Analyst Conference Summary

biotechnology

Release date: February 23, 2021 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2020 (fourth quarter 2020, Q4)

Forward-looking statements

Overview: Product launch for Tazverik remains slow.

Basic data (GAAP):

Revenue was $8.4 million, up sequentially from $3.6 million, and up from $4.3 million in the year-earlier quarter.

Net income was negative $66.2 million, down sequentially from negative $56.1 million, and up from negative $56.4 million year-earlier.

EPS was negative $0.65, up sequentially from negative $0.55, and down from negative $0.59 year-earlier.

Guidance:

Epizyme expects full year 2021 non-GAAP adjusted operating expenses between $235 and $255 million. Cash runway expected to go to 2023. No revenue guidance.

Conference Highlights:

Robert Bazemore, President and CEO said "Epizyme cemented its position as a leader in epigenetics in 2020, with back-to-back accelerated approvals for Tazverik, the first and only FDA-approved EZH2 inhibitor. Following the approvals, we quickly reached epithelioid sarcoma and follicular lymphoma patients in need, adapting our physician and patient outreach efforts to meet the unique challenges presented by the evolving COVID-19 pandemic. While the resurgence of COVID-19 cases in the fourth quarter extended many of these challenges, the adoption of Tazverik in both ES and FL continued to expand, with net revenue increasing 31% in the fourth quarter from the third quarter. Importantly, our sales and medical affairs teams continue to make progress reaching and educating physicians, reflected in the more than 50% increase in new accounts prescribing Tazverik during the fourth quarter. In addition to launch execution, we are encouraged by our clinical progress throughout 2020, during which we achieved all trial milestones on or ahead of schedule. Armed with sufficient capital to support our planned commercial and clinical execution, we believe Epizyme is well-positioned for success in 2021 and beyond."

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 $4.5 million, up 32% sequentially from $3.4 million. Was approved in Q4 2019, but no revenue that quarter. Collaboration revenue was $3.9 million. In February 2021, the NCCN Clinical Practice Guidelines in Oncology were amended to recommend Tazverik for relapsed/refractory FL patients with no satisfactory treatment options and whose EZH2 status is unknown.

Despite the slow ramp, Epizyme believes Tazverik represents a multi-billion dollar global market oppertunity (see Slide 4, November 2020 presentation). Only 800 ES patients in the U.S., about 300 eligible for Tazverik. Average ES duration of therapy 4 to 5 months. Expects physicians will use earlier as they gain experience. Believes FL presciptions will improve as pandemic subsides.

The Tazverik (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.

The safety portions of both the ES and FL confirmatory trials with Tazverik are both fully enrolled and the efficacy expansion portions of both trials remain on track for initiation in early 2021. The ES confirmatory trial is evaluating Tazverik in combination with doxorubicin compared with doxorubicin plus placebo as a front-line treatment for ES. The FL confirmatory trial is evaluating Tazverik in combination with R2 (Revlimid plus Rituxan) compared with R2 plus placebo in the second-line treatment setting in patients. Progress around the clinical development of tazemetostat in earlier lines of therapy for FL and opportunities in new solid tumor indications, including prostate cancer, continues. Patient enrollment also continues in several collaborative studies, including the Lymphoma Study Association (LYSA) trial in front-line Diffuse Large B-cell Lymphoma (DLBCL) and FL, and in investigator sponsored trials.

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

On March 2, 2021 will discuss future plans for the pipeline.

See also the Epizyme pipeline page.

Cash and equivalents ended at $374 million, up sequentially from $280 million. Long term debt was $216 million.

Operating expenses of $71 million consisted of: cost of goods sold $2 million; $34 million for R&D and $35 million for general and administrative. Loss from operations was $62 million. Other expense was $4 million.

Q&A:

Sales key? Reimbursement is good, 90% of patients covered. We lead in new prescription market share in third-line setting. Challenge is patient visits down.

$150 million credit line? Purely an option, no specific criteria, mutual consent with lender.

Our share is higher in mutant patients than in wild type, as expected. In Q4 between 15% and 20% new patient share. Increasingly seeing community practices prescribing, but still 60% academic.

Patients in the third-line market tend to turnover about once per year, but pandemic is slowing that. The market size has not changed, those patients will come back. The main problem has been doctors not wanting to try something new.

Reminder Taz in first line, data from Phase 2 study shows works better than in later lines.

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