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FATE Incurs Narrower-Than-Expected Q1 Loss on Lower Expenses

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Fate Therapeutics (FATE - Free Report) reported a loss of 19 cents per share in the first quarter of 2023, narrower than the Zacks Consensus Estimate of a loss of 55 cents and the year-ago loss of 68 cents.

The loss narrowed year-over-year due to higher revenues and lower expenses owing to corporate restructuring.

The company earned collaboration revenues of $59 million in the first quarter, which easily surpassed the Zacks Consensus Estimate of $42 million and were up from $18.4 million reported in the year-ago quarter. Out of the total revenues, $52.3 million was associated with the termination of its collaboration with Janssen, a unit of Johnson & Johnson (JNJ - Free Report) and $6.7 million was derived from its ongoing collaboration with ONO Pharmaceutical.

Under the company’s collaboration with ONO, a one-time amount of $6.2 million was recorded as revenues for the first quarter of 2023, associated with IND-enabling activities for FT825/ONO-8250, for which ONO exercised its development and commercialization option in November 2022.

R&D expenses decreased to $65.6 million from $72.1 million in the year-ago quarter. G&A expenses increased 5.8% to $21.9.

Cash, cash equivalents and investments at the end of the first quarter were $42 million.

Shares of Fate have plunged 37.4% in the year so far compared with the industry’s fall of 6.5%.

Zacks Investment Research
Image Source: Zacks Investment Research

Pipeline Update

FATE is focused on the development and manufacture of universal, off-the-shelf cell products using its proprietary induced pluripotent stem cell (iPSC) product platform. Its immuno-oncology pipeline includes off-the-shelf, iPSC-derived natural killer (NK) cells and T-cell product candidates. These candidates are designed to synergize with well-established cancer therapies, including immune checkpoint inhibitors and monoclonal antibodies and to target tumor-associated antigens using chimeric antigen receptors (CARs).

Fate is currently enrolling two-dose treatment cohorts as monotherapy and in combination with CD38-targeted mAb therapy at 300 million cells per dose in its phase I study of F576. Upon clearance of the current treatment cohorts, the company plans to open and assess three-dose treatment cohorts starting at 1 billion cells per dose.

Fate recently submitted an investigational new drug (IND) application to the FDA to investigate the safety and activity of FT522 in combination with CD20-targeted mAb therapy in patients with B-cell lymphoma.

A phase I study of FT819, a T-cell product candidate manufactured from a clonal master iPSC line, is currently enrolling patients in single-dose escalation cohorts at 540 million cells in B-cell lymphoma and at 180 million cells in chronic lymphocytic leukemia.

Under its collaboration with ONO Pharmaceutical, Fate is co-developing FT825/ONO-8250, a multiplexed-engineered, iPSC-derived CAR T-cell product candidate targeting human epidermal growth factor receptor 2 (HER2)-expressing solid tumors. IND-enabling activities for FT825/ONO-8250 are underway and both companies expect to submit an IND application to the FDA in 2023 to commence a phase I study for the treatment of patients with HER2-positive solid tumors.

Fate Therapeutics, Inc. Price, Consensus and EPS Surprise

Fate Therapeutics, Inc. Price, Consensus and EPS Surprise

Fate Therapeutics, Inc. price-consensus-eps-surprise-chart | Fate Therapeutics, Inc. Quote

Key Updates

In January 2023, Fate announced the termination of its agreement with Janssen. Both companies signed an agreement in April 2020 to collaborate on the development of iPSC-derived CAR NK- and CAR T-cell product candidates for the treatment of cancer.

In connection with the termination of its collaboration with JNJ’s Janssen Biotech, Fate discontinued all collaboration activities, including withdrawing an IND application, which was previously allowed by the FDA for a first collaboration product for the treatment of B-cell lymphoma.  Moreover, following a strategic review of its wholly-owned iPSC-derived NK cell and T-cell programs, Fate has also decided to discontinue FT516, FT596, FT538 and FT536 NK cell product candidates. As part of its corporate restructuring, the company reduced its workforce to approximately 220 employees.

Fate currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the sector include Spero Therapeutics (SPRO - Free Report) and Ligand Pharmaceuticals (LGND - Free Report) .  While Spero sports a Zacks Rank #1 (Strong Buy), LGND carries the same rank as FATE. You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, loss estimates for SPRO have narrowed to $1.02 from $1.45 for 2023. SPRO topped earnings estimates in three of the last four quarters and missed in the remaining one, the average surprise being 56.37%.

Over the past 60 days, earnings estimates for LGND for 2023 have increased by 55 cents to $4.16. LGND topped earnings estimates in just one of the last four quarters and missed in the remaining three.



 

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