Why Is Global Blood (GBT) Down 15% Since Last Earnings Report?

A month has gone by since the last earnings report for Global Blood Therapeutics (GBT). Shares have lost about 15% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Global Blood due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Global Blood Q4 Earnings Miss, Voxelotor Gets FDA Nod

Global Blood incurred a loss of $1.73 per share in fourth-quarter 2019, which was wider than a loss of 93 cents in the year-ago quarter and the Zacks Consensus Estimate of a loss of $1.22. The loss excludes a gain on lease modification of $8.3 million.

The company’s sales of $2.1 million, driven by initial sales of Oxbryta, beat the Zacks Consensus Estimate of $1 million. The company did not generate product sales in the fourth quarter of 2018.

Research and development expenses in the fourth quarter were $65 million, up 76.6% year over year. The increase can be mainly attributable to higher employee-related and elevated costs associated with the company’s sickle cell disease (SCD) program for Oxbryta, increased expenses related to preclinical research and manufacturing activities for inclacumab, and a $20 million upfront payment incurred in December 2019 related to its Syros collaboration agreement.

Selling, general and administrative expenses were $44.6 million, up 191.5% year over year. The increase was due to higher employee-related costs including non-cash stock compensation expense, and increased professional and consulting services associated with the build-out of the company's commercial operations and launch of Oxbryta.

2019 Results

Loss came in at $4.71 per share wider than the loss of $3.41 in 2018.

The company’s sales were $2.1 million. The company did not report any revenues in 2018.

Pipeline Update

In November 2020, it received FDA approval of Oxbryta for the treatment of SCD in adults, and children 12 years of age and older. The accelerated approval came three months before the action date of Feb 26, 2020. Oxbryta is the first treatment that specifically targets the root cause of SCD. Oxbryta was available to patients and physicians through GBT’s specialty pharmacy partner network within days after approval.

It initiated the HOPE-KIDS 2 study, a post-approval confirmatory study using transcranial Doppler flow velocity to assess the ability of Oxbryta to decrease the risk of stroke in children 2 to 15 years of age.

The company also initiated a dose-optimization study designed to explore the potential safety and tolerability of Oxbryta at doses higher than 1500 mg.

It has another pipeline candidate, inclacumab, a novel fully human monoclonal antibody against P-selectin, in its portfolio. The drug is being developed as a treatment for vaso-occlusive crises in patients with SCD.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -26.06% due to these changes.

VGM Scores

At this time, Global Blood 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 lowest 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, Global Blood has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.