What's in Store for Selecta (SELB) This Earnings Season?

We expect investors to focus on Selecta Biosciences, Inc.’s SELB progress with its lead pipeline candidate SEL-212 and its recent licensing agreements for other pipeline developments during the third-quarter 2020earnings call

The company’s surprise record has been mixed so far as its bottom line beat estimates in two of the trailing four quarters and lagged the same on the other two occasions, the average miss being 42.79%. In the last reported quarter, Selecta witnessed a negative earnings surprise of 153.13%.

Shares of Selecta have rallied 31.5% in the year so far against the industry’s 3.2% decrease.

Let’s see, how things are shaping up for the quarter to be reported.

Factors at Play

In absence of any marketed drugs in the company’s portfolio, investors’ focus during the third-quarter conference call will be on the updates related to its lead pipeline candidate SEL-212, which is a combination of its ImmTOR immune tolerance platform and a therapeutic uricase enzyme pegadricase.

In September 2020, Selecta along with Swedish Orphan Biovitrum AB (Sobi) initiated the phase III DISSOLVE program on SEL-212 for chronic refractory gout, with the randomization of the first patient in the study. The companies are looking to investigate SEL-212 as a new, once-monthly treatment option for the given indication. We expect an update on the same during the upcomingearnings call

Notably, in June 2020, Selecta announced a strategic license agreement with Sobi to help advance the development and commercialization of SEL-212. Selecta out-licensed SEL-212 to Sobi as the latter is now responsible for the development and commercial activities in all territories outside China.

Meanwhile, the head-to-head phase II COMPARE study is evaluating SEL-212 versus pegloticase to treat patients with chronic refractory gout. The primary endpoint of the study is to see the maintenance of serum uric acid (SUA) levels at the end of three and six months.

In September 2020, Selecta announced top-line results from the COMPARE study, which showed that treatment with SEL-212 led to a higher response rate for the primary endpoint during the three and six-month regimes combined. However, SEL-212 did not meet the primary endpoint of statistical superiority.

Additionally, in June, Selecta entered into a research and license option agreement with Sarepta Therapeutics SRPT. The deal granted the latter an option to license the rights to use the ImmTOR immune tolerance platform of the former for developing therapies to address neuromuscular diseases like Duchene muscular dystrophy and certain limb-girdle muscular dystrophies. An update on the same is expected during the investors' call.

Research and development costs are expected to have increased year over year due to costs related to Selecta’s gene therapy program in collaboration with privately-held company, AskBio. Notably, Selecta and AskBio have been jointly developing a broad portfolio of next-generation AAV gene therapies.

Recent Developments

In October 2020, the FDA granted a Rare Pediatric Disease (RPD) designation to Selecta and AskBio’s investigational candidate MMA-101, which is currently being developed in pre-clinical studies for the treatment of isolated methylmalonic acidemia (MMA), an inherited rare metabolic disorder caused by methylmalonyl-CoA mutase (MMUT) gene mutation.

Selecta and AskBio are on track to initiate a phase I study on MMA-101 in the first half of 2021 for treating patients with MMA. An update regarding the same is expected on the impendingearnings call

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Selecta this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Selecta has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at a loss of 12 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Selecta Biosciences currently carries a Zacks Rank #5 (Strong Sell).

Selecta Biosciences, Inc. Price and Consensus

Selecta Biosciences, Inc. Price and Consensus

Selecta Biosciences, Inc. price-consensus-chart | Selecta Biosciences, Inc. Quote

Stocks to Consider

Here are some drug/biotech stocks worth considering from the same space as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Alnylam Pharmaceuticals ALNY has an Earnings ESP of +4.23% and a Zacks Rank #3, currently. The company is scheduled to report earnings on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Compugen CGEN has an Earnings ESP of +7.69% and a Zacks Rank #2, presently. The company is scheduled to report earnings on Nov 5.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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