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Is a Beat in the Cards for ImmunoGen (IMGN) in Q2 Earnings?

We expect ImmunoGen, Inc. IMGN to beat expectations when it reports second-quarter 2017 results on Jul 28, before the market opens.Last quarter, the company delivered a positive earnings surprise of 44.44%.

ImmunoGen’s shares significantly outperformed the industry by gaining 189.2% so far this year, while the industry witnessed an increase of just 6.9%.

Although ImmunoGen’searnings performance has been disappointing with earnings missing expectations in three of the last four quarters, it has beaten estimates in the last quarter bringing the average negative surprise to 0.91%.

ImmunoGen, Inc. Price and EPS Surprise

ImmunoGen, Inc. Price and EPS Surprise | ImmunoGen, Inc. Quote

Factors at Play

With no approved product in ImmunoGen’s portfolio, investor focus should remain on the company’s progress with its lead pipeline candidate, mirvetuximab soravtansine, and other programs.

ImmunoGen has made significant progress with regard to its lead pipeline candidate, mirvetuximab soravtansine, which is currently in a phase III study (FORWARD I) as a single-agent therapy.

Combination regimens with mirvetuximab soravtansine in ovarian cancer are in phase Ib/II FORWARD II study. Following successful completion of dose escalation, a phase II expansion cohort in combination with Roche Holding AG’s RHHBY Avastin is also ongoing. ImmunoGen reported initial data from the FORWARD II study in May 2017, which demonstrated promising tolerability by the candidate in patients. This shows the potential of the combination of the candidate with currently available therapies in treating ovarian cancer.

Apart from mirvetuximab soravtansine, ImmunoGen is working on developing a couple of other candidates, including IMGN779 and IMGN632. Data from a phase I study evaluating IMGN779 in acute myeloid leukemia (AML), presented in June, showedfavorable tolerability and encouraging anti-leukemia activity in patients. It showed safety and tolerability across seven dose levels with no dose limiting toxicities.The company plans to file an investigational new drug application (INDA) for IMGN632 to treat hematological malignancies in the third quarter of 2017.

In May 2017, the company announced the saleof its pipeline candidate, IMGN529, a clinical-stage anti-CD37 antibody-drug conjugate, to Switzerland-based Debiopharm International SA which is being evaluated in B-cell malignancies, such as non-Hodgkin lymphoma. ImmunoGen received an upfront payment of $25 million this quarter and is entitled for another $5 million in milestone payments.

In its last earnings call, the company had said that it has enough funds to continue its operations in the second quarter of 2018.

What Our Model Indicates

Our proven model shows that ImmunoGen is likely to beat on earnings because it has the right combination of the two key ingredients. A 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.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (loss of 20 cents per share) and the Zacks Consensus Estimate (loss of 30 cents per share), is +33.33%. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ImmunoGen has a Zacks Rank #2. The combination of ImmunoGen’s favorable Zacks Rank #2 and positive ESP makes us confident of an earnings beat in the upcoming release.

Sell-rated stocks (Zacks Rank #4 or 5), on the other hand, should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

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.

Nivalis Therapeutics, Inc. NVLS is expected to release results on Aug 8. The company has an Earnings ESP of +45.83% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exact Sciences Corporation EXAS has an Earnings ESP of +5.41% and a Zacks Rank #2. The company is scheduled to release results on Jul 25.

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