Intercept Pharmaceuticals, Inc. ICPT is scheduled to report second-quarter 2015 results on Aug 5.
Intercept Pharma has a mixed track record with the company beating estimates in one of the last four trailing quarters. The company posted a positive average earnings surprise of 43.85% over the last four quarters. Let’s see how things are shaping up for this announcement.
Factors at Play in Q2
Since Intercept Pharma does not have any approved product in its portfolio, revenues mainly comprise fees derived from collaborative agreements for the development and commercialization of its product candidates. In this scenario, investor focus should remain on pipeline updates from the company.
Intercept Pharma’s lead candidate, obeticholic acid (OCA), is being developed for a variety of chronic liver diseases including primary biliary cirrhosis (PBC), non-alcoholic steatohepatitis (NASH), nonalcoholic fatty liver disease and primary sclerosing cholangitis.
The most advanced development program for OCA is for PBC as second-line treatment for patients who respond inadequately to standard-of-care therapy or as monotherapy for those intolerant to standard-of-care therapy and therefore, need additional treatment. During the second-quarter, Intercept Pharma completed the rolling new drug application submission for OCA in the U.S. for PBC. The candidate was accepted by the European Medicines Agency in the same indication during this quarter.
Meanwhile, Intercept Pharma is planning to finalize the design of a phase III program on OCA for NASH. Additionally, the company has plans to study the lipid metabolic effects of OCA and cholesterol management effects of concomitant statin administration in patients suffering from NASH. We expect the company to discuss its approach for the studies on its second-quarter call.
Intercept Pharma said on its first-quarter call that it expects operating expenses to increase over the course of the year as a result of higher investments in pipeline development, higher regulatory expenses related to approval for OCA and expansion of commercial infrastructure in the U.S., Europe and Canada.
What Our Model Indicates
Our proven model does not conclusively show that Intercept Pharma is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This 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%. This is because both the Most Accurate estimate the Zacks Consensus Estimate stand in line at a loss of $1.94.
Zacks Rank: Intercept Pharma carries a Zacks Rank #3. Though a Zacks Ranks Rank #1, 2 or 3 increases the odds of earnings beat, the company’s 0.00% ESP makes a surprise prediction difficult.
However, we caution against stocks with Zacks Rank #4 or #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 this quarter:
Mylan MYL has an Earnings ESP of +1.15% and carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 6.
Epizyme, Inc. EPZM has an Earnings ESP of +3.08% and carries a Zacks Rank #2. The company is slated to release second-quarter results on Aug 6.
Inovio Pharmaceuticals, Inc. INO has an Earnings ESP of +275.00% and carries a Zacks Rank #3. The company is slated to release second-quarter results on Aug 10.
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