Agios Pharmaceuticals, Inc. AGIO is slated to report second-quarter 2018 results on Aug 2 before the market opens.
The company’s earnings history has been dismal so far, having missed expectations on three occasions and surpassing on one with an average miss of 5.02%. Last reported quarter, the company came up with a negative surprise of 1.87%.
Shares of Agios have soared 52.5% in a year’s time, comparing favorably with the industry’s increase of 10.6%.
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Let’s see, how things are shaping up for this quarter to be reported.
Factors at Play
Agios does not generate any product revenues. It records only collaboration and royalty revenues from partners. Agios receives royalties on net sales of Idhifa (enasidenib) from collaboration partner Celgene CELG. Idhifa was launched for treating AML patients with IDH-2 mutation last August. In the first quarter of 2018, Agios recorded $1.4 million in royalty revenues, backed by Idhifa’s net sales. We expect higher royalty revenues in the second quarter.
Earlier this month, Agios announced the FDA approval of Tibsovo for the treatment of patients with relapsed or refractory acute myeloid leukemia (AML) with an isocitrate dehydrogenase-1(IDH-1) mutation. The approval came a month earlier than the action date of Aug 21, 2018, which is a huge boost to the company as it represents immense commercial potential in the AML market.
We expect management to discuss Tibsovo’s launch plans in detail on second-quarter conference call.
Meanwhile, a regulatory filing for the Tibsovo (ivosidenib) in the EU is expected during the fourth quarter of 2018 for the same indication.
Currently, Tibsovo is also being evaluated in phase I study for the treatment of advanced hematologic malignancies and in a phase I/II combination trial with Celgene’s Vidaza for treating newly diagnosed AML patients, who are not eligible for intensive chemotherapy.
On Jun 26, Agios announced that it has entered into an exclusive collaboration and license agreement with China’s CStone Pharmaceuticals to develop and commercialize its pipeline candidate, Tibsovo (ivosidenib; AG-120), in Mainland China, Hong Kong, Macau and the Taiwan territory for leukemia indications.
Agios’ lead pipeline candidate, AG-348, is being developed to treat patients with Pyruvate kinase (PK) deficiency. In June, the company announced the initiation of the phase III ACTIVATE study on the candidate to treat adult patients with PK deficiency, who do not receive regular blood transfusions.
AG-348 is also undergoing a phase III program called ACTIVATE-T, a single-arm pivotal study on adult PK deficiency patients, who receive regular blood transfusions.
Earnings Whispers
Our proven model does not conclusively show that Agios is likely to beat estimates in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Agios has an Earnings ESP of -4.06%, representing the percentage difference between the Most Accurate Estimate (loss of $1.69 per share) and the Zacks Consensus Estimate (loss of $1.62). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Agios carries a Zacks Rank #3, which increases the predictive power of ESP. However, a company needs to have a positive ESP to be confident about an earnings surprise. Therefore, this combination leaves surprise prediction inconclusive.
We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks with the right combination of elements to beat estimates this time around:
BioDelivery Sciences International, Inc. BDSI is scheduled to report second-quarter 2018 results on Aug 9 after market close. The company has an Earnings ESP of +3.23% and a Zacks Rank #2.
Aduro Biotech, Inc. ADRO is expected to release second-quarter 2018 results on Aug 1. The company has an Earnings ESP of +4.55% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
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