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Is a Beat in Store for Ionis (IONS) This Earnings Season?

We expect Ionis Pharmaceuticals, Inc. IONS to beat expectations when it reports second-quarter 2017 results on Aug 8.

Last quarter, the company delivered a positive earnings surprise of 130%. In fact, it has pulled off a positive surprise in three of the trailing four quarters, recording an average beat of  95.70%.Let’s see how things are shaping up for this announcement.

Notably, Ionis’ share price has increased 9.7% year to date, compared with the Zacks classified industry’s gain of 3.7%.

Earnings Whispers

Our proven model shows that Ionis is likely to beat estimates this quarter as it has the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) – which have a significantly higher chance of beating earnings.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +157.14%. This is because the Most Accurate estimate is of 8 cents per share while the Zacks Consensus Estimate is pegged at a loss of 14 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ionis’ currently carries a Zacks Rank #2, which when combined with a positive ESP makes us reasonably confident of an earnings beat.

Note that we caution you 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.

Factors to Consider

Ionis earns revenues in the form of upfront, milestone and other payments under its partnerships with leading health care companies like Biogen Inc. BIIB and Glaxo. These agreements also validate the company’s technology platform.

Spinraza, for the treatment of spinal muscular atrophy (SMA) was approved in the U.S. in Dec 2016 and launched subsequently. It was granted marketing authorization in the European Union in Jun 2017. Also, it is the first approved treatment in the EU for SMA. Ionis entered into a collaboration agreement with Biogen to develop and commercialize Spinraza in 2012. Further, Inonis licensed Spinraza to Biogen and began receiving commercial revenue from Spinraza royalties after the drug was approved in the U.S.

Last week, Biogen released its second quarter 2017 results and announced that Spinraza was doing better-than-expected. Biogen raised its 2017 guidance for the drug. The company stated that Spinraza has witnessed faster-than-expected adoption in the U.S. and Biogen is ramping up launch efforts in outside U.S. markets.

Apart from Spinraza, we expect investor focus to be on Ionis’ pipeline update at the second-quarter conference call.

Last month, Ionis and Akcea submitted a marketing authorization application (MAA) to the European Medicines Agency (EMA) for volanesorsen for the treatment of patients with familial chylomicronemia syndrome (FCS).  In March, the companies also announced positive results from the Phase III APPROACH study of volanesorsen in patients with FCS. In fact, they believe that volanesorsen has the potential to be the first treatment option for patients suffering from the daily burden as well as the life-threatening risks of FCS.

Notably, Ionis and partner Bayer are advancing pipeline candidates IONIS-FXI Rx and IONIS-FXI-L Rx. In the second half of 2017, Ionis plans to initiate a phase IIb study evaluating IONIS-FXIRx in patients with end-stage renal disease to optimize the design of the phase III program. Furthermore, it plans to initiate a phase I study of IONIS-FXI-LRx early next year.

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 expected 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 scheduled to release results on Aug 3.

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