What happened

Shares of Epizyme (NASDAQ:EPZM) dropped more than 27% last month, according to data from S&P Global Market Intelligence. The tumble marked an abrupt end to a rally that extended back to October 2019. Shares nearly doubled from October to the beginning of March as investors cheered multiple developments for the development-stage pharmaceutical company.

While most of the progress remains intact, the coronavirus pandemic threatens to pause or delay recent commercialization efforts, including an important regulatory deadline. That promises to make the pharma stock volatile until more information is known.

A steadily ascending chart that suddenly declines.

Image source: Getty Images.

So what

In January, Epizyme announced that its lead drug candidate, tazemetostat, earned accelerated approval from the U.S. Food and Drug Administration (FDA) as a treatment for epithelioid sarcoma. The company immediately commenced the commercial launch of the drug, now branded as Tazverik, and announced the FDA would make a decision by mid-June on the expanded use of the drug in follicular lymphoma. 

The market potential of Tazverik hasn't evaporated because of the coronavirus pandemic, but efforts to begin realizing that potential are likely to be delayed. For example, even if access to Tazverik remains unimpeded, investors might expect the FDA to delay its mid-June decision on expanded approval of the drug. Meanwhile, many clinical trials across the pharmaceutical industry have been delayed or paused for patient safety reasons. 

Now what

A falling stock price isn't ideal, but investors might want to take a long-term view of this stock. Epizyme planned on launching Tazverik for epithelioid sarcoma in a manner that would allow for the seamless launch of the drug in follicular lymphoma. That would blunt the impact of a potentially delayed approval. 

In addition, the company began 2020 with $431 million in cash, which was enough to fund operations into 2022. That suggests Epizyme is well positioned to weather the current market uncertainty.