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Why Is Epizyme (EPZM) Down 11.9% Since Last Earnings Report?

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A month has gone by since the last earnings report for Epizyme (EPZM - Free Report) . Shares have lost about 11.9% in that time frame, underperforming the S&P 500.

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

Epizyme Reports Narrower-Than-Expected Loss in Q3

Epizyme incurred a loss of 54 cents per share in the third quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 60 cents and the year-ago loss of 63 cents.

Quarter in Detail

With no approved products in its portfolio as of now, Epizyme heavily relies on its collaborators for revenues. The company did not report any collaboration revenues during the quarter.

Research and development (R&D) expenses decreased 6% year over year to $27 million in the quarter. This decline was primarily due to decreased clinical trial expenses and discovery-stage research expenses, offset by an increase in tazemetostat manufacturing costs.

General and administrative (G&A) expenses were $11.5 million in the quarter, up 23.8% from the year-ago period due to increases in pre-commercialization activities and personnel-related expenses.

Epizyme had $180.8 million of cash, cash equivalents and marketable securities as of Sep 30, 2018 compared with $307.2 million as of Sep 30, 2017. The company expects its existing cash, cash equivalents and marketable securities to be sufficient to fund its planned operations in the first quarter of 2020.

Pipeline Update

Epizyme presented positive interim data from the fully enrolled epithelioid sarcoma cohort of its ongoing phase II study of its lead pipeline candidate tazemetostat in October. The study showed that oral, twice daily administration of tazemetostat resulted in durable objective responses and encouraging clinically meaningful overall survival in both treatment-naive patients and patients who had been previously treated with an anticancer therapy. The company is on track to submit its new drug application (NDA) for tazemetostat in ES in the first half of 2019, with a path to submission for accelerated approval.

The company also is on track to complete enrollment of follicular lymphoma patients with EZH2 activating mutations by the end of 2018. Epizyme plans to continue engaging with the FDA to refine its registration strategy in follicular lymphoma, and provide an update on its plans in early 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 17.66% due to these changes.

VGM Scores

Currently, Epizyme has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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.

Outlook

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




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