It has been about a month since the last earnings report for Fate Therapeutics (FATE Quick QuoteFATE - Free Report) . Shares have lost about 12.2% 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 drivers.

FATE Reports Wider-Than-Expected Q1 Loss, Beats on Revenues

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

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

The company earned collaboration revenues of $11.1 million in the first quarter, easily beating the Zacks Consensus Estimate of $7 million and up from $2.5 million reported in the year-ago quarter. Revenues are primarily derived from the company’s collaborations with Janssen, a unit of Johnson & Johnson, and Ono Pharmaceutical.

Research & Development expenses surged to $44.8 million from $29.3 million in the year-ago quarter.

General & Administrative expenses jumped to $12.5 million from $7.7 million in the year-ago quarter.

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

Pipeline Update

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

The phase I study of FT538 as a monotherapy (NCT04614636) is enrolling in the first dose cohort (100 million cells per dose).

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

Fate has submitted a protocol amendment to the FDA to assess the administration of multi-dose treatment schedules for FT596. Dose escalation of the single-dose treatment schedule is ongoing with enrollment in the third dose cohort (300 million cells) as monotherapy and in combination with rituximab for the treatment of BCL, and in the first dose cohort (30 million cells) as a monotherapy for the treatment of chronic lymphocytic leukemia (CLL).

The phase II PROTECT study, designed to assess the safety and efficacy of ProTmune, did not meet the primary endpoint of prevention from acute GvHD and hence, Fate is discontinuing the development of the same.


 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -15% due to these changes.

VGM Scores

At this time, Fate Therapeutics has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 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.