Analyst Conference Summary

biotechnology

Release date: November 6, 2020 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2020 (third quarter 2020, Q3)

Forward-looking statements

Overview: Product revenue launch for Tazverik, disappointing revenue so far.

Basic data (GAAP):

Revenue was $3.6 million, up sequentially from $2.5 million, and down from $5.7 million in the year-earlier quarter.

Net income was negative $56.1 million, down sequentially from negative $58.5 million, and down from negative $36.1 million year-earlier.

EPS was negative $0.55, up sequentially from negative $0.58, and down from negative $0.40 year-earlier.

Guidance:

Epizyme updated its guidance for full year 2020 non-GAAP operating expenses to between $215 million to $235 million, from the previous $235 million to $255 million.

Conference Highlights:

Robert Bazemore, President and CEO said "We are executing our Tazverik launches well, given the unprecedented challenges presented by the COVID-19 pandemic on FL patients access to their physicians and on access to our customers. While we acknowledge the impact the COVID-19 dynamics have had on the initial uptake in FL, we are reaching both the ES and FL patient populations expected based on our label, and our view of the value proposition of Tazverik is unchanged. We believe that the combination of our commercial and clinical performance, and strong balance sheet, sets us up for a positive future." Believes pandemic continued to impact sales, with new patient starts down for all therapies. But gaining traction and good feedback from physicians, and reimbursement from payers is good. So far most prescriptions are from the larger centers. Believes in 2021 projections and long term opportunity for Tazverik.

Epizyme and Pharmakon Advisors in Q3 2020 expanded their original loan agreement established in November 2019, enabling Epizyme to draw down an additional $150 million from the loan facility. Epizyme believes that its existing cash, cash equivalents and marketable securities combined with the proceeds from the loan facility will fund the company's operations into at least 2023.

Tazverik revenue wss $3.4 million, up 55% sequentially from $2.2 million. Collaboration revenue was $0.2 million.

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.

Epizyme is 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 $280 million, down sequentially from $322 million. Long term debt was $69 million.

Operating expenses of $58 million consisted of: cost of goods sold $2 million; $26 million for R&D and $31 million for general and administrative. Loss from operations was $54 million. Other expense was $2 million.

Q&A:

Incremental revenue Q3 over Q2, new starts, market share? 55% sequential growth was prescriptions in FL. Scripts go through specialty channels. May loose ES as average length for them is 8 months. R/R in third line is 6000. Q3 was just two months of launch effort for FL. It is still a larger share of new prescriptions than many other recent introductions. Patient visits remained down about 30% in Q3, and many patients won't change a prescription on a virtual call. We are not giving guidance on Q4 sales, but there was an acceleration towards the end of Q3, and physician accounts continue to increase. So our 2021 and beyond view has not changed. They like the T label.

While FL is slow, physicians are realizing they can't stay away from visits forever. Doctors are seeing patients in many types of cancer progress between visits that were set too far apart.

FL is a fragmented category. There is no real standard of care. Patients on other drugs are monitored until progression, then a new drug may be chosen.

FL is a more Medicare based population. But no barriers to access. Same as ES.

EZH2 testing? What we hear is the test is not a barrier and is being reimbursed for.

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