What's In Store For Endocyte (ECYT) This Earnings Season?

Endocyte, Inc. (NASDAQ:ECYT) is expected to report fourth-quarter 2017 results on Feb 26 after the market closes.

Endocyte delivered a positive earnings surprise of 14.29% in the last quarter. The company has a mixed earnings surprise record, having surpassed the Zacks Consensus Estimate in two and missing in the other two of the trailing four quarters. Overall, the company delivered an average positive surprise of 0.47%.

Endocyte’s shares have rallied 79.7% year to date, as against the industry’s slip of 0.4%.

Let's see how things are shaping up for this quarter.

Factors at Play

Endocyte is a development-stage biopharmaceutical company, focused on bringing targeted therapies for cancer and inflammatory diseases to the market.

In June 2017, Endocyte announced plans to reduce its workforce by about 40% to better focus its resources on more valuable opportunities. The company also looks forward to shift its focus on most promising programs, which include its CAR-T cell small-molecule drug conjugates (SMDCs) adaptor platform, the dual-targeted DNA crosslinker drug EC2629. The restructuring will help the company to increase cash balance at the end of fourth quarter of 2017.

Currently, EC1456 is being evaluated in a small number of patients in an ovarian cancer surgical study.

Endocyte also filed an Investigational New Drug (“IND”) application with the FDA for EC2629 and is planning to initiate a phase I study in patients selected as positive for the folate receptor in cancers where tumor associated macrophages (TAMs) are known to be prevalent in the tumor micro-environment.

Currently, the company is evaluating EC1169 in a phase I study for metastatic castration-resistant prostate cancer (mCRPC) in taxane-exposed patients. Patients are being scanned with its companion imaging agent, EC0652 to identify the presence of prostate-specific membrane antigen.

However, with no approved product in its portfolio at the moment, Endocyte has to depend heavily on its partners for top-line growth.

In October 2017, the company acquired exclusive worldwide rights to develop and commercialize PSMA-617 including the product candidate known as ¹⁷⁷Lu-PSMA-617 from ABX GmbH. ¹⁷⁷Lu-PSMA-617 is a first-in-class radioligand and therapeutic (“RLT”) that targets prostate-specific membrane antigen (“PSMA”). In the first half of 2018, Endocyte expects to initiate a phase III study for the same. The company remains optimistic about this candidate, which is its priority at the moment holding more than $1-billion market opportunity. This transaction is transformational to Endocyte, and accelerates its path to commercialization.

Investors can expect some news about the pipeline candidates EC1169 and EC2629 during the fourth-quarter earnings call.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Endocyte 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.

Zacks ESP: Endocyte’s has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are 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: Endocyte's carries a Zacks Rank #3 which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings beat.

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.

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 deliver an earnings beat this quarter.

Puma Biotechnology (NASDAQ:PBYI) is expected to release fourth-quarter 2017 results on Mar 1 after the market closes. The company has an Earnings ESP of +2.02% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gemphire Therapeutics (NASDAQ:GEMP) is expected to release fourth-quarter 2017 results on Mar 21. The company has an Earnings ESP of +6.62% and a Zacks Rank #2.

Atara Biotherapeutics (NASDAQ:ATRA) is expected to release fourth-quarter 2017 results on Mar 8. The company has an Earnings ESP of +7.42% and a Zacks Rank #3.

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