AVEO Pharmaceuticals, Inc. (AVEO - Free Report) is expected to report second-quarter 2018 results on Aug 8.
The company has a mixed track record with missed estimates in two of the last four quarters while surpassing the same on other two occasions with an average miss of 58.57%. Last reported quarter, AVEO lagged estimates with a negative surprise of 14.29%.
Shares of AVEO have plunged 25.1% year to date against the industry’s increase of 5.3%.
Let’s see how things are shaping up for this quarter to be reported.
Factors at Play
Last August, AVEO and its partner EUSA Pharma received approval from the European Commission for its VEGF tyrosine kinase inhibitor, Fotivda (tivozanib), for the first-line treatment of advanced renal cell carcinoma (RCC).
EUSA launched Fotivda in the United Kingdom, Germany and Austria. Earlier this February, EUSA Pharma announced that the United Kingdom’s National Institute for Health and Care Excellence has recommended the approval of Fotivda for the treatment of advanced RCC in first-line setting. AVEO will receive $2 million in milestone payment from EUSA Pharma.
In April 2018, Fotivda sales were also initiated in Austria. AVEO will again receive $2 million as milestone payment from EUSA Pharma.
However, the company faced a major setback when tivozanib received an extended review timeline. The phase III TIVO-3 study evaluated tivozanib as a third-line treatment for advanced renal cell carcinoma. The company now expects to report top-line data from the trial during the fourth quarter of 2018, which was previously scheduled in the third quarter. The extended review timeline was issued due to slower-than-expected progression free survival (PFS) with 10 patients being removed from the PFS event count.
AVEO announced completion of enrollment in phase II portion of phase I/II TiNivo program, evaluating Fotivda in combination with Bristol-Myers’ (BMY - Free Report) Opdivo in RCC. We expect the company to provide an update on these analyses on its second-quarter earnings call.
AVEO’s another promising pipeline candidate is ficlatuzumab, currently under evaluation in combination with Erbitux in a phase II study for treating metastatic head and neck squamous cell carcinoma.
We expect management to release the latest data in detail on Fotivda’s performance and the progress of ficlatuzumab on second-quarter conference call.
Our proven model does not conclusively show that AVEO is likely to beat estimates this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: AVEO has an Earnings ESP of -10.53% since the Most Accurate Estimate stands at a loss of 7 cents while the Zacks Consensus Estimate is pegged at a loss of 6 cents. Thus, this key ingredient represents the difference between the two estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: AVEO currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company needs to have a positive ESP to be confident about an earnings surprise. Therefore, this combination leaves surprise prediction inconclusive.
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some biotech stocks that you may want to consider as per our model, these have the right combination of elements beat on earnings this reporting cycle.
Pacira Pharmaceuticals, Inc. (PCRX - Free Report) has an Earnings ESP of +42.86% and a Zacks Rank #2. The company is scheduled to release second-quarter results on Aug 2 before the market opens. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dicerna Pharmaceuticals, Inc. (DRNA - Free Report) is expected to release second-quarter results on Aug 9. The company has an Earnings ESP of +30.95% and a Zacks Rank of 3.
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