Analyst Conference Summary

biotechnology

Epizyme
EPZM

conference date: March 9, 2017 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2016 (fourth quarter 2016, Q4)


Forward-looking statements

Overview: Epizyme is a clinical-stage oncology therapy company with a platform based on small molecule inhibitors of chromatin modifying proteins (CMPs). June data on tazemetostat will be followed by discussion with regulators on a pathway to commercial registration. The launch target for the first indication is 2018.

Basic data (GAAP):

Revenue was $0.5 million, down sequentially from $6.6 million, and down from $0.6 million in the year-earlier quarter.

Net loss was $35,9 sequentially, down sequentially from a loss of $24.3 million, and down from a $22.2 million loss year-earlier.

EPS was negative $0.60, down sequentially from negative $0.42, and down from negative $0.53 year-earlier.

Guidance:

R&D expense is expected to increase in 2017, but cash is sufficient to last until Q3 2018.

Conference Highlights:

Robert Bazemore, CEO of Epizyme, said "2016 was a year of tremendous progress across all aspects of Epizyme, which set the stage for 2017 to be a transformational year for the company," said Robert Bazemore, president and chief executive officer of Epizyme. "We have a broad clinical development program with tazemetostat in multiple tumor types and treatment settings. We plan to present data from both our ongoing, global Phase 2 studies in both molecularly defined solid tumors and non-Hodgkin lymphoma in June, and to initiate discussions with regulators to define registration pathways for tazemetostat. We are advancing our ongoing monotherapy and combination studies and plan to announce the next development candidate from our preclinical pipeline this year. As we look ahead, we are on our way to achieving our vision of rewriting cancer treatment through novel epigenetic medicines."

Epizyme has a global development plan for tazemetostat (an EZH2 inhibitor), which includes a phase 2 study in patients with NHL which has completed enrolling three of five cohorts. It is also in a three-arm phase 2 study in adult patients with certain genetically defined solid tumors which initiated dosing in the quarter, and a dose-escalation and dose-expansion phase 1 study in pediatric patients with certain genetically defined solid tumors. Tazemetostat in combination with prednisolone in relapsed/refractory DLBCL, is being added as the sixth cohort of the Phase 2 NHL study. Also added a follicular lymphoma cohort in January.

Epizyme plans to meet with regulatory authorities, beginning with the FDA in mid-2017, to review data to be presented at a meeting in June and to discuss registration strategies based on the NHL and solid tumor studies. Received Fast Track designation for DLBCL with EZH2 activating mutations.

Tazemetostat enrollment continued in the Company's ongoing Phase 2 clinical study in adult patients and Phase 1 study in pediatric patients with INI-1 negative tumors or synovial sarcoma.

A Phase 2 trial for tazemetostat for mesothelioma characterized by BAP1 loss-of-function started in August and is enrolling well.

However, has decided to stop investigating tazemetostat as a monotherapy, even though the synovial sarcoma cohort surpassed its pre-specified futility hurdle.

A Phase 1b study of tazemetostat with Tecentriq with relapsed/refractory diffuse large B-cell lymphoma (DLBCL) was initiated by Genentech/Roche.

Epizyme continued clinical evaluations of tazemetostat as a combination therapy, including a phase 1/2 study with R-CHOP in front-line high-risk patients with diffuse large B-cell lymphoma in collaboration with the Lymphoma Study Association in France.

Two new combination studies with tazemetostat will be initiated in 2017.

A dose-escalation study of pinometostat in pediatric patients with MLL-r acute leukemia is continuing enrollment. Epizyme is partnering with Celgene for potential clinical development of pinometostat in combination with other agents.

Epizyme has preclinical work underway with five new targets that are planned for introduction into the clinic by 2020.

Three programs are partnered with GSK and three with Celgene.

Cash and equivalents ended at $242 million, down sequentially from $263.3 million. Epizyme believes it has sufficient funding though at least the third quarter of 2018. Longer if milestone payments are received or new partnership revenue comes in.

Operating expenses of $36.0 million consisted of $28.4 million for R&D and $7.6 million for general and administrative. Loss from operations was $35.5 million. Other income was $0.5 million.

R&D expense is expected to ramp through 2017 to support the expanded clinical trial activity. But is managing costs.

Q&A:

INI-1 negative solid tumors, response rate needed? Little prior data on these because lack of knowledge of INI-1. We believe we are conducting a trial with the largest number of patients. High unmet need with no standard of therapy.

ECH2 wild type responses, NHL reclassification? We are seeing activity in ECH2 wild type tumors. Classification was based on older technologies. We now have nanostring and retroactively assessed patients, some were found to be misclassified. Some had ECH2 mutations that were thought not to. So we reclassified as appropriate. But non-GCB cohort also had some complete responses. More data is on the way. [See slide 12]

B cell malignancy new competition? We see our drug as potentially working well with many other therapies as overlapping toxicity would be minimized.

Our ECH2 test is from Roche and seems to be working well.

At ASCO we will have our latest data from the trials.

Pediatric sarcoma trial progress? Phase 1 study with oral formulation is in the dose escalation phase, going well.

Our INI-1 negative strategy is to get as broad of a label as we can from the beginning, but we can also start with a narrow label and expand it, depending on discussions with regulators.

Partial responses of long duration are as important as complete responses of short duration.

Too early to talk about pricing, but we believe innovative therapies that make a difference in patient lives will continue to be funded.

Mesothelioma data not likely to be reported until 2018.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. This is investment journalism, not financial advice.

Copyright 2017 William P. Meyers