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Soleno Therapeutics (SLNO) to Post Q1 Earnings: What's Up?

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Soleno Therapeutics, Inc. (SLNO - Free Report) will report first-quarter 2019 earnings results.

The company’s performance over the trailing four quarters has been encouraging with its earnings having surpassed expectations twice while missing the same once. The average trailing four-quarter beat is 31.61%. In the last reported quarter, Soleno Therapeutics delivered a positive surprise of 57.14%.

Shares of Soleno Therapeutics have rallied 20.4% so far this year, outperforming the industry’s increase of 11%.

 

Let’s see, how things are shaping up for this announcement.

Factors to Consider

Soleno Therapeutics does not have any approved product in its portfolio at the moment. As a result, the company is yet to generate any revenues from the same.

The company is developing its lead candidate, Diazoxide Choline Controlled-Release (DCCR) tablets, for the treatment of Prader-Willi syndrome (PWS). It is currently enrolling patients in the ongoing placebo-controlled phase III DESTINY PWS study, which is evaluating the efficacy and safety of DCCR for the given patient population.

Notably, this March, the Data Safety Monitoring Board (DSMB) recommended the continuation of the DESTINY PWS study without modification, supporting the safety profile of DCCR tablets. Soleno Therapeutics plans to present top-line data from this program later this year.

We expect management to provide an update on the same during the upcoming investors call.

Last July, the DCCR development analysis for treating PWS was granted a Fast Track designation by the FDA.

Soleno Therapeutics has activated 14 sites across the United States as 90% patients, who completed the DESTINY PWS study, decided to continue with C602, the 9-month open-label safety extension probe. The company continues to raise more funds through private placement of equity securities to support the DCCR development program. We expect this trend to continue in the future quarters as well.

Earnings Whispers

The proven Zacks model does not conclusively show that Soleno Therapeutics is likely to beat estimates this earnings season. This is because a stock needs to have both a positive Earnings ESP and a top Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Soleno Therapeutics has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 29 cents each. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Soleno Therapeutics currently sports a Zacks Rank of 1, which increases the predictive power of ESP. However, the company’s 0.00% ESP in the combination makes surprise prediction difficult for the stock this reporting cycle.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are a few health care stocks worth considering as our model shows that these have the right mix of elements to beat on earnings this time around.

Aduro Biotech, Inc. has a Zacks Rank #2 and an Earnings ESP of +82.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Horizon Pharma Public Limited Co. has a Zacks Rank #3 and an Earnings ESP of +25.00%. The company is scheduled to report first-quarter 2019 results on May 8.

Clovis Oncology, Inc. has a Zacks Rank #2 and an Earnings ESP of +5.45%. The company is scheduled to report first-quarter 2019 results on May 7.

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