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What's in the Cards for Ionis (IONS) This Earnings Season?

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Ionis Pharmaceuticals (IONS - Free Report) is scheduled to report first-quarter 2018 results on May 4, before market open.

In the last reported quarter, the company delivered a positive earnings surprise of 125%. The company has a mixed track record. It missed estimates twice in the four trailing quarters while beating the same on two occasions, delivering an average positive earnings surprise of 26.25%.

Notably, Ionis’ share price has decreased 14.4% so far this year, compared with the industry’s decline of 3.4%.

Let’s see how things are shaping up for this announcement.

Earnings Whispers

Our proven model does not conclusively show that Ionis is likely to beat estimates 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) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (loss of 15 cents) and the Zacks Consensus Estimate (loss of 11 cents), is -39.54%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ionis’ Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Factors to Consider

Ionis earns revenues in the form of upfront, milestone and other payments under its partnerships with leading health care companies like Biogen (BIIB - Free Report) .

Ionis and Biogen have collaborated to develop and commercialize Spinraza. Ionis earns royalties on Spinraza sales from Biogen. Last week, Biogen released its first-quarter 2018 results and announced that Spinraza witnessed strong demand in the international markets.

Ionis earned $30 million in the first quarter in license fees from AstraZeneca related to out-licensing of its fatty liver candidate, AZD2693.

In December 2017, Ionis initiated a phase I study to evaluate antisense drug candidate, IONIS-JBI1-2.5Rx, in patients with gastrointestinal immune disorder. This will likely increase R&D cost in the soon-to-be reported quarter.

Apart from Spinraza, Ionis is focused on two late-stage candidates, inotersen and volanesorsen. Regulatory applications for both the candidates are under review in the United States as well as Europe. These candidates are expected to receive approval in the second half 2018. Ionis is also gearing up for their launch.

Ionis also granted an exclusive, worldwide license for inotersen to Akcea Therapeutics to leverage the latter’s commercial infrastructure and capabilities for a successful launch of the drug.

We expect investor focus to be on launch plans for inotersen and volanesorsen on the first-quarter conference call.

Subsequent to the quarter, Ionis announced top-line data from a phase I/II study on its antisense drug candidate, IONIS-HTTRx, which demonstrated that the candidate significantly reduced disease-causing protein and also improved clinical measures of Huntington's disease.

Ionis has several mid-stage pipeline candidates for various indications. We expect the company to provide updates on different studies, including the path forward for inotersen and volanesorsen, on the first-quarter earnings call.

Stocks That Warrant a Look

Here are some biotech stocks that you may want to consider, as our model shows that they too have the right combination of elements to post an earnings beat this quarter.

Emergent Biosolutions Inc. (EBS - Free Report) has an Earnings ESP of +61.8% and a Zacks Rank #3.  The company is scheduled to release first-quarter results on May 3. You can seethe complete list of today’s Zacks #1 Rank stocks here.

Vanda Pharmaceuticals Inc. (VNDA - Free Report) has an Earnings ESP of +25% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 2.

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