ARIAD Pharmaceuticals, Inc. ARIA is scheduled to report second-quarter 2015 results on Aug 5, before the opening bell. ARIAD has a mixed track record with the company beating estimates in two of the last four quarters with an average positive earnings surprise of 17.55%.
In the last reported quarter, ARIAD had posted a negative earnings surprise of 3.70%. Let’s see how things are shaping up for the second quarter of 2015.
Factors at Play
Iclusig, the company’s sole marketed product, should continue to perform well in the second quarter of 2015 driven by patient growth and reimbursement in additional EU countries. Iclusig recorded a 10% and 18% sequential increase in sales in the U.S. and EU, respectively, in the first quarter of 2015. A lower dose of Iclusig should drive sales further.
On the first quarter call, ARIAD had informed that there were 750 prescribers of Iclusig at the end of the quarter, up 14% from the preceding quarter. Meanwhile, almost 120 new patients were treated with Iclusig in the U.S. during the first quarter of 2015. Moreover, Iclusig uptake in EU countries has been strong following the completion of the Article 20 review of the drug.
In Jan 2015, the European Commission endorsed the Committee for Medicinal Products for Human Use’s recommendation regarding the use of Iclusig for all approved indications in the EU. So far, the company has been able to secure pricing and reimbursement in several EU countries while full pricing and reimbursement are expected to take place later this year.
Meanwhile, given that patient demographics are skewed toward later lines of treatment, ARIAD continues to work on focusing its promotional efforts on third-line chronic-phase chronic myeloid leukemia (CML) patients. The company estimates that 55% of current patients on Iclusig are in the second or third line.
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.
While ARIAD expects research & development expenses to increase for the rest of 2015 due to its efforts to develop the pipeline and conduct additional studies on Iclusig, selling, general and administrative expenses are expected to remain at approximately the same level on a quarterly basis for the remainder of 2015. Taking into consideration these factors, the company is expected to see a rise in operating expenses in the second quarter of 2015.
On the second quarter call, investor focus will remain on updates on the performance of Iclusig as the company continues to rebuild patient and physician confidence in the drug. Investors will also be keen on evaluating the company’s progress with its 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 29 cents per share.
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.
The Earnings ESP for Aegerion Pharmaceuticals, Inc. AEGR is +85.19% and it carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 5.
Agios Pharmaceuticals, Inc. AGIO has an Earnings ESP of +75% and carries a Zacks Rank #1. It is scheduled to report second-quarter results on Aug 6.
The Earnings ESP for BioDelivery Sciences International, Inc. BDSI is +6.45% and it carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 10.
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