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Adverum (ADVM) to Post Q4 Earnings: What's in the Cards?

Zacks Equity Research

Adverum Biotechnologies, Inc ADVM is expected to report fourth-quarter 2016 results on Mar 2. In the last reported quarter, Adverum posted a negative surprise of 20.7%.

Adverum has a dismal track record with the company missing estimates in three of the last four quarters, bringing the average negative earnings surprise to 18.5%.

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

Adverum’s share price movement in the last six months indicates that the stock has underperformed the Zacks classified Medical-Biomedical/Genetics industry. The company’s shares have lost 27.3% during this period, which compares unfavorably with the industry’s 5.1% fall.

Factors Influencing the Quarter

Being a development-stage biotech company, Adverum does not have any approved product in its portfolio. Investors are thus expected to keep an eye on the company’s pipeline development.

Adverum is focused on three lead gene therapy programs for wet AMD, rare diseases alpha 1 antitrypsin (A1AT) deficiency and hereditary angioedema (HAE).  The Annapurna acquisition (May 2016) added a number of early-stage candidates to Adverum’s portfolio including ANN-001 (ADVM-043), ANN-002 and ANN-003 among others.

The company is progressing with the pre-clinical development of new anti-VEGF gene therapy candidates, ADVM-022 and ADVM-032 in the wet AMD space. The company plans to initiate toxicology studies for ADVM-022 and ADVM-032 in the first half of 2017.

Adverum is also advancing ADVM-043 (formerly known as ANN-001) for the treatment of alpha 1 antitrypsin deficiency (A1AT). The company plans to meet with the FDA in the first quarter of 2017 to review its development plan for the candidate and initiate patient enrollment in a phase I/II trial in fourth-quarter 2017.

Adverum is also evaluating ADVM-053 (formerly known as ANN-002) to treat hereditary angioedema (HAE) and plans to initiate toxicology studies for ADVM-053 in the first half of 2017.

Meanwhile, Adverum has a collaboration agreement with Regeneron Pharmaceuticals, Inc. REGN for the joint development of novel candidates based on the former’s Ocular BioFactory platform. These candidates include AVA-311 for the treatment of juvenile X-linked retinoschisi.

It has collaborated with Editas Medicine, Inc. for exploring the delivery of genome editing medicines to treat inherited retinal diseases. These collaborations constitute an important source of funds for Adverum.

What Our Model Indicates

Our proven model does not conclusively show that Adverum 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 beat estimates. But that 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% since the Most Accurate estimate is in line with the Zacks Consensus Estimate of a loss of 25 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Adverum’s Zacks Rank #3 increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

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

Adverum Biotechnologies, Inc. Price and EPS Surprise


Adverum Biotechnologies, Inc. Price and EPS Surprise | Adverum Biotechnologies, Inc. Quote

Stocks to Consider

Here are a couple of healthcare companies that you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Pacira Pharmaceuticals, Inc. PCRX is expected to release results on Mar 1. The company has an Earnings ESP of +20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tesaro, Inc. TSRO has an Earnings ESP of +0.51% and a Zacks Rank #3. The company is scheduled to release results on Feb 28.

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Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report
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