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Immune Design (IMDZ) Q1 Earnings: What Awaits the Stock?

Immune Design Corp. IMDZ is scheduled to report first-quarter 2016 results after the market closes on May 10.

The company has a mixed track record so far. It beat estimates in two of the last four trailing quarters and missed the same on two other occasions, with a positive average earnings surprise of 4.14%. Let’s see how things are shaping up for this announcement.

Factors in Play

Being a development-stage biopharmaceutical company, Immune Design has not generated any product revenues yet. The company earns revenues from collaboration and licensing agreements, and the sale of products associated with material transfer, collaboration and supply agreements.

Investors are expected to focus on the company’s progress on its pipeline. The company is developing multiple candidates using its two discovery platforms – ZVex and GLAAS – for the treatment of various types of cancer. Key pipeline candidates include CMB305 and G100. CMB305 has been designed under a prime-boost approach, involving the sequential dosing of two complementary agents – LV305 (from the ZVex platform) and G305.

CMB305 is currently undergoing an expansion study as a single agent in patients with cancers expressing the NY-ESO-1 tumor antigen. Data from the study are anticipated in the first half of 2016. The company also believes that CMB305 has the potential to gain orphan designation in both the U.S. and the EU. 

In addition, a randomized phase II trial on CMB305, in combination with Roche Holdings’ RHHBY investigational anti-PD-L1 therapy, atezolizumab, in comparison with atezolizumab alone, for locally advanced, relapsed or metastatic soft tissue sarcoma is currently underway. Data are expected in the fourth quarter of 2016. The company plans to seek for a regulatory approval for CMB305 in the soft tissue sarcoma indication assuming positive results from the ongoing trial.

Meanhwile, another candidate, G100, developed from the GLAAS platform, completed a phase I trial in patients with merkel cell carcinoma. Data are expected in the first half of 2016. Immune Design is collaborating with Merck & Co. Inc. MRK to evaluate G100 in combination with Merck’s Keytruda, for the treatment of patients with non-Hodgkin’s lymphoma.

The company recently dosed the first patient in a randomized phase Ib/II trial in patients with follicular non-Hodgkin lymphoma in combination with Keytruda. Results from the study are expected to be out by the first half of 2017.

Due to the numerous ongoing trials, operating expenses are expected to remain high in the first quarter. We expect the company to shed light on its progress with these trials during the first-quarter call.

What Our Model Indicates

Our proven model does not conclusively show that Immune 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. This is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 65 cents.

Zacks Rank: Although Immune Design’s Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

A Stock that Warrants a Look

Here is a company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Jazz Pharmaceuticals plc JAZZ has an Earnings ESP of +6.11% and a Zacks Rank #3. The company is expected to release first-quarter results on May 10.

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ROCHE HLDG LTD (RHHBY): Free Stock Analysis Report
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JAZZ PHARMACEUT (JAZZ): Free Stock Analysis Report
IMMUNE DESIGN (IMDZ): Free Stock Analysis Report
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