Merrimack Pharmaceuticals, Inc. MACK is slated to report third-quarter 2015 results after the market closes on Nov 9.
Merrimack has a mixed track record with the company beating estimates in two of the last four quarters. The company delivered a negative earnings surprise of 89.58% in the trailing four quarters. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Merrimack gained FDA approval in late October for its first product, Onivyde, for use in combination with fluorouracil (5-FU) and leucovorin for the treatment of patients suffering from metastatic adenocarcinoma of the pancreas, who have been previously treated with Eli Lilly and Company’s LLY Gemzar-based therapy.
While third quarter results will not reflect the impact of this approval, we expect investor focus on the third quarter call to remain on details regarding physician and patient interest in and awareness of Onivyde as well as coverage and initial scrip data.
The company is working on expanding Onivyde’s label into other indications as well – currently ongoing studies include those for sarcoma, glioma and metastatic breast cancer. Data from the glioma and sarcoma programs are expected in 2016. The company should also be providing information on its progress with the development of Onivyde for front-line pancreatic cancer and front-line HER2-negative gastric cancer.
An update on the company’s progress on gaining funding for MM-121 so that its development can be expanded into breast cancer, should also be out.
What Our Model Indicates
Our proven model shows that Merrimack 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 likely beat expectations. That is 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 +2.44%. This is because the Most Accurate Estimate is a loss of 40 cents while the Zacks Consensus Estimate is a loss of 41 cents.
Zacks Rank: Merrimack carries a Zacks Rank #3, which when combined with a positive ESP, makes us fairly confident of the company beating estimates this season.
However, we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks that Warrant a Look
Here are a couple of other companies you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter:
The Earnings ESP for Intercept Pharmaceuticals, Inc. ICPT is +1.54% and it carries a Zacks Rank #2. The company is expected to release results on Nov 9.
Alnylam Pharmaceuticals, Inc. ALNY has an Earnings ESP of +2.13% and carries a Zacks Rank #3. The company is slated to release third-quarter results on Nov 9.
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