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Why Is Epizyme (EPZM) Up 16.2% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Epizyme, Inc. (EPZM - Free Report) . Shares have added about 16.2% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is EPZM due for a pullback? 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 drivers.

Epizyme Reports Narrower-Than-Expected Loss in Q1

Epizyme incurred a loss of 49 cents per share in the first quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 54 cents as well as the year-ago loss of 56 cents.

Quarter in Detail

With no approved products in its portfolio as of now, Epizyme heavily relies on its collaborators for revenues. The company fell short of earning any revenues in the reported quarter for the lack of collaboration milestones. However, the Zacks Consensus Estimate for the top line was pegged at $1 million.

Research and development (R&D) expenses increased 3.8% year over year to $25.6 million in the quarter. This downside was primarily due to the higher costs related to tazemetostat manufacturing and clinical development activities as well as research with respect to advancing the company’s preclinical G9a inhibitor program. General and administrative (G&A) expenses were $9.4 million in the quarter under review, up 13.3% from the year-ago period. This stemmed from an increased headcount and related expenses as well as expanded pre-commercial activities.

Epizyme had $247.9 million of cash, cash equivalents and marketable securities as of Mar 31, 2018 compared with $276.4 million as of Dec 31, 2017.

The company also expects its balance sheet as of Mar 31, 2018 to be sufficient enough to fund its planned operations through the third quarter of 2019. 

Pipeline Update

On Apr 23, 2018, the  FDA issued a partial clinical hold on the new enrollment of U.S. patients in the company’s ongoing trials for its lead pipeline candidate- tazemetostat. The FDA’s decision was based on a safety report of a pediatric patient, who developed a secondary T-cell lymphoma in the ongoing phase I study for tazemetostat. Epizyme is aggressively working to address the partial clinical hold and plans to confirm alignment with U.S. and French regulators so that enrolment can be resumed.

Epizyme was also advised on similar line by French National Agency for Medicines and Health Products Safety (ANSM). The company will present a new clinical data at multiple medical meetings during the second quarter and expects to file its first new drug application by the fourth quarter of 2018.

During the first quarter, the European Commission (EC) granted an orphan drug designation to tazemetostat for the treatment of patients with follicular lymphoma, diffuse large B-cell lymphoma (DLBCL) and malignant mesothelioma.

During the first quarter, Epizyme completed enrolling 71 wild-type EZH2 patients in its cohort, investigating tazemetostat in combination with the steroid prednisolone for relapsed or refractory DLBCL.

During the first quarter, the company also completed the enrollment of 45 patients with relapsed or refractory DLBCL in a phase Ib trial, investigating tazemetostat in combination with Roche’s Tecentriq (atezolizumab), a PD-L1 inhibitor.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been six revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 7.5% due to these changes.

Epizyme, Inc. Price and Consensus

VGM Scores

At this time, EPZM has a poor Growth Score of F, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth 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 these revisions 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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