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Fate Therapeutics (FATE) Down 9% Since Last Earnings Report: Can It Rebound?

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Zacks Equity Research
·4 min read
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It has been about a month since the last earnings report for Fate Therapeutics (FATE). Shares have lost about 9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Fate Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

FATE Reports Wider-Than-Expected Q4 Loss on Higher Expenses

Fate reported a loss of 61 cents per share in the fourth quarter of 2020, wider than the year-ago loss of 37 cents and the Zacks Consensus Estimate of a loss of 38 cents.

Increased Research & Development and General & Administrative expenses led to the wider loss.

The company earned collaboration revenues of $15.9 million in the fourth quarter, easily beating the Zacks Consensus Estimate of $5 million and $2.8 million reported in the year-ago quarter. Revenues are primarily derived from the company’s collaborations with Janssen and Ono Pharmaceutical.

Research & Development expenses surged to $38.9 million from $25.2 million in the year-ago quarter.

General & Administrative expenses jumped to $10.3 million from $6.7 million in the year-ago quarter.

Full-Year 2020 Results

Revenues increased to $31.4 million from $10.7 million in the prior year and surpassed the Zacks Consensus Estimate of $20.9 million.

Loss per share widened to $2.10 from $1.44 in 2019 and came in wider than the Zacks Consensus Estimate of $1.88 per share.

Pipeline Update

Fate is developing iPSC-derived CAR NK and CAR T-cell product candidates for the treatment of cancer.

In December 2020, the company reported positive interim data from its phase I study of FT516 in combination with rituximab for patients with relapsed / refractory B-cell lymphoma (BCL) who have previously failed or progressed on CD20-targeted monoclonal antibody therapy. As of the Nov 16 cut-off date, three patients in the second dose cohort (90 million cells per dose) and one patient in the third dose cohort (300 million cells per dose) had each received two FT516 treatment cycles, each cycle consisting of three days of outpatient lympho-conditioning, one dose of rituximab and three once-weekly infusions of FT516 with IL-2 cytokine support. Three of four relapsed/refractory patients achieved an objective response, including two complete responses, following the second FT516 treatment cycle. The two-cycle treatment regimen was well tolerated, supporting the potential to safely administer up to six doses of FT516 in the outpatient setting.

The phase I dose-escalation study is designed to assess the safety and determine the maximum dose of FT516 as a monotherapy for the treatment of relapsed / refractory acute myeloid leukemia (AML) and in combination with CD20-targeted monoclonal antibody therapy for the treatment of relapsed / refractory BCL (NCT04023071). Dose escalation is ongoing at 900 million cells per dose in both disease regimens.

In December 2020, the FDA allowed a second Investigational New Drug (IND) application for the evaluation of three once-weekly doses of FT538 in combination with daratumumab for the treatment of relapsed / refractory AML.

The agency has also allowed the company’s IND application for evaluation of FT576 in patients with relapsed / refractory multiple myeloma who have failed at least two lines of therapy.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Fate Therapeutics has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Fate Therapeutics has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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