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Epizyme (EPZM) Q2 Loss Narrows, Shares Crash 24% on Setbacks

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Epizyme, Inc. (EPZM - Free Report) incurred a loss of 42 cents per share in the second quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 53 cents as well as the year-ago loss of 48 cents.

Shares of the company crashed almost 24% following the earnings release. So far this year, the stock has decreased 21.9% compared with the industry’s decline of 2.8%.

Quarter in Detail

With no approved products in its portfolio as of now, Epizyme heavily relies on its collaborators for revenues. The collaboration revenue in the reported quarter was $12 million which surpassed the Zacks Consensus Estimate of $2 million.

Research and development (R&D) expenses increased 14.9% year over year to $31.3 million in the quarter. This upside was primarily due to the higher costs related to tazemetostat manufacturing and pipeline activities as well as other early-stage pipeline development

General and administrative (G&A) expenses were $10.9 million in the quarter, down 2.3% from the year-ago period due to reduced consulting costs.

Epizyme had $215.6 million of cash, cash equivalents and marketable securities as of Jun 30, 2018 compared with $193 million as of Jun 30, 2017.

Pipeline Update

Epizyme expects to file its first new drug application for its leadpipeline candidate- tazemetostat for the treatment of epithelioid sarcoma (ES) in the first half of 2019. The company has delayed the filing by six months as initially it was planned for the fourth quarter of 2018.

The company has been conducting a phase II study that is assessing tazemetostat activity in cohorts of patients with relapsed and/or refractory diffuse large B-cell lymphoma (DLBCL). These include study of tazemetostat as a monotherapy and in combination with prednisolone studies.

Epizyme conducted an interim assessment of data from this study and concluded that the clinical activity seen in these cohorts is not sufficient to warrant further development of tazemetostat in DLBCL as a monotherapy or in combination with prednisolone. Thus, the company has decided not to pursue the tazemetostatmonotherapy and the combination with prednisolone studies.  The company has two additional combination studies in DLBCL ongoing and plans to evaluate other potential combinations to treat DLBCL.

In April, the FDA issued a partial clinical hold on the new enrollment of U.S. patients in the company’s ongoing trials for tazemetostat. The FDA’s decision was based on a safety report of a pediatric patient, who developed a secondary T-cell lymphoblastic lymphoma (T-LBL) in the ongoing phase I study for tazemetostat.

Along with the earnings release, the company said it has reviewed the single T-LBL case in detail, completed a comprehensive assessment of tazemetostat safety data and clinical activity observed to date across studies, and consulted a panel of external experts to review and validate the assessment. Epizyme said tha this information will be included in a formal response to regulatory authorities.

Importantly, however, the company suggested that there could be some changes in the study protocols , including some “changes to the patient populations” being evaluated in the study.

All these development setbacks instigated the stock decline.

Epizyme, Inc. Price, Consensus and EPS Surprise

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

 

Zacks Rank & Other Stocks to Consider

Epizyme currently carries a Zacks Rank #2 (Buy).

Some better-ranked stocks worth considering are Gilead Sciences Inc. (GILD - Free Report) , Utlragenyx Pharmaceutical Inc. (RARE - Free Report) and Vanda Pharmaceuticals Inc. (VNDA - Free Report) . All of them carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gilead’s earnings per share estimates have increased from $6.11 to $6.57 for 2018 and from $6.36 to $6.48 for 2019 over the past 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 6.43%. The stock has rallied 8.4% so far this year.

Utlragenyx’s loss per share estimates have narrowed from $5.32 to $5.30 for 2018 and from $6.88 to $6.80 for 2019 over the past 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 47.6%. The stock has rallied 71.6% so far this year.

Vanda’s earnings per share estimates have increased from 18 cents to 20 cents for 2018 and from 77 cents to 80 cents for 2019 over the past 30 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 133.1%. The stock has rallied 42.8% so far this year.

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