the litigation on terms agreeable to all parties, pursuant to which the Company filed a request for dismissal with prejudice of all claims on October 31, 2024.

In the second of the Shoreline litigations, also filed on May 13, 2022, the Company and Whitehead Institute for Biomedical Research (Whitehead) filed a lawsuit in the U.S.

District Court for the Southern District of California against Shoreline and Kaufman seeking monetary damages for the defendants’ infringement of U.S.

8,071,369, 8,932,856, 8,951,797, 8,940,536, 9,169,490, 10,457,917, and 10,017,744.

On June 7, 2023, the Company and Whitehead filed a motion to dismiss our patent infringement claims against Kaufman in his personal capacity;

that motion was granted on June 9, 2023.

On August 30, 2023, the court granted Shoreline’s motion for summary judgment and denied the Company’s motion for partial summary judgment as moot.

Judgment in favor of Shoreline was entered on August 31, 2023.

On September 27, 2023, the Company and Whitehead filed a Notice of Appeal with the Court of Appeals for the Federal Circuit challenging the trial court’s claim construction and grant of summary judgment in favor of the defendants;

the defendants cross-appealed challenging the district court’s earlier denial of a motion to dismiss and partial motion for summary judgment on other grounds.

The Federal Circuit docketed the case on October 5, 2023, and briefing was completed on June 26, 2024.

On October 28, 2024, the parties entered a settlement agreement resolving the litigation on terms agreeable to all parties, pursuant to which the parties filed a joint notice of dismissal of the appeal and cross-appeal on October 31, 2024.

On January 20, 2023, a purported stockholder of the Company filed a securities class action lawsuit against the Company and certain of its officers captioned Hadian v.

3 unchanged sentences

On July 24, 2023, the lead plaintiff filed an amended complaint.

The amended complaint alleges that the Company violated the federal securities laws by making allegedly false and/or misleading statements and/or omissions in its public disclosures dating back to August 2020 relating to our collaboration agreement with Janssen Biotech, Inc.

The amended complaint alleged that the Company violated the federal securities laws by making allegedly false and/or misleading statements and/or omissions in its public disclosures dating back to August 2020 relating to the Company’s collaboration agreement with Janssen Biotech, Inc.

(the Janssen Agreement), potential product candidates subject to the Janssen Agreement, and the termination of the Janssen Agreement.

On September 22, 2023, we filed a motion to dismiss the amended complaint in its entirety.

Briefing on our motion to dismiss was completed on December 6, 2023.

The court may, in its discretion, either hold oral argument on the motion to dismiss or issue a ruling on the motion based upon the parties’ briefing.

We intend to continue to vigorously defend against this action.

On September 22, 2023, the Company filed a motion to dismiss the amended complaint.

On September 19, 2024, the court granted the Company’s motion to dismiss the amended complaint, with leave for plaintiff to file a second amended complaint.

On October 18, 2024, the lead plaintiff filed a second amended complaint alleging substantially similar facts and claims as in the prior amended complaint.

The Company filed a motion to dismiss the second amended complaint on November 18, 2024, and briefing on the motion was completed on January 21, 2025.

The Company intends to continue to vigorously defend against this action.

On June 2, 2023, a derivative complaint, captioned Guarino v.

Wolchko, et al., was filed by a purported stockholder of the Company in the U.S.

District Court for the Southern District of California.

The derivative lawsuit names members of our board of directors and certain officers as defendants.

The Company is named as a nominal defendant.

The plaintiff asserts derivative claims arising out of substantially the same alleged facts and circumstances as the Securities Action.

The complaint asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violation of federal securities laws.

On August 14, 2023, the court stayed the derivative lawsuit pending the court’s decision on our motion to dismiss in the Securities Action filed September 22, 2023.

We intend to vigorously defend against this action.

From time to time, the Company may be involved in various other lawsuits, legal proceedings, or claims that arise in the ordinary course of business.

Management believes there are no claims or actions pending against the Company as of December 31, 2023 , which will have, individually or in the aggregate, a material adverse effect on its business, liquidity, financial position, or results of operations.

Litigation, however, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business.

District Court for the Southern District of California (the Guarino Action).

On June 12, 2024, an additional derivative complaint, captioned Horrobin v.

Wolchko, et al., was filed by a purported stockholder of the Company in the same district (the Horrobin Action).

On December 3, 2024, the court entered an order consolidating the Guarino Action and the Horrobin Action under the caption In re Fate Therapeutics, Inc.

Derivative Litigation (the Derivative Action) and staying the Derivative Action pending the court’s decision on our motion to dismiss the second amended complaint in the Securities Action.

The court’s ruling on the motion is pending.

The Derivative Action names members of the Company’s board of directors and certain officers as defendants.

The Company is also named as a nominal defendant.

The plaintiffs in the Derivative Actions assert derivative claims arising out of substantially the same alleged facts and circumstances as the Securities Action.

The Guarino complaint asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violation of federal securities laws.

The Horrobin complaint asserts substantially similar claims in addition to a claim of breach of fiduciary duty for insider trading.

The Company intends to vigorously defend against the Derivative Action.

From time to time, the Company may be subject to various other legal proceedings and claims that arise in the ordinary course of business activities.

Subsequent Events

California Institute for Regenerative Medicine Award

On February 22, 2024, the Company was awarded a $ 7.9 m illion grant from the California Institute for Regenerative Medicine (CIRM) to support the conduct of the Company’s Phase 1 study of FT819 in patients with SLE.

On January 30, 2025, the Company received approval from CIRM for funding of a $ 4.0 million grant to support the conduct of pre-clinical and IND-enabling activities for FT836.

Employment Agreement with Chief Executive Officer

On March 3, 2025, the Company entered into an Employment Agreement (the “Employment Agreement”) with Bahram Valamehr (“Valamehr”).

Pursuant to the Employment Agreement, Dr.

Valamehr will have the customary powers and responsibilities of a chief executive officer of a corporation of the size and type of the Company.

Changes in and Disagreements with Acco untants on Accounting and Financial Disclosure

5 unchanged sentences

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer) of our disclosure controls and procedures as required by Rules 13a-15 and 15d-15 under the Exchange Act, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023, the end of the period covered by this report.

Based on our management’s evaluation (with the participation of the individual who serves as our principal executive officer and principal financial officer) of our disclosure controls and procedures as required by Rules 13a-15 and 15d-15 under the Exchange Act, the individual serving as our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2024, the end of the period covered by this report.

Management’s Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).

Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including the individual serving as our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013 Framework).

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Othe r Information

a) 8-K Events.

On March 3, 2025, the Company entered into an employment agreement with Bahram Valamehr, Ph.D., pursuant to which Dr.

Valamehr serves as the Company’s President and Chief Executive Officer (the “Employment Agreement”).

The Employment Agreement sets forth Dr.

Valamehr’s then-current annual base salary, an option grant and his eligibility to participate in our incentive bonus and benefit plans generally.

Pursuant to the Employment Agreement, Dr.

Valamehr is eligible to receive an annual incentive compensation at a target percentage of 60% his annual base salary, as determined by the Board of Directors or the Compensation Committee from time to time.

Valamehr’s employment is at-will.

In the event that Dr.

Valamehr’s employment is terminated by the Company without “Cause” (other than due to death or disability) or by Dr.

Valamehr for “Good Reason” (as such terms are defined in the Employment Agreement), in each case outside of the “Sale Event Period” (as defined below), subject to his execution of a nonrevocable separation agreement and release, Dr.

Valamehr will be entitled to (i) a lump sum cash payment equal to the sum of (A) twelve (12) months of Dr.

Valamehr’s then-current base salary and (B) his annual target incentive compensation for the year of termination, and (ii) payment of the premiums for Dr.

Valamehr’s and his family’s participation in the Company’s group health care plans, subject to Dr.

Valamehr’s copayment amount, for up to twelve (12) months after such termination.

Pursuant to the Employment Agreement, in the event that Dr.

Valamehr’s employment is terminated by the Company without Cause (other than due to death or disability) or by Dr.

Valamehr for Good Reason, in each case within the period beginning three months prior to and ending eighteen (18) months following a “Sale Event” (as defined in the 2022 Plan) (the “Sale Event Period”), subject to his execution of a nonrevocable separation agreement and release, Dr.

Valamehr is entitled to (i) a lump sum cash payment equal to the sum of (A) eighteen (18) months of Dr.

Valamehr’s then-current base salary (or base salary in effect immediately prior to the Sale Event, if higher) and (B) one and a half (1.5) times his annual target incentive compensation for the year of termination;

(ii) full acceleration of vesting of all outstanding equity awards;

provided, however, that for any equity awards that include a performance-based vesting condition, no acceleration of vesting will be provided unless the applicable performance-based vesting condition has been satisfied as of the date of Dr.

Valamehr’s termination, provided further that, in determining whether achievement of a specified stock price has been satisfied, such price is satisfied to the extent that the consideration payable per share of common stock of the Company upon a Sale Event exceeds such stock price;

and (iii) payment of the premiums for Dr.

Valamehr’s and his family’s participation in the Company’s group health care plans, subject to Dr.

Valamehr’s copayment amount, up to eighteen (18) months after such termination.

The payments and benefits provided to Dr.

Valamehr under the Employment Agreements in connection with a change of control may not be eligible for federal income tax deduction for the Company pursuant to Section 280G of the Code.

These payments and benefits may also be subject to an excise tax under Section 4999 of the Code.

If the payments or benefits payable to Dr.

Valamehr in connection with a change of control would be subject to the excise tax imposed under Section 4999 of the Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to him.

b) Rule 10b5-1 Trading Plans

41 unchanged sentences

April 19, 2023

Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect

June 10, 2024

Specimen Common Stock Certificate

August 29, 2013

Description of Securities

November 8, 2023

Form of Pre-Funded Warrant

January 8, 2021

2007 Equity Incentive Plan and forms of agreements thereunder

August 29, 2013

Form of Pre-Funded Warrant

March 21, 2024

Description of Securities

November 8, 2023

Amended and Restated 2013 Stock Option and Incentive Plan and forms of agreements thereunder

7 unchanged sentences

Amended and Restated Non-Employee Director Compensation Policy

August 8, 2023

Filed herewith

Fate Therapeutics, Inc.

17 unchanged sentences

August 8, 2016

Form of Indemnification Agreement

August 29, 2013

Whitehead Institute for Biomedical Research Exclusive Patent License Agreement between the Registrant and the Whitehead Institute for Biomedical Research, dated as of February 24, 2009

6 unchanged sentences

February 24, 2021

Securities Purchase Agreement, dated August 6, 2016, by and among the Registrant and the Purchasers

August 8, 2016

Registration Rights Agreement, dated August 6, 2016, by and among the Registrant and the Purchasers

August 8, 2016

Securities Purchase Agreement, dated November 21, 2016, by and among the Registrant and the Purchasers

November 22, 2016

Registration Rights Agreement, dated November 21, 2016, by and among the Registrant and the Purchasers

November 22, 2016

Severance and Change in Control Policy

15 unchanged sentences

March 2, 2020

Offer Letter by and between the Registrant and Edward Dulac III, dated May 20, 2020

August 19, 2020

Letter Agreement, dated December 4, 2020, by and between the Registrant and Ono Pharmaceutical Co., Ltd.

12 unchanged sentences

Amendment 03 to Collaboration and Option Agreement, dated November 30, 2023, by and between the Registrant and Ono Pharmaceutical Co.

Filed herewith

Exclusive License Agreement, dated April 17, 2020, by an between the Registrant and Baylor College of Medicine

February 26, 2024

Exclusive License Agreement, dated April 17, 2020, by and between the Registrant and Baylor College of Medicine

February 26, 2024

Securities Purchase Agreement, dated March 19, 2024, between the Registrant and RedCo II Master Fund, L.P.

March 21, 2024

Amended and Restated 2022 Stock Option and Incentive Plan and form agreements thereunder

Amended and Restated Form of Indemnification Agreement

August 30, 2024

Amendment No.4 to Collaboration and Option Agreement by and between the Registrant and Ono Pharmaceutical Co., Ltd, dated August 28, 2024

November 12, 2024

Strategic Advisory Services Agreement between the Registrant and J.

Scott Wolchko, dated as of December 31, 2024

January 6, 2025

Employment Agreement by and between the Registrant and Bahram Valamehr, dated March 3, 2025

Filed herewith

Amended Code of Business Conduct and Ethics

February 26, 2024

Insider Trading Policy

Filed herewith

5 unchanged sentences

Filed herewith

Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15-d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15-d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

Certification of Principal Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14 and 15-d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

Certification of Principal Financial Officer pursuant to 18 U.S.C.

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

1 unchanged sentence

Compensation Recovery Policy

Filed herewith

February 26, 2024

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

8 unchanged sentences

Fate Therapeutics, Inc.

February 26, 2024

Scott Wolchko

President and Chief Executive Officer

(Principal Executive Officer and Authorized Signatory)

February 26, 2024

/s/ Edward J.

Chief Financial Officer

(Principal Financial and Accounting Officer)

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of J.

Scott Wolchko and Edward J.

Dulac III as his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his or her substitute or substitutes may do or cause to be done by virtue hereof.

March 5, 2025

/s/ Bahram Valamehr

Bahram Valamehr, Ph.D., MBA

President, Chief Executive Officer and Director

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Bahram Valamehr as his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his or her substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated:

Scott Wolchko

President and Chief Executive Officer and Director

February 26, 2024

Scott Wolchko

(Principal Executive Officer)

/s/ Edward J.

Chief Financial Officer

February 26, 2024

(Principal Financial and Accounting Officer)

/s/ Bahram Valamehr

President, Chief Executive Officer and Director

March 5, 2025

Bahram Valamehr, Ph.D., MBA

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

/s/ William H.

Chairman of the Board and Director

February 26, 2024

March 5, 2025

Rastetter, Ph.D.

Vice Chairman of the Board and Director

February 26, 2024

March 5, 2025

Mendlein, Ph.D., J.D.

/s/ Shefali Agarwal

February 26, 2024

March 5, 2025

Shefali Agarwal, M.D.

/s/ Timothy P.

February 26, 2024

March 5, 2025

/s/ Robert S.

February 26, 2024

/s/ Robert Hershberg

February 26, 2024

Robert Hershberg, M.D., Ph.D.

March 5, 2025

/s/ Karin Jooss

February 26, 2024

March 5, 2025

Karin Jooss, Ph.D.

/s/ Michael Lee

February 26, 2024

March 5, 2025

/s/ Neelufar Mozaffarian

March 5, 2025

Neelufar Mozaffarian, M.D., Ph.D., FACR

March 5, 2025

Yuan Xu, Ph.D.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis