Agenus (AGEN): What's Ahead For The Stock In Q2 Earnings?

Agenus Inc. (NASDAQ:AGEN) is scheduled to report second-quarter 2016 results on Jul 28. Last quarter, Agenus delivered a negative earnings surprise of 13.04%. Let’s see how things are shaping up for the company this quarter.

Factors at Play

Agenus is an immuno-oncology company focused on the discovery and development of revolutionary new treatments that engage the body’s immune system to fight cancer. The company has three platform technologies for the development of its candidates – Retrocyte Display, SECANT and phage display – each designed to produce quality human antibodies.

Given that Agenus does not have any approved product in its portfolio yet, investor focus should remain on pipeline updates by the company. The company has several early-to-mid stage candidates in its portfolio.

Agenus received a major boost when the FDA cleared its investigational new drug (IND) application for both AGEN1884 and INCAGN01876 this January. It has initiated a phase I study on AGEN1884 in patients with advanced or refractory cancer and a phase I/II study on INCAGN1876 in patients with advanced or metastatic solid tumors. Consequently, research and development expenses are expected to be up sequentially.

We remind investors that Agenus’ lead candidate as well as several backup antibodies had been selected by Merck (NYSE:MRK) for an undisclosed checkpoint target. The company received a milestone payment of $2 million under the terms of the agreement. This should be reflected in the company’s second-quarter results.

Agenus earns revenues primarily through fees received under collaboration and license agreements. Collaboration agreements with companies like GlaxoSmithKline plc (NYSE:GSK) not only provide it with funds in the form of upfront and milestone payments and future royalties, but also validate the company’s proprietary product platform. Collaboration revenues should continue to drive the top line in the second quarter as well.

We expect investors to focus on pipeline updates given by the company during its second-quarter earnings call.

Surprise History

Agenus’ track record has been disappointing so far. The company has missed estimates in all of the last four quarters, with an average negative surprise of 54.65%.

Earnings Whispers

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 in line with the Zacks Consensus Estimate of a loss of 34 cents.

Zacks Rank: Agenus currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

A Stock That Warrants a Look

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

Bristol-Myers Squibb Co. (NYSE:BMY) has an Earnings ESP of +1.49% and a Zacks Rank #1. It is scheduled to report second-quarter results on Jul 28.

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