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Fate Reports In-Line Loss in Q4

Zacks Equity Research

Share price of Fate Therapeutics (FATE) gained 10.3% after the company released fourth quarter earnings but lost 4.0% in the next trading session. Overall, shares gained 6.15% following the fourth quarter results.

Fate Therapeutics reported a loss of 29 cents in the fourth quarter of 2013, in line with the Zacks Consensus Estimate but narrower than the year-ago loss of $3.51 per share.

Fate Therapeutics did not generate any revenues in the fourth quarter of 2013. Revenues in the year-ago quarter came in at $0.6 million.

Quarter in Detail

Research and development expenses were $3.0 million, down from $3.4 million in the year-ago quarter due to the timing of clinical and regulatory related expenses incurred in the year-ago quarter for the commencement of clinical trials of lead candidate Prohema in 2013.

Prohema, the lead candidate at Fate Therapeutics, is a pharmacologically modified hematopoietic stem cell therapeutic derived from umbilical cord blood.

General and administrative expenses came in at $1.9 million compared to $1.3 million in the year-ago quarter.

Annual Results

Revenues in 2013 were $1.0 million compared to $2.7 million in 2012 and in line with the Zacks Consensus Estimate. Net loss per share came in at $3.54 compared to a loss of $13.06 per share in 2012. The Zacks Consensus Estimate was a loss of $2.77 per share.

Pipeline Update

Earlier in the month, Fate enrolled the first patient in its phase II study (PUMA − Prohema in UMbilical cord blood transplant in Adults) on Prohema.

The open-label, randomized, controlled multi-center study will evaluate the efficacy and safety of Prohema, when enhanced with a nutrient-rich media formulation (NRM formulation) in patients undergoing hematopoietic stem cell (HSC) transplantation for the treatment of hematologic malignancies. Data related to the primary efficacy endpoint of the study should be out in mid-2015.

Fate Therapeutics submitted a clinical protocol to U.S. Food and Drug Administration (:FDA) for the evaluation of Prohema in pediatric patients with hematologic malignancies. The company also plans to amend its existing Investigational New Drug (IND) application for Prohema in the second quarter of 2014 to include pediatric patients as well. 

Fate Therapeutics also intends to conduct studies on Prohema for hematopoietic reconstitution in demyelinating lysosomal storage disorders (LSDs) in pediatric patients in the second half of 2014.

We expect investor focus to remain on results from these studies since Fate Therapeutics doesn’t have any approved product in its kitty.

Fate Therapeutics carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biopharma sector include Alexion Pharmaceuticals, Inc. (ALXN), Gilead Sciences Inc. (GILD) and Actelion Ltd (ALIOF). While Alexion and Gilead Sciences carry a Zacks Rank #1 (Strong Buy), Actelion holds a Zacks Rank #2 (Buy).

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