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AVEO Pharmaceuticals (AVEO) to Post Q1 Earnings: What's Up?

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AVEO Pharmaceuticals, Inc. will report first-quarter 2019 earnings results.

The company’s performance over the last four quarters has been mixed so far with two earnings beat as well as a couple of misses. The average negative surprise over the trailing four quarters is 24.41%. In the last reported quarter, AVEO delivered a positive surprise of 50.00%.

Shares of AVEO have plunged 40.5% so far this year against the industry’s increase of 4.8%.

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

Factors to Consider

AVEO’s top line comprises collaboration and licensing revenues plus partnership royalties. Fotivda (tivozanib) is the first approved drug in the company’s portfolio. It won the nod in the EU during August 2017 for the first-line treatment of advanced renal cell carcinoma (RCC).

However, this January, AVEO faced a major setback when it had to delay the submission of a new drug application (NDA) for Fotivda for the first-line treatment of advanced RCC. The company decided not to file an NDA in the United States after the regulatory agency informed that it was not satisfied with the preliminary overall survival (OS) data reported along with the top-line TIVO-3 study results on the progression-free-survival (PFS), last November.

Key Events of Q1

Previously, the company intended to submit the NDA in the first half of 2019. However, it has planned a final analysis of OS come August. Data from this interim assessment will be available during the fourth quarter of 2019. We expect management to provide an update during the upcoming conference call as investors are keen to know the outcome of the same.

Meanwhile, last December, AVEO entered into a collaboration deal with AstraZeneca (AZN - Free Report) to evaluate the safety and efficacy of the latter's Imfinzi in combination with Fotivda. This phase I/II study will assess the combo for the treatment of first-line hepatocellular carcinoma (HCC). It is expected to begin this year. If the outcome of the study is positive, then that should push up the stock going forward.

AVEO has several promising early to mid-stage developing candidates in its pipeline.

One such candidate in AVEO’s pipeline is ficlatuzumab, a hepatocyte growth factor inhibitory antibody, currently being evaluated in phase I/II programs for various oncological indications. Earlier this month, AVEO along with partner Biodesix, Inc. announced favorable results from the phase Ib expansion cohort of ficlatuzumab in combination with cytarabine for addressing patients with relapsed and refractory acute myeloid leukemia (AML).

We expect management to provide an update on the same during the impending call.

Earnings Whispers

The proven Zacks model does not conclusively show that AVEO is likely to beat estimates this to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a top 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 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 5 cents each. 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 #2, which increases the predictive power of ESP. However, the company’s 0.00% ESP in the combination makes surprise prediction difficult for the stock this reporting cycle.

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

AVEO Pharmaceuticals, Inc. Price and EPS Surprise

Stocks That Warrant a Look

Here are a few health care stocks worth considering as our model shows that these have the right mix of elements to beat on earnings this time around.

Aduro Biotech, Inc. has a Zacks Rank of 2 and an Earnings ESP of +82.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences, Inc. (GILD - Free Report) is a Zacks #2 Ranked player and an Earnings ESP of +1.54%. The company is scheduled to release first-quarter results on May 2, after the market closes.

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