Fate's first clinical trial focuses on a molecule known as FT1050. The molecule appears to stimulate proliferation of hematopoietic stem cells--which give rise to blood and immune cells--and helps guide them to the bone marrow. If successful, the drug could become an invaluable companion treatment to bone-marrow transplants and cord-blood transfusions used to treat cancer and blood diseases.

Treatment for leukemia or lymphoma, for example, kills off most of a patient's hematopoietic stem cells, and the best way to repopulate them is through bone marrow transplanted from a matched donor. When a bone-marrow donor match is unavailable, oncologists turn to umbilical-cord blood, which is rich in stem cells and requires only a partial tissue-type match. However, cord blood is also incredibly expensive, costing upwards of $30,000 or more per unit, and blood from a single cord is often insufficient to treat an adult.

"It becomes very difficult to find a unit large enough to sufficiently large enough for a full-grown adult," says Dennis Confer, chief medical officer of the National Marrow Donor Program. Physicians can sometimes use blood from two cords, but this is even more expensive and requires that both cord samples match the donor. "If someone could come up with an expansion strategy that was more cost-effective, that could gain wide acceptance," he says.

In an early-stage clinical trial, Fate Therapeutics is testing FT1050 in 12 patients who've undergone chemotherapy for lymphoma. The patients will each receive two units of cord blood: one that's been treated with the stem-cell-modulating drug, and another that's been left alone. The trial is primarily a safety study, but because the two units were harvested from two different newborns, researchers can use the genetic differences to track the cells and determine if FT1050-treated stem cells can more efficiently take hold and prosper in bone marrow.

Fate believes that multiple conditions can be treated this way, using small molecules to control adult stem-cell activity. The company is even pursuing the same strategy for cancer treatments, with the hope that they can disrupt the uncontrolled growth of cancer cells by forcing them into a more differentiated, less malignant state.