Epizyme, Inc.
Q1 2015 Earnings Call Transcript

Published: 29 Apr 2015

[Operator:]

Good afternoon. And welcome to the Epizyme first quarter 2015 conference call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session at the end and please be advised that this call is being recorded at Epizyme’s request. I would now like to turn the conference over to the Epizyme team. Please proceed.

[Manisha Pai:]

Thank you. Good morning. This is Manisha Pai, Head of Epizyme Corporate Communications, and welcome to Epizyme’s first quarter 2015 conference call. The news release with our first quarter financial results and company update became available at 4 o’clock PM today and can be found on our website at epizyme.com. The agenda for today’s call is as follows. Dr. Robert Gould, President and CEO, will discuss highlights of the quarter and provide an update on the company’s progress. Dr. Peter Ho, Chief Development Officer will review the upcoming milestones for the company’s clinical programs. Dr. Bob Copeland, President of Research and Chief Scientific Officer will review recent pipeline developments. Andy Singer, Chief Financial Officer will review the company’s financial position. Robert will then make closing remarks and open the call for Q&A. Before we begin, I would like to remind you that today’s discussion will include statements about the company’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements, as a result of various important factors including those discussed in the Risk Factors section of our Form 10-K filed with the SEC on March 12, 2015 and in our other filings from time to time with the SEC. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Now, I will turn the call over to Robert Gould.

[Robert Gould:]

Thanks Manisha. Good afternoon everyone and thank you for joining us on the call today. In the first quarter of 2015, two events set the future course for Epizyme. In March we reacquired worldwide rights to our EZH2 Inhibitor, EPZ-6438 from our partner Eisai. We’ve assumed full operational responsibility for global development, manufacturing and commercialization of 6438 outside of Japan where Eisai retains rights. We believe that 6438 is exactly the kind of first-in-class therapy on which successful biopharmaceutical companies are built. Our decision to assume control of 6438 is a transformative step in the evolution of our company. The transition of responsibility from Eisai to Epizyme is proceeding smoothly. We’ve made excellent headway on transferring the inventories of 6438 clinical supplies and active pharmaceutical ingredient for Eisai to Epizyme. We are taking responsibility for the ongoing Phase 1 dose escalation study and its expansion cohorts, the clinical pharmacology studies, the planned Phase 2 study in NHL and the planned expansion into studies in INI1-deficient tumors. The second important event in the first quarter of 2015 was the completion of our successful follow-on offering. We expect that the proceeds that we raised from this financing will enable us to continue to progress our two clinical programs in our preclinical pipeline. Andy will review the details of the offering later in the call. We believe that these two events set the stage for Epizyme’s continued growth and leadership in the epigenetic space and they are significant milestones in our ongoing work as an independent fully integrated oncology company. Peter will now walk you through what's to come in our clinical programs in 2015.

[Peter Ho:]

Thank you, Robert. As Robert mentioned, we are very excited to have regained full operational control of 6438 from our partners at Eisai and our clinical team has been hard at work to aggressively move with 6438 development program forward. We completed enrollment in both the 800 mg and 1600 mg expansion cohorts of the ongoing Phase 1 study. Of our two planned clinical pharmacology studies for 6438, we initiated the food effect study in the first quarter and we plan to initiate the drug-drug interaction study after we complete enrollment in the food effect study. We announced last week that professor Vincent Ribrag of the Institut Gustave Roussy will be presenting updated data from the 6438 Phase 1 study at the International Conference on Malignant Lymphoma or ICML, on June 20 in Lugano, Switzerland. We are looking forward to providing an update on the breadth, depth and duration of responses in the patients who remain on study in the dose escalation cohorts as well as initial observations from the dose expansion cohorts. We aim to present further data from the dose expansion cohorts as well as the clinical pharmacology studies toward the end of 2015. We remain on track to initiate the five-arm Phase 2 in non-Hodgkin lymphoma this quarter. In this study we seek to gain additional experience in a broad set of patient populations, including patients, germinal center DLBCL and follicular lymphoma, segmented into those expressing mutant EZH2 and those expressing wild type EZH2, as well as in patients with non-germinal center DLBCL. We also anticipate initiating a Phase 2 study in adult patients with INI1-deficient tumors and a Phase 1 study in pediatric patients with INI1 deficient tumors later this year. For our other clinical programs, the DOT1L inhibitor, EPZ 5676, we continue to enroll adult MLL rearranged leukemia patients in the 54 mg per meter square dose expansion cohort and we expect this court to be fully enrolled by the end of 2015. We anticipate presenting data from the adult Phase 1 study toward the end of 2015 and these data will help us to determine the path forward for 5676 in adults. The Phase 1 dose escalation study of 5676 in pediatric acute leukemia patients is ongoing and currently enrolling patients in the US. We expect to complete enrollment of this study before the end of the year. We’re very excited about the progress we’re making in the clinic and we look forward to continuing that advancement. And with that, I’ll now turn it over to Bob for an update on our preclinical pipeline.

[Bob Copeland:]

Thanks Peter. Our research organization continues its pioneering work on our proprietary discovery pipeline and we are building on our portfolio of cancer implicated HMT targets for which we are progressing small molecule inhibitors at various stages of preclinical development. Last week at the annual meeting of the American Association for Cancer Research or AACR, we debuted our research on several new epigenetic targets. This included the first examples of crystal structures of CARM1 bound by histone derived peptides. CARM1 is an HMT that has been implicated in a variety of solid tumors and hematologic malignancies. We also presented data on the identification of an aryl pyrazole as the first small molecule PRMT6 inhibitor created from Epizyme’s proprietary product platform. PRMT6 is an HMT that is over-expressed in a variety of solid tumors. Our other AACR presentations included preclinical posters on DOT1L mechanisms of resistance, preclinical studies of synergies between 5676 and commonly used leukemia therapies and data on two new oncogenic HMT targets, SMYD3 and SETDB1. In the first quarter of 2015 we also largely completed our research obligations under the collaboration with GSK and we expect to complete the transfer of the remaining data and materials for these three programs to GSK this quarter. GSK is now fully responsible for further development and commercialization of these three programs, including PRMT5. We look forward to GSK’s future progress on these programs. I'm very pleased with the innovation and scientific rigor that Epizyme continues to bring to all of its research work and we all look forward to sharing further progress. Andy will now walk you through the financials for the first quarter of 2015 and expectations going forward. Andy?

[Andy Singer:]

Thanks, Bob. In March, we commenced the public offering of shares of common stock that raised a total of $130.7 million before accounting for offering expenses. With the proceeds from this offering, our operations are now funded through at least the end of 2016 which we expect will enable us to reach the following important clinical data milestones. First, as Peter mentioned, the next data disclosure for the Phase 1 trial of 6438 will be at ICML in June, and then we anticipate having data from the ongoing Phase 1 studies of 6438 and 5676 later in 2015. We expect initial data readouts from the planned Phase 2 study of 6438 in non-Hodgkin lymphoma in 2016. We began 2015 with $190 million in cash and cash equivalents and we ended the quarter with $245 million. Now turning to our first quarter results. Research and development expenses increased by $42 million to $57 million in the first quarter of 2015 as compared to $15 million in the first quarter of 2014, which primarily reflects the $40 million payment to Eisai which was expensed in March. We anticipate our R&D expenses will increase significantly in 2015 as compared with 2014 as we assume responsibility for the clinical trials and related global development of 6438. Taken this into account, we continue to shape the budget to stretch our cash into 2017 and that process is well underway. With the closing of our latest financing, we are well-positioned to execute on our clinical and research programs with the goal of delivering incremental value to our shareholders. I will now hand it back to Robert to wrap up before Q&A.

[Robert Gould:]

Thanks Andy. Epizyme continues to deliver on its research and clinical development strategy as demonstrated by the significant strides made to date in advancing the development of 6438 as well as the progress on our preclinical pipeline. We look forward to further advancement of our strategy over the coming year as we work to create value for our patients and their caregivers, our employees and our shareholders. We thank you for all of your continued support. We’ll now open the call up for Q&A. Operator?

[Operator:]

[Operator Instructions] The first question is from Mike King of JMP Securities.

[Mike King:]

Thanks for taking the question. I guess I will start where I typically do and just ask if you can speak about correlative studies that will go along with the additional patients in the Phase 1/2 for 6438?

[Peter Ho:]

Sure, Mike. Hi this is Peter. So we have a very deep slate of correlative studies in the biomarker arena for the trial. We will be collecting tumor samples initially for the patients to identify the EZH2 status in the cell of origin but with that tissue we also plan to be conducting gene expression profiles to help us better understand both the pharmacodynamics of the drug as well as to look for other markers that can help identify the most sensitive patient population.

[Mike King:]

And those – when do you think we start to see that kind of data, either would that be in 2016 or could any of that be discussed this year at all?

[Peter Ho:]

Mike, it’s hard to say right now – we expect that the different arms for the five-arm NHL study will recruit differently just based on the different prevalence of the patients. And as the data come in, we want to be able to look both within and across arms to make relevant comparisons. So I don’t want to promise anything right now in 2015, certainly if – as interesting translational data comes out that's useful for understanding the drug and also its activity, we will make that known.

[Mike King:]

And then just one more quick question and I will get back in queue and that is on both 5676 and 6438, you are pretty close to, if not, at recommended Phase 2 doses, what are the gating factors between monotherapy and combination that Robert spoke about it in formal remarks commonly used agents in the various clinical settings?

[Peter Ho:]

Sure, Mike. That’s a great question. We’re very interested in the use of both of the agents in combination and certainly Bob’s discovery and lipitor organization has generated a lot of interesting data in terms of which particular combinations seem to have synergy and biological additivity. But for the clinical activities we want to make sure with both of these agents we have a fairly firm understanding of the single agent activity and how best to carry forward into Phase 2 and then even later stage trials but certainly combination -- Phase 1 combination studies are on our list of things to actively explore as soon as possible.

[Operator:]

Thank you. And the next question is from Phil Nadeau of Cowen and Company.

[Phil Nadeau:]

My first is on 6438’s Phase 2 in NHL patients. Do you think you’re going to need to do something to enrich the population to have a sufficient number of EZH2 mutants in it given the low prevalence of that mutation you’ve seen in prior studies, or was the prior Phase 1 somehow not representative?

[Robert Gould:]

That’s a great question. Let me just speak to the limitations of Phase 1, I mean they are clearly different from Phase 2. We’ve had two centers enrolled in Phase 1. So just from a geographic constraint we have fewer attachment of patients there and of course we’re going to go much more broadly in Phase 2 across multiple countries and sites. But having said that I don't think that we need to take further patient enrichment maneuvers here. We are going to be looking at the EZH2 mutation patients. We have an assay that has been developed in conjunction with Roche Molecular already to go and so we will be able -- unlike the Phase 1, for the Phase 2 we will have a rapid turnaround for patients’ EZH2 mutation status and thus be able to prospectively find them into the appropriate cohorts. So we think we’re in good shape with that. And of course the other thing to consider is that already from the Phase 1, we’ve seen quite encouraging, even striking activity in patients with wide type EZH2.

[Phil Nadeau:]

And can you remind us in the Phase 2, is there a target for the number of patients who have an EZH2 mutation?

[Robert Gould:]

Right. So each of the cohorts of the Phase 2 including the two EZH2 mutation arms, one for DLBCL – the germinal center DLBCL and the other for follicular lymphoma have a target of 30 patients.

[Operator:]

Thank you. The next question is from Kennen MacKay [ph] of Citi.

[Unidentified Analyst:]

So just wanted to start off maybe with a question for Andy on the potential burn rate moving forward. You mentioned R&D increased but potentially costs coming down a little bit. Could you give a little bit of guidance there so we model that out?

[Andy Singer:]

So total cost will increase and we expect the burn rate of approximately $30 million per quarter. G&A will stay essentially flat and so the increase will be on the R&D side. And I would remind you that we have cash through at least the end of 2016. And on top of that we’re going to continue to shape the budget to extend our cash runway into 2017.

[Unidentified Analyst:]

And two other quick questions, one on sort of the pipeline front, that mentioned in your press release, I think that’s important, do you have a sense of when we might see some of the other inhibitors that debut at AACR potentially moving into the clinic?

[Bob Copeland:]

Yes, thanks, that’s a great question. We are very excited about our preclinical pipeline and we have programs at various stages of preclinical discovery and development. But at this time we’re not giving any direct guidance on our transition to IND or clinic.

[Unidentified Analyst:]

And then other question relating to the data that came out at AACR. The poster on the mechanisms of resistance to DOT1L, is there any sort of retreat to potentially how that could translate into the clinic and potential means of inhibiting that resistance?

[Robert Gould:]

That’s a great question. Of course, everything that we do in preclinical discovery is aimed at actionable things that we can use in the clinic. At this point we are evaluating those data and looking to see whether or not there is a mechanism for looking for similar types of effects in the clinic but we haven't crystallized those plans yet.

[Operator:]

Thank you. The next question is from Peter Lawson of Mizuho Securities.

[Peter Lawson:]

Maybe just any updates on the lymphoma issue you were seeing in rates for 6438?

[Bob Copeland:]

Thanks for the question. No specific updates but what I will tell you, though, is that we have formulated a number of hypotheses that we are studying in parallel and working through those data right now. And when we have something more concrete we will be happy to share that.

[Peter Lawson:]

And then on just your thoughts really around CARTIS therapy, and how that is changing the way you are thinking about particular settings or trials, that would be helpful?

[Robert Gould:]

Sure. Hi that’s a great question. CARTIS has gotten a lot of attention and certainly a lot of data presented at AACR. It’s a very interesting therapy. Obviously it’s quite involved, it’s shown some quite interesting activity in acute leukemias and I think where CARTIS sits for us is still something to be considered as fairly early days. We continue to move forward with both 5676 and 6438 and certainly we can't see any effect thus far in terms of differing types of patients who come into our trials or accrual and obviously one of the challenges for CARTIS is that expansion beyond single centers in terms of broad clinical development. I think that’s a question that remains to be seen for the entire field.

[Peter Lawson:]

And how do you see that with your therapies, where you think you potentially could benefit because of the success of CARTIS therapy?

[Robert Gould:]

Well, for both of our agents, I would say that there really isn't any effect on areas that we are planning to go. For 5676 it’s directed at MLL rearranged leukemias and that's not necessarily a direct area that CARTIS themselves are going and then in the area of the lymphomas what we have seen thus far in the Phase 1 is very clear evidence of clinical activity in patients dosed twice a day with an oral drug that allows them to at least what we reported thus far just to stay in response in on therapy for over a year. I think that’s a very different situation than for the CARTIS at least from the standpoint of clinical trials.

[Peter Lawson:]

And then finally just off of AACR, which clinical candidates excite you the most?

[Peter Ho:]

We love all of our children equally. We’re very excited by our preclinical portfolio as well as the programs that we have transitioned into the clinic. And we’re data-driven company, so the data will take us where we need to go.

[Operator:]

Thank you. And the next question is from Howard Liang of Leerink.

[Howard Liang:]

Regarding ICML data, can you clarify or confirm whether the data will be just on the dose – patients from the dose escalation cohort or could also include some of the patients from the expansion cohort?

[Peter Ho:]

Sure, Howard. That’s a great question. Certainly the dose escalation cohort will have additional data to supplement what’s already been presented in terms of longer follow-up on the patients that remained on study and acquisition [ph]. But we will also be able to present some preliminary observations from the dose expansion cohort as well.

[Howard Liang:]

For the dose expansion cohort, can you say whether you’re able to determine the genotype of these patients regarding EZH2 mutation?

[Peter Ho:]

We haven't disclosed the EZH2 mutation status beyond the first 10 patients that have been presented from the study all of whom as you know I think have been EZH2 wide type. But this is an ongoing effort to genotype the patients and we will speak to that when we’re able to.

[Howard Liang:]

For the Phase 2 that you are starting this quarter, will you be measuring EZH2 expression levels in the wide type cohort?

[Peter Ho:]

We will be looking at that in a retrospective fashion. The recent data that highlights levels of EZH2 over-expression being very commonly seen in DLBCL and follicular lymphomas is certainly something of interest to us and so we will be looking at that. The study was originally designed not to have that as a stratification marker but it’s certainly of interest to us.

[Howard Liang:]

Lastly, can you talk about your plan or the status of US IND for 6438? Is that dependent on the resolution of lymphoma signal or will humans [indiscernible]?

[Peter Ho:]

As you know we took over being the global regulatory sponsor from Eisai not much more than a month or so ago. And so having taken that on, we’re in discussions with agencies, regulatory agencies. I don’t want to go into detail about those discussions which obviously are under confidence. Certainly it is an interest of ours to expand the Phase 2 NHL study into the US. In order to do that we will have to have appropriate discussions with regulators within the context of clinical benefit risk estimations and certainly in light of the very encouraging clinical results we’ve so far seen in Phase 1 both from the standpoint of clinical safety as well as the efficacy that we’ve seen in the patients.

[Operator:]

[Operator Instructions] The next question is from Mike King of JMP Securities.

[Mike King:]

Thanks for taking the follow-ups. Couple of follow-ups on the previous questions. Can you remind us on whether there's going to be a difference in the breakdown of our GCB versus non-GCB? So I don't know this but I can’t remember if there's a difference.

[Peter Ho:]

So Mike, hopefully I am answering your question properly. So we have separate GCB and non-GCB arms for the five-arm phase too and each of the arm cohorts are 30 patients, was that your question?

[Mike King:]

Okay. So all right, you break it down by GCB status?

[Peter Ho:]

Absolutely yes.

[Mike King:]

And then on to follow up on Howard's question about the Lugano data. In the dose expansion can you just again remind us the doses that you expanded into and approximately what number of cycles these patients would have received? I just want us to be calibrated appropriately for expectations of the results?

[Peter Ho:]

Fair enough. That’s really an excellent question. So for the two doses that have been looked at in the expansion cohorts, one is the 800 mg twice a day which is our recommended Phase 2 dose and the second dose is 1600 mg twice a day. And there were six patients in each of the dose two expansion cohorts. As we had described in prior calls, really enrollment into these expansion cohorts only began in very late December and carried through into January, February timeframe. So in terms of looking at the patient experience by the time Lugano rolls around in June really it's going to be a maximum of six months or six cycles, for even the earliest patients and for the ones coming on later closer to just four cycles or four months.

[Mike King:]

And can you tell us what the data cutoff date was, Peter? Do you remember off-hand?

[Peter Ho:]

The data cutoff date for Lugano we haven't disclosed that as yet. But we’re trying to have the most current data presented.

[Mike King:]

And finally can you just talk us through the difference between INI negative – I am sorry INI1 negative and INI1 deficient and how that's determined and whether there's any expectation of response rates that are different between those two patient populations?

[Peter Ho:]

Great question, Mike. So for us INI1 negative tumors are ones in which the INI1 protein is not expressed at all and not expressed, the way we’re looking at it is by immunohistochemistry. It can be not expressed because of a deletion of the gene or from a mutation that prevents its transcription to the full protein. There are other diseases like synovial sarcoma for example that are INI1 deficient in the sense that the protein itself is made but because of the translocation that is characteristic of synovial sarcoma, the INI1 protein is essentially pushed out of the multimeric complex that is involved in chromatin remodelling. So when we say deficient there, it’s a deficiency in function but not a deficiency in terms of protein level.

[Mike King:]

Any expectation for different response rates?

[Peter Ho:]

I won’t say expectation but because this is a new area of biology I would certainly say that what we need to do is explore it and not go in with necessarily the absolute expectation that they’ll both be the same – they’ll both behave similarly from the standpoint of response to the drug, because these are quite different genetic diseases.

[Operator:]

[Operator Instructions] The next question is from Kennen MacKay of Citi.

[Unidentified Analyst:]

Thanks for taking my follow up. So I was wondering if you could just give us a little bit more detail on the path back on 6438 and what else is involved in that process?

[Robert Gould:]

I am sorry, in the what?

[Unidentified Analyst:]

In the path back from Eisai?

[Robert Gould:]

I am sorry, the transition. Sure thanks. In essence what we are transferring back from Eisai are clinical materials both the active pharmaceutical ingredient, the API as well as the packaged clinical materials, all of the clinical data that have been generated to date and the clinical and the patient database along with the associated safety database. The regulatory filings are in the process of being transferred back to us as part of the assumption of the regulatory authorities over 6438 as well as all of the contracts with the contract research organizations both for manufacturing as well as for execution and operational control of the clinical trials and then finally of course all of the preclinical toxicology data that’s been generated to date.

[Unidentified Analyst:]

And just to be clear, the CROs that are doing the manufacturing and operations there, those are staying the same?

[Robert Gould:]

There is so many of them that is going to go through the list on which ones are the same and which ones are different, would take a long time. And that’s -- what we have optimized for is efficiency and speed and in some cases that means using the same CROs and in some cases that means transferring to different CROs. End of Q&A

[Operator:]

Thank you. And ladies and gentlemen this concludes today’s conference. You may now disconnect at this time. Good day.

[Robert Gould:]

Thank you.