Analyst Conference Summary

biotechnology

Release date: March 1, 2022 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2022 (fourth quarter 2021, Q4)

Forward-looking statements

Overview: Tazverik continues to sell poorly; management emphasizes the pipeline, including Tazverik revenue expansion.

Basic data (GAAP):

Revenue was $8.7 million, down 25% sequentially from $11.6 million, and up 14% from $7.6 million in the year-earlier quarter.

Net income was negative $56 million, down sequentially from negative $51 million, and up from negative $70 million year-earlier.

EPS was negative $0.38, up sequentially from negative $0.49, and down from negative $0.69 year-earlier.

Guidance:

Has a cash runway to Q3 2023. Full year non-GAAP operating expenses between $160 and $180 million.

Conference Highlights:

Grant Bogle, President and CEO said "The relapsed or refractory follicular lymphoma treatment landscape is rapidly changing, and we believe Tazverik is poised to grow at an accelerated rate as the year progresses. We saw encouraging progress in important commercial metrics during the first quarter despite some seasonal impact related in part to the Medicare Part D drug benefit design and year-end prescription variability, which we continue to evaluate. Tazverik demand experienced a strong rebound in March, and we entered the second quarter with positive momentum. We believe that Tazverik has the potential to reach many more patients based on changes in the current treatment options for patients in the R/R follicular lymphoma market and the updated NCCN Guidelines for follicular lymphoma. We are also continuing to advance our key clinical programs and look forward to sharing updated Symphony-1 data from the Phase 1b cohort at ASCO." The inclusion of Taz in 2nd line setting could increase demand. Some PI3K drugs are being withdrawn, which also should provide opportunities for Taz.

The recently updated NCCN Guidelines for grade 1-2 follicular lymphoma (FL) now include tazemetostat as a suggested treatment regimen in the second line for elderly or infirm patients with EZH2 wild type or unknown relapsed/refractory (R/R) disease who have no satisfactory alternative treatment options. For third-line and subsequent therapy, tazemetostat is a suggested treatment regimen for patients with EZH2 mutation-positive disease or patients with EZH2 wild-type or unknown R/R disease who have no satisfactory alternative treatment options.

Tazverik revenue was $8.7 million, down sequentially from $11.6 million and up from $ million year-earlier. Just $0.5 million tazverik revenue was for third-party use in clinical trials, compared to $4.2 million in Q4 2021. So commercial demand was up 16% sequentially. 15% of demand was given as free goods for patient assistant program.

Despite the slow ramp, Epizyme believes Tazverik represents a multi-billion dollar global market oppertunity. 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 and ES presciptions will improve as pandemic subsides.

In Q1 2022 Epizyme discontinued enrollment in its Phase 2 study of tazemetostat in combination with rituximab (SYMPHONY-2, EZH-1401), as well as its Phase 1/1b basket study evaluating tazemetostat combinations in patients with solid tumors (EZH-1301). The decision to discontinue enrollment in these studies was based on evolving market dynamics.

The first patient has been does with tazemetostat combined with R2 for follicular lymphoma. This is the Symphony-1 Phase 1b/3 confirmatory study.

In Q4 2021 initiated a Phase 1 study of EZM0414, a first-in-class oral SETD2 inhibitor. Received fast-track status in DLBCL and Orphan drug status for multiple myeloma.

In December 2021 started Phase 3 trial in collaboration with HutchMed in China. This commercial and development collaboration will extend Tazverik's reach to China and allow for additional exploration of Tazverik + R2 across multiple tumor types. Symphony-1 is a confirmatory study for R/R FL. Epizyme will received upfront payment of $25 million from HutchMed in Q4 2021, with potential future development, regulatory and commercial milestone payments of up to $285 million. The IND received clearance in China in July 2021. Phase 1b data will be reported at ASH 2021.

Epizyme opened EZH-1501, its hematology basket study, evaluating tazemetostat across multiple hematological malignancies, in Q4 2021. The solid tumor basket study (EZH-1301) is open for enrollment and the hematological basket study is expected to begin enrolling patients by year end.

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. 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.

The Phase 2 Lymphoma Study Association study of tazemetostat + RCHOP in front line Diffuse Large B-cell Lymphoma (DLBCL) and FL is nearly complete as of May 2022. Interim results are expected before the end of 2022.

The tazemetostat prostate cancer study started enrolling the Phase 2 portion in July 2021. It was about 85% enrolled as of Ma 2022.

See also the Epizyme pipeline page.

Cash and equivalents ended at $200 million, up sequentially from $177 million. Raised $79.5 million from a common stock offering in January 2022. Long term debt was $216 million.

GAAP Operating expenses of $60 million consisted of: cost of goods sold $3 million; $30 million for R&D and $27 million for general and administrative. Loss from operations was $51 million. Other expense was $5 million.

Non-GAAP numbers: R&D expense was $28 million; SG&A expense $24 million.

Q&A summary:

Rebound in Q2 revenue? We did see a rebound in March that continued into April. Market is rapidly changing. Physicians are just processing the information. We hear this is a significant opportunity for Tazverik, particularly in third-line setting, because ours is oral and has a good safety profile. Will see more in 2H 2022 and into 2023.

Prescriber base changes? At start label was for ES and taken up in academic setting. Now more community, 35% to 50%, balance in academic setting. It is hard to assess growth in prescribers because we go through the specialty distributor channel. We see growth in new accounts, timed with issues around Pi3ks.

EZM0414? Phase 1 trial is mainly dose escalation. Will present data as available, possible 2H 2022. Will add multiple myeloma patient cohort once we determine the dose.

Marketing focus? We do not have payer issues. Issues are about access to providers, but offices are beginning to open up. Simplified message: educating on label, which is complicated. Importance of wild-type data and new data on combinations.

China lockdown effect on Symphony trial? We have 180 sites globally, only a few are in China. Will have about 500 patients. HutchMed is picking up some of the expense in China, but it is not significant compared to total expense for the trial.

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