H.C. Wainwright Reaffirms Buy On Epizyme On The Heels Of Disappointing DOT1L Expansion Data

In a research note published today, H.C. Wainwright analyst Andrew Fein reaffirmed a Buy rating on Epizyme Inc. (NASDAQ:EPZM) with a $45 price target, following the company’s release of its lackluster expansion data from the Phase 1 study of their DOT1L inhibitor, while failing to center focus on the more important EZH2 inhibitor program, whose value driving Phase 1 data is scheduled to be presented in 2 weeks at the EORTC meeting.

Fein wrote, “We believe that meeting abstract 387, released yesterday, does not yet tell the full story on the potential of the DOT1L inhibitor. What we do know from the abstract and management’s commentary on the call is that, as of the July data cut off, the only objective responses recorded were in the 54mg dose (2 CRs, also reported in Jan), with none in the newer cohorts receiving higher doses (80, 90mg). What we do not know—which in our view represents very important information—is the treatment duration in responders and in the recent expansion cohort which showed no response. Since the abstract notes a median time on study of 29 days (N.B. 1 cycle = 28 days), in the absence of other information, it is not unreasonable to suspect that patients in the expansion cohort may have just not received sufficient drug by the time of the data cut off in July, thus limiting the ability to record objective responses.”

The analyst continued, “While the focus of biotech investors and big pharma continues to roll over from genetics into epigenetics, EZPM represents a platform play in epigenetically-targeted therapies, as a $700M company with ~$214M cash in hand (expected to fund operations into 2016), two rolling clinical programs with data in 2H14, and a proprietary HMT pipeline partly validated by pharma partnerships. We believe that EPZM shares will perform well off current depressed levels in 4Q in anticipation of value-driving clinical data from EPZ-5676 and EPZ-6438, two small-molecule inhibitors of histone methyltransferases (HMTs) targeting genetic subgroups of AML/ALL and NHL, respectively. Near-term progress with the clinical leads may not only catalyze inflection points in the value of their respective programs, but may also serve as further validation of the HMT technology platform, leading to new indications and/or business development activity.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Andrew Fein has a total average return of 5.8% and a 37.1% success rate. Fein has a -26.3% average return when recommending EPZM, and is ranked #1148 out of 3382 analysts.


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