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Why Is Global Blood (GBT) Up 68.2% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Global Blood Therapeutics (GBT). Shares have added about 68.2% in that time frame, outperforming the S&P 500.

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

Global Blood's Q3 Loss Widens, Voxelotor in Focus

Global Blood incurred a loss of $1.07 per share in the third quarter of 2019, which was wider than a loss of 83 cents in the year-ago quarter and the Zacks Consensus Estimate of a loss of $1.03.

The company did not record any revenues during the quarter.

Research and development (R&D) expenses in the third quarter were $39.1 million, up 18.5% year over year. The increase can be mainly attributable to higher employee-related costs and elevated costs associated with NDA submission activities. 

General and administrative (G&A) expenses were $29.7 million, up 137.6% year over year. The increase was due to higher employee-related costs and elevated expenses associated with the buildout of the company’s commercial operations.

Pipeline Update

The company’s lead product candidate is voxelotor (GBT440), an oral, once-daily treatment for sickle cell disease (SCD).

In September, the FDA accepted Global Blood’s new drug application (NDA) seeking accelerated approval for voxelotor in SCD. The agency granted the NDA priority review and set an action date of Feb 26, 2020. The company intends to launch the drug by the first half of 2020. If the drug is approved, it could bring millions of dollars for the company annually.

The company is on track to initiate a post-approval confirmatory study on voxelotor. The study aims to achieve the primary endpoint of transcranial Doppler flow velocity before the end of 2019.

The company has another pipeline candidate, inclacumab, a novel fully human monoclonal antibody against P-selectin, in its portfolio. The drug is being developed as a treatment for vaso-occlusive crises (“VOC”) in patients with SCD.

Global Blood has an exclusive worldwide license agreement with drug giant, Roche Holding AG, for the development and commercialization of inclacumab.

Outlook

The company expects net loss to significantly increase in the fourth quarter of 2019 on higher expenses related to the continued buildout of commercial infrastructure, as it prepares for the potential commercial launch of voxelotor, the expansion of its manufacturing efforts for the same, the commencement of additional clinical studies on the drug in SCD and the advancement of its pipeline programs, including the inclacumab program.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -9.93% due to these changes.

VGM Scores

At this time, Global Blood has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

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

Outlook

Global Blood has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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