It has been about a month since the last earnings report for Epizyme (EPZM). Shares have lost about 14.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Epizyme Reports Narrower-Than-Expected Loss in Q4
Epizyme incurred loss of 29 cents per share in the fourth quarter of 2018, narrower than the Zacks Consensus Estimate of loss of 49 cents and the year-ago loss of 52 cents.
Quarter in Detail
With no approved products in its portfolio as of now, Epizyme heavily relies on its collaborators for revenues. Collaboration revenues for the fourth quarter of 2018 were $9.7 million compared with no revenues in the fourth quarter of 2017.
Research and development (R&D) expenses decreased 24.5% year over year to $21.8 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 $12.2 million in the quarter, up 44.4% from the year-ago period, due to rise in medical affairs and commercial costs as a result of organizational development in preparation for tazemetostat commercialization.
Epizyme had $240.3 million of cash, cash equivalents and marketable securities as of Dec 31, 2018, compared with $276.4 million as of Dec 31, 2017. The company expects existing cash, cash equivalents and marketable securities to be sufficient to fund its planned operations in the second quarter of 2020.
Epizyme is on track to submit its first new drug application (NDA) submission for tazemetostat for epithelioid sarcoma (ES) in the second quarter of 2019. If approved, tazemetostat will be the first commercially available EZH2 inhibitor and the first treatment specifically indicated for epithelioid sarcoma patients.
In late 2018, Epizyme met the FDA to review its planned registration strategy for tazemetostat in patients with Follicular Lymphoma (FL), who have been previously treated with two or more systemic therapies. Based on this interaction, the company anticipates to report updated data from a phase II study at a medical meeting in mid-2019 and submit an NDA for accelerated approval for this patient population in the fourth quarter of 2019.
In mid-2019, Epizyme is planning to initiate a combination study of tazemetostat with the chemo-free treatment regimen “R2” [Celgene’s Revlimid plus Roche’s (Rituxan)] for the treatment of patients with relapsed/refractory FL, who have received at least one prior therapy. The company is also finalizing plans for a trial of tazemetostat in combination with Rituxan for the treatment of patients with relapsed/refractory FL.
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 9.18% due to these changes.
At this time, Epizyme has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was 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.
Estimates have been trending upward for the stock, and the magnitude of these revisions has been net zero. 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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