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Why Is Epizyme (EPZM) Down 18% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for Epizyme, Inc. (EPZM - Free Report) . Shares have lost about 18% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is EPZM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Epizyme Reports Narrower-than-Expected Loss in Q4

Epizymereported a loss of 52 cents per share in the fourth quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of 56 cents but and the year-ago loss of 60 cents.

Quarter in Detail

With no approved products in its portfolio as of yet, Epizyme relies heavily on its collaborators for revenues. The company did not earn any revenues in the quarter as there were no collaboration milestones as against $0.5 million garnered in the year-ago quarter. However, the Zacks Consensus Estimate for fourth-quarter revenues was pegged at $1 million.

Research and development (R&D) expenses increased 1.9% year over year to $28.9 million. The increase was primarily owing to the increased to higher costs for tazemetostat manufacturing and clinical trial activities in 2017.

General and administrative (G&A) expenses were $8.4 million in the quarter, up 11.2% from the year-ago quarter. The increase was backed by increased consulting services and preparations for tazemetostat commercialization.

Epizyme had $276.4 million of cash, cash equivalents and marketable securities as of Dec 31, 2017 compared with $242.2 million as of Dec 31, 2016. The increase was driven by public offering of common stock that closed in September 2017, offset by operating expenditures for the year.

The company also expects that this balance as of Dec 31, 2017, will be sufficient to fund its planned operations into the fourth quarter of 2019. 

Pipeline Update

Epizyme had a positive interaction with the FDA in the fourth quarter of 2017 regarding its registration strategy for tazemetostat for the treatment of patients with follicular lymphoma. and the company also plans to submit for accelerated approval. The company expects to submit  a new drug application (NDA) in 2019.

Based on discussions with the FDA in 2017, Epizyme has identified a path to submit for accelerated approval for tazemetostat for the treatment of patients with epithelioid sarcoma. Further, the company also plans to submit for accelerated approval for tazemetostat for the treatment of patients with epithelioid sarcoma. A NDA filing is expected in the fourth quarter of 2018.

The company plans to present data from its phase II study of tazemetostat in patients with relapsed or refractory mesothelioma at a medical meeting and to communicate next steps for this tumor type in mid-2018.

Epizyme is advancing its ongoing phase II study of tazemetostat in adult patients with INI1-negative tumors. In the second half of 2018, the company plans to present data from cohorts that have surpassed futility, which currently includes epithelioid sarcoma, malignant rhabdoid tumor and other INI1-negative tumor cohorts.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.

Epizyme, Inc. Price and Consensus

 

Epizyme, Inc. Price and Consensus | Epizyme, Inc. Quote

VGM Scores

At this time, EPZM has a poor Growth Score of F. Its Momentum is doing a lot better with an A. The stock was also allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Notably, EPZM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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