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What's in Store for Intrexon (XON) in this Earnings Season?

Zacks Equity Research

Intrexon Corporation XON is expected to report second-quarter 2017 results on Aug 8.

Last quarter the company saw a negative earnings surprise of 13.04%. In fact, it missed expectations thrice in the trailing four quarters and met estimates once, with an average negative surprise of 13.04%.

Notably, Intrexon’s share price has decreased 12% year to date against the Zacks classified industry’s gain of 3.4%.

Factors to Consider

The company follows a business model under which it commercializes its technologies through exclusive channel collaborations (ECC), licensing agreements and joint ventures with collaborators that have market and product development expertise, as well as sales and marketing capabilities to bring new and improved products and processes to market. Such agreements provide Intrexon with funds in the form of technology access fees, and milestones and other payments.

Meanwhile, the company is developing several candidates in partnership with other companies. Intrexon in collaboration with Fibrocell Science, Inc. FCSC completed enrolment in a phase I/II study on FCX-007 for the treatment of recessive dystrophic epidermolysis bullosa (RDEB). A phase I/II trial with FCX-007 gene therapy for the ultra orphan indication of RDEB debilitating genetic disorder. Data is expected in the third quarter of 2017.

Also, the second gene therapy candidate- FCX-013, being developed by Fibrocell for the treatment of linear scleroderma. In Jun, FDA granted Rare Pediatric Disease Designation to FCX-013 for the treatment of moderate to severe localized scleroderma.

In May, Intrexon’s collaborator, ZIOPHARM Oncology, Inc. announced that the FDA accepted investigator-initiated Investigational New Drug (IND) application for a phase I study infusing Intrexon’s CD33-specific chimeric antigen receptor T cell (CAR-T) and therapy, for the treatment of relapsed or refractory acute myeloid leukemia (AML). ZIOPHARM 's immuno-oncology programs, in collaboration with Intrexon include CAR-T and other adoptive cell-based approaches that use non-viral gene transfer methods for broad scalability.

Notably, Intrexon has been quite active on the acquisition front. In Jun, Intrexon completed the acquisition of GenVec, Inc., which is a clinical-stage biopharmaceutical company and pioneer in the development of AdenoVerse gene delivery technology platform.  

With the addition of GenVec's AdenoVerse technology Intrexon plans to create the next generation of adenoviral (AdV) delivery with significantly higher payload capacity that exceeds 30kb, compared with current viral delivery methods ranging from 4.5kb – 9kb, through a scalable manufacturing platform utilizing helper-dependent adenovirus.

We expect investor focus to remain on the company’s performance along with other developmental updates on the quarterly call.

What Our Model Indicates

Our proven model does not conclusively show an earnings beat for Intrexon 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 surpass estimates. 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 are pegged at a loss of 21 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Intrexon has a Zacks Rank #3, which when combined with its 0.00% ESP makes surprise prediction difficult.

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

Intrexon Corporation Price and EPS Surprise


Intrexon Corporation Price and EPS Surprise | Intrexon Corporation Quote

Stocks to Consider

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.

Tesaro, Inc. TSRO has an Earnings ESP of +16.40% and a Zacks Rank #3.  The company is scheduled to release results on Aug 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

Esperion Therapeutics, Inc. ESPR has an Earnings ESP of +17.37% and a Zacks Rank #3.  The company is expected to release results on Aug 3.

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