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Immune Design (IMDZ): Stock to Disappoint in Q3 Earnings?

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Immune Design Corp (IMDZ - Free Report) is scheduled to report third-quarter 2016 results after the market closes on Nov 9.

In the last reported quarter Immune Design posted a negative surprise of 4.41%. The company reported a wider-than-expected loss in two of the four trailing quarters and a narrower-than-expected loss on the two other occasions, bringing the positive average surprise to 4%. Let’s see how things are shaping up for this announcement.

Factors in Play

Being a development-stage biopharmaceutical company, Immune Design has not generated any product revenue yet. The company earns revenues from collaboration and licensing agreements, the sale of products associated with material transfer and collaboration and supply agreements.

Investors are expected to focus on the company’s progress with its pipeline. Immune Design is developing multiple candidates using its two discovery platforms – ZVex and GLAAS – for the treatment of various types of cancers. Key pipeline candidates include CMB305 (solid tumor) and G100 (merkel cell carcinoma).

CMB305 is currently undergoing an expansion study as a single agent in patients with cancers expressing the NY-ESO-1 tumor antigen.

In addition, a randomized phase II study on CMB305, in combination with Roche Holding’s (RHHBY - Free Report) investigational anti-PD-L1 therapy, tecentriq, in comparison with tecentriq alone, for locally advanced, relapsed or metastatic soft tissue sarcoma is currently underway.

Meanwhile, Immune Design is collaborating with Merck & Co. (MRK) to evaluate G100 in combination with Merck’s anti-PD-1 agent Keytruda, for the treatment of patients with non-Hodgkin’s lymphoma.

The safety and efficacy of G100 in combination with low-dose local radiation and Keytruda, in patients with follicular non-Hodgkin’s lymphoma (NHL) is being evaluated in a randomized phase II Study. Data are expected in 2017.

Due to numerous ongoing trials, operating expenses are expected to remain high in the quarter. We expect the company to shed light on its progress with these trials during the third-quarter call.

IMMUNE DESIGN Price and EPS Surprise

What Our Model Indicates

Our proven model does not conclusively show that Immune Design 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. 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 and the Zacks Consensus Estimate stand at a loss of 71 cents.

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

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

Note that 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 healthcare companies that you may consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Synergy Pharmaceuticals, Inc. (SGYP - Free Report) is expected to report results on Nov 14. The company has Earnings ESP of 18.18% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AveXis Inc. . is scheduled to report results on Nov 10. The company has Earnings ESP of 11.43% and a Zacks Rank #2

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