Aduro (ADRO) Q1 Loss Wider than Expected, Revenues Fall

Aduro BioTech, Inc. ADRO reported a loss of 45 cents per share in the first quarter of 2016, wider than the Zacks Consensus Estimate of a loss of 30 cents but narrower than the year-ago loss of $39.97.

Since Aduro does not have any approved product in its portfolio yet, the company's top line solely comprises collaboration, license and grant revenues.

Quarter in Detail

Quarterly revenues were down 58.3% year over year to $4 million, primarily due to deferred revenues from the company's collaboration agreement with Johnson & Johnson's JNJ Janssen Biotech, Inc. Revenues were also below the Zacks Consensus Estimate of $13.5 million.

Research and development (R&D) expenses escalated 97.2% to $20.9 million, primarily due to manufacturing costs related to the ongoing studies and personnel expenses.

General and administrative (G&A) expenses were $9 million, up 45.2% year over year.

Pipeline Update

Meanwhile, Aduro is progressing with the candidates in its pipeline. Currently, the company is evaluating CRS-207, in combination with GVAX Pancreas, in two phase IIb studies – ECLIPSE and STELLAR – in patients with metastatic pancreatic cancer. The company expects to present top-line data from the ECLIPSE study in the second quarter of 2016 and interim data from the STELLAR study in the second half of the year.

Our Take

Aduro's first-quarter results were disappointing with the company reporting a wider-than-expected loss and revenues lagging estimates. However, we are positive on the company's collaboration with Janssen Biotech, which should drive revenues in the form of milestone payment. With a number of data readouts lined up for the coming quarters, we expect investors to focus on the company's pipeline updates, going forward.

Aduro currently has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector are Aegerion Pharmaceuticals, Inc. AEGR and Gilead Sciences Inc. GILD, both  sporting a Zacks Rank #1 (Strong Buy).

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