Epizyme, Inc. EPZM reported a loss of 41 cents per share in the first quarter of 2016, narrower than both the Zacks Consensus Estimate of a loss of 48 cents and the year-ago loss of $1.75. Quarter in Detail The company earned collaboration revenues of $0.5 million in the quarter, significantly lower than the year-ago figure of $0.9 million, and missed the Zacks Consensus Estimate of $0.6 million. Revenues declined due to lower deferred contributions from upfront payments, and research and development revenues related to the GlaxoSmithKline GSK collaboration. Research and development expenses were $17.7 million, down 69%. General and administrative expenses escalated 11.7% to $5.8 million primarily due to an increase in personnel-related expenses associated with ramp-up of the company’s business operations. Pipeline Update Epizyme’s lead pipeline candidate, tazemetostat, is currently in a registration-supporting, five-arm, phase II monotherapy study on relapsed or refractory B-cell non-Hodgkin lymphoma (NHL), prospectively stratified by cell of origin and EZH2 mutational status. The three arms confirmed to have surpassed the futility hurdle are: germinal center diffuse large B-cell lymphoma (DLBCL) with an EZH2 mutation; germinal center DLBCL with wild-type EZH2; and non-germinal center DLBCL. The company expects to present study data in Jun 2016. An Independent Data Monitoring Committee (IDMC) has recently planned an expansion of enrollment in all five arms of the phase II study in patients with NHL to improve statistical precision around the overall response rate estimates within each population. As a result, the total patient population will now increase to 270 from 150. Meanwhile, the company has expanded the number of arms in the phase II study on tazemetostat in adult patients with certain genetically defined solid tumor (INI1-negative tumors, SMARCA4-negative tumors or synovial sarcomas) to five arms from three. The increase was due to a higher-than-anticipated accrual of patients with certain types of INI1-negative tumors by the company. On the other hand, enrolment in a phase 1 dose-escalation and expansion study on tazemetostat in pediatric patients with certain INI1-negative tumors, including rhabdoid tumors and synovial sarcomas, is progressing on track. The study has moved onto the second dose level with preliminary data expected in 2017. Earlier this month, the FDA accepted the company’s Investigational New Drug (IND) application for tazemetostat for the treatment of adult patients with mesothelioma characterized by BAP1 loss-of-function. Consequently, the company now plans to initiate a phase II trial in patients with mesothelioma in the third quarter of 2016 in the U.S. and internationally thereafter. A phase Ib/II study on tazemetostat, administered in combination with R-CHOP as a front-line therapy for elderly high-risk patients with DLBCL, is also expected to begin in mid 2016, in collaboration with the Lymphoma Academic Research Organization. 2016 Guidance Epizyme continues to expect an increase in R&D expenses in 2016 related to ongoing and planned clinical trials on tazemetostat, including registration-supporting trials in patients with NHL, and adult and pediatric patients with certain genetically defined solid tumors. The company also plans to commence combination studies on the candidate in patients with DLBCL and BAP1 loss-of-function mesothelioma. Moreover, discovery and preclinical research costs are expected to increase as the company advances its wholly owned small molecule programs against five novel targets and progresses with the development program under its collaboration agreement with Celgene Corporation CELG. Operating expenses are also projected to increase as the company focuses on pre-commercial activities. Epizyme projects that its current cash balance, along with net proceeds of $130 million from the January follow-on offering, will be sufficient to fund its operations through at least the end of 2017. Our Take The company’s narrower-than-expected loss in the first quarter of 2016 was encouraging. With no approved products in its kitty as of yet, the company’s efforts to develop its lead candidate tazemetostat for a number of indications are also impressive. Epizyme expects 2016 to be a critical year given several data readouts lined up from its trials on tazemetostat in NHL and solid tumors. The company is in advanced stages of discussion with a collaboration partner for tazemetostat. Moreover, the company has outlined a five-year growth strategy and targets to launch tazemetostat globally for both NHL and genetically-defined solid tumors by 2020. The company also expects to move at least three new oncology programs into clinical development by 2020. Epizyme currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Shire plc SHPG with a Zacks Rank #2 (Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GLAXOSMITHKLINE (GSK): Free Stock Analysis Report CELGENE CORP (CELG): Free Stock Analysis Report SHIRE PLC-ADR (SHPG): Free Stock Analysis Report EPIZYME INC (EPZM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research