ARIAD Pharmaceuticals, Inc. ARIA is set to report first-quarter 2015 results on May 7, before market open. ARIAD’s performance has been encouraging in 2014 with the company reporting a narrower-than-expected loss in three of the last four trailing quarters with an average beat of 22.38%.
Last quarter, ARIAD had posted a positive earnings surprise of 75%. Let’s see how things are shaping up for the first quarter of 2015.
Iclusig in Focus
The key highlight of the quarter was the European Commission endorsing the Committee for Medicinal Products for Human Use’s recommendation regarding the use of Iclusig for all approved indications in the EU in Jan 2015. The decision has removed an overhang on the benefit-risk aspect of the drug’s usage in the EU.
Iclusig, the company’s sole marketed product, should continue to perform well in the first quarter of 2015 as reimbursement in additional EU countries pick up. Iclusig recorded a 60% and 10% sequential increase in sales in the U.S. and EU, respectively, in the fourth quarter of 2014. Lower dose of Iclusig should drive sales further.
On the fourth quarter call, ARIAD informed that Iclusig had already penetrated around 50% of the market on a weekly basis. At the end of the fourth quarter, the company reported 660 prescribers of Iclusig, up 25% from the preceding quarter.
Meanwhile, given that patient demographics are skewed toward later lines of treatment, ARIAD is working on focusing its promotional efforts on third-line chronic-phase patients. The company is looking to exit 2015 as the market leader in third-line, chronic-phase CML treatment both in the U.S. and EU. ARIAD is also working on studying Iclusig in earlier lines of therapy and intends to initiate three studies in 2015.
On the first quarter call, investors will be keen to know about Iclusig’s performance as ARIAD continues to rebuild patient and physician confidence in the drug. Investor focus will also be on the company’s strategic plans targeting sustained profitability, starting 2018.
Earnings Whispers?
Our proven model does not conclusively show that ARIAD is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat earnings. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% since the Most Accurate estimate is in line with the Zacks Consensus Estimate of a loss of 27 cents.
Zacks Rank: ARIAD carries a Zacks Rank #3. ARIAD’s Zacks Rank #3 when combined with an ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat.
Genocea Biosciences, Inc. GNCA has an earnings ESP of +22.81% and carries a Zacks Rank #3. The company is scheduled to release first-quarter 2015 results on May 7.
The Earnings ESP for Actavis ACT is +0.78% and it carries a Zacks Rank #2. The company is scheduled to release results on May 11.
Impax Laboratories Inc. IPXL has an Earnings ESP of +15.00% and carries a Zacks Rank #3. The company is scheduled to release first-quarter 2015 results on May 11.
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