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Will Agenus (AGEN) Disappoint Investors this Earnings? - Analyst Blog

Agenus Inc.AGEN is scheduled to report second-quarter 2015 results on Jul 23, 2015.

Although the company doesn't have an impressive track record with a four-quarter average negative earnings surprise of 12.59%, let's see how things are shaping up for this announcement.

Factors at Play

With the company lacking approved product in its portfolio, investor focus remains on its pipeline updates. In fact, the company has a number of pipeline-related activities lined up for 2015. The company's research and development (R&D) expenses are expected to climb this quarter over the prior-year quarter.

The company is developing Prophage for the treatment of glioblastoma multiforme and expects to advance the candidate into a registration study in newly diagnosed glioblastoma multiforme patients later this year.

We note that Agenus has an agreement with GlaxoSmithKline GSK for the development of vaccines containing QS-21 stimulon adjuvant. Glaxo is developing two vaccines for shingles and malaria, both of which contain Agenus QS-21 stimulon adjuvant.

Meanwhile, the company is quite active on the collaboration front. Earlier this week, Agenus acquired exclusive, worldwide rights for the development and commercialization of antibodies targeting carcinoembryonic antigen cell adhesion molecule 1 from an Italian biotech company, Diatheva s.r.l. Additionally, in Apr 2015, Agenus acquired some key antibody assets from a privately held company, Celexion, including the SECANT yeast display platform for the generation of monoclonal antibodies. The company will utilize this platform in combination with its Retrocyte Display platform to step up the development of internal as well as partnered programs.

Additionally, last month, Agenus announced that its partner, Merck & Co. Inc. MRK has extended its research term (up to Apr 2016) under an existing collaboration and license agreement for the discovery and development of therapeutic antibodies for the treatment of cancer. Per the amendment, Merck will be responsible for further development and commercialization of candidates generated under the collaboration, while Agenus will be eligible to receive approximately $100 million in milestone payments apart from royalties on worldwide product sales.

What Our Model Indicates

Our proven model does not conclusively show that Agenus is likely to beat estimates this quarter. That 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. Unfortunately, this is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Agenus is 0.00% since the Most Accurate estimate stands at a loss of 14 cents per share, in line with the Zacks Consensus Estimate.

Zacks Rank: Agenus' Zacks Rank #3 increases the predictive power of ESP. However, an Earnings ESP of 0.00% makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Ranks #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

A Stock that Warrants a Look

Here is a health care stock that you may want to consider, as our model shows it has the right combination of elements to post an earnings beat this quarter:

The Medicines Company MDCO has an Earnings ESP of +125% and carries a Zacks Rank #2. It is scheduled to release second-quarter results on Jul 29.

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MEDICINES CO (MDCO): Free Stock Analysis Report

GLAXOSMITHKLINE (GSK): Free Stock Analysis Report

MERCK & CO INC (MRK): Free Stock Analysis Report

AGENUS INC (AGEN): Free Stock Analysis Report

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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.


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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