Immune Design (IMDZ): Stock To Disappoint On Q2 Earnings?

Immune Design Corp. (NASDAQ:IMDZ) is scheduled to report second-quarter 2016 results after the market closes on Aug 9.

Immune Design has a mixed track record so far. The company reported a wider-than-expected loss in two of the four trailing quarters and a narrower-than-expected loss on the two other occasions, with a positive average earnings surprise of 2.5%. Let’s see how things are shaping up for this announcement.

Factors in Play

Being a development-stage biopharmaceutical company, Immune Design has not generated any product revenues yet. The company earns revenues from collaboration and licensing agreements, and the sale of products associated with material transfer, collaboration and supply agreements.

Investors are expected to focus on the company’s progress on its pipeline. The company is developing multiple candidates using its two discovery platforms – ZVex and GLAAS – for the treatment of various types of cancer. Key pipeline candidates include CMB305 and G100. CMB305 has been designed under a prime-boost approach, involving the sequential dosing of two complementary agents – LV305 (from the ZVex platform) and G305.

CMB305 is currently undergoing an expansion study as a single agent in patients with cancers expressing the NY-ESO-1 tumor antigen. The completed dose-escalation study on CMB305 showed a favorable safety profile, and a positive signal in progression-free survival (PFS)-related endpoints have been observed.

In addition, a randomized phase II study on CMB305, in combination with Roche Holding’s (OTC:RHHBY) investigational anti-PD-L1 therapy, atezolizumab, in comparison with atezolizumab alone, for locally advanced, relapsed or metastatic soft tissue sarcoma is currently underway. Data are expected in the fourth quarter of 2016.

Meanwhile, another candidate, G100, developed using the GLAAS platform, has completed enrolment in a phase I study in patients with merkel cell carcinoma in combination with radiation. Results from the study showed a 50% overall response rate including a pathologic complete response (CR) following single agent G100 alone.

Immune Design is collaborating with Merck & Co. (NYSE:MRK) to evaluate G100 in combination with Merck’s anti-PD-1 agent Keytruda, for the treatment of patients with non-Hodgkin’s lymphoma. A randomized phase Ib/II study in patients with follicular non-Hodgkin lymphoma in combination with Keytruda is ongoing and results from the study are expected by the first half of 2017.

Due to numerous ongoing trials, operating expenses are expected to remain high in the quarter. We expect the company to shed light on its progress with these trials during the second-quarter call.

What Our Model Indicates

Our proven model does not conclusively show that Immune is likely to beat estimates this quarter. 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) to be able to beat estimates. This is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 68 cents.

Zacks Rank: Immune Design currently carries a Zacks Rank #4 (Sell). As it is, we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement.

Stock That Warrants a Look

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

Impax Laboratories (NASDAQ:IPXL) has an Earnings ESP of +3.03% and a Zacks Rank #2. The company is scheduled to report results on Aug 9.