Form 4: Redmile Group Executes Cross Trades in Fate Therapeutics Stock, Maintains Significant Ownership

Redmile Group, a significant shareholder in Fate Therapeutics, engaged in cross trades of common and preferred stock, maintaining its substantial beneficial ownership while also closing out a portion of cash-settled swap agreements.

Summary

• Redmile Group, LLC, and its principal Jeremy Green, executed cross trades involving Fate Therapeutics common stock and Class A Convertible Preferred Stock on December 20, 2024.
• These cross trades involved private investment vehicles managed by Redmile and other Redmile Funds, with the price per share of common stock at $1.68.
• The transactions resulted in no profit for Redmile or Jeremy Green and did not change their aggregate beneficial ownership.
• Redmile also purchased and sold shares of common stock concurrently with the cross trades at the same price of $1.68.
• Additionally, Redmile closed out a portion of cash-settled swap agreements, with a reference price of $3.02, involving the economic equivalent of 56,331 shares of common stock.
• The Class A Preferred Stock is convertible into common stock at a ratio based on a stated value of $13.30 and a conversion price of $2.66.
• Redmile's beneficial ownership includes 12,884,277 shares of common stock and 2,755,086 shares of Class A Convertible Preferred Stock, which are held indirectly through the Redmile Funds.

Sentiment

Score: 6

Explanation: The document reflects routine transactions by a major shareholder, with no significant positive or negative implications. The sentiment is neutral to slightly positive due to the continued investment by Redmile.

Positives

• Redmile Group maintains a significant ownership stake in Fate Therapeutics.
• The cross trades were executed at a consistent price, indicating a structured approach to managing their holdings.
• The transactions did not result in any profit for Redmile or Jeremy Green, suggesting a focus on portfolio management rather than short-term gains.

Negatives

• The document does not explicitly state any negative impacts, but the closing out of swap agreements could indicate a change in Redmile's hedging strategy or market outlook.

Risks

• The document does not explicitly mention any risks, but the complex nature of the transactions and the use of swap agreements could introduce potential risks related to market fluctuations and counterparty risk.
• The conversion of Class A Preferred Stock is subject to a 14.99% ownership limit, which could impact Redmile's ability to convert all of its preferred shares to common stock.

Management Comments

• Mr. Michael Lee, a member of the board of directors of the Issuer and a managing director of Redmile, was elected to the board of the Issuer as a representative of Redmile and its affiliates.
• The Reporting Persons disclaim beneficial ownership of the reported securities except to the extent of their pecuniary interest therein, if any.

Industry Context

This filing reflects the ongoing investment activity of a major institutional investor in a biotechnology company, which is common in the sector. The use of cross trades and swap agreements is a sophisticated strategy often employed by large funds to manage their positions.

Comparison to Industry Standards

• Cross trades and swap agreements are common practices among institutional investors in the biotech sector, similar to strategies used by firms like Baker Bros. Advisors and OrbiMed Advisors.
• The level of detail provided in the SEC Form 4 is standard for reporting changes in beneficial ownership, consistent with filings from other major shareholders in publicly traded companies.
• The 14.99% ownership limit on preferred stock conversion is a common provision to prevent hostile takeovers, similar to clauses found in other biotech companies' financing agreements.

Management Changes

Stakeholder Impact

• The transactions have a neutral impact on shareholders as they do not change Redmile's overall ownership position.
• The continued investment by Redmile may provide some reassurance to other investors.

Key Dates

Keywords

Redmile Group, Fate Therapeutics, cross trades, common stock, preferred stock, beneficial ownership, swap agreements, Jeremy Green, investment, SEC Form 4