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Proteostasis (PTI) to Post Q1 Earnings: What's in Store?

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Investor focus will remain on Proteostasis Therapeutics, Inc.’s (PTI - Free Report) studies on triple combination regimes for cystic fibrosis when the company reports first-quarter 2019 earnings results.

The company’s performance over the previous four quarters has been mixed so far with two earnings beats and a couple of misses. The average positive surprise over the trailing four quarters is 11.35%. In the last reported quarter, Proteostasis delivered a positive surprise of 21.74%.

Shares of Proteostasis have plunged 67.3% so far this year against the industry’s increase of 5.2%.

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

Factors to Consider

Proteostasis has been developing its proprietary triple combination candidates, namely PTI-801, a cystic fibrosis transmembrane conductance regulator (CFTR) corrector, PTI-808, a CFTR potentiator, and PTI-428, a CFTR amplifier.

In March this year, Proteostasis announced disappointing data from a dose-selecting phase I program on its triple combination candidates in patients with cystic fibrosis (CF). Shares of the company significantly took a hit then.

Data showed that a statistically significant improvement in percent predicted FEV1 (ppFEV1), measurement of lung function, at day 14 was achieved in the study cohort with higher dose of the company’s CFTR corrector. However, the uptrend was much lower than what was attained by the triple combinations of Vertex Pharmaceuticals (VRTX - Free Report) in late-stage clinical analyses for the treatment of CF.

Also, during March, the company announced data from two add-on studies evaluating PTI-801 or PTI-428 in patients receiving Vertex Pharma’s Symdeko. The evaluations showed enhancement in the average sweat chloride levels.

Patient population also included Orkambi-intolerant patients. Although improvement in ppFEV1 was not of any statistical significance, it demonstrated PTI-801’s potential as CF treatment. These outcomes suggest a golden opportunity for Proteostasis’ product line for patients, non-responsive to Vertex’s pipeline.

Proteostasis is planning to advance the above-mentioned combination in phase II development with the optimal dose as there was no plateau in ppFEV1 improvement at day 14. The company believes that longer duration studies are likely to increase ppFEV1 betterment from baseline. The company is anticipating the phase III development to start in mid-2020.

Final data readouts, expected at 2019-end or early 2020, might provide clarity on the progress of Proteostasis’ triplet combination.

We expect management to provide an update on the same during the upcoming investors’ call.

Earnings Whispers

The proven Zacks model does not conclusively show that Proteostasis is likely to beat estimates this earnings season. 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: Proteostasis 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 43 cents each. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Proteostasis 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.

Proteostasis Therapeutics, 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. (ADRO - Free Report) 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.

Horizon Pharma Public Limited Company (HZNP - Free Report) has a Zacks Rank #3 and an Earnings ESP of +25.00%. The company is scheduled to report first-quarter 2019 results on May 8.

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