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Arcus (RCUS) to Report Q1 Earnings: What's in the Cards?

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Arcus Biosciences Inc. (RCUS - Free Report) is expected to provide an update on its pipeline, when it releases first-quarter 2019 results. 

The company has surpassed expectations in two of the previous four quarters and missed in one, the average negative earnings surprise being 49.66%.

Arcus’ share price has increased 1% compared with the industry’s  growth of 5%.year to date.


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

Factors to Consider

We expect the company to throw more light on pipeline updates.

Arcus, a clinical-stage biopharmaceutical company focused on creating innovative cancer immunotherapies, is developing four pipeline candidates. The company gets collaboration revenues from the Japanese company, Taiho Pharmaceutical Co.,Ltd.

The company’s most advanced small molecule pipeline candidate, AB928, is in a phase I/Ib program, being evaluated in combination with chemotherapy. AB928 is being evaluated in three combination studies with Doxil in triple negative breast cancer (TNBC) and ovarian cancer. The drug is in combination with mFolfox in colorectal cancer and gastroesophageal cancer. It is also being studied in  combination with Arcus’s own AB122 in advanced solid tumors. The company expects to report initial data from the dose-escalation portion of the AB928 combination studiesand initiate dose-expansion cohorts in the studies in 2019.  

The company’s CD73 inhibitor, AB680, is a highly potent, reversible and selective inhibitor of the CD73 enzyme. The company initiated its first study on AB680 (intravenous infusion) in healthy volunteers in the second half of 2018. As CD73 plays a critical role in the extracellular generation of adenosine, AB680 may provide a highly effective approach to prevent adenosine-mediated immune suppression. The company expects to report safety, tolerability, pharmacokinetic and pharmacodynamic data from the phase I study of AB680 in mid-2019.                                                                                            

Arcus has also initiated phase I studies for its two antibody product candidates — AB122 and AB154 (anti-IGIT antibody).  

What Our Model Indicates

Our proven model does not conclusively show that Arcus is likely to beat on earnings in the to-be-reported quarter. This is because the 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.

Earnings ESP: Arcus has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #1, which increases the predictive power of ESP. However, we need to have a positive Earnings ESP to be confident of an earnings beat.

Note that Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement are best avoided.

Stocks That Warrant a Look

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Ultragenyx Pharmaceuticals Inc. (RARE - Free Report) has an Earnings ESP of +6.36% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Glaxo SmithKline plc. (GSK - Free Report) has an Earnings ESP of +3.55% and a Zacks Rank #3. The company is scheduled to release first-quarter 2019 results on May 1.

Novo Nordisk A/S (NVO - Free Report) has an Earnings ESP of +0.80% and a Zacks Rank #3. The company is scheduled to release its first-quarter 2019 results on May 3.

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