Epizyme, Inc.
Q2 2017 Earnings Call Transcript

Published: 4 Aug 2017

[Operator:]

Operator Good morning, and welcome to Epizyme’s Second Quarter 2017 Earnings Conference Call. [Operator Instructions] Please be advised that this call is being recorded at Epizyme’s request. I would now like to turn the call over to Monique Allaire with THRUST Investor Relations. You may begin.

[Monique Allaire:]

Thank you, and good morning. Thank you all for joining us today. This morning, we issued a press release detailing Epizyme’s second quarter 2017 operating results. This press release and reference slides are available in the Investor Center of our website at epizyme.com. Joining me on the call are Rob Bazemore, Chief Executive Officer; and Dr. Peter Ho, Chief Medical Officer. Additional members of the Epizyme team will be join us for the Q&A session. During this call, we will use forward-looking statements related to Epizyme’s current expectations and plans, which are subject to risks and uncertainties. Actual results may differ materially due to various important factors, including factors, including those described in the Risk Factor section of Epizyme’s Form 10-Q filed in May. These statements represent our views as of this call and should not be relied upon as representing our views as of any date in the future. We undertake no obligation to publicly update any forward-looking statements. Let me now turn the call over to Rob.

[Rob Bazemore:]

Thank you, Monique, and thank you, everyone, for joining us this morning. Over the last several months, we have made tremendous progress and achieved important milestones with our lead agent, tazemetostat, an internally developed, orally administered, first-in-class EZH2 inhibitor. Throughout the first half of the year, we’ve been focused on executing key clinical and regulatory milestones. I am very proud of this team and I want to congratulate everyone on our many accomplishments, including reporting positive interim data in 3 different cancer indications from our ongoing Phase II clinical trials; executing on our goal of further accelerating enrollment of EZH2 mutation patients in our ongoing Phase II NHL study as demonstrated by our recently announced collaboration with U.S. Oncology; conducting a productive meeting with the FDA that led to identifying a path forward for our first NDA submission for the accelerated approval of tazemetostat in epithelioid sarcoma, targeted for 2018; completing enrollment in the epithelioid sarcoma cohort of our Phase II solid tumor study, which is intended to support an NDA submission for accelerated approval; expanding our solid tumor program into one of the top 4 tumor indications through our collaboration with Genentech and Roche to investigate tazemetostat and atezolizumab as a combination regimen for non-small cell lung cancer; completing enrollment in our mesothelioma Phase II study; and establishing the recommended dose for tazemetostat in pediatric patients and initiating the dose expansion part of the study. For today’s call, we’ll review some of these events and talk in more depth about the market opportunities for tazemetostat and our strategic view for bringing tazemetostat to patients. Let’s begin first with our programs in follicular lymphoma and diffuse large cell B-cell lymphoma or DLBCL. I’ll pass the call to Peter briefly to review the interim data we presented in June.

[Peter Ho:]

Thanks, Rob. At ICML, we reported positive interim efficacy and safety data as of June 1 from our study of tazemetostat as monotherapy in relapsed or refractory patients with either FL or DLBCL. In patients with FL, who had EZH2 activating had mutations, interim data showed that tazemetostat as a single agent resulted in a striking 92% response rate. 12 of 13 patients had achieved a confirmed objective response. This cohort is continuing to enroll patients and as such, it is premature to determine a medium duration of response. The FL wild-type cohort completed enrollment and we are pleased with the interim activity showing that 26% of patients had achieved an objective response as of the date of cutoff, with nearly an equivalent number of patients with stable disease who remain on treatment. As is the case for FL patients with EZH2 mutations, it is too early to determine the median duration of response for FL patients with wild-type EZH2. Responses in both FL patient groups were seen between 2 and 8 months, and for a number of mutation and wild-type EZH2 patients, responses have lasted more than 1 year. In addition, we have observed partial responses that converted to complete responses over time, which is consistent with the experience in our Phase I study. These data are still maturing and we look forward to observing how responses to tazemetostat evolve in both mutation- bearing and wild-type EZH2 patients with FL. Also at ICML, we reported encouraging interim data from our cohorts of patients with relapsed or refractory DLBCL. In 17 patients with EZH2 mutations, tazemetostat as a monotherapy achieved an objective response rate of 29%. We expect that as the number of patients and their time on study increases, the response rate will further evolve over time. The time to response ranged between 1 and 12 months on treatment, and 3 of the 5 responders experienced durable responses lasting 15 months on longer. We’ll describe the treatment landscape for these patients in just a bit. But given the treatment challenges for this population, we consider the responses and durability observed thus far to be promising. While we saw objective responses, including complete responses, some DLBCL patients with wild-type disease, we believe that this patient population will likely benefit most from combination therapy with tazemetostat and we have several studies ongoing to evaluate its combination potential. Importantly, across all cohorts of this Phase II study and consistent with what we’ve seen throughout the clinical development program, tazemetostat continues to demonstrate a favorable safety profile. As noted earlier, patient recruitment for the wild- type EZH2 cohorts was completed earlier this year and enrollment is ongoing in the EZH2 mutation cohorts. The overall prevalence of patients with EZH2 mutations in our study is what we anticipated, with approximately 20% of enrolled FL and germinal center DLBCL patients having an EZH2 mutation. We have initiated a number of efforts to further accelerate enrollment of EZH2 mutation patients as demonstrated by the recently established collaboration with U.S. Oncology Research, one of the largest community- based oncology research programs in the United States. Under U.S. Oncology Research has significantly expanded the footprint for our clinical study by conducting screening of NHL patients at 68 locations in the U.S. Once an EZH2 mutation patient is identified, U.S. Oncology will direct the patient and their treating physician to our clinical trial for protocol screening and potential enrollment. Sites are open and patient screening began in July. We know that screening is key to identifying patients with EZH2 mutations. We’re delighted to have established this collaboration to support the identification of these patients and plan to pursue other such avenues to screen more patients for patient enrollment. Both our FL and DLBCL programs are advancing well and we’re on track with our plans to meet with FDA in the second half of this year. The objective for this meeting is to determine the optimal registration paths in order to bring tazemetostat to these patients and to guide next steps for the program. Let me now pass the call back over to Rob

[Rob Bazemore:]

Thanks, Peter. Let me spend a few minutes going through each of the FL and DLBCL treatment landscapes and where we think tazemetostat can fit. FL is an indolent lymphoma that, unlike DLBCL, is still considered to be incurable. Upon initial diagnosis, virtually all patients will receive systemic treatment, which is typically a Rituxan-based chemotherapy of combination. Regrettably, nearly all patients will eventually relapse or become refractory to their treatment. As they do, these patients will cycle through multiple systemic therapies despite decreasing levels of efficacy. In addition, these regimens can be associated with long-term toxicities, including cumulative myelosuppression, neuropathy and cardiotoxicity. In our view, this leaves a significant need for a new treatment option like tazemetostat. We understand that there is a perception that nearly all FL patients respond to treatment regardless of the therapy. However, we’ve seen something quite different in our clinical study. In fact, in our trial, a substantial number of patients that cycle through multiple rounds of prior treatments and almost half of the patients enrolled were refractory to their last treatment. Each year, we estimate that approximately 40,000 FL patients in the United States and EU5 alone are treated with these systemic therapies. Of these patients, approximately 20% harbor the EZH2 activating mutation. Our goal is to provide a new treatment that can lead to durable responses and can be taken safely over a long period of time. We believe that there are multiple opportunities for a targeted treatment like tazemetostat to be used either alone or as a combination agent. We also see a significant opportunity for tazemetostat in DLBCL as both a monotherapy and a combination agent. As the most common subtype of NHL, we estimate that approximately 80,000 patients in the U.S. and EU5 alone are actively treated with systemic therapies to manage their disease. 40% of DLBCL patients are diagnosed with germinal center lymphoma and approximately 20% of these patients harbor an EZH2 mutation. Although the prognosis of patients with DLBCL has improved with R-CHOP as a first-line treatment, approximately 40% to 50% of patients will ultimately relapse and have recurrent disease. For these patients, clinicians seek to achieve meaningful and durable remissions. However, only a small percentage of patients are eligible for stem cell transplantation and patients often aren't ideal candidates for high-dose complex chemotherapy due to their age or other comorbidities associated with their disease. We believe that our study is representative of this difficult to treat patient population since we do not require a prolonged period of stable disease without treatment for a patient to come into our trial. New treatment options that are well tolerated and provide meaningful and durable responses would be an attractive consideration, and we believe tazemetostat has the potential to deliver important benefit for these patients. Using this as a backdrop, let's turn to our registration strategies in FL and DLBCL. We have developed a strategic clinical development plan designed to bring tazemetostat to both patient groups as quickly as possible and ultimately, enable the broadest possible use in both indications. Our initial approach to registration through our current Phase II study targets relapsed or refractory patient populations and in particular, those with EZH2 mutations. Our encouraging interim data showing enhanced activity in these patient groups which is entirely consistent with our scientific hypothesis, combined with the lack of targeted treatments for these patients and the challenges of currently used therapies, supports our belief that tazemetostat may play an important role in treating these patients in the future. In our Phase II study, the interim response rate in FL patients with an EZH2 mutation is nearly fourfold what we observed in FL patients with wild-type EZH2. And in the DLBCL groups, the response rate nearly doubled. We believe that these FL and DLBCL EZH2 mutation populations may represent the fastest avenues to market in the NHL space. Moving up the treatment paradigm, from the multiply relapsed and refractory setting, we see potential expansion opportunities for tazemetostat as a second-line treatment, likely as a combination agent with both targeted and chemotherapeutic agents. Longer term, we want to move tazemetostat into the newly diagnosed patients in the frontline setting where we hope to eventually improve the current standard of care in both FL and DLBCL. Our development program is designed to achieve this. In support of the potential in FL, we have a number of studies underway or planned. We see tremendous potential as a monotherapy given the 92% single- agent response rate reported in June in relapsed refractory patients with EZH2 mutations. And we see significant potential in patients with wild-type EZH2, either alone or in combination. Recall that tazemetostat was granted Fast Track designation for FL regardless of EZH2 mutational status. In order to expand tazemetostat's utility into earlier lines of FL treatment, we plan to initiate a combination study with tazemetostat in the second line setting later this year, looking at patients both with and without EZH2 mutations. We look forward to telling you more about our combination approach in this setting as we get closer to study initiation. As part of our registration strategy in DLBCL, we are pursuing tazemetostat as a monotherapy in relapsed refractory patients who have an EZH2 mutation with encouraging activity observed already. This is a population where tazemetostat also has Fast Track designation. As we look at the opportunity for treating DLBCL patients with wild-type EZH2, we believe that tazemetostat may have greater potential as a combination agent and we have a number of studies already underway to establish this potential. We have an ongoing combination study with prednisolone, a commonly used agent in the treatment of DLBCL and an ongoing combination study with atezolizumab, both of which are enrolling relapsed refractory patients. We also have an ongoing combination study with R-CHOP in the frontline setting. By taking this approach, we intend to establish a role for tazemetostat in all lines of care and are working to advance our studies to make this a reality in the future. Switching gears now, let me ask Peter to review some of the progress in our solid tumor program across multiple indications and multiple clinical trials. Peter?

[Peter Ho:]

Thanks, Rob. We've made significant progress in our global Phase II study in patients with mesothelioma. We recently completed enrollment in that study ahead of schedule and are assessing the activity of tazemetostat as a monotherapy in patients with mesothelioma, characterized by a loss of function of BAP1. With enrollment completed, we are now assessing clinical activity and durability in the entire study population, and we intend to report data at a medical meeting in 2018. We have also decided on the next indication for tazemetostat, non-small cell lung cancer. In June, we expanded our year-old collaboration with Roche to include a second clinical trial of the combination of tazemetostat and atezolizumab, this time, in patients with non-small cell lung cancer, one of the top 4 highest prevalent tumors, as part of Genentech's MORPHEUS study. A growing body of data suggests that EZH2 inhibition may have a priming effect on the immune system and may improve the activity of checkpoint inhibitors, such as atezolizumab. Using this study, we hope to evaluate that hypothesis in this indication. Switching now to our pediatric development program, we recently established the recommended Phase II dose of the oral suspension formulation of tazemetostat in children. We completed the dose escalation portion of our study of tazemetostat in pediatric patients and as we stated in May, observed objective responses in several patients. We have now moved into the dose expansion portion of the study and enrollment is underway. Also in the pediatric population is the NCI's recently initiated pediatric MATCH study. The NCI is evaluating tazemetostat as a monotherapy in one of the study arms for pediatric patients with certain, genetically defined solid tumors or non- Hodgkin lymphoma. This and potential future studies are part of a cooperative research and development agreement or CRADA established last year. Among all of these achievements is the progress made in patients with epithelioid sarcoma, a rare soft tissue sarcoma. Historically, we believe ES has been underdiagnosed due to similarities with other tumor types, such as metastatic poorly differentiated carcinoma or other epithelioid malignant neoplasms. It is likely that there are more patients with ES than the historic SEER estimates suggest. We believe that there are approximately 600 newly diagnosed patients each year in the U.S. and Europe. Patients can present either with local or metastatic disease. For those patients who present with local disease, the overwhelming majority will undergo surgical resection, but most will relapse and require systemic therapy. For the patients who are initially diagnosed with unresectable or metastatic disease, their median survival is typically less than 1 year. They will immediately go on to systemic treatment with chemotherapy that is used more commonly for other sarcomas. As of today, there is no approved treatment for patients with ES and there's no single agreed- upon evidence-based standard of care. As such, we and our investigators believe a true need exists for new and novel treatment options for this disease. Following discussion with FDA, we have identified a path towards submission for accelerated approval based on a 60- patient cohort in our ongoing Phase II study. We are pleased that we've recently completed enrollment in this expanded ES cohort and are beginning our efforts to prepare for our very first NDA submission for this indication in 2018. Overall, this patient population may represent the quickest path to registration for tazemetostat across all of our indications. Enrollment is ongoing in the other arms of the Phase II study and we expect to report updates from these cohorts later this year. Based on clinical and laboratory observations, both from Epizyme and in the published literature, we consider it important to further explore the effect of tazemetostat treatment on immune responsiveness. To that end, we plan to open a new cohort of the study to include up to an additional 40 ES patients who will undergo paired pre- and posttreatment biopsies. We consider the translational data that this cohort will generate to be important to the tazemetostat program as a whole and to be independent of the 60-patient cohort that will serve for a registration in this disease. We’ll share more on the cohort design and timing as we get closer. Let me now pass the call back over to Rob.

[Rob Bazemore:]

Thanks, Peter. As you’ve heard, the first half of 2017 has been a very productive time for Epizyme. And we have a busy year ahead of us. Importantly, we believe we have the financial strength to continue to execute against our pipeline and achieve important clinical and regulatory milestones. We ended the second quarter of 2017 with $193 million in cash and marketable securities. We maintain our guidance that this capital will be sufficient to fund our operations into at least the third quarter of 2018, which does not take into account any additional milestones or other potential nondilutive sources of cash that might further extend our runway. As we think about the future of Epizyme, particularly as it relates to our financial strength and creating value for our shareholders, we have a number of options to maintain a strong balance sheet. As we have in the past, we will evaluate all available opportunities in order to ensure that we have the resources necessary to drive our programs forward in the most meaningful way. With no debt, our current capital and anticipated milestones from our collaborations, we have the flexibility to make the right decisions at the right time. In the second half of the year, our focus will be on executing on the important milestones ahead for the company, which bring us closer to achieving our 2020 goals. The first of our 4 strategic goals through 2020 is starting to come into sight, bringing tazemetostat to patients with solid tumors and hematological malignancy as quickly as possible. We are well underway with clinical studies designed to support the expanded benefit of tazemetostat in multiple combination regimens in both early and late lines of care, and in a variety of cancer indications. And we are still on track to name the next development candidate from our research platform later this year. This is an exciting time for our company as we further establish our role as the leader in the field of epigenetics and work to rewrite the way cancer is treated. With that, we’ll now open the line for questions.

[Operator:]

[Operator Instructions] And our first question comes from the line of Geoff Porges with Leerink Partners. Your line is open.

[Geoff Porges:]

Thanks very much, before the question congratulations on our progress.

[Rob Bazemore:]

Thank you Geoff.

[Geoff Porges:]

My first question, Rob, is on enrollment. In the mutated EZH2 populations, as of June 1, you had 41 patients enrolled and it looked as though at the time you were enrolling, I think, it was 1 to 2 patients per month, if you go back to the April update. Assuming you can give us an update on the total enrollment to those arms, could you comment on the rate of enrollment on a monthly basis, whether you’ve seen any inflection in the 2 months that have ensued since that cutoff? And then my second question is in the mesothelioma study, now that, that study is fully enrolled, can you give us a little bit more color about what you’re going to need to see there for that to be a registration enabling study? It sounds as though you’re steering as more to be focused on ES indication rather than mesothelioma, but the meso study is fully enrolled. And then could you just talk a little bit more about the combination strategy? It certainly seems to be taking a while. I know we have been discussing this for quite some time. But as you’re looking at all of the possible options, what is making the most sense as the ideal combination with tazemetostat as you move into those earlier lines of NHL? Thanks.

[Rob Bazemore:]

Sure. Geoff, I think we have them all. I’ll start. I’ll address your question on enrollment. I’ll let Peter address the question on mesothelioma and then we can both probably tag team on the question around combination. So in terms of enrollment, as we said on the conference call when we called in from ICML, we’ve seen an uptick in enrollment over the course of the whole year in patients with EZH2 activating mutation. There were a number of initiatives that we put in place late last year, including screening initiatives at all of our sites to identify patients even ahead of their eligibility for the study. That has helped to expand the number of patients that we are finding. It’s not linear, so it’s hard to look at it on a month-by- month basis because you don’t find them necessarily in a linear fashion, but we had already seen an uptick in enrollment. We are continuing to push towards that and that’s why we’re pleased to have the collaboration that we just announced last week with U.S. Oncology because this works a bit like rare disease. These are – 20 of these patients are 20% of the total NHL patient population. So the more broadly you screen, the earlier you can find them and the easier it is to find them. So now that we have the data, particularly data showing that there is an enhanced activity in patients who have an EZH2 mutation, the community centers are more interested in screening. And so this is why the collaborations like the one we announced last week with U.S. Oncology is really helpful to continuing to drive the rate of enrollment that we’re seeing in these patients. And I’ll turn it over to Peter to talk about our meso program.

[Peter Ho:]

Yes. Geoff, so with meso, we are very pleased because the study enrolled much faster than our original expectations. And so with this study, the primary endpoint is disease control at 12 weeks and that’s because this is a population of patients with relapsed or refractory disease. And mesothelioma, even in a frontline setting, as we all know, is an extremely aggressive disease. So we are looking from this study for, of course, responses as well as the primary endpoint of disease control, the rate of disease control for the patient population through that. And we’ll take a look at that data and see where it leads us, whether it is sufficient to think about accelerated approval strategies, whether it guides us to combinations as next steps. I think all of those are possibilities for us to consider. But we are very pleased to be in the position to now be assessing the data rather than enrolling the patients because that’s gone so well.

[Rob Bazemore:]

Thank you. And then on the question around combination strategy, and I’ll start and I’ll let Peter add in as well. I think we’ve been very aggressive in our approach to looking at combination regimens with tazemetostat. We have 3 studies already ongoing that were initiated in 2015, almost simultaneous with the initiation of the Phase II study and ahead of even having single-agent activity data. So those studies have already been ongoing and we hope to have, at least internally, to be able to do what you asked, which is to understand what those data are looking like and to be able to make some call on those in 2018. In addition, we continue to expand the combination strategy because so far, all three of those trials are in the diffuse large B-cell lymphoma space where we always anticipated that a combination approach may be important to those patients given the aggressiveness of their disease. But we are extending that this year into the follicular lymphoma space, and our intent and we’re still on track to start the first combination study with tazemetostat and FL by the end of the year this year. Peter, I don’t know if you like to add to that.

[Peter Ho:]

Sure. I think one of the things from the clinical side that we think about is the safety profile for tazemetostat. We’ve mentioned this before in the past that the safety profile continues to look very favorable and that really allows tazemetostat to enter into a variety of different combinations. We are in combinations with chemotherapy. We are in combinations in nonchemotherapeutic regimens in the form of checkpoint inhibitors or steroids. And certainly, between DLBCL and follicular lymphoma, there are different standard regimens in the frontline and second-line settings. And I think we are in very good shape to go into those different regimens. And then lastly, the addition recently of a combination with atezolizumab in non-small cell, I think that opens up a whole avenue of different possibilities, given how prevalent checkpoint inhibitors are being investigated in a variety of solid tumors. So we are very excited about all of these combination studies.

[Geoff Porges:]

ob, can I just follow up? What about the combination or the sequential use of tazemetostat with CAR-T? Presumably part of what’s going on in DLBCL as these patients – the refractory patients are going to CAR-T approaches, wherever possible. And have patients who come from tazemetostat studies gone on to CAR-T? Do you have any data on the effect that tazemetostat has on CAR T responses or durability or anything like that?

[Peter Ho:]

Let me take the question. We don’t have the data to let us know all of the various treatments that patients may go on to after receiving tazemetostat. What we – the data that we have better are the prior treatments that patients have had before coming on to our trial and we have certainly had some patients in our trial after having had CAR-Ts and not having as optimal response in that setting as they might have.

[Geoff Porges:]

Okay, thanks I will come back later.

[Operator:]

Thank you. And our next question comes from the line of David Nierengarten with Wedbush Securities your line is open.

[David Nierengarten:]

Hi, thanks for taking my question. Just a quick couple. First off, have you – you mentioned meeting the FDA again in the second half of the year. Do you have a date yet?

[Rob Bazemore:]

We don’t have a particular date that we are sharing. We are excited about our ability to engage with the FDA in the second half of the year. As you know, we’ve already engaged with FDA on our NHL program. We already have Fast Track designation for patients with FL irrespective of their EZH2 mutational status and we have Fast Track designation for patients with diffuse large B-cell lymphoma who have EZH2 mutation. So we started to engage with them sometime back. But we look forward to sharing more of the details of the meeting and the outcome when it’s occurred.

[David Nierengarten:]

And then a couple of other follow-ups or different questions, I should say. So – sorry, we saw, of course, the pricing for the [indiscernible] recently approved drug and rare forms of AML. We’ve seen another pricing recently approved drug [Indiscernible] at $16,000 a month or so. Are those kind of the new benchmarks for where you’re thinking? I know it’s a little bit early to think about commercial, but if you are planning to be a commercial company, relatively short order, have you started to thinking about that and think about your commercial capabilities?

[Rob Bazemore:]

Yes. I think, broadly, the thing I would say about that is that I think it’s encouraging that the market still supports the introduction of novel therapies that bring significant benefit to unmet medical need, like those approvals that you just described. In terms of pricing for tazemetostat, it’s a bit early to comment on that. I think it depends on a lot of things including where we launch first, labeling, a lot of things that are still left to be worked out. So it’s premature to talk about the price for tazemetostat. But overall, I think it’s encouraging that the market continues to reward innovation and drugs like this that come into the space that meet significant unmet need.

[David Nierengarten:]

And then one last one, on GSK discontinuing their internal EZH2 inhibitors. Do you have any insight as to that? Or if that has any impact on yourself? Thanks

[Peter Ho:]

Hi David, it’s Peter. We don’t have specific insight on GSK’s decisions. Of course, we read as others have from the public domain that this was part of a broader rebalancing, whatever you want to say, of their portfolio. So we don’t have insight. However, I would say that from the standpoint of EZH2 inhibitors, when we have looked at the patients that they have made on the compound, I think having an intravenous compound for the GSK 1 is certainly something that from the standpoint of optimal dosing of an EZH2 inhibitor, we feel that having an oral dosing allow – that allows for continual dosing and exposure for patients is very important. So I don’t know if that played a part into their decision or not.

[David Nierengarten:]

Great thanks.

[Operator:]

Thank you, Our next question comes from the line of Phil Nadeau with Cowen and Company.

[Phil Nadeau:]

Good morning congratulate on the progress and thanks for taking my questions. I guess, first, on the filing in epithelioid sarcoma, what do you have to do between here and the filing? Why is it in 2018? What are the rate limiting stuffs?

[Peter Ho:]

Yes, sure. Phil, it’s Peter again. So we’re very excited to have completed the accrual to the study and really it’s allowing the data to mature, both from the extended cohort, the sort of second 30 patients, as well we are still following patients in the first 30 that we have enrolled. And we’re looking at response rate. We’re looking at the durability of response and disease control, I mean all of the things that are important, particularly from the perspective of a time-dependent endpoint that we and others are aware are important for regulators to be looking at. So we’re looking to see how the patients do.

[Phil Nadeau:]

And is there anything that you learned from your FDA discussion? You had mentioned that you expected to file previously [indiscernible] meeting, confirm that, but were there any other notable pieces of information that came out of that discussion?

[Peter Ho:]

I think a lot of the, I think, discussions that we’ve had with FDA, they’ve been very helpful to us. We had the ability to engage in a dialogue in a tumor type that other sponsors, to the best of our knowledge, have not engaged directly before, molecularly targeted sarcoma. That being said, I think, certainly, we will continue with additional dialogue with FDA as we move forward, but really nothing to add to that for now.

[Phil Nadeau:]

Its okay. And then on the lymphoma study, can you give us some sense of how the sites in the trial have increased over the last 8 or 9 months since late last year? And in particular, if you include the US Oncology sites now as part of the trial, what is the likelihood in terms of [indiscernible] lymphoma patients today versus where it was at the end of 2016?

[Peter Ho:]

Sure. No, very fair question. So what we’ve done from the perspective of sites is we do continue to add sites. And as I think you know, this program started in the EU, primarily in France and in the U.K., so since the end of 2016, we’ve been focusing our efforts on expanding sites globally, particularly in the U.S. but also in EU and Eastern Europe as well, where we haven’t had as much of a footprint in the past. And of course, with U.S. Oncology as one large entity and then with other specific sites in the U. S., we’re moving to expand that and we’re also looking at sites in Asia as well.

[Phil Nadeau:]

And I’m guessing, it would be fair to say that sites have at least doubled since late last year? Or could the increase be even bigger – even greater than that?

[Peter Ho:]

Well, the addition of the 68 U.S. Oncology sites enrolling substantially increases our footprint there. I don’t want to get into specific numbers, but that’s a substantial increase for sure.

[Phil Nadeau:]

Okay. And then last question. Do you have any new thoughts on how many patients it may take to file in follicular lymphoma? In the past, we’ve seen filings around 100 or maybe slightly more than that patients in single-line Phase IIs. Any thoughts on whether you could file on that number, somewhat less, somewhat more?

[Peter Ho:]

Well, yes. So what we’ve talked about is the – that – for lymphoma, be it DLBCL or follicular lymphoma for patients with EZH2 mutations, there hasn’t been any precedent for that. And so in terms of ultimate numbers, I think that is a discussion we’re looking forward to having with the agency in the second half of the year. And of course, that’s also going to be dependent on the efficacy that we see, right, with something that is much more striking as in the case of our response rate in follicular lymphoma, we feel that would warrant smaller numbers for sure.

[Phil Nadeau:]

Great. Thanks for taking my question, and congratulation.

[Operator:]

Thank you. And our next question comes from the line of Mike King with JMP Securities. Your line is open.

[Mike King:]

Good morning guys, thanks for taking the question. A lot of my questions have been answered. I just want to drill down a little bit more in some of the solid tumor topics. First of all, Peter, just with regard to your comment about epithelioid sarcoma incidents/prevalence being more common than had previously been thought. Can you – maybe can we drill down a little bit more on that? What exactly do you think would be the differentiating factors that would – would it be just EZH2 status? Or would there be other histological aspects that might further characterize ES versus – I’m sorry, I’ve forgotten the other tumor type you mentioned that is often confused with. But what kind of things could segregate the one from one another?

[Peter Ho:]

Sure, Mike. Well, I think two things are operative here, right? One is the fairly recent addition of INI1 testing to identify patients with epithelioid sarcoma compared with sort of a more general bucket that ES patients may have been put in before. And even to the point that histologically, when you look at these tumors, they tend to be fairly undifferentiated, which means that they tend not to have the characteristics under microscopy with regular staining that set them out one from a different tumor, for example. So we feel that for many patients with ES, they may have not been diagnosed with ES in the past because of that limitation. But increasingly, now with INI1 testing, one can make more easily a definitive diagnosis so that some patients who may have been diagnosed with one of the other undifferentiated type tumors before would now be diagnosed with ES with INI1 testing. And the second thing is now that we have what we and our investigators consider to be a therapeutic – investigational therapeutic with activity in ES, I think that is also provides a push to make a more definitive diagnosis in this patient population. I think the example that I can draw upon is the example of GIST, gastrointestinal stromal tumors, in the past where it was really almost an unheard of diagnosis. And with the advent of Gleevec as a targeted therapeutic for patients with GIST, in fact the frequency of diagnoses increased dramatically. How much that will be the case for ES, of course, it’s too early for us to say right now. But certainly, we feel that the epidemiologic data, which is really quite limited for ES that exist now, probably does underestimate the total incidents of the disease.

[Operator:]

Thank you. And our next question comes from the line of Matthew Eckler with RBC Capital Markets. Your line is open.

[Matthew Eckler:]

Hi, good morning and thanks for taking the question. So wanted to ask a little bit more about solid tumors. Now that the ES cohort is fully enrolled, when might we anticipate seeing more data from this study? And is it possible that you could present more data before filing for registration? And then separately, the 40-patient ES cohort that you mentioned today, is this something that was requested by FDA?

[Peter Ho:]

So Matt, let me take your two questions. The first is relates to when we will be reporting out on the additional patients. Since we recently completed enrollment in this population, both response rate as well as disease control for a longer period and what we have talked about in the past for our population as we feel that eight months is significant, it is clinically relevant rather for the population. I think really this would be a 2018 event where – at the earliest where we would be presenting data. And as to whether we would be presenting that data before a file, I think that’s under consideration. We’ll see how the data pan out along with when various meetings are, for which it would be most appropriate to present these data come about in the next year. From the standpoint of the second cohort that we added, now this was not based on any discussions with FDA. We feel that there’s still a lot we need to learn in the area of tazemetostat’s activity and in particular, its potential role in combining with checkpoint inhibitors and other immunotherapeutics. And we felt that in looking at the type of patients for whom we have received pre- and posttreatment tumor biopsies, we’ve had much more of that in our solid tumor studies. And so we felt that with the ES population, given the activity that we’ve seen so far, given that it is a solid tumor, for just the best opportunity to be collecting these paired tumor biopsies to look specifically at these immuno- oncology type translational endpoints – biomarker endpoints that we’re looking for.

[Matthew Eckler:]

Okay, great thanks Peter. And then maybe this one is for either Rob or Andy, if he’s there. I guess, I wonder if you could talk a little bit more about what assumptions are going into your current guidance around cash and how confident, if at all, are you that you can get the NDA filed for solid tumors or in current cash?

[Rob Bazemore:]

Well, thanks for the question, Matt. I think we’re operating from a strong position of financial strength. We have, as we’ve said, enough cash to get us into at least the third quarter of 2018 That’s not including any additional milestone payments or other partner revenues. So as a part of how we think about operating the business, we continue to look at all the opportunities that we have to make sure we have the financial resources to build these programs, execute the programs that Peter and I have described. I think we are in a strong place where we’ve demonstrated efficacy now in not only the solid tumors but in non- Hodgkin lymphoma as well, and we have a path to submitting for ES in 2018. We own the global rights to tazemetostat outside of Japan. So this puts us in a great position to continue to develop tazemetostat in a broad range of tumors and lines of therapy and we could choose to do that on our own or we could choose to do that through partnerships. We also have a wholly-owned pipeline and discovery effort outside of those programs that we have partnered with Celgene and with GSK. And again, we could choose to continue to develop those multiple classes of epigenetic targets either alone or with partners. So we feel like we have multiple avenues for accessing capital, be that the equity markets and we currently have no debt. So we think these allow us to make the right decision at the right time in terms of how we continue to resource the company.

[Operator:]

And we have a follow-up question from the line of Mike King with JMP Securities. Your line is open.

[Mike King:]

I also wanted to ask, maybe dig down a little bit more on non-small cell lung. Obviously, could be a potential large market opportunity. Just wondering what biologic signatures we should think about there. Is it INI1? Is it EZH2? Is it other – some other component of PRC2 complex? Can you enlighten us?

[Peter Ho:]

Yes, Mike. So for the study that we have with the MORPHEUS, the study with Roche, it’s really not directed at a specific molecular signature within the tumor with respect to tazemetostat. This is really leveraging the potential that tazemetostat has in enhancing an immunotherapy effect through various mechanisms could relate to increased new antigen expression as well as enhancement of lymphocytic infiltrates into tumors. But – so it’s really along those lines rather than the sort of tumor specific molecular signatures that we have for our other monotherapy programs.

[Mike King:]

Okay. Is there something particularly unique about the tumor microenvironment in non-small cell lung that would make it favorable towards EZH2 inhibition?

[Peter Ho:]

Certainly not that we know about. I think non-small cell, of course, is a tumor with a lot of history with checkpoint inhibitors and we feel that if we see activity there, that may have more broader applications to other tumors as well. Now certainly, inflammatory elements within tumors as part of the microenvironment, as you point out, are very important. But I don’t know that there is anything specific to non-small cell in this particular case.

[Mike King:]

Is there any intention to enroll patients with either cold tumors? Or to see if they can flip them to hot tumors to make them hotter? Can you help us understand how you’re thinking about that aspect of it? Or is it more of a signal seeking type of study with all commerce?

[Peter Ho:]

Well, so I think when we look at what we’d like to do with tazemetostat in this space, we are looking at both hot and cold or not so hot, if you will, tumors. And so in the case of our NHL study with atezolizumab, that really falls in more of the latter, right, so far. Whereas for the non-small cell study, it’s really more the former, hot tumor and perhaps making it harder or reactivating all those kinds of things. So we want to look across the board in the immuno-oncology space.

[Mike King:]

Okay. And then finally, just I wanted to ask about mesothelioma and BAP1 loss of function, just wanted to better understand how that’s determined because I’m reminded of INI1 loss versus INI1 deficient that we encountered in that setting. So how is that assessed? And is it a pure loss of function versus, I’d say, a mutation, et cetera?

[Peter Ho:]

Right. So there are multiple ways for loss of function to occur. It could be via mutation at the DNA level. It could be through posttranscriptional or posttranslational events as well. So that being said, the way that we look at BAP1 in our studies is via immunohistochemistry. BAP1 should be in the nucleus and so if it’s not in the nucleus, then that’s what we are looking at as BAP1 loss. Now that being said, right, I think you know, Mike, we went down this line of clinical investigation on the basis of very compelling preclinical data that was generated in collaboration with us by investigators at Sloan-Kettering. And so what we have done in our study in the Phase II portion of it is to look exclusively at patients who have BAP1 loss by this IHC. That being said, I think we’re going to take a look at our data, and you know when we move forward, it may also be instructive to see what tazemetostat does in the so-called BAP1 wild-type patients as well, but we’ll make that determination after we’ve had a chance to review the data from this ongoing study.

[Mike King:]

Okay, that’s helpful. Thanks.

[Operator:]

Thank you. And our next question comes from the line of Peter Lawson with SunTrust Robinson Humphrey. Your line is open.

[Peter Lawson:]

Peter, patients that have come off CAR T-cell therapy, do you get a sense of how they respond to tazemetostat? Do you get a sense of a more or less likely to have a EZH2 mutation?

[Peter Ho:]

Peter, I think where we are with that is the numbers are too few, really, to make any kind of conclusive statement on that. So this is just a space that we’re following, seeing as we continue to accrue patients and especially those who have mutations, seeing if there is any difference or not in how they do, if they are patients who’ve had prior CAR-T. Just too early to say.

[Peter Lawson:]

And then just – for ASH, what data would we get? What are you thinking about submitting? Would we – where we’re for R-CHOP combo?

[Rob Bazemore:]

So we wouldn’t likely see data on the combination studies, Peter, until sometime in the next year. Those are studies that are both – or all 3 of them actually are still enrolling patients. And so that would be data that we’d expect next year. ASH is an important meeting for us. We certainly plan to have a presence there this year. We’ve not specified what data, if there are any that would come from the ongoing studies that we will present there. In terms of a full update that we presented at ICML, our plan would be to present that again next year. We want to have more patients enrolled. We’d certainly like to be more fully enrolled on the mutant arms. And importantly, we want to be able to say something more meaningful than about durability. And so those time bound endpoints, we need time to follow patients and so we expect a full update on the NHL data set in 2018.

[Peter Lawson:]

Thank you. And then, just given the really encouraging side effect profile of tazemetostat, is there any more thoughts about using it in what’s like a maintenance setting?

[Peter Ho:]

Yes, Peter. Absolutely. And this is something that we’d be very excited about doing for all the reasons that you mentioned. And I think we are just looking for the right opportunity and clinical setting to do that, but that is definitely in our minds.

[Peter Lawson:]

Great. Thank you so much.

[Operator:]

Thank you. And our next question comes from the line of Robyn Karnauskas with Citi. Your line is open.

[Robyn Karnauskas:]

So let me just ask a big picture question. We’ve seen some interesting partnership deals in this space recently, especially for combination therapies for checkpoints and given that the focus, how are you thinking about, you’ve said before, "open to a partner." How are you thinking about a broader partnership? And if you start doing smaller partnerships, like, how do you think that could affect your speed in getting yourself into a competitive position with all these different combos?

[Rob Bazemore:]

Yes, Robyn, thank you for the question. So we’re, of course, a company that has been based – our business model has always been based on partnerships. We’ve had them on our platform, a number of the studies now that we’re doing on, even with tazemetostat, both with R-CHOP as well as the studies that we’ve introduced with Tecentriq are being done with partners for a couple of reasons, one, to bring specific expertise that helps us in the case of the studies with Tecentriq, specifically expertise in assessing immune biomarkers, as an example, as well as deferring the costs so that we’re not paying for the cost of the studies fully on our own. In terms of a broader partnership, as a matter of business practice, we’ve routinely met with other companies to keep them apprised of our progress. We think that there is a high level of interest in a product that has a product profile like tazemetostat, that is favorable safety. It’s got now efficacy across those solid tumors and hematological malignancies, combines well. We have a path to submission for an accelerated approval in 2018. So these have been routine discussions. I have nothing specific to comment on in terms of the progress of those, but it’s something that we’ve been doing as a matter of principle as a way of thinking about continuing to expand the development of tazemetostat.

[Robyn Karnauskas:]

As a follow-up, so is there anything in particular that a broader partnership is looking for or would need to see before they would – you or either side would be interested? Are you waiting for a certain data set? Are they waiting for a certain data set before those discussions might advance?

[Rob Bazemore:]

No. I don’t – I wouldn’t say that’s the case at all. I think that for us – that we’ve always said that we would really start to think about whether a partnership played an important role in the ongoing development and commercialization of tazemetostat after we had gotten through the presentation of our data and really understood what our profile look like. And so we’re just sort of there having presented our data this summer in both solid tumors as well as in non-Hodgkin lymphoma.

[Robyn Karnauskas:]

Got it. And then last question, anything else, I’m still thinking about the differences seen between the DLBCL and the follicular responses, and I understand the differences in enrollment and all sorts of things. Anything you learned about EZH2 mutants between DLBCL and follicular since you’ve gotten the data?

[Peter Ho:]

Hi Robyn, this is Peter. This is still certainly something that we are looking very hard at. And at ICML, we presented some preliminary data from our translational studies using the 62 gene proprietary panel that we’ve developed. So we look forward to looking at the full data set to see if there are any additional markers that may be different between follicular and DLBCL. Now that being said, I think it’s also important for us to remember that the 2 diseases, even in the relapsed refractory setting, are still quite different, independent of whatever various molecular marker differences there may be in terms of the aggressiveness, and both diseases are quite aggressive in the relapsed refractory setting. But still between the 2, there are differences, presumably related to cellular proliferation rates in the various lymphoma types. So those are things that we continue to look at. So by that I mean various clinical characteristics of the patients to see if we can further define any particular differences that might help shed light on how the drug works and where it might work best.

[Robyn Karnauskas:]

Got it. Thank you so much.

[Operator:]

And I’m showing no further questions at this time. I would now like to turn the call back to Rob Bazemore, Chief Executive Officer, for any closing remarks.

[Rob Bazemore:]

Thank you, and thank you all for joining the call. I think you’ve heard today that we’ve made tremendous progress in the first half of the year. We’ve been able to achieve a number of the important milestones that we laid out when we began the year. We’re pleased with the progress that we’re making in our clinical programs, but also the interactions that we’ve had so far with the FDA on our solid tumor program. In the second half of the year, as I’ve said in the call, it’s a busy second half of the year. We stay focused on continuing to develop tazemetostat, particularly involving enrolling patients in the EZH2 mutation arms. We look forward to meeting with the FDA to discuss our regulatory strategy in NHL and have the same clarity that we now have in patients with epithelioid sarcoma, and we look forward to updating you once we’ve done so. Thank you for joining the call, and have a terrific weekend.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.