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What's in the Cards for Adverum (ADVM) this Earnings Season?

Zacks Equity Research

Adverum Biotechnologies, Inc ADVM is expected to report second-quarter 2017 results later this month.

In the last reported quarter, Adverum missed estimates, with a negative surprise of 8%. In fact, the company has a dismal track record as it missed estimates in three of the last four quarters, resulting in an average negative earnings surprise of 17.4%.

Adverum Biotechnologies, Inc. Price and EPS Surprise

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

Also, Adverum’s share price movement year to date indicates that the stock has underperformed the industry. The company’s shares have lost 12.1% against the industry’s gain of 9.8%.

Factors to Consider

Adverum is a development-stage biotech company with no approved product in its portfolio. Investors are thus expected to focus on pipeline development.

Adverum is currently developing gene therapy programs for rare diseases, alpha 1 antitrypsin (A1AT) deficiency, wet AMD and hereditary angioedema (HAE). The acquisition of Annapurna in May 2016 added a number of early-stage candidates to Adverum’s portfolio including ANN-043 (ADVM-001), ANN-053 (ANN-002) and ANN-003 among others.

Additionally, the company is planning to advance its anti-VEGF gene therapy candidates, ADVM-022 based on its pre-clinical development results, which showed comparable efficacy with current standard-of-care. In fact, Adverum met with the FDA in Feb 2017 and plans to file an investigational new drug (IND). The company is also developing another anti-VEGF gene therapy, ADVM-032.

Adverum is also advancing ADVM-043 in a phase I/II study for the treatment of A1AT deficiency. The company had plans to meet with the FDA to review its development plan for the candidate and initiate patient enrollment in the study in fourth-quarter 2017.

Moreover, it is evaluating ADVM-053 to treat hereditary angioedema (HAE) and discussed a development plan with the FDA in the first quarter. It is preparing to file an IND.

Meanwhile, the collaboration with Regeneron Pharmaceuticals, Inc. REGN for the joint development of novel candidates based on the former’s Ocular BioFactory platform was extended by three years till May 1, 2020.

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

In Apr 2017, the company notified REGENXBIO about the exercise of rights of termination of a license agreement related to A1AT disease. The termination will take effect in Oct 2017.

Earnings Whispers

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 be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: 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 37 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Adverum’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult this quarter.

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 a couple of 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.

Arena Pharmaceuticals, Inc. ARNA is expected to release results on Aug 14. The company has an Earnings ESP of +5.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Syndax Pharmaceuticals, Inc. SNDX has an Earnings ESP of +9.88% and a Zacks Rank #2. The company is expected to release results on Aug 8.

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