Epizyme, Inc.
Q4 2015 Earnings Call Transcript

Published: 10 Mar 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, Nicole. Good morning everyone and thank you for joining us on Epizyme 2015 financial results and corporate strategy conference call. Earlier this morning, we issued two press releases, the first of which outlined our vision for Epizyme through 2020 and the second reviewed our 2015 financial results. Those press releases are available in the Investor Center of our website at epizyme.com. Joining me on the call Rob Bazemore, President and CEO; Andy Singer, Executive Vice President and Chief Financial Officer; Dr. Bob Copeland, President of Research and Chief Scientific Officer and Dr. Peter Ho, Chief Medical 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 2015 Form 10-K 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.

[Rob Bazemore:]

Thank you, Rebecca. And thank you all for joining us on the call this morning. Almost six months ago I joined Epizyme because I was motivated by the potential with our unique lead product candidate tazemetostat and by the potential of our epigenetic scientific platform. Today I am even more excited because the entire company is driven by our vision of rewriting cancer therapy through targeted medicines for patients with unsolved diseases. The breakthroughs we want to deliver will hopefully change the standard of care for patients and physicians. Our goal is to create medicine targeted at specific causes of diseases that are orally administered, tolerable and easy for patients to take an are based on a deep understanding of which patients will benefit from them. In 2015, we made important progress across all aspects of our organization. We regain control of the vast majority of our pipeline by reacquiring the rights for tazemetostat from Eisai, as well as renegotiating our agreement with Celgene. We established clinical proof of concept and safety with tazemetostat in both non-Hodgkin lymphoma or NHL and certain genetically defined solid tumors. We initiated three global registration supporting clinical trials for tazemetostat. We expanded tazemetostat development into the US with acceptance of INDs for the treatment of diffuse-large B-cell lymphoma or DLBCL and for INI1 negative and SMARCA4 negative solid tumors. We identified the next indication for tazemetostat development, mesothelioma with BAP1 loss-of-function. And we selected five additional targets and advanced drug discovery efforts against them. 2015 provided a solid foundation on which to build our future. Looking ahead, we have defined a five your vision for Epizyme. By 2020, we expect to have accomplished four transformative activity n the short, the mid and the long-term. First, we will have launched tazemetostat globally in both NHL and the genetically defined solid tumors and transition into a commercial stage organization. Second, we will be executing a broad clinical program for tazemetostat that will support its expanded use in earlier lines of therapy in combination regimen and an additional tumor type. Third, we will have built robust pipeline with at least three new oncology product candidates in clinical development, and a growing set up preclinical assets behind those. And four, we will have further established our leadership position in the field of epigenetics and in chromatin remodeling. This is a bold vision that will guide the sustainable growth of our business in oncology and beyond over the next five years. As we achieve milestones toward this vision, we believe that we will significantly improve the care of people with a number of different cancers, while at the same time create meaningful value for our shareholders. To accomplish this, we have a clear set of priorities for 2016 and beyond. In the short term, we are working to rapidly bring tazemetostat to market in both NHL and the genetically defined solid tumors. There are two core components to achieving this. One is enrolling and completing our Phase 2 trials quickly. The second is defining successful global regulatory strategies that can accelerate registration. And in NHL we plan to more than double the number of clinical sites enrolling patients in our five-arm Phase 2. We will soon begin enrolling DLBCL patients US site under are open IND and expanding our footprint to over 40 sites globally by the end of the year. As a part of the study, we are using a biomarker screening approach to elucidate the mechanism of action among patients who respond to treatment. We expect that this information will help us to further identify patients most likely to benefit from tazemetostat in each of the tumor types that we are studying. We plan to report interim findings from this Phase 2 trial and all arms that have past the futility hurdles at a scientific meeting in mid-2016. The study is enrolling rapidly and it’s proceeding as expected. Based on the data we have seen, we expect that we have already surpassed the futility hurdle in three of the five arms. The remaining two arms have not yet reached the point to assess that we have surpassed futility or not. Confirmation of these futility analysis is pending review by the Independent Data Monitoring Committee. We intend to move quickly into discussions with the regulatory authority to establish the path forward in each NHL subtypes as we gain sufficient patient experience. These discussions should provide clarity on the registration path for each subtype, including distinguishing in which subtypes we can pursue accelerated path without larger randomized trials. In our genetically defined solid tumors program, including our Phase 2 study in adults and our Phase 1 study in pediatrics, we are rapidly adding both US and European sites. We expect to open up the 45 clinical trial sites supporting enrollment by year end. We plan to present interim findings from our Phase 2 solid tumor trial in adult patients in the second half of this year. As with NHL if we see sufficient activity, we want to move quickly into discussions with regulatory authorities to determine potential accelerated paths to market. These near term activities lay the groundwork for our five year organizational plan to prepare for an accelerated launch. We are expanding our capabilities in areas including market intelligence, medical affairs, regulatory and pre-commercial planning. With data expected from our trials of tazemetostat and NHL and solid tumors and preparing for discussions with global regulatory authorities, a lot will be happening in 2016. Looking to our mid term plans, we want to expand the reach of tazemetostat more broadly than the current indication, leveraging its pipeline within a product potential. You've heard us talk about some of these plans which we put in place last year. We have already been excluding on them for the last several months. An important component is living tazemetostat into the frontline treatment of patients with NHL. In the second quarter of 2016 we will initiate a clinical trial with tazemetostat in combination with R-CHOP. The standard of care chemotherapy regimen for patients with newly diagnosed DLBCL. This is the most common type of NHL. This Phase 1b/2 trial will study the combination as a front line therapy in elderly, high-risk patients where we see lower response rates to R-CHOP alone and a higher need for new therapies. The primary objective is demonstrating a complete response rate that is superior to R-CHOP alone based on historical data. We also want to explore the potential for tazemetostat to enhance the clinical activity of immuno-oncology therapies, by combining with an anti-PD 1 or PDL-1 agent. There are strong preclinical evidence for this combinations and we are looking to conduct this trial in collaboration with an established immuno-oncology leader to obtain access to their product and their expertise and to share development cost. Partnering discussions are well underway and we expect to initiate a collaboration in the second quarter of this year. Because we believe tazemetostat has the potential to treat a broad range of diseases, we are planning to initiate clinical development in five new indications over the next five years. Internal research is already underway using novel biomarkers of response to help us rapidly identify new indications. Our effort to evaluate the role of tazemetostat treatment in new cancer indications is also being done through more than two dozen academic collaborations. Once we see strong preclinical evidence of tumor sensitivity to EZH2 inhibition, we intend to move quickly into clinical proof of concept trials. The first new indication we have selected is BAP1 loss-of-function mesothelioma, which came out of our collaboration with Memorial Sloan Kettering Cancer Center. We observe strong preclinical evidence of the sensitivity of these tumor sales to EZH2 inhibition and now are planning to initiate a Phase 2 clinical proof of concept study with tazemetostat in the third quarter of this year. As a genetically defined solid tumor, with preclinical evidence of activity, and significant unmet medical needs, this new tumor type is right into our model for attractive new indications. The long-term growth of Epizyme is based on utilizing our unique and proprietary scientific expertise to develop a pipeline of novel, first in class treatment for patients with cancer and other unsolved diseases. Epizyme pioneered the discovery and development of small molecule inhibitors of histone methyltransferase or HMT. Our HMT expertise enabled us to create a first two HMTs enter clinical trials. It is also enabled us to develop a number of programs under ongoing collaborations with Celgene and GlaxoSmithKline, including a First-In-Class PRMT5 Inhibitor with GSK. We are continuing to pioneer the identification of new targets with an adaptive approach that includes using CRISPR, a gene editing tool for target screening. We are using CRISPR in a very sophisticated way to efficiently pinpoint the targets where we see a clear signal for activity in specific tumor types. This approach, in combination with our comprehensive library of tumor cell line has led us to a compelling set of HMT and other chromatin modifying proteins or CMP target of height interest in cancer. To prioritize the targets and programs that we want to move forward, we use a multi factor assessment approach. This process led us to select five novel HMT and other CMP targets against which we are now developing small molecule inhibitors. By 2020, we expect to have moved at least three new oncology programs into clinical development. We plan to evaluate new collaboration that would accelerate our research and development efforts in some of these programs, while bringing additional expertise and resources. Our targeted identification efforts have also led us to opportunities outside of our oncology focused today. We believe that these will likely be of interest to companies developing products in these therapeutic areas, and represent further opportunities for partnership. As you can hear, Epizyme is in a great position to deliver on our vision and it is important to ensure that we have the resources to accomplish our goals. Let me now ask Andy to review our financial position. And talk a bit about how we think about funding our future. Andy?

[Andrew Singer:]

Thanks, Rob. Epizyme has significant potential for long-term value creation and we plan to capitalize fully on the opportunities ahead of us. Earlier this year, we completed a financing to enable us to continue our aggressive development plan for tazemetostat, while also building our pipeline. We have a strong leadership position with tazemetostat, a potential first in class EZH2 inhibitor and we want to maintain our lead. We have also identified several compelling CMP targets where we may be in the lead in here again we want to stay in front. We expect that our cash and cash equivalents of $208 million as of December 31, 2015, together with the net proceeds of $130 million from the January follow-on offering will be sufficient to fund our operations through at least the end of 2017, and importantly, the many key milestones. In 2015, we carefully managed our general and administrative expenses to allow us to channel our capital into research and development. R&D expenses, net of the reacquisition payment to Eisai declined slightly in 2015, as compared to 2014, as we shifted development resources from pinometostat to tazemetostat and reinvigorated our pipeline development efforts upon renegotiating our Celgene partnership. For additional details related to our 2015 financial results, I refer you to our earnings release issued this morning. In 2016 our R&D spend will increase meaningfully, as we expand our investment in tazemetostat with the goal of accelerating the registration process in both NHL and in genetically defined solid tumors. The majority of our R&D investment will be in the tazemetostat development program. This will include supporting preclinical work on biomarkers to further define the patient population that may benefit from tazemetostat. And additional clinical pharmacology studies to support further development and a potential commercial launch. In addition, now that we have taken over responsibility for tazemetostat required from Eisai, we plan to increase our investment in manufacturing to support our expanded clinical development program and potential commercialization. In order to carefully manage our expenditures, we have prioritized the clinical trials that we believe have the greatest potential to contribute to the value of tazemetostat. Throughout 2016 we also plan to evaluate partnering opportunities, including combination study partnerships and platform deals. That could offset our expenditures and bring in additional resources and expertise to accelerate development of tazemetostat in the rest of our pipeline. We are excited and enthusiastic about the future of Epizyme and we look forward to continuing to execute on our five-year plan. With that, I would like to open the call for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Peter Lawson of SunTrust. Your line is now open.

[Peter Lawson:]

Hey, Robert, I just wanted to talk through a couple of things. I think, firstly, when do you think we could see the results of the futility analysis, and would that be for the three arms that have - you think you already hit that or would that be for all five arms? And then, the other question is just around pinometostat, has that been - that sounds like that has been completely de-prioritized now, are we still going to see results year end for pediatric?

[Rob Bazemore:]

Thank you, Peter, for the question. I think I'll have our Chief Medical Officer, Peter Ho, answer both the questions around what we expect to see with the futility analysis, as well as what we are doing with pinometostat.

[Peter Ho:]

Sure, thanks, Peter. With respect to the futility analyses, we need to take the data to the independent data monitoring committee. And we plan to present all of the clinical data from our phase 2 NHL trial mid year, when we are - when we have a planned scientific presentation, and at that time, we will go through all of the data on the arms that have passed the futility. With respect to pinometostat, we are continuing the pediatric study, and we do plan to present those results at the end of the year. We are still exploring additional pathways in terms of combination of development, in both the adult and pediatric indications as well.

[Peter Lawson:]

Great. And just a final question, just tazemetostat, the combination trials and I apologize if you mentioned this. But if you can clarify what B-cell signaling or immuno-onc agent you are going to be using in combination? And thanks for the five-year outlook, that really helps.

[Rob Bazemore:]

Yes. Hi, Peter. So in terms of the combination studies, there are two studies that we'll begin in the first half of this year. One is with R-CHOP in the front-line setting. The second one that we've announced that we will do, and the first we'll start in the middle of the year, is a combination with a PD1, PDL-1. So that's the immono-oncology class of agents that we will be looking at. We're still interested in looking at B-cell signaling agents. We are just gating our work here to make sure, Peter has a lot of work already underway between the phase 2 studies that are ongoing in NHL in solid tumors, the phase 2 study that we'll start with mesothelioma in the third quarter. So we're just gating how many new trials we try to start at once, but the immuno-oncology agent that we will be using – it will be a PD1 PDL-1.

[Peter Lawson:]

Great. Thanks so much.

[Operator:]

Thank you. And our next question comes from the line of Simos Simeonidis of RBC Capital Markets. Your line is now open.

[Simos Simeonidis:]

Hi. Yes, good morning. My question is on the futility hurdle that you mentioned on the tazemetostat trial in NHL. Can you tell us, which three arms have already met the hurdle? And then a little more about the hurdle, is this a formal predefined hurdle that was part of the trial? Or is this more a company metric, or what you were hoping to see in terms of efficacy?

[Rob Bazemore:]

Sure, absolutely. Thanks for the question. The futility hurdle that's within the NHL study was pre-specified as part of the statistical analysis when the trial was written. And these are hurdles that differ according to the indication as they should. And so, we haven't disclosed which of the three arms that we feel have passed already. We certainly don't want to influence the IDMC in that regard, and so it is important for us to take that data first to the IDMC, before we have more public disclosures.

[Simos Simeonidis:]

I see. Okay. I was wondering if you could tell us a little more about your work with the biomarker? And you said, if I understood you correctly, you said that once patients respond, then you analyze the data to understand what - which are the patients that have responded. Can you talk about that work a little bit?

[Rob Bazemore:]

Absolutely. No, we're very excited by that work. We really do want to understand which patients will benefit the most from tazemetostat. And we have a proprietary 62 gene panel, a DNA panel, that's being used for exploratory analysis for this phase 2 study. We don't expect the data to be ready for discussion at the time that we conduct the mid year presentation of the data. But certainly, as we continue forward in the trial, and we have more mature clinical data, we'll be able to tie in this translational work that will really help us to better understand the population best suited for tazemetostat.

[Simos Simeonidis:]

Okay. On the R-CHOP study, I can't remember if you've disclosed this before. But is this is going to be R-CHOP plus or minus tazemetostat, or will be a single arm trial in the elderly high-risk patients?

[Rob Bazemore:]

Sure. So this is R-CHOP plus tazemetostat. And it is important in this trial to do dose finding, to ensure what is the proper dose of tazemetostat to go forward with, with the standard dose R-CHOP. So this is designed as a phase 1b/2 study that after we identify the dose, we will continue forward into a phase 2 study, a single arm phase 2 study targeting complete response rate.

[Simos Simeonidis:]

Great. Final question. On the PD1 PDL-1, which tumor types would you be targeting? Is it hematological solid, and which specific tumor types?

[Peter Ho:]

Yes. So we will - the study will begin in diffuse-large B-cell lymphoma. Once we see a signal there, we're open to looking at other areas that we can expand the combination, however, so we'll be looking at solid tumors and other tumor types. But we are beginning in diffuse-large B-cell lymphoma.

[Simos Simeonidis:]

Great. Thank you very much.

[Operator:]

Thank you. Our next question comes from the line of Chris, I am sorry, Eric Criscuolo of Mizuho. Your line is now open.

[Eric Criscuolo:]

Hey, guys, good morning. Excuse me, I guess, the phase 2 NHL study, would that - could you file potentially directly off that -- off the data from the trial, or would you - do you think you would need to run another trial after that?

[Peter Ho:]

Sure, thanks, Eric. The phase 2 trial is initially designed to explore the activity, and moreover the differences in activity between the arms. But we certainly can see that there's an opportunity to file with that data. It is always a data-driven decision. So if the data are very promising, that's possible. And we see that more likely in the genetically-defined populations, such as those that have the EZH2 mutation.

[Rob Bazemore:]

And I will add to that, this is Rob. There's certainly precedent for oncology drugs being approved, based on phase 2 data, particularly in the types of tumors that Peter just described, where you have genetically defined patient populations, they are relatively small patient populations in these genetically-defined solid tumors. These INI1 negative, SMARCA4 negative rhabdoid tumors, these are patients that are several thousand worldwide. So they are relatively small patient populations. And if we demonstrate a robust response in the phase 2, the studies are designed to inform discussions with regulators, where we can proceed forward, and potentially file based on those data. It's difficult in that patient population, in particular to imagine doing a subsequent control study against another agent, because part of the reason we're looking at them is, there is no standard of care. These are patients for which there are no really effective therapies to treat them. So doing a controlled trial against the competitive agent wouldn't be easy to do.

[Eric Criscuolo:]

Got it. Thanks. And then I guess, for Peter, the combination trial PD1, PDL-1, any thoughts on which combination, whether it would be PD 1 or PDL-1 would be better suited to combine with, because of mechanism of action or anything like that?

[Peter Ho:]

Sure. Actually, let me ask Bob to answer that question, because his group has been looking at this question in the laboratory.

[Bob Copeland:]

Yes, thanks for the question. We've actually seen that both type of agents, PD 1 and PDL-1 provide significant activity. That's well-known from the clinical experience as well as the literature. And in our preclinical studies both here at Epizyme, and more generally in the scientific community, we've seen evidence that EZH2 inhibition can play a role in modulating immune response. And so, we believe that a combination of an EZH2 inhibitor, with either of those immune checkpoint inhibition modalities would be very interesting to look at.

[Eric Criscuolo:]

Okay. Thanks. And then, I guess, for Andy, just a housekeeping question. The ending share count after the raise, what is that at now?

[Andrew Singer:]

So that's at 57 million pro forma for the raise.

[Eric Criscuolo:]

Great. Thanks, guys. Appreciate it.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from the line of Seamus Fernandez of Leerink. Your line is now open.

[Rich Goss:]

Hi, this is Rich Goss calling in for Seamus. Thanks for taking my question. I just was wondering if you'd be able to provide a bit more detail on the three new clinical programs that you are planning? Do you have a sense as to when the first of these might enter the clinic? And also, I noticed that you had a poster at AACR this year on another EZH2 inhibitor for AML. Is this something you're planning to report in the clinic as well?

[Rob Bazemore:]

Thanks for the question. This is Rob. So yes, we're very excited as a part of the strategy to the reinvigorating the work around our pipeline, and beginning to explore new targets beyond tazemetostat. So I'll ask Bob to actually answer the question, as to what we're looking at, and the timing on this compound.

[Bob Copeland:]

Sure. Thanks for the question. So we've been able, with our proprietary target credentialing method, as well as our deep understanding of cancer biology, and our chemical microbiology approaches to identify a large pool of targets among the histone methyltransferase and other chromatin modifying proteins that look really exciting. And as Rob mentioned on the call, we've elevated five of those targets, for the point where we're starting to really engage those targets in terms of drug discovery. We expect to be able to bring three of those five forward to INDs in the 2020 time frame. We're not disclosing what those targets are at this point, but as those programs mature, as we've done with DOT1L, with EZH2, with PRMT5, at the appropriate time, we will be presenting those at scientific meetings, publishing on them, and communicating that to the broader community. In terms of the poster that you mentioned, that was using a [tool] compound that we have published on, that is related to tazemetostat, but is chemically different, that we've made available to the academic community. And the work in AML is very interesting, and it's among a collection of really interesting things that we've learned about through our strategic alliances with academic collaborators. Today we have over two dozen collaborations with academic collaborators, exploring a broad spectrum of utilities for tazemetostat in both solid and hematologic cancers.

[Rich Goss:]

Great. Thank you. And just, in terms of the timing for the NHL data, what are the chances that you would be able to present this at ASCO? I realize that the late breaker submission deadline is coming up soon, but are you able to submit any sort of placeholder abstract?

[Peter Ho:]

Sure. We have not disclosed which of the meetings mid year that we'll be going to. And the three that are on the schedule are, of course, ASCO, EHA, and ASH [ph] lymphoma. And so, we'll be targeting one of those three meetings. Since we are approaching mid year. I would like to clarify what we will be presenting, as a first look from this NHL phase 2 study. We plan to report interim data from all of the arms that have passed the futility analysis, and this will include patient characteristics, safety, and efficacy. Now it is important to remember that tazemetostat is not a cytotoxic drug, and that our phase 1 experience taught us that responses often take time, in fact as much as 10 months to develop in patients with NHL. And then these responses, PRs can evolve to CRs afterwards. Many of our phase 2 patients will have been on therapy for only a few months by mid year. So we will be providing another update from this trial at the end of the year, when our data are even more mature.

[Rich Goss:]

Okay, great. Thank you.

[Operator:]

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

[Rob Bazemore:]

Okay. Well, I wanted to thank everyone for joining the call today. Over the next five years, I hope it's clear, that our focus is on a couple things. First of all, accelerating tazemetostat development broadly, to be able to bring it to market quickly, but also to maximize the utility of the compound. But also in parallel, we'll continue to work on our novel pipeline of targets to treat unmet need cancers, and continue to lead in the field of cancer epigenetics. So thank you for joining the call today, and have a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. The does conclude today's conference. You may all disconnect. Have a great day everyone.