Analyst Conference Summary

biotechnology

Conference date: February 26, 2018 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2018 (fourth quarter 2018, Q4)

Forward-looking statements

Overview: Tazemetostat NDA planned for Q2 2019 is on track.

Basic data (GAAP):

Revenue was $9.7 million, up sequentially from $0.0 million, and up from $0.0 million in the year-earlier quarter. All revenue was from collaborations.

Net income was negative $22.9 million, up sequentially from negative $37.5 million, and up from negative $36.2 million year-earlier.

EPS was negative $0.29, up sequentially from negative $0.54, and up from negative $0.52 year-earlier.

Guidance:

Current cash should last into Q2 2020, longer if milestone payments are received. [WPM: so expect a cash raise]. R&D relatively flat 2019 v. 2018.

Conference Highlights:

Robert Bazemore, president and CEO said "We made tremendous progress last year, leading into what is poised to be one of our most meaningful and value-creating years as a company in 2019, with two successive NDA submissions planned for tazemetostat and a robust clinical expansion strategy. Following our meeting with FDA late last year, we are confident in the submission path for accelerated approval for all patients with follicular lymphoma, regardless of EZH2 mutation status, who have been previously treated with two or more therapies. We believe tazemetostat, based on its ongoing safety and efficacy data, would be well-suited to address the unmet need and treatment goals for patients with this indolent disease. Our first NDA submission for tazemetostat for epithelioid sarcoma remains on track to be submitted in the second quarter, and if successful, would make tazemetostat the first commercially available EZH2 inhibitor and the first treatment specifically indicated for epithelioid sarcoma patients."

In November 2018, Epizyme entered a strategic collaboration with Boehringer Ingelheim focused on the research, development and commercialization of novel small molecule inhibitors directed toward two previously unaddressed epigenetic targets. These targets are enzymes within the helicase and histone acetyltransferase (HAT) families. The company received an upfront payment of $15 million and will receive an additional $5 million in research funding in 2019. Epizyme is eligible to receive a total of up to $280 million in milestones.

In December 2018, Epizyme earned an $8 million milestone payment from its partner GlaxoSmithKline (GSK) following initiation of patient dosing in a Phase 1 clinical trial of GSK3368715, a first-in-class protein arginine methyltransferase1 (PRMT1) inhibitor. It is the second program to enter the clinic under the collaboration. The company has earned an aggregate of $89 million in up-front, research and milestone payments to date, and may earn up to an additional $375 million from GSK if all remaining milestones are met.

Tazemetostat for epithelioid sarcoma trials had positive Phase 2 results that Epizyme believes qualifies for accelerated approval (before a Phase 3 trial). Positive updated data from Phase 2 were presented in October 2018. Updated data should be reported in mid-2019. An NDA expected in Q2 2019. A confirmatory study is being prepared to support the registration strategy and full approval. ES is rare but usually deadly.

Tazemetostat for follicular lymphoma (a kind of NHL) Phase 2 study EZH2+ enrollment should complete by the end of 2018. On track for an NDA in Q4 2019 using accelerated approval. Already has orphan and fast-track status. The application is for third-line therapy. Will cover both EZH2 mutations and wild type EXH2. Epizyme is also planning for trials to bring to earlier lines of therapy in combinations with Revlimid plus Rituxan.

Tazemetostat studies in prostate cancer and platinum-resistant solid tumors will begin in 2019. Epizyme anticipates initiating a combination study in patients with castration-resistant prostate cancer in mid-2019, followed by a combination study with a PARP inhibitor in patients with platinum-resistant solid tumors, such as small-cell lung cancer, triple-negative breast cancer and ovarian cancer, in the second half of 2019.

Tazemetostat is in Phase 2 combination with prednisolone, RCHOP, and atezolizumab cohorts in relapsed/refractory DLBCL, (another kind of NHL). Despite clinical activity and safety, the monotherapy path was discontinued after interim data showed insufficient efficacy. But may pursue other taz combinations in future trials for DLBCL.

Tazemetostat is also in a three-arm phase 2 study in adult patients with certain genetically defined, InI1-negative solid tumors.

In mesothelioma, Tazemetostat trial completed Phase 2 enrollment in Q2 2017.

A Tazemetostat study for pediatric patients with genetically defined solid tumors or NHL was started by the NCI in July 2017.

A Phase 1b study of tazemetostat with Tecentriq for patients with with relapsed/refractory diffuse large B-cell lymphoma (DLBCL) with Genentech/Roche was halted. Also planned is a similar trial in non-small cell long cancer.

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.

EZM8266 for G9a [EHMT2] inhibition is in clinical approach, preclinical details were presented at ASH. It targets sickle cell disease. Phase 1 now scheduled for 2H 2019.

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

See also the Epizyme pipeline page.

Cash and equivalents ended at $240.3 million, up sequentially from $180.8 million. In October raised $86.25 million with a stock offering at $9.00 per share. Epizyme believes it has sufficient funding though at least the second quarter of 2020. Longer if milestone payments are received or new partnership revenue comes in.

Operating expenses of $34 million consisted of $22 million for R&D and $12 million for general and administrative. Loss from operations was $24 million. Other income was $1 million.

FL target population, third line, about 12,000 in US and 8,000 in EU. Taz could gain rapid adoption. In earlier lines about 45,000 patients in US and EU. Current literature says ES has just 800 patients, 300 metastatic and therefore potential for TAZ. But may be underdiagnosed. Sales force can reach the doctors and patients relatively easily.

Q&A:

ES filing approvability? There are no current treatments specific to ES. Interaction with FDA was positive. Safety database is substantial. FDA expected to focus on totality of evidence, including durability. We are confident.

FL update change in data? We don't expect a major change in the data. What we presented to the FDA in Q4 is likely to be very similar to what we file. The response rate has been consistently high. Could see some improvement in duration of response.

Timeline for earlier line FL combination studies? R2 to start midyear. Investigator initiatated +Rituxan could start midyear. RCHOP ongoing study to be extended to FL also midyear. No guidance on when data could be reported.

Partial clinical hold in EU? We are off hold in Germany and have answered all questions in France.

Prostate rational? Evidence of EZH2 corresponding to advancement.

Checkpoint inhibitors? Looking at that for non-small cell [lung cancer].

New trials effect on cash flow? Cash needs about the same as 2018 as large studies are wrapping up while we are initiating small, proof of concept trials. We think we can do a commercial launch in the US with a small organization.

Cash raise? Looking at our options.

Partnerships on TAZ? Would need to be a lot of value added. We have learned from partnering our earlier pipeline, and we have not counted any potential milestones in the cash flow runway.

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