The Rally Likely To Continue For Fate Therapeutics After Positive Clinical Trials Data

[Updated: 6/10/2021] FATE Stock Update

The stock price of Fate Therapeutics (NASDAQ: FATE), a biopharmaceuticals company focused on oncology and immunology treatments based on natural killer T-Cell programs, has seen a 9% rise over the last five trading days, and we believe the stock will likely continue to rally in the near term. The 9% rise can primarily be attributed to the announcement of positive interim data from a phase one study for patients with relapsed or refractory B-cell lymphoma. The data from the trials showed that eight of eleven patients being evaluated for assessment of safety and efficacy of the FT516 treatment achieved an objective response, while six of those patients achieved a complete response. Fate Therapeutics is currently working on multiple programs, including FT500, FT516, FT-ONO2, and FATE-NK100 for the treatment of advanced solid tumors, and the developments around the clinical trials for these treatments has kept its stock buzzing of late.

Looking at the recent rally, the 9% rise for FATE stock over the last five days compares with a 0.7% growth seen in the broader S&P 500 index. Now that FATE stock has seen a rise of 9% in five trading days, can it continue its upward trajectory, or is a decline imminent? Going by historical performance, there is roughly an equal chance of a rise or fall in FATE stock over the next month. Out of 352 instances in the last eight years that Fate Therapeutics stock saw a five-day rise of 9% or more, 178 of them resulted in FATE stock rising over the subsequent one month period (twenty-one trading days). This historical pattern reflects 178 out of 352, or about 49% chance of gain in FATE stock over the coming month. See our analysis on Fate Therapeutics Stock Chances of Rise for more details.

That said, given the current momentum in FATE stock, and the positive data from clinical trials will likely result in continued growth in FATE stock in the near term. In fact, the average price estimate for FATE stock is $112, reflecting a large 40% premium to the current market price of $79.

Five Days: FATE 9.3%, vs. S&P500 0.7%; Outperformed market

(18% likelihood event; 49% probability of rise over next 5 days)

• Fate Therapeutics stock rose 9.3% over a five-day trading period ending 6/8/2021, compared to the broader market (S&P500) rise of 0.7%
• A change of 9.3% or more over five trading days (one week) is a 18% likelihood event, which has occurred 352 times out of 1945 in the last 8 years
• Of these 352 instances, the stock has seen a positive movement over the next five trading days on 174 occasions
• This points to a 49% probability for the stock rising over the next five trading days

Ten Days: FATE 7%, vs. S&P500 0.9%; Outperformed market

(31% likelihood event; 45% probability of rise over next 10 days)

• Fate Therapeutics stock rose 7.0% over the last ten trading days (two weeks), compared to a broader market (S&P500) rise of 0.9%
• A change of 7% or more over ten trading days is a 31% likelihood event, which has occurred 597 times out of 1945 in the last 8 years
• Of these 597 instances, the stock has seen a positive movement over the next ten trading days on 266 occasions
• This points to a 45% probability for the stock rising over the next ten trading days

Twenty-One Days: FATE 3.6%, vs. S&P500 0.01%; Outperformed market

(43% likelihood event; 56% probability of rise over next 21 days)

• Fate Therapeutics stock rose 3.6% the last twenty-one trading days (one month), compared to a broader market (S&P500) rise of 0.01%
• A change of 3.6% or more over twenty-one trading days is a 43% likelihood event, which has occurred 831 times out of 1944 in the last 8 years
• Of these 831 instances, the stock has seen a positive movement over the next twenty-one trading days on 464 occasions
• This points to a 56% probability for the stock rising over the next twenty-one trading days

[Updated: 3/30/2021] Can FATE Stock Rebound?

The stock price of Fate Therapeutics, a biopharmaceuticals company focused on oncology and immunology treatments based on natural killer T-Cell programs, has seen a large 20% drop in just five trading sessions. The decline is driven in part by the broader sell-off in high growth stocks. Separately, Fate Therapeutics’ Chief Scientific Officer – Daniel Shoemaker – will be leaving the company in June this year, and this development has likely hurt the stock. But now that the stock has fallen 20% in just five days, will the FATE stock resume its downward trajectory over the coming weeks, or is a rise in the stock imminent? Using the recent trend (20% fall in a week) and seven years of historical stock data, the Trefis AI engine finds that the stock will likely move 15.1% over the next one month (twenty-one trading days), outperforming the broader indices.

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using historical stock data, returns for FATE stock average around 6% in the next one-month (twenty-one trading days) period after experiencing a 5% fall in a week (five trading days). Notably, though, the stock is likely to beat S&P500 returns by 4% over the next month (twenty-one trading days).

But how would these numbers change if you are interested in holding FATE stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Fate Therapeutics stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF FATE stock moved by -5% over five trading days, THEN over the next twenty-one trading days, FATE stock moves an average of 6%, which implies an excess return of 4% compared to the S&P500.

More importantly, there is 60% probability of a positive return over the next twenty-one trading days and a 53% probability of a positive excess return after a -5% change over five trading days, based on historical data.

Some Fun Scenarios, FAQs & Making Sense of Fate Therapeutics Stock Movements:uestion 1: Is the average return for Fate Therapeutics stock higher after a drop?

Answer: Consider two situations,

Case 1: Fate Therapeutics stock drops by -5% or more in a week

Case 2: Fate Therapeutics stock rises by 5% or more in a week

Is the average return for Fate Therapeutics stock higher over the subsequent month after Case 1 or Case 2?

FATE stock fares better after Case 1, with an average return of 6% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 3.8% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Fate Therapeutics stock is likely to behave after any specific gain or loss over a period.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although FATE stock appears to be an exception to this general observation.

Question 2: Does patience pay?

Answer: If you buy and hold Fate Therapeutics stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong. Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks! It’s pretty powerful to test the trend for yourself for Fate Therapeutics stock by changing the inputs in the charts above.

[Updated: 2/10/2021] Can The FATE Stock Rally Continue?

The stock price of Fate Therapeutics has seen a solid 16% rise over the last five trading days, while it’s up 13% over the last ten trading days, and we believe the rally may continue in the near term. The rise can largely be attributed to increased investor expectations from Fate’s pipeline, which focuses on a class of treatment that is based on Natural Killer cells. While the usual process is to create a different batch for each patient from their own stem cells, Fate is intending for mass production of such treatment. The company is currently working on multiple programs, including FT500, FT516, FT-ONO2, and FATE-NK100 for the treatment of advanced solid tumors. It has seen positive findings from early trials for FT500, something that has kept the stock price buzzing of late.

The 16% rise for FATE stock compares with 4% gains seen in the broader S&P 500 index. Now, is FATE stock poised to gain further? It appears so. While we believe that FATE stock is richly valued, the market potential is huge, especially in multi-billion dollar – oncology treatments. Given the current momentum in the stock, and based on our machine learning analysis of trends in the stock price over the last few years, we believe that there is an 64% chance of a rise in FATE stock over the next month (twenty one trading days). See our analysis on Fate Therapeutics Stock Chances of Rise for more details.

Five Day: FATE 16%, vs. S&P500 4%; Outperformed market

(9% likelihood event)

• Fate Therapeutics stock rose 16% over a 5-day trading period ending 2/8/2021, compared to broader market (S&P500) rise of 4.0%
• A change of 16% or more over 5 trading days is a 9% likelihood event, which has occurred 114 times out of 1256 in the last 5 years

Ten Day: FATE 13%, vs. S&P500 1.8%; Outperformed market

(20% likelihood event)

• Fate Therapeutics stock rose 13% over the last 10 trading days (2 weeks), compared to broader market (S&P500) rise of 1.8%
• A change of 13% or more over 10 trading days is a 20% likelihood event, which has occurred 252 times out of 1240 in the last 5 years

[Updated: 1/20/2021] Is FATE Stock Overbought?

After a stellar 5x rise since the March 23 levels of last year, at the current price of around $114 per share we believe Fate Therapeutics stock (NASDAQ: FATE), a biopharmaceuticals company focused on oncology and immunology treatments based on natural killer T-Cell programs, has reached its near-term potential. FATE stock has rallied from $22 to $114, significantly outperforming the S&P which moved 70% over the same period, with the resumption of economic activities as lockdowns are gradually lifted and vaccines are being approved in multiple countries. The outperformance of FATE can be attributed to positive findings from early clinical trials of FT500 and FT516 treatments. FATE stock is also up a massive 18x from levels of $6 seen in early 2018, three years ago.

Most of the 18x rise of the last 3 years can be attributed to expansion of its P/S multiple, as the company does not have any marketable product yet. Fate’s revenue did grow a solid 160% from $4.1 million in 2017 to $10.7 million in 2019. However, the company saw a 62% growth in total shares outstanding due to share issuances, resulting in only a 61% growth in revenue per share to $0.16 in 2019, compared to $0.10 in 2017. We believe the stock has rallied meaningfully and it is likely to see downside after the recent uptick. Our dashboard, ‘What Factors Drove 1771% Change in Fate Therapeutics Stock between 2017 end and now?, has the underlying numbers.

So what’s the likely trigger and timing for downside?

Fate has been focused on the oncology and immunology pipeline for multiple cancer types including myeloid leukemia, B-cell lymphoma, and multiple myeloma among others. Given that the company does not have any marketable products currently, it generates revenues primarily from collaboration with other pharmaceutical companies. The revenues are expected to see a sharp jump of over 90% to $20.4 million in 2020, due to collaboration agreements with Janssen and Ono.

Fate is working toward a class of treatment that is based on NK cells. While the usual process is to create a different batch for each patient from their own stem cells, Fate is intending for mass production of such treatment. The company is currently working on multiple programs, including FT516 for the treatment of acute myeloid leukemia and B-cell lymphoma, FT596 to treat B-cell lymphoma, FT538 to treat AML and multiple myeloma, FT576 to treat multiple myeloma, FT500, FT516, FT-ONO2, and FATE-NK100 for the treatment of advanced solid tumors. It has seen positive findings from early trials for FT500, preventing disease progression for 11 out of 15 patients, something that has kept the stock price buzzing of late. It does make sense given oncology is a high value market and a single drug approval in this space would mean a significant growth in the company’s sales from the $20 million currently. That said, the treatment is still in the very early stages of clinical trials, implying there is still some time before the drug can even move to late stage trials, let alone file for approval subject to a positive outcome of the upcoming studies. And the recent stock price growth means that some of the positives are already priced in at the current price of $114.

Going by the consensus revenue estimate of $20.4 million in 2020, FATE stock is trading at 456x its RPS of $0.25, which appears to be very high. However, looking at the P/S for Fate is not helpful given the company doesn’t have any marketable product yet, and it is more of a story of exciting products in the pipeline. Now that the stock has seen a strong run up over the recent months, and given that the company is far away from any significant revenue growth, we believe that it is vulnerable to downside risk. However, any positive outcome on the trials related to the company’s solid tumor treatment candidates will likely result in stock price growth.

While FATE stock may be overvalued, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Pfizer vs Merck.See all Trefis Featured Analyses and Download Trefis Data here

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