Epizyme (EPZM) Reports Narrower-than-Expected Loss In Q4

Epizyme, Inc. ( (NASDAQ:EPZM) ) reported 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 and the year-ago loss of 60 cents.

So far this year, the stock has gained 16.1%, as against the industry’s decline of 3.3%.

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 stemmed from higher 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 in 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.

Our Take

Epizyme reported narrower than expected loss in the fourth quarter of 2017. Epizyme's efforts on developing its lead candidate, tazemetostat, for a number of hematological malignancies and genetically defined solid tumors are impressive. During the fourth quarter of 2017, the company had a productive interaction with the FDA to design the registration strategy for tazemetostat for epithelioid sarcoma and follicular lymphoma (FL) and identified a path to submit for accelerated approval for both the indications. The company also plans to file a first new drug application (NDA) of tazemetostat for epithelioid sarcoma in fourth quarter of 2018 and second NDA for FL in 2019. A potential approval for the candidate will be a boost for the company.

Zacks Rank & Key Picks

Epizyme holds a Zacks Rank #3 (Hold). A few better-ranked stocks from the same space are Regeneron (NASDAQ:REGN) , Ligand Pharmaceuticals (NASDAQ:LGND) and Enanta Pharma (NASDAQ:ENTA) . While Regeneronsports a Zacks Rank #1 (Strong Buy), Ligand and Enanta Pharma carry a Zacks Rank #2 (Buy), each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Regeneron’s earnings per share estimates have moved up from $18.65 to $18.67 and from $21.56 to $21.58 for 2018 and 2019, respectively in the last 30 days. The company pulled off a positive earnings surprise in three of the last four quarters, with an average beat of 9.15%.

Ligand’s earnings per share estimates have moved up $3.78 to $4.24 from $4.75 to $5.32 for 2018 and 2019, respectively over the last 30 days. The company delivered positive earnings surprises in three of the trailing four quarters, with an average beat of 24.88%. The company’s shares have rallied 66.8% over a year.

Enanta Pharma delivered a positive earnings surprise in three of the last four quarters, with an average beat of 373.1%. The company’s shares surged 200.5% over a year.

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