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Ionis (IONS) Q3 Earnings: What's in the Cards for the Stock?

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Ionis Pharmaceuticals, Inc. (IONS - Free Report) is scheduled to report third-quarter 2016 results on Nov 9. Last quarter, the company recorded a positive earnings surprise of 2.08%. Let’s see how things are shaping up for this announcement.

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 Inc. (BIIB - Free Report) and GlaxoSmithKline plc (GSK - Free Report) . These agreements also validate the company’s technology platform.

In Aug 2016, Biogen exercised its option to develop and commercialize nusinersen globally following favorable results from a phase III study (ENDEAR) on the candidate for the treatment of spinal muscular atrophy (SMA). Under the terms of the agreement, Ionis received $75 million as license fee which will be recognized in the to-be-reported quarter.

Meanwhile, a New Drug Application (NDA) for nusinersen has recently been accepted by the FDA for Priority Review and a Marketing Authorization Application (MAA) has been validated by the European Medicines Agency (EMA). The product will be marketed as Spinraza, upon approval. In the upcoming conference call, we expect the company to provide further updates on the regulatory front.

We remind investors that the company’s revenues vary on the basis of the timing of payments under the agreements with its partners. In 2016, the company expects to earn meaningful milestone payments related to the development of its candidates.

In its second-quarter call, Ionis projected revenues to be above $240 million in 2016. Revenues are anticipated to be slightly higher in the second half of the year compared to the first half.

On the third-quarter call, we expect the company to shed more light on the development of its pipeline candidates IONIS-TTRRx (transthyretin amyloidosis), nusinersen (SMA in infants and children) and volanesorsen (familial chylomicronemia syndrome and familial partial lipodystrophy). In addition, the company has several early-to-mid stage candidates in its pipeline.

Surprise History

Ionis’ track record has been mixed so far. Over the four trailing quarters, the company posted an average negative earnings surprise of 4.59%, having beaten estimates in two quarters and missed the same twice.

IONIS PHARMACT Price and EPS Surprise

 

IONIS PHARMACT Price and EPS Surprise | IONIS PHARMACT Quote

Earnings Whispers

Our proven model does not conclusively show that Ionis 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 surpass estimates. 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%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 7 cents per share.

Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.

Zacks Rank: Though Ionis’ Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

Note that 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.

A Stock to Consider

Here is a health care stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Tokai Pharmaceuticals, Inc. (TKAI - Free Report) is expected to release third-quarter results on Nov 8. The company has an Earnings ESP of is +18.42% and it carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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