Fate Therapeutics (FATE) looks headed for a turnaround post-COVID

Fate Therapeutics, Inc. (NASDAQ: FATE), a clinical-stage biopharma company, has been drawing the market’s attention after reporting positive results from advanced-stage clinical trials on its leukemia and tumor treatments. The positive trend is catalyzed by the improvement in the coronavirus situation and vaccine rollout.

Stock Peaks

Earlier this month, the company’s stock surged to a record high. Currently, it is one of the fastest-growing Wall Street stocks, with the value more than doubling in the past three months alone. The stock offers a buying opportunity that investors wouldn’t want to miss, though it looks poised to lose a part of the recent gains in the near term. Market watchers are almost unanimous in their bullish view on Fate, underscoring the company’s positive long-term prospects.

For the company, which does not have any marketable product yet, the recent achievements in drug development mean a lot. Revenues, which mostly come from partnerships with other pharmaceutical companies, have grown consistently in recent years. More tie-ups are on cards, with the likes of Janssen, adding to the prospects of the topline hitting the high-growth path this year.

Positive Results

The La Jolla, California-based company, which is focused on oncology and immunology treatments based on natural killer T-Cell programs, last month reported positive results from the phase-III clinical trial on its acute myeloid leukemia drug candidate FT516 and phase-I study on FT500, a treatment for advanced solid tumors. The announcement was well-received by the market and triggered a buying spree.

“I do expect us in the coming months to have a conversation with the FDA, including presenting the data that we have on FT500 and FT516, to try and transition and move to a multi-dose treatment paradigm, much like we have with all our other products, including FT538 and even FT819… Under the amended protocol, we have also extended the clinical footprint of the FT596 Phase one clinical trial to include relapsed refractory chronic lymphocytic leukemia, and have now initiate enrollment of FT596 as monotherapy at the first dose level of 30 million cells,” said Fate’s CEO Scott Wolchko while talking to analysts at the post-earnings conference call.

Elusive Profit

Meanwhile, Fate continued its losing streak in the September-quarter as higher research & development expenses dragged down margins. Third-quarter net loss widened to $0.68 per share from $0.40 per share last year, despite revenues almost tripling to $7.6 million. But the numbers fell short of the market’s expectations. The highlight of the quarter was the solid advancements in various clinical trials. Also, the company closed a public offering as part of its fundraising program to meet the growth goals.

The company has joined the race to develop an effective treatment for advanced-stage COVID-19 infection by initiating a clinical trial on its FT516 drug candidate, which is also being investigated for the treatment of B-cell Lymphoma in combination with Rituximab.

Read management/analysts’ comments on quarterly reports

Currently trading slightly below the $100-mark, shares of Fate Therapeutics pulled back from their peak earlier this month. It had an upbeat start to the year and continued to outperform the market. On Tuesday, the shares traded slightly above the levels seen at the beginning of the year.