Geron Corporation is expected to report second-quarter 2017 results next week.
The company’s earnings came in line with the Zacks Consensus Estimate in the last reported quarter. Let’s see how things are shaping up for the upcoming announcement.
Geron’s shares outperformed the industry by rising 39.2% so far this year, while the industry witnessed a gain of 12.7%.
Focus on Imetelstat
Geron has no approved product in its portfolio and its top line solely comprises license fees and royalties. In such a scenario, investor focus will remain on the company’s sole pipeline candidate, Imetelstat. Geron, in collaboration with Johnson & Johnson’s (JNJ - Free Report) Janssen Biotech, is developing the candidate for treating patients with hematologic myeloid malignancies like myelofibrosis (MF), myelodysplastic syndromes (MDS) and acute myelogenous leukemia (AML).
In April, Geron provided a positive update on two late-stage studies for imetelstat – IMbark (phase II) for the treatment of myelofibrosis (MF), and IMerge (phase II/III) for the treatment of myelodysplastic syndromes (MDS). Owing to the favourable update, both trials are continuing unmodified.
Geron informed that Janssen has completed the second internal review of data from two studies, IMbark and IMerge, on imetelstat, Janssen said that the benefit/risk profile of imetelstat in the treated patients supports continued development in lower risk MDS indication.
For IMbark, the latest clinical benefit and a potential overall survival benefit observed supports continuation of the trial without modifications. The trial that assesses the safety and efficacy of imetelstat treatment in relapsed or refractory MDS will also include an assessment of overall survival. Also, the data suggest that 9.4 mg/kg is an appropriate starting dose in the study
Janssen is expected to take a decision regarding the initiation of the phase III stage of the IMerge study later this year and a decision regarding the continued development of imetelstat for relapsed or refractory MF indication next year.
We expect the company to provide an update on the path forward for imetelstat development program at the second quarter conference call,
Geron’s performance over the last four quarters has been mixed, with the company surpassing expectations thrice and meeting the same once. The average positive surprise over the last four quarters is 27.98%.
Our proven model does not conclusively show that Geron 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 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 5 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Although Geron’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult this quarter.
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.
Stocks That Warrant a Look
Here are a couple of health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Arena Pharmaceuticals, Inc. (ARNA - Free Report) is expected to release results on Aug 14. The company has an Earnings ESP of +1.47% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Vertex Pharmaceuticals Incorporated (VRTX - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank #1. The company is scheduled to release results on Jul 26.
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