It has been about a month since the last earnings report for Fate Therapeutics (FATE). Shares have added about 21.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fate Therapeutics 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 drivers.
FATE’s Loss Wider Than Expected in Q4, Pipeline in Focus
Fate reported a loss of 72 cents per share in the fourth quarter of 2021, wider than the Zacks Consensus Estimate of a loss of 68 cents and the year-ago loss of 38 cents.
Increased research & development (R&D) and general & administrative (G&A) expenses led to the wider year-over-year loss.
The company earned collaboration revenues of $17 million in the fourth quarter, which easily beat the Zacks Consensus Estimate of $13 million and were up from $15.9 million reported in the year-ago quarter. Revenues are primarily derived from Fate’s collaborations with Janssen, a unit of J&J and Ono Pharmaceutical.
R&D expenses surged to $6.5 million from $38.9 million in the year-ago quarter.
G&A expenses jumped to $16.9 million from $10.3 million in the year-ago quarter.
Cash, cash equivalents and investments at the end of the fourth quarter were $716.6 million.
Pipeline Update
The first patients have been treated with a multi-dose, multi-cycle treatment schedule of FT596 in combination with rituximab (FT596+R) for relapsed / refractory (r/r) B-cell lymphoma (BCL) in the dose-escalation stage of the multi-center phase I study. Fate plans to initiate multiple disease-specific, dose-expansion cohorts in the first quarter of 2022.
FT819 is the first-ever T-cell therapy manufactured from a clonal master induced pluripotent stem cell (iPSC) line to undergo clinical investigation.
The phase I study of FT538 as monotherapy and an investigator-initiated study of FT538 in combination with the CD38-targeted monoclonal antibody daratumumab are each currently enrolling patients in the second multi-dose escalation cohort (300 million cells per dose) for r/r acute myeloid leukemia (AML).
Fate has treated the first patients in its multi-center phase I study to assess single-dose and multi-dose treatment regimens of FT576 as monotherapy and in combination with Darzalex for the treatment of r/r multiple myeloma (MM).
It has also treated the first patients in its multi-center phase I study to assess the safety and activity of three once-weekly doses of FT538 in combination with monoclonal antibody therapy for advanced solid tumors.
In December 2021, the FDA cleared an Investigational New Drug (IND) application for FT536, its off-the-shelf, multiplexed-engineered, iPSC-derived NK cell product candidate.
In January 2022, Johnson & Johnson’s Janssen elected to initiate IND-enabling activities for a second iPSC-derived CAR NK cell product candidate incorporating a Janssen proprietary antigen binding domain, triggering the payment of a milestone fee to the company under the collaboration.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -14.67% due to these changes.
VGM Scores
At this time, Fate Therapeutics has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fate Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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