What's In Store For Agios Pharma (AGIO) In Q2 Earnings?

Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) is expected to report second-quarter results on Aug 3.

Shares have surged 38.9% so far this year, comparing favorably with the industry’s increase of 22.3%.

Agios’ performance has been mixed with the company missing estimates twice in the trailing four quarters and surpassing the same on the two other occasions. Overall, Agios has an average positive surprise of 0.90%.

Last quarter, the company delivered a positive surprise of 12.85%. Let’s see how things are shaping up for this quarter.

Factors at Play

As a development-stage company, Agios does not have approved products in its portfolio yet. Investors are thus expected to keep an eye on pipeline updates at the earnings call.

It is worth mentioning that the company has several interesting candidates in its pipeline. Its cancer pipeline comprises Idhifa (enasidenib), AG-120 (IDH1 mutant inhibitor) and AG-881 (pan-IDH mutant inhibitor). Notably, Agios is developing enasidenib and AG-881 in collaboration with Celgene Corporation (NASDAQ:CELG) , which should bring in collaboration revenues.

Idhifa is presently under FDA review for treatment of patients with relapsed or refractory acute myeloid leukemia (AML) with an isocitrate dehydrogenase 2 (IDH2) mutation. The company expects the FDA to give its decision on Aug 30, 2017.

Idhifa is being evaluated in several phase I dose-escalation studies, evaluating both hematological and solid tumor cancers with IDH2 mutations. Last month, the company announced positive efficacy and safety data from the ongoing phase I dose-escalation and expansion study evaluating Idhifa in patients with relapsed or refractory acute myeloid leukemia (R/R AML) and an isocitrate dehydrogenase-2 (IDH2) mutation. Agios and Celgene intend to initiate a high-risk myelodysplastic syndrome study on enasidenib in 2017.

Apart from Idhifa, Agios is also planning to initiate a phase III study on AG-120 in front-line AML patients with an IDH1 mutation soon. The company plans to explore a similar regulatory path for AG-120, which could lead to an NDA submission in the U.S. this year.

Earnings Whispers

Our proven model does not conclusively show that Agios 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) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.00%. This is because both the Most Accurate estimate stands and the Zacks Consensus Estimate stand at a loss of $1.52 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Agios has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% Earnings ESP makes surprise prediction difficult.

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

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Zoetis Inc. (NYSE:ZTS) , which is scheduled to release results on Aug 8, has an Earnings ESP of +1.89% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tesaro, Inc. (NASDAQ:TSRO) is scheduled to release results on Aug 8. The company has an Earnings ESP of +16.40% and a Zacks Rank #3.

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