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ArQule (ARQL) to Post Q2 Earnings: What's in the Cards?

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ArQule, Inc. is scheduled to report second-quarter 2019 results on Aug 7, before the market opens.

The company’s earnings record has been mixed so far, having delivered a positive surprise in two of the last four quarters, missing expectations once while delivering in-line results on another occasion. The average four-quarter beat is 38.54%. In the last reported quarter, ArQule came up with a negative surprise of 12.50%.

Shares of ArQule have skyrocketed 241.9% so far this year compared with the industry’s rally of 7.2%.

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

Factors to Consider

ArQule does not have any approved product in its portfolio at the moment. As a result, the company is yet to generate any revenues.

ArQule is developing ARQ 531, currently in phase I study for treating patients with BTK-mutated B-cell malignancies refractory to other therapeutic options. The candidate is a potent and reversible dual inhibitor of both wild type and C481S-mutant BTK. In June, the company presented preliminary results from this early-stage study on ARQ 531 for treating patients with relapsed or refractory hematologic malignancies, at the annual meeting of European Hematology Association. ARQ 531 demonstrated substantial anti-tumor activity and a favorable safety profile.

Meanwhile, ArQule received the first conditional Institutional Review Board (IRB) approval for miransertib, its investigational AKT inhibitor. The company plans to begin a registrational clinical study on the same for treating Proteus syndrome and PIK3CA-Related Overgrowth Spectrum (PROS) family of rare overgrowth diseases. An IRB approval is required before commencing research projects involving human subjects.

Derazantinib, an FGFR inhibitor, is currently in a registrational clinical study for treating intrahepatic cholangiocarcinoma in patients with FGFR2 fusions. Notably, ArQule out-licensed derazantinib rights to Switzerland’s Basilea Pharmaceutica last April to develop/commercialize derazantinib in the United States, European Union, Japan and the rest of the world excluding Greater China.

We expect management to provide a thorough update on the company’s pipeline during the upcoming earnings call.

Earnings Whispers

Our proven model does not conclusively show that ArQule is likely to beat estimates this quarter to be reported. 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) for this to happen. But that is not the case here as you will see below.

Earnings ESP: ArQule has an Earnings ESP of -5.56%, representing the percentage difference between the Most Accurate Estimate of a loss of 10 cents and the Zacks Consensus Estimate of a loss of 9 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ArQule has a Zacks Rank #3, which increases the predictive power of ESP. However, its negative ESP in the combination leaves surprise prediction inconclusive.

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

ArQule, Inc. Price and EPS Surprise

Stocks That Warrant a Look

Here are some biotech stocks worth considering as our model shows that these have the right mix of elements to beat on earnings this reporting cycle.

BeiGene, Ltd. (BGNE - Free Report) has a Zacks Rank of 1 and an Earnings ESP of +8.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intec Pharma Ltd. has an Earnings ESP of +7.14% and a Zacks Rank #2.

Puma Biotechnology, Inc. (PBYI - Free Report) has a Zacks Rank of 3 and an Earnings ESP of +1.11%. The company is scheduled to release second-quarter results on Aug 8, after the market closes.

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