Analyst Conference Summary

biotechnology

Release date: August 4, 2020 @ 5:30 AM Pacific Time
for quarter ending: June 30, 2020 (second quarter 2020, Q2)

Forward-looking statements

Overview: Product revenue launch for Tazverik very slow, but second indication added towards the end of Q2.

Basic data (GAAP):

Revenue was $2.5 million, up sequentially from $1.4 million, and down from $5.9 million in the year-earlier quarter.

Net income was negative $58.5 million, down sequentially from negative $51 million, and down from negative $48.5 million year-earlier.

EPS was negative $0.58, down sequentially from negative $0.51, and down from negative $0.53 year-earlier.

Guidance:

Non-GAAP adjusted cash-based operating expenses for 2020 will be between $235 and $255 million. Existing cash should last at least into 2022.

Conference Highlights:

Robert Bazemore, President and CEO said "As we move into the second half of the year, we are focused on the successful execution of our launches and all other aspects of our business. Despite the evolving COVID-19 situation, our commercial launches are proceeding very well, and our in-house and clinical collaboration efforts to evaluate tazemetostat in additional combinations and indications remain on track. We have delivered on the major corporate objectives we set for the first half of 2020, and we look forward to the continued advancement of our programs in order to help as many patients as possible." Expects FL to be a much bigger revenue generator than ES for Tazverik. FL is largely treated in community hospital settings.

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, was approved by the FDA on June 18, 2020, for third-line therapy. Covers both EZH2 mutations and wild type EXH2. A confirmatory study will be needed for full approval. In 2020 Epizyme 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 June 2020 Tazverik was added to the NCCN clinical practice guidelines for FL.

In total, as of Q2 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.

Tazverik revenue wss $2.2 million, up sequentially from $1.3 million. Collaboration revenue was $0.2 million.

Epizyme i planning clinical development of EZM8266, a novel, first-in-class G9a inhibitor, with a Phase 1 clinical trial for sickle cell disease.

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 at $322 million, down sequentially from $377 million. Long term debt was $68 million. In Q2 2020, following the approval of Tazverik in the FL indication, the final milestone to Eisai of $25 million was paid and funded by the third and final tranche of the $70 million loan facility with Pharmakon Advisors.

Operating expenses of $60 million consisted of: cost of goods sold $1 million; $26 million for R&D and $33 million for general and administrative. Loss from operations was $58 million. Other income was $2.2 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:

FL usage so far? "Responses to the label have been quite enthusiastic." We have seen adoption in both wild type and muation bearing patients, and in the academic and community settings.

Testing? With regard to the label, testing for the mutation has been mixed. But may want testing to set patient expectations. EZH2 Roche test was recently approved.

390 ES medical policies? That is related to policy coverage, now 90% of the lives with ES. Very successful in working with payers, no barriers to access, that will be critical for FL going forward.

Fross to net? 12 to 15%. We don't see a need for a big discount.

ES estimated revenue for 2020 is $4.5 to $5.0 million.

FL patients so far, mutations? Too early, should know more at end of Q3.

We do have a trial ongoing, investigator sponsored [unintelligible]. We want to look as Tazverik combined with drugs currently being used for FL. We would hope combo with R2 would become standard of care for second line FL, assuming trial results are positive. Our label already allows some flexibility to physicians.

Was there warehousing of FL patients? Yes. Patients had been identified before the approval. We have seen some early successes.

Potential Covid impact? We are watching how communities open back up. We are working in a virtual environment.

Tazverik does not require special monitoring, patients can stay at home and take the drug. Majority of patients are being actively managed by their physicians. In general oncology therapies have been hit least hard by the pandemic, and orals have been hit least hard within oncology.

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