Why is Fate Therapeutics (FATE) down 12.2% since its last earnings report?

It’s been about a month since Fate Therapeutics’ (FATE) last earnings report. The stock lost about 12.2% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Fate Therapeutics poised for a breakout? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

FATE reports larger-than-expected first-quarter loss, beating revenue

Fate reported a loss of 48 cents per share in the first quarter of 2021, wider than the year-earlier loss of 44 cents and the Zacks Consensus Estimate of a loss of 42 cents.

Increased R&D and general and administrative expenses led to a larger loss.

In the first quarter, the company posted collaborative revenues of $11.1 million, easily surpassing the Zacks Consensus Estimate of $7 million, up from the $2.5 million reported in the year-ago quarter. Revenue comes primarily from the company’s partnerships with Janssen, a unit of Johnson & Johnson, and Ono Pharmaceutical.

Research and development expenses increased to $44.8 million from $29.3 million in the same quarter last year.

General and administrative expenses increased to $12.5 million from $7.7 million in the year-ago quarter.

The value of cash, cash equivalents and investments at the end of the first quarter amounted to USD 888.4 million. This amount includes net proceeds from the January 2021 underwritten public offering of approximately $432 million.

Pipeline update

The Phase I FT516 monotherapy study (NCT04023071) has completed enrollment in the first and second dose cohorts (90 million and 300 million cells per dose, respectively), and dose escalation is underway with enrollment in the third dose cohort (900 million cells) per dose. dose).

The Phase I study of FT538 monotherapy (NCT04614636) is enrolling a first-dose cohort (100 million cells per dose).

Dose escalation is ongoing with enrollment of the fourth dose cohort (900 million cells per dose) in a Phase I study to evaluate safety and determine maximum dose of FT516 in combination with CD20-targeted monoclonal antibody therapies for relapsed/refractory disease Cellular lymphoma B (BCL) (NCT04023071).

Fate has submitted a protocol amendment to the FDA to evaluate the administration of multidose FT596 treatment regimens. Dose escalation of the single-dose regimen is ongoing with the inclusion of a third dose (300 million cells) monotherapy cohort and in combination with rituximab for BCL and a first dose (30 million cells) monotherapy cohort for chronic lymphocytic leukemia (CLL).

The Phase II PROTECT trial, designed to evaluate the safety and efficacy of ProTmune, did not meet its primary endpoint of preventing acute GvHD, and Fate is discontinuing the trial.

How have estimates changed since then?

It turns out that the estimate review has been trending downward over the past month. Due to these changes, the consensus estimate moved by -15%.

VGM results

Fate Therapeutics currently has a Weak Growth Rating of F, but its Momentum Score is performing much better at C. Plotting a somewhat similar path, the stock is rated D on the value side, placing it in the bottom 40% for this investment strategy.

Overall, the company’s overall VGM score is F. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Fate Therapeutics carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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