Aeterna Zentaris Inc. AEZS is likely to report its fourth-quarter 2018 earnings soon.
Aeterna’s earnings performance has been encouraging, with the company beating estimates in the last four quarters, with the average positive surprise being 297.95%.
However, shares of Aeterna have significantly outperformed the industry in the past six months. The stock has rallied 124.8% against the industry’s decline of 11.8%.
In the last reported quarter, Aeterna delivered a positive earnings surprise of 40%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Aeterna is a specialty biopharmaceutical company focused on developing treatments for rare endocrine diseases either through acquisitions, in-licensing or in-house development. The company has one approved diagnostic test – Macrilen – in its portfolio used for assessing patients with adult growth hormone deficiency (“AGHD”).
In January 2018, the company out-licensed rights to the drug to Strongbridge Ireland Limited, a subsidiary of Strongbridge Biopharma SBBP for commercialization of the test in the United States and Canada. Aeterna is eligible to earn royalty on net sales of Macrilen, which was launched in July 2018 by Strongbridge. Aeterna will share development costs of Macrilen with Strongbridge and is eligible to receive milestone payments as well. The companies are developing the test for pediatric patients.
Per the agreement, Aeterna also supplies ingredients for the manufacture of Macrilen to Strongbridge, which is recorded as product sales. Aeterna generated $0.7 million in product sales in third-quarter 2018. Moreover, Strongbridge recorded sales of $1.1 million from Macrilen in the third quarter and Aeterna will receive a royalty on the amount. Uptake of the demand for test in the fourth quarter will impact product sales. In October, Strongbridge entered into an agreement with Novo Nordisk NVO to transfer Macrilen rights to the latter.
In January 2019, Macrilen received approval in Europe. We expect management to be flooded with questions on its commercialization plans in Europe at the conference call.
Operating expenses for the company are likely to remain low due to decrease in clinical activities as well as elimination of sales activities following the agreement with Strongbridge.
Investors will primarily focus on the progress of Macrilen in pediatric studies on the company’s fourth-quarter earnings call.
Our proven model does not conclusively show that Aeterna 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.
Earnings ESP: Aeterna’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 19 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Although Aeterna’s Zacks Rank #2 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
Aeterna Zentaris Inc. Price and EPS Surprise
Aeterna Zentaris Inc. Price and EPS Surprise | Aeterna Zentaris Inc. Quote
A Stock That Warrants a Look
Here is a biotech stock that has the right combination of elements to beat on earnings:
BioDelivery Sciences International, Inc. BDSI has an Earnings ESP of +38.46% and a Zacks Rank #2. The company is scheduled to report results on Mar 14.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Novo Nordisk A/S (NVO) : Free Stock Analysis Report
AEterna Zentaris Inc. (AEZS) : Free Stock Analysis Report
Strongbridge Biopharma PLC (SBBP) : Free Stock Analysis Report
BioDelivery Sciences International, Inc. (BDSI) : Free Stock Analysis Report
To read this article on Zacks.com click here.