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Epizyme's Loss Narrower than Expected, Focus on Pipeline - Analyst Blog

Epizyme, Inc.EPZM reported fourth-quarter 2014 net loss of 44 cents per share, narrower than the Zacks Consensus Estimate of a loss of 54 cents. The company had reported earnings per share of 52 cents in the year-ago period.

Epizyme Inc. - Earnings Surprise | FindTheCompany

The company earned collaboration revenues of $10.3 million.

In the fourth quarter of 2014, research and development expenses were $20.5 million, up 30.7% from the year-ago quarter. The rise in R&D expenditure was primarily due to pipeline development.

General and administrative expenses increased 12.7% year over year to $4.9 million.

2014 Results

In 2014, Epizyme reported a loss of $1.67 per share, compared to a loss of 22 cents in the previous year. Collaboration revenues came in at $41.4 million, down 39.5%, primarily due to decline in milestone revenues, which was partially offset by increased research and development services revenues.

Re-acquisition of EPZ-6438 Rights and Other Pipeline Updates

Concurrently, Epizyme announced that it has re-acquired global rights to its EZH2 program, including EPZ-6438, from Eisai Co. Ltd. ESALY . According to the agreement, Eisai will hold the rights to the candidate in Japan, while Epizyme will take the responsibility of development, manufacturing and commercialization (upon approval) of the candidate in all other countries. Apart from royalty at mid-teen percentage on the sales of EPZ-6438 outside Japan, Epizyme will make an upfront payment of $40 million to Eisai, with total potential clinical milestone payments of up to $20 million and potential regulatory milestone payments of up to $50 million. In exchange, Epizyme will be entitled to a royalty at mid-teen percentage on EPZ-6438's sales in Japan.

EPZ-6438 is currently being evaluated in a phase I/II study for the treatment of B-cell non-Hodgkin lymphoma (NHL) and INI1-deficient solid tumors including synovial sarcoma and malignant rhabdoid tumor. Additionally, Epizyme intends to initiate a phase II study for NHL in Europe and other studies for INI1-deficient tumor in the second quarter and second half of 2015, respectively.

Meanwhile, the company intends to complete patient enrolment in a phase I pediatric study for EPZ-5676 for acute leukemia in the second half of 2015. The company said that it will reveal data from the 54 mg/m¬¬¬2 expansion cohort for adult patients suffering from acute leukemia before the end of 2015.

2015 Outlook

In 2015, Epizyme expects its research and development expenses to increase significantly due to the acquisition of global development rights to EPZ-6438. The company said that it intends to monitor its expenses in 2015 so as to be able to devote enough resources for speedy development of the candidate.

Our Take

We are pleased with Epizyme's fourth-quarter 2014 results. Moreover, with Epizyme gaining full control over development, manufacturing and commercialization (outside Japan) of EPZ-6438, the lead candidate at the company, we believe that its development process will expedite.

Epizyme carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are ANI Pharmaceuticals, Inc. ANIP and Cytokinetics, Incorporated CYTK . Both carry a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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