FATE - Fate Therapeutics shares crater ~50% on ending tie-up with Janssen layoffs

Fate Therapeutics ( NASDAQ: FATE ) on Thursday said it had terminated its collaboration and option agreement with Johnson & Johnson's ( JNJ ) Janssen, with all collaboration activities set to be wound down in Q1 2023.

As a result of the termination, FATE said it would prioritize its clinical programs and reduce its operating expenses, including through layoffs and the discontinuation of some clinical programs.

FATE shares slumped about 50% after hours.

FATE in April 2020 had announced a collaboration with Janssen for cell-based cancer immunotherapies, under which FATE received a $50M upfront payment.

Janssen Biotech had presented FATE with a proposal for the continuation of the agreement on revised terms and conditions which FATE declined.

"We are disappointed that we were not able to align with Janssen on their proposal for continuation of our collaboration, where two product candidates targeting high-value, clinically-validated hematology antigens were set to enter clinical development in 2023,” FATE CEO Scott Wolchko said in Thursday's statement .

The company said it would reduce its headcount to about 220 employees in Q1 2023, and would discontinue several of its natural cell killer programs in various cancers.

FATE added that it ended 2022 with about $475M in cash, cash equivalents and receivables, and expects to have sufficient financial resources to fund operations through 2025.

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