'We Expect A Quick Resolution': Despite Partial Clinical Hold On Epizyme's Drug Candidate, Wedbush Stays Bullish

Epizyme Inc (NASDAQ: EPZM)'s announcement that the FDA was placing a partial hold on its lead cancer candidate tazemetostat has "minimal" long-term consequences, a Wedbush analyst said Tuesday.  

The Analyst

Analyst David Nierengarten maintained an Outperform rating on the shares of Epizyme and lowered the 12-month price target from $24 to $20.

The Thesis

The safety concerns behind the partial hold on tazemetostat are "fully addressable" and unlikely to substantially restrict the usage of the drug, Nierengarten said in a Tuesday note. 

The hold is a precautionary measure following a pediatric patient's development of a secondary malignancy in the tazemetostat study, the analyst said. Epizyme has not indicated any change to its regulatory timeline guidance, he said. 

The NDA for tazemetostat in epithelioid sarcoma adult patients who are INI1-negative is likely to be filed on time in the fourth quarter, while the filing for follicular lymphoma could be delayed to late 2019 or early 2020 versus an original itinerary of 2019, according to Wedbush. 

The FDA's decision to allow patients who are already enrolled to continue with the therapy is an indicator of the FDA's view that the overall risk-benefit profile is positive, the analyst said.

Wedbush expects the hold to be lifted as soon as Epizyme completes an update of the therapy's informed consent forms, investigator's brochure and other study materials, Nierengarten said. 

"We expect a quick resolution, but are slightly pushing off our timelines to account for the pause in enrollment and also trimming peak opportunity in molecularly defined solid tumors," he said. 

The Price Action

Epizyme shares had gained about 22 percent year-to-date through Monday.

The stock was down 15.2 percent off the open at the time of publication Tuesday. 

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