Investor focus will remain on Evoke Pharma, Inc.’s EVOK progress and issues related to its new drug application (NDA) filling for Gimoti to treat diabetic gastroparesis when it reports first-quarter 2019 earnings results.
The company’s performance over the trailing four quarters has been encouraging with its earnings having surpassed expectations twice while missing the same just once and delivering in-line results on another occasion. The average previous four-quarter negative surprise is 3.40%. In the last reported quarter, Evoke Pharma delivered a positive surprise of 9.09%.
Shares of Evoke Pharma have plummeted 71% so far this year, underperforming the industry’s increase of 8.7%.
Let’s see, how things are shaping up for this announcement.
Factors to Consider
Evoke Pharma’s present portfolio is in want of an approved product. As a result, the company is yet to generate any revenue figures from the same.
The company is developing its pipeline candidate, Gimoti (metoclopramide), for treating symptoms in adult women with acute and recurrent diabetic gastroparesis. Last August, the FDA accepted the NDA for Gimoti related to the given indication and set an action date of Apr 1, 2019.
Notably, this March, the FDA issued a multi-disciplinary review (DR) letter to Evoke Pharma for conveying its preliminary thoughts on deficiencies identified in connection with the NDA filling review of Gimoti. Following this, in the same month, Evoke Pharma submitted its response and requested a meeting with the regulatory body to discuss supplemental materials ahead of the action date set for Gimoti.
However, last month, Evoke Pharma announced that it has received a Complete Response Letter (CRL) from the FDA regarding the NDA for Gimoti. The regulatory agency decided not to approve the NDA in its present form and recommended an NDA resubmission. The decision was based on clinical pharmacology and the product quality/device quality issues.
We expect management to provide a thorough update on the same during the upcoming investors’ call.
The timely approval for Gimoti would have been a huge boost to the company. However, with the FDA issuing a CRL, the future prospect for Evoke Pharma is a lingering concern in the upcoming quarters.
The proven Zacks model does not conclusively show that Evoke Pharma is likely to beat estimates this earnings season. This is because a stock needs to have both a positive Earnings ESP and a top 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: Evoke Pharma has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 7 cents each. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Evoke Pharma currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP in the combination makes surprise prediction difficult for the stock this reporting cycle.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Evoke Pharma, Inc. Price and EPS Surprise
Evoke Pharma, Inc. Price and EPS Surprise | Evoke Pharma, Inc. Quote
Stocks That Warrant a Look
Here are a few health care stocks worth considering as our model shows that these have the right mix of elements to beat on earnings this time around.
Adverum Biotechnologies, Inc. ADVM has a Zacks Rank of 3 and an Earnings ESP of +1.82%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merus N.V. MRUS has a Zacks Rank of 1 and an Earnings ESP of +9.62%.
Repligen Corporation RGEN has a Zacks Rank #2 and an Earnings ESP of +22.64%. The company is scheduled to report first-quarter 2019 results on May 9.
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