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What's in Store for Innoviva (INVA) This Earnings Season?

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Zacks Equity Research
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We expect royalties from Innoviva, Inc.’s INVA collaborated drugs to have driven revenues in fourth-quarter 2020.

Shares of the company have lost 13.9% in the past year against the industry’s rise of 5%.

Innoviva’s earnings performance has been mixed over the trailing four quarters. The company beat expectations in three of the last four quarters and missing the same once. The trailing four-quarter earnings surprise is 33.09%, on average.

In the last reported quarter, Innoviva delivered an earnings surprise of 9.52%.

Let’s see how things have shaped up prior to this announcement.

Factors to Note

Innoviva has a long-acting beta2 agonist (“LABA”) collaboration agreement with British pharma giant, Glaxo GSK. Per this agreement, Innoviva records royalties on global sales of certain Glaxo’s Ellipta products — Relvar/Breo, Anoro and Trelegy. This is Innoviva’s sole revenue source.

We expect strong demand for Trelegy Ellipta to have driven its sales in the fourth quarter, and in turn Innoviva’s royalties. The drug demonstrated a strong growth trend in the first nine months of 2020 despite the pandemic. At-home administration of this drug has helped it remain in the positive territory.

Moreover, the FDA approved a label expansion of Trelegy Ellipta in September 2020, which is likely to have boosted sales of the drug in the fourth quarter.

Sales of Relvar/Breo Ellipta recovered during the third quarter on the back of a stronger ICS/LABA market in the United States, following a period of competitive pressure due to the U.S. generic launch of Glaxo’s respiratory drug, Advair, in early 2019. We expect recovery in the U.S. sales of the drug to have continued in the soon-to-be reported quarter. Meanwhile, growth in European markets and Japan is likely to have boosted sales further.

Uptrend in sales of Anoro Ellipta is likely to have continued in the fourth quarter, driving royalties further

We expect foreign currency translation to have positively impacted ex-U.S. sales of these drugs, thus benefiting royalties for Innoviva.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Innoviva this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Innoviva’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at earnings of 40 cents.

Zacks Rank: Innoviva currently carries a Zacks Rank #4 (Sell).

Innoviva, Inc. Price and Consensus

Innoviva, Inc. Price and Consensus
Innoviva, Inc. Price and Consensus

Innoviva, Inc. price-consensus-chart | Innoviva, Inc. Quote

Stocks That Warrant a Look

Here are some biotech stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

Alexion Pharmaceuticals, Inc. ALXN has an Earnings ESP of +12.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes plc ALKS has an Earnings ESP of +21.74% and a Zacks Rank #3.

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