Morgan Stanley: Epizyme Has 'Blockbuster' Cancer Drug In The Making

Clinical-stage biopharma company Epizyme Inc EPZM's tazemetostat has shown effectiveness in treating blood cancers and solid tumors with minimal toxicities in early- and mid-stage trials, according to Morgan Stanley. 

Tazemetostat is an EZH2 inhibitor that moderates gene expression. It is administered orally and kills cancer cells by targeting epigenetic functions, which are heritable changes in gene expression.

The Analyst

Morgan Stanley analyst Andrew Berens initiated coverage of Epizyme with an Overweight rating and $20 price target.

The Thesis

Tazemetostat offers an extremely compelling proposition that allows integration into existing regimens — both as a treatment agent and maintenance drug, Berens said in a Wednesday note. (See the analysts's track record here.) 

The analyst expects the drug to reach blockbuster status, a term reserved for extremely popular drugs that generate annual sales of at least $1 billion for their inventor. Peak U.S. sales could reach $2.1 billion by 2030, Berens said.

Epizyme's shares do not reflect the drug's potential to be used in both the treatment and maintenance settings, given its favorable efficacy and tolerability profile and oral administration route, according to Morgan Stanley. 

The drug's initial approval could be in a number of orphan solid tumor indications, with the potential for accelerated approval in 2019, Berens said. Additionally, the analyst said Epizyme's pipeline showed potential for epigenetics to reach beyond cancer, as the company has two other clinical stage compounds underway. 

Pinometostat, which Epizyme is codeveloping with Celgene Corporation CELG, and GSK3326595, for which it has partnered with GlaxoSmithKline plc (ADR) GSK.

The Price Action

Over the past year, Epizyme shares are up about 14 percent.

Epizyme shares were soaring 12.40 percent to $14.05 at the time of publication Wednesday morning. 

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