Analyst Conference Summary

biotechnology

Release date: May 4, 2020 @ 6:00 AM Pacific Time
for quarter ending: March 31, 2020 (first quarter 2020, Q1)

Forward-looking statements

Overview: First product revenue for Tazverik.

Basic data (GAAP):

Revenue was $1.4 million, down sequentially from $4 million, and from $7.9 million in the year-earlier quarter.

Net income was negative $51 million, up sequentially from negative $56 million, and down from negative $32 million year-earlier.

EPS was negative $0.51, up sequentially from negative $0.59, and down from negative $0.39 year-earlier.

Guidance:

Excluding non-cash items, operating expense for 2020 expected between $235 and $255 million. Cash available should fund the company into 2022.

Conference Highlights:

Robert Bazemore, president and CEO said "The first quarter of 2020 was significant for Epizyme, marked by the FDA approval of Tazverik in eligible patients with epithelioid sarcoma and our transition to a commercial-stage company. Despite the global challenges as a result of the COVID-19 pandemic, and the continued uncertainties in the recovery process, we know that patients with cancer still need better treatments, and we remain committed to advancing innovative medicines on their behalf. In addition to continuing our commercialization of Tazverik for epithelioid sarcoma, a critical activity for our organization, we are preparing to launch in follicular lymphoma, should Tazverik be approved for that indication. We believe strongly in Tazverik's potential to make a meaningful impact in the lives of patients."

Tazverik (tazemetostat) for epithelioid sarcoma was approved by the FDA on January 23, 2020 and became commercially available on February 1. Positive Phase 2 results had been presented at ASCO. Because it was an accelerated approval, confirmatory study will be done to support full approval. Commercial launch began the first week after approval, with the first patient dosed on February 1. There are about 300 patients eligible under the label in the U.S.

The tazemetostat for follicular lymphoma (a kind of NHL), relapsed/refractory, PDUFA date is June 18, 2020. The application is for third-line therapy. Will cover both EZH2 mutations and wild type EXH2. A confirmatory study would be needed for full approval. In 2020 plans to expand clinical investigation of tazemetostat in combination with R-CHOP in the high-risk front-line treatment setting for patients with FL; and support the investigator-sponsored studies assessing tazemetostat in combination with rituximab, venetoclax and BTK inhibitors in the third-line and later FL treatment setting.

In total, as of Q1 2020, 12 clinical trials were underway and four were planned for initiation in 2020. Epizyme expects to complete the ongoing safety run-in portions and begin the efficacy expansion portions of the following clinical trials in 2020: Global, randomized, controlled confirmatory Phase 1b/3 trial assessing the combination of Tazverik plus doxorubicin compared with doxorubicin plus placebo as a front-line treatment for ES patients; global randomized, controlled confirmatory Phase 1b/3 trial assessing Tazverik in combination with Revlimid plus rituximab in the second-line FL treatment setting; and a Phase 1b/2 clinical trial in chemo-naive patients with metastatic castration-resistant prostate cancer, combining tazemetostat with enzalutamide or with abiraterone.

Pursuant to the terms of its agreements with Royalty Pharma and Pharmakon Advisors, in January 2020, Epizyme exercised its option to sell $50 million of its common stock to Royalty Pharma.

Epizyme anticipates beginning clinical development of EZM8266, a novel, first-in-class G9a inhibitor, with a Phase 1 clinical trial for sickle cell disease in the second half of 2019.

Tazemetostat studies in prostate cancer and platinum-resistant solid tumors began in 2019.

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.

See also the Epizyme pipeline page.

Cash and equivalents ended $377 million, down sequentially from $381 million. Long term debt was $48 million. $50 million was raised in Q1 2020.

Operating expenses of $52.7 million consisted of: cost of goods sold $0.6 million; $25.2 million for R&D and $26.9 million for general and administrative. Loss from operations was $51.4 million. Other income was $0.4 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:

Launch, lead adopters, etc.? The first two months of sales went well. Academic centers made the majority of prescriptions.

FL v. ES markets? FL most patients are in community based settings. Will still expand quickly from the ES infrastructure. Because of COVID privoting to digital presentations.

KOL feedback on FL? Feedback is consistent that there is no standard of care and current options are not good. So well positioned as an oral medicine. We expect the community offices will reopen earlier than the academic centers. We have secured reimbursement from most payers.

The confirmatory studies will have relatively small enrollments this year.

Gross to net discount? Roughly between 10% and 15%.

New patients or from clinical studies? New.

Number of potential patients? Some new scripts have now transitioned into refills. Also, the revenue was all demand, little stocking. Patients don't need to have proof on INI1, it is so prevalent for SA. So both wildtype and mutated EZH2are getting prescribed, and our length of response is attractive for both.

We have seen presciptions for FL and other cancers with appropriate mutations. But through the month of April most are for ES.

We will have another $25 million milestone to pay if we get the FL approval; we will take it out of the loan.

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