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What to Expect From Epizyme (EPZM) This Earnings Season?

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Epizyme, Inc.  is scheduled to report third-quarter 2017 results on Nov 1, after the closing bell.

Last quarter, the company came up with a positive earnings surprise of 14.29%. In fact, its track record has been strong, with Epizyme surpassing expectations in each of the trailing four quarters, recording an average positive surprise of 14.16%.

Notably, Epizyme’s share price has increased 32.7% year to date outperforming the industry’s gain of 3.7%.

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

Factors Influencing This Quarter

Epizyme is a development-stage company with no approved products in its portfolio. In fact, its top line comprises revenues earned through collaborations. Hence, investor focus is expected to remain on the company’s pipeline updates.

Currently, the company’s lead candidate, tazemetostat (an EZH2 inhibitor), is being evaluated as monotherapy in multiple phase II studies for indications such as relapsed or refractory non-Hodgkin lymphoma and in patients with certain molecularly defined solid tumors. The candidate showed meaningful clinical activity as a monotherapy, and was generally well tolerated in these trials.

Also, it intends to meet with the FDA, in the second half of 2017 and discuss the NHL program, with the goal of defining its registration pathways in various subtypes.

Furthermore, Epizyme is exploring tazemetostat to increase the clinical activity of immuno-oncology therapies by combining it with an anti-PD 1 or PDL-1 agent. Under its collaboration with Roche Holding AG (RHHBY - Free Report) , the company is evaluating tazemetostat in combination with anti-PD-L1 cancer immunotherapy, Tecentriq, for the treatment of patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) to determine the recommended phase II dose and advance into the expansion portion of the study.

Markedly, the company’s other experimental candidate, pinometostat, an inhibitor of the DOT1L HMT is currently in a phase I study for the treatment of children with MLL gene (MLL-r).

Epizyme had $193 million of cash, cash equivalents and marketable securities as of Jun 30, 2017 and expects that it will be sufficient to fund its planned operations at least till the third quarter of 2018.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Epizyme 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) — for this to happen. Unfortunately that is not the case here, as you will see below.

Zacks ESP: Epizyme 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 65 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Epizyme has a Zacks Rank #2. This when combined with 0.00% ESP makes surprise prediction difficult.

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

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.

Clovis Oncology, Inc. is scheduled to release results on Nov 1, after market close. The company has an Earnings ESP of +2.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +12.83% and a Zacks Rank #2. The company is scheduled to release results on Oct 30.

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