Why Epizyme Inc. Shares Rocketed Higher

Epizyme shares soar after the company reaches another creative milestone with partner GlaxoSmithKline.

Apr 22, 2014 at 12:38PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Epizyme (NASDAQ:EPZM), a clinical-stage biopharmaceutical company with a therapeutic focus on treating cancer, soared as much as 18% after the company announced that it received a milestone and licensing payment for reaching a third target in an ongoing collaboration with GlaxoSmithKline (NYSE:GSK).

So what: According to the press release, Epizyme received $4 million for discovering the third of three histone methyltransferase, or HMT, targets in collaboration with GlaxoSmithKline using its proprietary discovery platform. This marks the third such instance since January in which GlaxoSmithKline has given Epizyme a milestone and licensing payment (the other two totaled $2 million and $4 million).

Now what: Epizyme isn't exactly hurting for cash, holding $123.6 million in the bank as of the latest quarter. However, given that the company is burning through through $50 million annually with ongoing trials and research, even a $4 million payment can be seen in positive light. The real excitement revolves around how seemingly quickly Epizyme was able to discover three HMT compounds, which lends a lot of hope that Epizyme could make many additional discoveries along this pathway in a short amount of time. Of course, we're also talking about very, very early stage ideas here, so it'd be wise for shareholders not to get too caught up in that noise until we have some clinically concrete data.

Epizyme shares may be soaring today, but they'll likely struggle to keep pace with this top stock in 2014
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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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