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Inovio (INO): Is a Surprise in Store this Earnings Season?

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Inovio Pharmaceuticals, Inc. (INO - Free Report) is scheduled to report third-quarter 2016 results on Nov 9, before market opens. Last quarter, the company incurred loss as expected.

Inovio’s performance so far has been mixed with the company beating expectations in two of the last four quarters while posting in-line results in one and missing estimates in the other quarter. The average positive earnings surprise over the last four quarters is 205.15%.

INOVIO PHARMAC Price and EPS Surprise


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

Factors to Consider

Given that Inovio does not have any revenue-generating product in its portfolio yet, investor focus will remain on pipeline and regulatory updates.

VGX-3100 is the most advanced candidate in the company’s pipeline. Last month, Inovio suffered a setback with the FDA placing a clinical hold on its late-stage program for VGX-3100. The company was looking to move VGX-3100 into phase III development in the fourth quarter but with the clinical hold in place, it now expects the program to be delayed until the first half of 2017 pending resolution of the FDA’s requests.

On its second-quarter earnings update, Inovio had said that it is looking to evaluate VGX-3100 for the treatment of HPV-16/18-related high grade cervical dysplasia. The FDA has asked the company to provide additional data supporting the shelf-life of the newly designed and manufactured disposable parts of the Cellectra 5PSP immunotherapy delivery device. The company expects that the requested data will be available by the year end.

Apart from VGX-3100, Inovio has several other candidates in its pipeline in early- to mid-stage development. Meanwhile, the company is working on the development of Ebola, Zika and Middle East respiratory syndrome virus vaccines. In August, Inovio announced that it has initiated the second study on Zika vaccine, GLS-5700, in Puerto Rico. Positive results from the study will allow Inovio to meet regulators in 2017 to determine the path forward for the Zika vaccine. In the same month, Inovio also announced that it is expanding the enrolment in a phase I study evaluating Ebola DNA vaccine, INO-4212.

Inovio has collaborations with several companies and institutes for the development of its pipeline candidates. And with no approved product in its portfolio, Inovio depends largely on collaborations, grants and other payments for revenues as well as for the development of its pipeline candidates. Therefore, the top line of the company varies on a quarterly basis depending on the timing of such events.

Investor focus should remain on pipeline updates as many pipeline-related events are lined up along with the company’s plans related to the development of its Ebola and Zika vaccines.

Earnings Whispers

Our proven model does not conclusively show that Inovio is likely to beat the Zacks Consensus Estimate 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) for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.0% as both the Most Accurate estimate as well as the Zacks Consensus Estimate is pegged at a loss of 26 cents. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.

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

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

AveXis, Inc. is scheduled to release results on Nov 10. The company has an Earnings ESP of 11.43% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Global Blood Therapeutics, Inc. (GBT - Free Report) with an Earnings ESP of +16.95% and a Zacks Rank #2. The company is expected to release results on Nov 10.

Ekso Bionics Holdings, Inc. (EKSO - Free Report) with an Earnings ESP of +9.76% and a Zacks Rank #3. The company is scheduled to release results on Nov 9.

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