Epizyme, Inc.
Q1 2016 Earnings Call Transcript

Published: 9 May 2016

[Operator:]

Good morning, and welcome to Epizyme’s Conference Call. At this time, all participants are in a listen-only mode. There we will be a question-and-answer session after the prepared remarks. Please be advised that this call is being recorded at Epizyme’s request. I would now like to turn the call over to Rebecca Cohen of Epizyme. You may begin.

[Rebecca Cohen:]

Thank you. Good morning everyone and thank you for joining us on Epizyme’s first quarter 2016 results conference call. Earlier this morning, we issued a press release outlining our financial results, which is available at the investor centre of our website at epizmyme.com. Joining me on the call Rob Bazemore, President and Chief Executive Officer; Andrew Singer, Executive Vice President and Chief Financial Officer; Dr. Peter Ho, Executive Vice President and Chief Medical Officer; and Dr. Bob Copeland, President of Research and Chief Scientific Officer and Susan Graf, Chief Business Officer. During today’s call, we will be making forward-looking statements related to the company’s future expectations, plans and prospects. These statements are subject to risks and uncertainties. Our actual results may differ materially as a result of various important factors, including those described in the risk factors section of our Form 10-Q filed earlier this morning. These statements represent our views as of today 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. I will now turn the call over to Rob

[Rebecca Cohen:]

Thanks you Rebecca and thank you all for joining us this morning. Earlier this year, we laid out Epizyme’s multi-year vision to revise substantial therapy to through epigenetic medicines for patients with unsolved diseases. Over the next five-years, we are focused on four transformational activities of which we have already made significant progress. Our first area of focus in on accelerating the global launch of Tazemetostat in patients with non-Hodgkin lymphoma or NHL and patients with certain genetically defined solid tumors. Tazemetostat, our lead product candidate and a first-in-class inhibitor of EZH2 is in three registration supporting trials. Enrollment in these trials is ramping up and its on-track with our expectation while we had new sites in the U.S. and other countries. We are gaining patients’ experience which will drive the next steps for Tazemetostat in each population and inform potential paths to registration. We had submitted an abstract for presentation at the ASH meeting on Lymphoma Biology taking place in June. That would be a preliminary update on our Phase II study in NHL. The update will include a review of the safety profile of Tazemetostat to-date, as well as a preliminary review of the activity in the arms of the study that have surpassed the pre-specified utility hurdles, as confirmed by our independent data monitoring committee. In case there was any confusion, we did not submit the data for presentation at the ASCO Annual Meeting. Our expected abstract for ASCO is simply a trial is in progress abstract. Peter will go into more detail on both our NHL and solid tumor programs in just a bit. The second area of focus is expanding the clinical program for Tazemetostat to leverage its potential as a pipeline within a product in multiple lines of therapy and multiple indications and a combination regiments, as well as monotherapy. An important component of this strategy is demonstrating the potential of Tazemetostat as a frontline treatment option in NHL. Just this morning we announced a collaboration agreement with Lymphoma Academic Research Organization or LYSARC to being our frontline combination trial. Under this collaboration, we will be conducting the planned study of Tazemetostat in combination with R-CHOP as a frontline treatment in elderly high-risk patients with DLBCL. LYSARC is the operational arm of the Lymphoma Study Association, a premier cooperative group in France that concentrates on clinical and translational research in Lymphoma and is certified by the French National Cancer Institute. This agreement aligns with our strategy of partnering with high quality organizations that can help us accelerate the development of our programs, while at the same time reducing our expenses. Under the agreement LYSARC will be the sponsor of the study and will provide the R-CHOP regiment. We have jointly design the Phase IB2 trial, which we expect to initiate mid-year. This open label study has design to provide important clinical data that will inform us our development plans for other combination studies for Tazemetostat. We expect to announce the collaboration agreement with a leader in oncology to combine Tazemetostat with an anti-PD1 or PDO1 agent for the treatment of NHL and potentially other types of cancer. This is another example of the ways that we are using creative partnering to help fulfill our strategy while managing our spends. We expect this collaboration to result in sharing the expense of the combination trail 50/50 with our partner. At the same time, we will be gaining valuable expertise to help to find the best combination approach with these two novel agents. We are well underway on our business development discussions and we anticipate signing an agreement by mid-year and starting this new combination trial as soon as possible thereafter. In parallel, we've made progress towards initiating the Phase II clinical trial of Tazemetostat in patients with mesothelioma characterize by BAP1 loss-of-function. Mesothelioma is the first of five new clinical development programs that we plan to initiate with Tazemetostat in the next five-years. We recently announced that our investigation on new drug application was accepted by the FDA for the treatment of patients with this difficult to treat cancer. We look forward to initiating this trial of Tazemetostat as a monotherapy in leading U.S. Academic medical centers in the third quarter of this year and would expect to expand the trail internationally thereafter. The third of focus of our long-term vision is creating a pipeline with at least three new oncology product candidates in clinical development by the end of 2020. Our research team continues the advance the development of small molecule inhibitors against five-priority targets that we selected. We have also began conversations with potential partners regarding platform ventures that could allow us to more aggressively pursue multiple epigenetics classes of targets. The fourth area of focus is further establishing our leaderships in the field of oncology epigenetics and beyond to enable sustainable business growth. We have expanded our team bringing in a number of highly experienced and talented individuals in key leadership goals to help us execute on our strategies, prepare for the potential launch of Tazemetostat and to build value that extends beyond our lead asset. We are delighted to welcome Susan Graf, our new Chief Business Officer and Matt Ros, our new Chief Operating Officer to the team. Susan and Matt are both accomplished global biopharmaceutical executives with more than 20-years of experience each. Susan will oversee our long-term corporate strategy and lead corporate and business development, as well as alliance management. Matt will be directing on operational analyzing the launch readiness efforts for Tazemetostat as we accelerate the Michael Boretti, as a Vice President of Business Development and Jeannie Chu, as the Vice President of Program and Portfolio Management. These talented individuals come at an important time for us as we execute on our vision and guide the growth of our organization. Our progress and our future are made possible by the dedication of all of our employees. I want to thank each one of them for their continued focus and their contributions across all aspects of Epizyme. Let me now turn to one of the core drivers for the company today. The clinical program for Tazemetostat in NHL and solid tumors. As I mentioned earlier, all three of our ongoing clinical trials are enrolling well and we have a number of important milestones this year in both our NHL and solid tumor programs. The first of these milestones is the expected upcoming update on the Phase II trial in patients with relapsed or refractory NHL but the ASH Lymphoma Biology meeting. As a reminder, this global trail consists of five arms, design to evaluate the safety and efficacy of Tazemetostat in different sub-types of NHL and to determine potential path towards registration in each based on activity. This Phase II study is intended to build off of the safety and efficacy findings in the phase I trial. As was the case in our phase I study, patients in the Phase II trial have relapsed or refractory NHL and have been treated with two or more prior therapies. In general, these are heavily pre-treated very ill patients. A patient with relapsed or refractory NHL who has progressed after two prior therapies currently has no meaningful effective treatment options. They have a poor prognosis and a low rate of survival. Our goal in developing Tazemetostat is to bring safe and effective new treatment options to patients just like these. Let me ask Peter to provide an update on both our NHL and solid tumor program for Tazemetostat. Peter.

[Peter Ho:]

Thanks Rob. At the ASH Lymphoma Biology meeting, we expect to provide an early snapshot of the Phase II trial. What we will be presenting from this initial look includes patient accrual across all lines of the trial, the safety experience for all patients and an early look at clinical activity in the patient populations that have surpassed their futility hurdles. In the phase I trial, we observed several important characteristics of response to Tazemetostat. First, patients who exhibit no response to Tazemetostat usually progressed within two-months in discontinued therapy. This is important, because we can quickly identify the patients who do not respond. For patients who did respond to Tazemetostat objective responses were not rapid as we have come to expect [indiscernible]. Because EZH2 in addition induces reprogramming of cellular function in our phase I trial the time to first objective response occurred as late as 10-months from the onset of treatment. During this window time in responding patients, we observed gradual but persistent reductions in tumor volume with objective responses by Cheson/IWG criteria developing later. These clinical observations are consistent with Tazemetostat’s anti-tumor effects in laboratory models in which longer drug exposures will require. We observe an evolution in response in some patients where partial responses became complete responses overtime. In fact, we have seen additional evidences of this phenomenon and at ASH Lymphoma we will give an update on our phase I experience. This includes a patient who previously had a partial response that evolves into a complete response at one-year of treatment. As such the phase I experience suggests that continued Tazemetostat treatment has the potential to translate into tumor regressions over a prolonged period of time. Enrollment in the Phase II trial is going well. We initiated the study in July of last year at a single trial site with additional sites receiving IRB approval and beginning to enroll patients late in the fall. Since then, we have seen a steady ramp up of patient enrolment as more sites have come on board. So far, approximately 70% of patients in Phase II study has been treated for Tazemetostat for three-months or less. At ASH Lymphoma we intent to provide a review of the safety profile of Tazemetostat across all five arms of the trial. It will be important to compare the safety profile in Phase II patients with that from phase I where we observe Tazemetostat to be well tolerated. A favorable safety profile is particularly important for an all treatment like Tazemetostat where an extended duration of treatment appears to be associated with the potential for greater clinical benefit. Turning to activity, we previously stated that three of the five arms of the study have surpassed their prespecified futility hurdles based on our internal assessment of the data. The Independent Data Monitoring Committee or IDMC recently confirmed this assessment. The three arms that have surpassed the futility hurdles are non-terminal centre, diffused large B-cell lymphoma or DLDCL, germinal centre DLBCL was an EZH2 mutation and germinal centre DLBCL with wild-type EZH2. Surpassing futility in each of the DLDCL arms is based on observing at least one objective response in the first 10 patients enrolled. We have also observed responses in the two follicular lymphoma arms. However, these arms have not yet reached the point where we can assess futility. Surpassing futility in each of the follicular arms is based on observing at least two objective responses out of the first 10 patients enrolled. Given the greater expectations for clinical activity in follicular lymphoma by the treating community a higher bar for futility in this population were set. In the presentation, we plan to present preliminary efficacy data from the arms and the study that have been confirmed to have surpassed futility by the IDMC which are the three DLDCL arms as of today. The IDMC also approved our plant expansion of enrollment in all five arms of the study. We intend to increase the total study size to 270 patients from 150. The three arms enrolling patients with DLDCL will now enroll 60 patients each and the two arms enrolling patients with follicular lymphoma have now enrolled 45 patients each. We are expanding enrolment to improve the statistical precision around these overall response rate estimates within each population of NHL. This will provide better guidance for determining how best to move forward in each sub-types and the statistical design of subsequent studies that maybe necessary. This also informs whether accelerated registrations strategies maybe considered including for example in patients with EZH2 activating these patients. The expanded enrollment will take place globally we currently have 22 sites opened for enrollment in France, United Kingdom, Australia, Italy and Canada and will open additional sites through the end of the year in the United States and other European countries. As we accelerate our enrollment efforts, we will gain additional experience with Tazemetostat across all ones of the trial. There will be longer follow-up for patients on studies such that the arms that has been characteristics of Tazemetostat clinical activity in Lymphoma will be more mature. Pending abstracts submission and acceptance, we plan to present an updated look at the Phase II experience at the ASH Annual Meeting in December. We are encouraged by the progress we are making, in the upcoming presentation we would be looking at a variety of leadership response including the number of patients on treatment, treatment duration, early evidence of clinical activities and the kinetics of tumors response to name a few. We look forward to sharing the update with you next month. Let me now briefly touch upon our solid tumor program, as you know we have two ongoing global registration supporting clinical trials in patients with genetically defined solid tumors the Phase II study in adult patients and a Phase I study in pediatric patients with INI1-negative tumors, SMARCA4-negative tumors or synovial sarcomas. These tumors are aggressive and associated with devastating outcomes for patients. For most of them there are no approved treatment options today. Both of our studies are enrolling extremely well. In fact, due to the higher accrual of patients with certain types of INI1-negative tumors than we had anticipated, we are expanding the adult Phase II study form three cohorts to five cohorts with enrollment of up to 30 patients in each. Two of these cohorts remain unchanged, these are the arms enrolling patients with rhabdoid tumors and synovial sarcomas. The third arm will continue to enroll patients with other INI1-negative tumors and we have now separated out two specific INI1-negative cohorts from the third arm. One arm will enroll patients with epithelioid sarcoma and another will enroll patients with renal medullary carcinoma. Renal medullary carcinoma is a rare an aggressive cancer that effects the kidney and is difficult to treat. This Phase II trial in adults is progressing on-track and we with plan present preliminary data from this study at the Molecular Targets Conference later in the year pending abstract submission and acceptance. The pediatric Phase I study is also advancing well. There is strong interest in participation in the study with many patients ready to enroll as we move through each of dose cohort in the dose escalation phase. We have escalated to the second dose level and plan to report our preliminary data in 2017. I'll now pass over the call to Andy to review our financial results.

[Andrew Singer:]

Thanks Peter. Earlier today, we issued a press release detailing our first quarter results. So I'll just provide some highlights in context for you. We ended the first quarter with $312.7 million in cash and securities. As of May 2, 2016 we had 57.2 million shares outstanding. R&D expense for the first quarter was $17.7 million. The bulk of our development spending in the first quarter was focused on the Tazemetostat program. As we expand the NHL and adult solid tumor studies and plan to initiate new studies including in mesothelioma and in combinations, we anticipate an increase and development expenses throughout 2016. We also continue to invest in our research platform both our Celgene partner programs as well as our prioritized wholly owned programs. G&A expense for the quarter was $5.8 million. We expect an increase in G&A expense throughout 2016 as we build out the team, begin preparing for certain pre-commercial activities and invest in our systems to support our growth. Today we are financially strong and we reaffirm our guidance that we expect that our existing cash and cash equivalents as of March 31, 2016 will be sufficient to fund our planned operating expenses and capital expenditure requirements through at least beyond this 2017. As we look ahead, our investments will be made with the rigorous filter to focus on areas that we believe have the greatest potential for value creation for shareholders and benefit for patients. As Rob mentioned earlier, we are evaluating a variety of partnership opportunities that would enable us to advance the development of our product candidates and research programs, while offsetting some of the associated costs. We will continue to explore other creative partnering opportunities throughout the year to leverage our cash and access external expertise and resources. Now, I will hand the call back to Rob for a few final comments.

[Robert Bazemore:]

Thanks Andy. As you have heard we are pleased with the progress that we've made on our multiyear vision including significant advancements in our ongoing Tazemetostat clinical program, the advancement of our discovery pipeline and the strengthening of our team and our business operations. There are number of importance events and milestones on the horizon. With the start of the combination and new monotherapy Tazemetostat clinical trials and the data readouts from both our NHL and solid tumor programs 2016 will be an important year of progress and execution With that, we will be happy to answer any of your questions.

[Operator:]

Our first question is from Robyn Karnauskas with Citi. You may begin.

[Robyn Karnauskas:]

Great. Thanks so much and congratulations on a lot of progress and giving a lot of specific color on what we should expect for the conference, it’s very helpful. I just wanted to clarify a couple of things. So in the two follicular arms have not hit futility, so besides safety will we get any efficacy data from those arms at all and then as far as when - now that you have decides to open up enrollment. Do you have any updated thoughts about when you think the data will be mature enough to do the FDA and talk just about the next step.

[Robert Bazemore:]

Hi Robin. Thank you for the question. I’ll ask Peter to answer both of those.

[Peter Ho:]

Yes, hi Robin. So in the follicular arms we believe that the responses in follicular make take longer to occur and we need to allow time for those patients on study and as we observed in Phase I. So what we have said is that we will present data on all of the arms that have passed futility according to the IDMC. We’re still looking at data as it comes in, in fact we haven’t yet performed the data cut for the ASH Lymphoma meeting. So if there are more information certainly we will report it. But as of today we have a passed futility on the three DLBCL arms as the start and that’s where we are planning to present as of today.

[Robert Bazemore:]

And just one other things of that Robin I believe and Peter you could correct me if I’m wrong , but for the safety update, we plan to present safety across the entire patient population including those patients with follicular.

[Peter Ho:]

That is correct Rob.

[Robyn Karnauskas:]

Okay and what do you need do you think before you go to the FDA, just talk about the next steps.

[Peter Ho:]

Sure. Well we think that any discussion with the FDA or any other regulator needs to be meaningful. So this will be data driven decision and certainly as the data mature from the study through the year and we will be continually looking for the earliest opportunity to have discussions with regulators.

[Robyn Karnauskas:]

And then last question. I like the idea of partnering of platform program. Can you just help us understand in that situation what are you looking for financially for the partners to provide, are you looking for money upfront or are you looking for someone who has a synergistic program that would be easily combined with your products. How do we think about potentially expecting not just a partnership program for single products that maybe a platform partnership.

[Robert Bazemore:]

Yes, Robin this is Rob. I can answer that. So what we’re looking for essentially, as we’ve talked about on previous calls the work that we’re doing with CRISPR and other technologies to screen new epigenetic target has led us out side of the HNCs into the other classes of estimated targets. We believe those practice could be as important as the HNCs have been and the whole company was found on the HNC platform. So a platform partnerships enables us to explore those other classes of targets more aggressively with co-funding initiatives along with a partner, but also gaining expertise through a partner that we would rather not have to build all the expertise in-house.

[Robyn Karnauskas:]

Great thanks.

[Operator:]

Thank you. Our next question is from Michael King with JMP Securities.

[Michael King:]

Hey guys thanks for taking the question and let me add my congrats on the progress. A couple of questions, a little bit of follow-up to answers to Robins questions. Just wanted to understand the strategic decision to increase the size of the participants in the Phase II and I’m just wondering Peter when you said to get greater statistical precision are you seeing more variability I guess is the question in terms of response rates or demographics or something where you feel like a larger sample set is going to give you greater reliability of your readout?

[Peter Ho:]

Yes thanks Rob. The answer to the last set of questions is no, when this study was originally designed as a Phase I/II study. There was no clinical data at all about Tazemetostat and so what we wanted to go going into Phase II and that’s why the futility analysis were very important is to confirm that we are seeing clinical activity across all the arms similar to as we have seen in Phase I. Once there, we wanted to take the opportunity to increase the number of patients as a general strategy of increasing the statistical precision obviously for a smaller numbers of patients it’s a wider confidence interval around any results be it high, medium or low. And so with this, it will allow us to gain greater confidence by the end of the study with the data and decide how best to go forward.

[Michael King:]

I see. So I guess the continuation to that question is in order to better understand what we get as investors as returns for that other than taking more time and costing more. How does this help Tazemetostat’s timeline and again I guess, with some of these studies able to be turned into registration directed trials as compensation on the sort of the backend of the timeline based on today's decision

[Peter Ho:]

Yes, indeed Mike that is the case. We do see that there are distinct opportunities for some of the cohorts to go forward with an accelerated registration strategy and having greater numbers will allow us to move more quickly in that direction both for now and at the backend.

[Michael King:]

Okay thanks for answering that. I think I was good on your other programs. Just one question about LYSARC I'm not familiar with the organization. Can you help us to understand what does Epizyme believe it gets from collaborating with LYSARC, is it speed, is it creditability, have they done or participated in successful registration trails before, is it purely cost saving measure et cetera or any color you can give us on that would be great. Thank you

[Peter Ho:]

Sure, Mike well, it's all of those combined. First of LYSA is the premier lymphoma cooperative group in France, they have done a many studies as both by themselves and along with pharma and biotech partners. So they are very much an established entity, similar to the cooperative groups we have here in the U.S. it’s just they are focused on Lymphoma, which of course4 c wanted to take advantage of. And so they are absolute experts in the area LYSARC is the operational on for LYSA and so that's why we announced it in that way, but certainly we look to gain expertise both in lymphoma in general and in terms of trials conduct, LYSA has very good relationships with the French regulators as well. It basically allows us to move forward into a frontline setting while focusing on the near-term registration directed activities that we discussed earlier.

[Michael King:]

Is there a some advantages that taking help you gain through speed of recruitment?

[Peter Ho:]

Absolutely, so again they are an establish cooperative group in France. So they have the infrastructure to accrue quickly rather than our building it together [indiscernible].

[Michael King:]

Got it. Thank you very much.

[Robert Bazemore:]

Actually mike the other thing you know the couple of things that I would just add is that one of the important parts to the announcement is that LYSA has agreed to officially be the sponsor of the study. So in terms of the complexity of the work that Peter is trying to do through the two Phase II studies that are enrolling patients, we announced that we are going to being enroll mesothelioma Phase II study in the fall. So LYSA taking this on as a sponsor, really helps in terms of the complexity of the amount of different studies that we're monitoring. It also helps us with paying for the R-CHOP regiment, they are able to secure that reimbursement for R-CHOP in the patients in the study, which means we're not paying for it. So it is actually a cost savings to Epizyme as well that they are running with study.

[Michael King:]

Got it all. Thanks guys, appreciate it.

[Operator:]

Thank you. Our next question is from Peter Lawson with SunTrust Robinson Humphrey. You may begin.

[Peter Lawson:]

Robert just the objective you have seen in the NHL population, can you talk about how deep those responses are with NHL. And then these responses, PRs can evolve to CRs?

[Peter Ho:]

So peter this is Peter Ho. It's our practice to release clinical trials data at medical meeting. So we look forward to describing all of that in detail at the ASH Lymphoma.

[Peter Lawson:]

Got you and then when do you think you could see data for either the Mesothelioma or the R-CHOP study?

[Peter Ho:]

Sure, so for Mesothelioma we are looking to initiate that study at mid-year. So I think given that it will most likely be a 2017 event that we will have initial data from that study. With the R-CHOP study we haven't discussed, details of study’s find, but there are two components as you would expect with any combination trial. We certainly have to do an initial dose finding, Tazemetostat with combination followed by larger expansion again which we will detail, but we could see the data from the dose escalation, dose finding phase again as a 2017 event

[Peter Lawson:]

And then just finally your comments around partnerships for platforms, would that be like a CRISPR collaboration, or was that something broader from that? Would you assume potentially to in license novel molecules?

[Robert Bazemore:]

It's possible, yes. So, it's not just a CRISPR collaboration, this actually would be a drug discovery and drug development collaboration looking at classes of epigenetic target. So it's not just screening initiatives. If we were to find opportunities for in licensing that would make sense based on our pipeline and where we're looking to go obviously that will be something that could be opportunistic about, but it’s not the intent of those collaborations that we talked about.

[Operator:]

Perfect. Thank you so much, congrats on the progress.

[Operator:]

Thank you. Our next question is from Seamus Fernandez with Leerink. Your may begin.

[Seamus Fernandez:]

Thanks for the questions. So a couple of quick questions. First off, Rob can you just help us understand a little bit - I’m struggling a bit to understand the technology partnership, it seems like cost are accelerating to some degree over the next series of quarters. So I’m trying to get a better understanding of the timing of critical value inflexion point, I know the lymphoma society is one to begin with, but I think real one is whether or not your discussions with the agency will provide an opportunity for an accelerated filings in any of the various indications that you are pursuing. So can you just give us a little bit of update on again, is the partnership oriented specifically only to technology or access to technology that will sort of provide economics to another player, so that there would be an opportunity to offset some of these costs? And then the separate question is really where and how have your discussions with the agency gone particularly around some of these data expansions that we're looking at? And I've got a couple of follow-up questions.

[Robert Bazemore:]

Okay thank you Seamus. It seems like there were couple of questions in there so let me try to attack them one-by-one. First of all, just with regards to the opportunities for acceleration, we clearly do so passive acceleration for the approval of Tazemetostat. One of things that we said on the first quarter call is, if the data are robust as an example in the solid tumor study and we're able to avail ourselves accelerated path to registration. We could be on the market as early as the second quarter of 2018 and a year later with NHL. So there are couple of arms of these studies particularly in the solid tumors and the patients in the NHL study with these EZH2 mutations that we think could represent paths to accelerated approval. It’s one the critical components that peter said for why we’re expanding these cohorts, because we believe that we might need a broader set of patients, but could be registered based on Phase II data. So there clearly are acceleration opportunities and we're pursuing those. With regards to partnerships, I wasn’t clear if you meant with Tazemetostat or particularly with the platform. So let me talk about both. We have not intended to really engage in any conversations around partnering Tazemetostat until sometime early next year by next year. Well by then we will have a more robust data from the Phase II studies on both solid tumors and in NHL, we will understand a lot more about the profile of Tazemetostat in both types of cancers. We will understand a lot more in terms of the paths to registration and what that means in terms of costs of subsequent studies and that could go a long way in informing what is any type of partnership that we would want to do longer term on Tazemetostat. With regards to the platform partnership, if you were speaking of that one of the reasons we're doing is exactly what you mentioned, it's an opportunity to help offset some of the costs of the development of our platform in a more aggressive way than we could do on our own. We mentioned when we rolled out the five-of your strategy that we really intended to reinvigorate work on our pipeline and we see a number of opportunities with targets that can play a very important role in cancer. However, to try and to all of that on our own as you correctly pointed out would require a lot of funding and so we see opportunities to do some of these work with partners who can not only provide funding, but also provide really valuable expertise in some of the areas that would help us accelerate those platforms.

[Seamus Fernandez:]

Perfect. That’s really helpful and then as we think about just sort of some of the specifics just curious as to why you decided to expand the DLBCL arms to 60 patients and in terms of the follicular lymphoma arms to only 45 patients. Is it based on the activities seems so far or just due to recruitment difficulty and then I have got one additional question?

[Peter Ho:]

Sure Seamus, it's Peter. So it has nothing to do with recruitment differences or not, the expansion is based on statistical assumptions and parameters and with follicular lymphoma the bar is higher for activity and when that's the case one doesn't need as many patients to achieve the same level of statistical precision. So that's really the reason.

[Seamus Fernandez:]

Okay perfect and just in terms of the 62-gene signature information, is there a point when we should anticipate seeing data on this from the Phase II, should we anticipate it maybe at ASH at the end of the year or perhaps even before?

[Peter Ho:]

Right. Great question. So I think it's a little early for us to do an analysis with the 62-gene panel. Of course, we're analyzing the data as it comes in, but really it's most effective when we can pair that up with a more significant dataset with response to patient outcomes and we see that occurring more at the end of the year.

[Seamus Fernandez:]

Okay, perfect. Thanks so much.

[Operator:]

Thank you. Our next question comes from the David Nierengarten with Wedbush Securities. You may begin.

[David Nierengarten:]

Hi thanks for taking the questions. I was curious given the initial responses that you have seen with Tazemetostat to-date if there was any discussion for maybe as a little bit of the different kind of statistical analysis from the next set of studies you know given the length of time it takes to responds. Is there any discussions in that matter with the FDA or something new we could look forward to or is it going to be the traditional objective of responses the rates of response et cetera? Thanks.

[Peter Ho:]

Yes David, so I think you are alluding to the fact that we are seeing in many patients both a longer time to first response as well as a longer durations of response. And we look forward to updating the community on our Phase I data at ASH Lymphoma as well as providing that first look at the patients in Phase II. Now having said that, at least for me, I do see that there are some parallels between what we've observed thus far in lymphoma and the so called exceptional responders that have been seeing with immune checkpoint inhibitors. Obviously I'm not proposing that this is working by the same mechanism, but I think it does allow for looking at data in perhaps a less traditional way along with the traditional ones off course. And so I think as we have greater experience, broader experience in terms of patient numbers I think those are the types of discussions that we will engage with regulators.

[David Nierengarten:]

Great thanks.

[Robert Bazemore:]

David just a quick follow-on to that. I think you know so what we are looking for in this interim, analysis obviously we saw their robust objective responses in the in the Phase I data but they occurred a bit later in the trial. So given this is early in the study, I think what we will be looking for in this interim analysis, obviously an early sign of partial and complete responses. But also just the number of patients that are still on drug indicating that they are in some level of response. And then as Peter said by the time we get to ASH we expect it will happen more robust [indiscernible] the objective responses in the study.

[David Nierengarten:]

Got it. Thanks.

[Operator:]

Thank you. Our next question comes from Simos Simeonidis with RBC Capital Markets. You may began.

[Simos Simeonidis:]

Good morning. Thanks for taking my questions. I'll get back to Peter's answer to Seamus’ question on the statistical assumptions. I just want to make sure I understand what you said Peter. So in the DLBCL arms you are doubling the size of the trail. In the follicular lymphoma arms you are increasing it by 5%. In follicular lymphoma you have not yet met your threshold and that is a more prevalent and more indolent disease and you have not gotten to where you wanted to get. Is it fair to assume that given that you are only increasing it by 50% versus 100% in DLBCL that it's less on unlikely to see a response and you may be using up on follicular lymphoma or is that not correct?

[Peter Ho:]

Yes Simos, actually absolutely not. The reason why we do not have to increase the arms as much as the DLBCL arms is the target is higher, the target for activity and as such when it's a higher target you need to fewer patients to show the same level of statistical precision. So we do not have any different view today with respect to the likely hood for success in follicular lymphoma. And as mentioned earlier, we are still actively accruing into those arms and following the patients, if one looks at our Phase I data the follicular patients did take longer to enter into their responses than did the DLCBL patients. So for us it really is a matter of simply continuing to follow those patients.

[Simos Simeonidis:]

And the fact that in the three DLBCL arms you have had responses in the two follicular lymphoma arms, you have not - it's you say there is random chance or something else.

[Peter Ho:]

So again, let me just correct that. It is not that we have not seen responses in follicular lymphoma, the fertility hurdle is higher in follicular lymphoma and so I don’t want you to walk away thinking that yes we've seen response in DLBCL, no we haven’t seen responses in follicular lymphoma. It is the higher bar of the number of responders in the first 10 patients as we described earlier and so for us it's really taking a little longer to assess those patients to get to that level [multiple speakers].

[Simos Simeonidis:]

Yes, you are right. I was also going to ask you about the EZH2 mutated, the two arms that are EZH2 mutated. Have you been able to fully enroll those, are you at 30 for both or at least tell us how difficult it has been to find these patients?

[Peter Ho:]

Well we look forward to presenting all of the accrual data when we get to ASH Lymphoma. I think what I can say now is that what we are seeing in terms of the patients with EZH2 mutations both in DLBCL and follicular lymphoma have been that those proportions of patients are much closer to the 15% and 20% population [indiscernible] that we have seen going in. And that’s really different from the Phase I experience where again that study occurred in just two centers. So there may have been some biasing in terms of patient accrual. But now that we have study open in 22 centers across multiple countries, we are seeing those EZH2 mutation bearing patients enrolling at our projected proportions.

[Simos Simeonidis:]

Alright. Then as you are getting more patient experience in the past year, especially between EZH2 mutated and EZH2 wild-type are you starting to be able to bisect of the drugs mechanism of action a little more closely, are you seeing differences in how patients are responding based on whether a wild-type or have a mutation.

[Peter Ho:]

Well that really is the intent of our study in these five different cohorts of patients and so as we go forward and gain greater experience, we will be doing precisely that both with the clinical data as well as biomarker data.

[Simos Simeonidis:]

So, do you think we’ll be able to see that in Colorado springs or is this something that we’ll have to wait until San Diego?

[Peter Ho:]

Yes, I think as we've talked about earlier what we will be presenting in Colorado Springs is an early look and its important and it goes along with what we saw in Phase I to allow the clinical data with Tazemetostat to mature overtime, allow patients to be on study longer. And I think that will provide a better sense of the drugs activity and as well as the translational biomarkers that can help to distinguish which patients there are more sensitive, which patients may be less sensitive to the drug.

[Simos Simeonidis:]

Okay. Final question on the frontline DLBCL study, doing elderly high-risk patients. What are you expectations there? What type of responses or efficacies are you going to look for as a hurdle to move that forward?

[Peter Ho:]

Right, so we haven’t yet spoken about the study design, as we get close to the start of that trial, we will.

[Simos Simeonidis:]

Okay. Thank you very much.

[Operator:]

Thank you. Our next question is from Eric Criscuolo from Mizuho. You may begin. .

[Eric Criscuolo:]

Hi, good morning everyone. So Peter on the high-risk DLBCL trial, what percentage of yield or population would that trial encompass?

[Peter Ho:]

It is a fraction of all of the patients obviously, we’re selecting on the basis primarily of age, but it’s also a set of patients that for frontline therapy have not been served as well with the existing R-CHOP regiments. So again, that’s where we see the opportunity for us.

[Eric Criscuolo:]

Would it be like 10% to 15% of the overall DLBCL patients or is it more like 50% or any parameters around that?

[Peter Ho:]

We’ll look into that but again I think it’s more important to think about it as an opportunity for us. But it is going to be a proportion of patients, many DLBCL patients who are first diagnosed are elderly at the same time will have a better sense of the actual numbers as we move forward.

[Eric Criscuolo:]

Okay. And then getting back to the longer time to response for Tazemetostat, does that affect your thoughts and your strategy for future combination strategies outside of R-CHOP going forward?

[Peter Ho:]

Not really. I don’t see that certainly for patients as long as they are not progressing, we think that’s a good thing. And as they remain longer on therapy, we do see that based on the Phase I experience, there is an opportunity for responses to occur. But in terms of various combinations, we know that based on our preclinical studies the drug seems to combine quite well with a variety of different classes of agents and we look forward to exploring that in the clinic.

[Robert Bazemore:]

Eric we said when we talked about the five-year strategy, the three important to building out the overall profile of Tazemetostat, one is continuing to work on as the monotherapy and we’ve seen robust responses in Phase I. The second is looking at new indication, we committed to five new clinical development programs in the next five-years, mesothelioma is the first of those that we’ll start this year. The third is looking at combinations, so we’ve always said this is an important part of how we think about developing the molecules. We’ve chosen two important ones this year the R-CHOP study is important, because it’s the first study with Tazemetostat in a frontline setting and it’s the first study of Tazemetostat in combination where we have pre-clinical evidence of synergy. The PD1, PDO1 is the second and there are obviously other things that we’re looking at doing as well. B-cell signaling agents we’ve talked about there are number of other potential combinations that we could look at, but we've said this is all important to the overall way we think about developing the molecule.

[Eric Criscuolo:]

Got it. Thank you. And then just lastly on clarification. The two follicular arms for the Phase II trial, is there a potential that they reach their futility threshold and we get data on them at ASH Lymphoma or you is it just going to be the three arms that have already hit their parallel rates?

[Peter Ho:]

Right, so we haven’t completed the actual data cut that we will be using for the ASH Lymphoma. So it's certainly maybe possible that in the time between now and then that we have additional data. If that were the case, we would have to take that to the IDMC to review because again it is our practice to present publicly only data from arms that have surpass that futility from the IDMC. So couple of things would need to happen but as certainly wouldn’t rule out any possibilities.

[Eric Criscuolo:]

Great. Thank you for that.

[Operator:]

Thank you. Our next question is from Phil Nadeau with Cowen and Company. You may begin.

[Phil Nadeau:]

Good morning and thanks for taking my questions. First one on the discussion to expand the follicular arm of the trial. Can you help us reconcile the fact that follicular arm have yet to surpass their futility hurdle, but you are expanding them. Is it that you expect as you said the responses in follicular can be relatively slow and takes some time to develop, may be able to complete the enrollment in this arms perhaps the futility hurdle is met and if that speed up futility hurdle is not met what happens to the expanded enrollment?

[Peter Ho:]

Sure very fair. So for the first question it as you described we have patients on study, we continue to follow them and we have seen no indication thus far that we will not meet the futility hurdle. But said we just simply have to let the data mature. If we do not meet the futility hurdle then we will see some enrollment in those arms that have not met that criteria.

[Phil Nadeau:]

Got it, okay. And then second on the solid tumors, why are you breaking out to the two groups that you have outlined in particular into new arms was that simply that there was greater than expected enrollment of those tumor types or have you seen some preliminary signs of activity in those tumors or is there a scientific rational for separating them?

[Peter Ho:]

Sure. That's a great question. So first of, there is scientific rationale in the sense that these are tumors that have a very high proportion of patients with the loss of INI1. Now we originally had a cohort in that study which really was a bucket cohort right, so basically these are non rhabdoid tumor patients who could have any tumor characterized by loss of INI1. And we want to use that to explore some of the additional tumor types. I think there are two factors that go into expanding out any particular group into a separate expansion cohort. One as we have surmised is accrual into the trial, we don’t want that bucket cohort to be overwhelmed by any single sub-type such that we don’t have enough patient slots to adequately explore the other ones and the other would be activity. So those are the two things that we think about.

[Phil Nadeau:]

Okay great. And then one last question. The DLBCL arms in particular could you give some sense for the level of activity that you would want to see to move forward into a pivotal trial and then maybe even more aggressive than that. At what level of activity which you need to see in order to be able to file off this data?

[Peter Ho:]

Right. Well it's important to remember that we’re pioneering the epigenetic therapy space and this is very new, it makes it somewhat difficult to use definitions that have been derived from older classes of drugs like cytotoxic. As we mentioned the recent experience with CTLA4 and checkpoint inhibitors points to evidence that activity for a drug class may not be based solely on response rate. So as we move forward, we want to look both at the response rate and other parameters time dependent endpoints such as duration of response, because we feel that together those will provide the best profile for the activity that would satisfy us, satisfy physicians and satisfy regulators.

[Phil Nadeau:]

I think there are some talks at the [indiscernible] of developing new endpoints for the IO therapy things like landmark analysis, do you think that would be space so far and drug like Tazemetostat?

[Peter Ho:]

Yes I mean it's early days, but I certainly welcome at the FDA and the epidemic community looking at alternative endpoints, because we've certainly seen very durable responses for several of our patients in Phase I and we look forward to seeing how well that establishing itself in Phase II and beyond as well.

[Phil Nadeau:]

Great. Thanks for taking my questions.

[Operator:]

Thank you. I'm showing no further questions at this time. I would like to turn the call back over to Rob Bazemore for any closing remarks.

[Robert Bazemore:]

Well, first thanks everyone for joining us today. As you heard, we are executing against all the components of our multiyear vision. We have a number of important milestones on the horizon led by the upcoming presentation of preliminary data from our Phase II NHL study at the ASH Lymphoma Meeting next month. There have been a couple of questions that I just wanted to touch on in terms of clarity of what we think we will see at ASH Lymphoma Meeting and the data presentation there. I think it will be clear that we will be able to determine that the early safety profile that we’re seeing across this larger patient population is favorable and is similar to what we observed in the Phase I study. I think it will also be clear that Tazemetostat have clinical activity as determined by the number of patients who were still on therapy and early signals of partial responses and complete responses that we see. It will also be clear that we identify patients and enroll them in each of the cohorts that we talked about that Peter described, including those patients who had EZH2 mutation. I think all of those things will be clear when we present the interim update next month. Financially, we’re strong and we’re doing things as we’ve talked about including the R-CHOP study, the PD-L-1 study in combination in order to stretch our runway out, but we are financially strong today with a long enough runway to support these upcoming activities in our operating plans through these major milestones. So thank you all for joining us on the call today and I hope you have a great day.

[Operator:]

Thank you. Ladies and gentlemen this concludes today’s conference. Thank you for your participation and have wonderful day.