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Why Is Fate Therapeutics (FATE) Down 14.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Fate Therapeutics (FATE - Free Report) . Shares have lost about 14.1% 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 the most recent earnings report in order to get a better handle on the important drivers.

FATE's Loss Narrower Than Expected in Q1, Pipeline in Focus

FATE reported a loss of 68 cents per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of 78 cents but wider than the year-ago loss of 49 cents.

Increased research & development (R&D) and general & administrative (G&A) expenses led to a wider year-over-year loss.

The company earned collaboration revenues of $18.4 million in the first quarter, which easily surpassed the Zacks Consensus Estimate of $10 million and were up from $11.1 million reported in the year-ago quarter. Revenues are primarily derived from Fate’s collaborations with Janssen, a unit of Johnson & Johnson and Ono Pharmaceutical.

R&D expenses surged to $72.1 million from $44.8 million in the year-ago quarter.

G&A expenses jumped to $20.7 million from $12.5 million in the year-ago quarter.

Cash, cash equivalents and investments at the end of the first quarter were $6417.7 million.

Pipeline Updates

Enrollment is ongoing in the company’s multi-center phase I study of FT596 in combination with rituximab (FT596+R) for relapsed / refractory (r/r) B-cell lymphoma (BCL) in the following cohorts to further assess dose and treatment schedule: multi-dose at 900 million cells per dose with FT596 being administered on day 1 and day 15; single-dose at 1.8 billion cells; and single-dose at 900 million cells.

In December, Fate announced that the FDA granted Regenerative Medicine Advanced Therapy (RMAT) designation to FT516 to treat r/r diffuse large B-cell lymphoma (DLBCL). Fate plans to hold a multi-disciplinary meeting with the FDA in mid-2022 to discuss key CMC topics and pivotal study design in patients who have progressed or relapsed following prior treatment with FDA approved CD19 directed chimeric antigen receptor (CAR) T-cell therapy.

The multi-center phase I study of FT516 in combination with rituximab (FT516+R) for r/r BCL is currently enrolling patients in multiple disease-specific multi-dose, multi-cycle expansion cohorts at 900 million cells per dose, including patients with r/r aggressive lymphomas who have previously been treated with CD19-targeted CAR T-cell therapy.

A phase I study to assess three once-weekly doses of FT538 as monotherapy is currently enrolling patients in the third multi-dose escalation cohort (1 billion cells per dose) for r/r acute myeloid leukemia (AML).

In April 2022, Janssen nominated a third iPSC-derived, CAR-targeted cell product candidate incorporating a Janssen proprietary antigen binding domain, triggering a milestone fee payment to the company.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Fate Therapeutics 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 fifth 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.

Performance of an Industry Player

Fate Therapeutics is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Qiagen (QGEN - Free Report) , a stock from the same industry, has gained 0.5%. The company reported its results for the quarter ended March 2022 more than a month ago.

Qiagen reported revenues of $628.39 million in the last reported quarter, representing a year-over-year change of +10.8%. EPS of $0.80 for the same period compares with $0.66 a year ago.

Qiagen is expected to post earnings of $0.45 per share for the current quarter, representing a year-over-year change of -32.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.7%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Qiagen. Also, the stock has a VGM Score of B.


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