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Why Fate Therapeutics Stock Is Sliding Today

By Cory Renauer – Aug 20, 2021 at 11:57AM

Key Points

  • Fate Therapeutics posted interim results from ongoing studies with its cancer therapy candidates based on natural killer cells.
  • While the company reported impressive results, its therapy candidates probably aren't going to outperform existing treatments.

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The positive results the company announced after the bell yesterday didn't meet some lofty expectations.

What happened

Shares of Fate Therapeutics (FATE 2.80%), a clinical-stage biotechnology company, are sliding in response to interim data from ongoing clinical trials with two of its new drug candidates. Investors unimpressed with the company's new approach to cancer drug development shaved 17.9% from the stock's price as of 11:41 a.m. EDT on Friday.

So what 

Fate Therapeutics reported interim results from 14 patients treated with FT596, an off-the-shelf immunotherapy made of natural killer cells engineered to target CD19. The company also reported interim results from a study with FT516, another experimental treatment made of NK cells engineered to stop cancer cells from shutting down the immune system when it attacks.

Scientist looking into a microscope.

Image source: Getty Images.

Patients in the smallest dosage cohort didn't respond at all, but data for 14 evaluable patients who received larger doses looks pretty good. Treatment with FT596 shrank tumors for 71% of patients in the second and third dosage cohort.

Results from FT596 were impressive, but they don't look good enough to compete with available CD19-targeting treatments that rely on autologous T-cells. For example, Yescarta from Gilead Sciences (GILD 1.29%) shrank tumors for 72% of patients treated in an already completed trial that enrolled over 100 patients.

Among 11 patients treated with larger dosages of FT516, eight have already achieved an objective response. Unfortunately, only five patients maintained their response for more than a few months without further intervention.

Now what

Five years ago, before the first T-cell-based cancer therapies earned approval to treat difficult lymphoma cases, the results Fate Therapeutics just presented would have pushed the stock through the roof. Its accomplishments so far are too impressive to close the book on this biotech and its unconventional approach to boosting the immune system's ability to attack cancer.  

If you're going to buy or hold this risky biotech stock, make sure you're ready for lots of wild price swings as investors argue about just how much Fate Therapeutics' assets are worth. This company's $6.7 billion market cap at the moment assumes a great deal of success down the road. If response rates for its treatments fall, as is usually the case in cancer trials, this stock could tumble a lot further than it has today.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Gilead Sciences. The Motley Fool has a disclosure policy.

Stocks Mentioned

Fate Therapeutics Stock Quote
Fate Therapeutics
$20.91 (2.80%) $0.57
Gilead Sciences Stock Quote
Gilead Sciences
$89.03 (1.29%) $1.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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