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Axovant (AXGT) to Post Q1 Earnings: What's in the Cards?

Zacks Equity Research

Axovant Gene Therapies Ltd. AXGT will report first-quarter fiscal 2019 earnings results.

The company’s earnings record has been mixed so far, having delivered a positive surprise in two of the last four quarters, missing expectations once while delivering in-line results once. The average four-quarter miss is 25.20%. In the last reported quarter, Axovant came up with a positive surprise of 72.89%.

Shares of Axovant have lost 17.6% so far this year against the industry’s rise of 0.3%.

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

Factors to Consider

Axovant does not have any approved product in its portfolio at the moment. As a result, the company is yet to generate any revenues.

Axovant is developing AXO-Lenti-PD, an investigational gene therapy as a potential one-time treatment of Parkinson’s disease (PD). In June, the company reported data from the first cohort of the phase II SUNRISE-PD dose escalation study on AXO-Lenti-PD, which examined two patients suffering PD. The candidate was generally well tolerated at six months of treatment following a single administration in both patients.

Axovant has already started enrollment in the second cohort of the phase II SUNRISE-PD study on AXO-Lenti-PD and plans to report initial data from up to six patients in this cohort in the fourth quarter of 2019.

Meanwhile, the company is developing two other investigational gene therapy candidates, namely AXO-AAV-GM1 and AXO-AAV-GM2. While AXO-AAV-GM1 is being developed for the potential treatment of GM1 gangliosidosis, AXO-AAV-GM2 is being developed as a potential one-time treatment of GM2 gangliosidosis (including Tay-Sachs disease and Sandhoff disease). GM1 gangliosidosis is a rare, inherited neurodegenerative lysosomal storage disorder.

In March 2019, the company reported initial data from a study on AXO-AAV-GM2 for treating patients with advanced Tay-Sachs disease. The candidate was well tolerated with no serious adverse event reported. Axovant plans to enroll patients in a multi-subject clinical study on AXO-AAV-GM2 in the second half of 2019. Moreover, in May 2019, Axovant dosed the first patient for the potential treatment of GM1 gangliosidosis with its gene therapy AXO-AAV-GM1. Initial data from the same is expected in the second half of 2019.

We expect management to provide a thorough update on the same during the upcoming earnings call.

Earnings Whispers

Our proven model does not conclusively show that Axovant is likely to beat estimates this quarter to be reported. This is because the stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Axovant has an Earnings ESP of -42.80%, representing the percentage difference between the Most Accurate Estimate of a loss of $1.91 and the Zacks Consensus Estimate of a loss of $1.34. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Axovant sports a Zacks Rank of 1, which increases the predictive power of ESP. However, its negative ESP in the combination leaves surprise prediction inconclusive.

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

Axovant Gene Therapies Ltd. Price and EPS Surprise

Axovant Sciences Ltd. Price and EPS Surprise

Axovant Gene Therapies Ltd. price-eps-surprise | Axovant Sciences Ltd. Quote

Stocks That Warrant a Look

Here are some biotech stocks worth considering as our model shows that these have the right mix of elements to beat on earnings this reporting cycle.

CRISPR Therapeutics AG CRSP has a Zacks Rank #1 and an Earnings ESP of +3.90%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences, Inc. GILD is scheduled to release second-quarter results on Jul 30, after the market closes. The company has an Earnings ESP of +2.41% and a Zacks Rank #2.

Regeneron Pharmaceuticals, Inc. REGN has a Zacks Rank #3 and an Earnings ESP of +6.25%. The company is scheduled to release second-quarter results on Aug 6, before the market opens.

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