What's In Store For Affimed (AFMD) This Earnings Season?

Investors will likely focus on the progress of Affimed N.V.’s (NASDAQ:AFMD) lead pipeline candidate, AFM13, on the company’s first-quarter earnings call.

In the last reported quarter, the company delivered a positive earnings surprise of 200.00%. The company has a mixed track record. It beat estimates twice in the four trailing quarters while missing the same in one quarter and meeting once, delivering an average positive earnings surprise of 44.12%.

Notably, Affimed’s shares have gained 13.9% so far this year compared with the industry’s increase of 3.3%.

Let’s see how things are shaping up for this announcement.

Affimed is a Netherland-based pharmaceutical company focused on developing novel therapies which engage the immune system to treat cancerous cells. The company has no marketed products and depends on collaboration for revenues.

The company is developing its immune cell engager, AFM13, as monotherapy or in combination with other agents for treating various types of lymphoma. A phase Ib/IIa is evaluating AFM13 monotherapy for treating relapsed or refractory CD30-positive lymphoma. A phase Ib study is evaluating the candidate in combination with Merck’s (NYSE:MRK) Keytruda (pembrolizumab) as a treatment for Hodgkin lymphoma (“HL”).

Apart from AFM13, the company is developing another immune cell engager, AFM11, in phase I studies. However, the studies are under clinical hold and Affimed has submitted data to the FDA in support of removal of the clinical hold. The company is also progressing with the investigational new drug application submission for the third immune cell engager, AFM24.

Ongoing clinical studies on AFM 13 and regulatory response/application for two other candidates will likely increase operating expense in the first quarter.

Affimed has a collaboration agreement with Genentech, a subsidiary of Roche (OTC:RHHBY) , for developing and commercializing NK cell engager-based immunotherapeutics to treat multiple cancer indications. During the first quarter, the company achieved a certain preclinical milestone, triggering an undisclosed payment from Genentech. This may boost the top line in first quarter.

The company may provide update on the progress of pipeline candidates, especially AFM13, on the first-quarter earnings call.

Earnings Whispers

Our proven model does not conclusively show that Affimed 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. But that is not the case here, as you will see below.

Earnings ESP: Its Earnings ESP is 0.00%. This is because the Most Accurate Estimate as well as the Zacks Consensus Estimate is pegged at a loss of 16 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Affimed’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

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

A Stock That Warrants a Look

Here is a stock from the pharma segment 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.

CannTrust Holdings Inc. (NYSE:CTST) is scheduled to release results on May 14. The company has an Earnings ESP of +6.25% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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