Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Epizyme Lost 27.6% in March

By Maxx Chatsko – Apr 6, 2020 at 7:58PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors were looking forward to the drug company's transition to commercial operations, but the coronavirus pandemic could delay the maturation process.

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. 

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
339%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.