Epizyme, Inc.

Q3 2021 Earnings Conference Call

11/9/2021

spk06: Hello, and welcome to Epizyme's conference call. All participants are in a listen-only mode. There 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 Craig West, Vice President of Investor Relations. You may now begin.
spk03: Thank you, Operator. This morning, Epizyme issued a press release providing a business update in addition to the third quarter 2021 financial results. That press release can be found in the investor section of the company's website at epizyme.com. On the call with me today is Grant Bogle, President and Chief Executive Officer, and Dr. Shefali Agarwal, Executive Vice President and Chief Medical and Development Officer. As a reminder, today's discussion will include forward-looking statements related to EpiSign's current plans and expectations, which are subject to certain risks and uncertainties. Actual results may differ materially due to various important factors, including those described in the Risk Factors section of our most recent forms, 10Q, 10K, and other SEC filings. These forward-looking statements represent our views as of this call and should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to publicly update these statements. At this time, I would like to turn the call over to Grant Vogel.
spk05: Grant. Thank you, Craig, and good morning, everyone. It's great to be here. with you to provide an update on our third quarter financial results and to share progress we've made against the four pillars of our strategic plan. As many of you are aware, when I joined Epizyme as CEO last quarter, we announced a number of strategic and organizational changes to more favorably impact the adoption of TASVIR and ultimately intend to establish it as a background of therapy in follicular lymphoma, or FL, and epithelioid sarcoma, or ES, We still have plenty of work to do. We believe the changes we've made were the right ones to accelerate growth. We have begun to see a positive commercial impact. We have also started to see an impact from the cost-saving initiatives announced last quarter. We remain on track to meet the revised non-GAAP adjusted operating expense guidance of between $220 and $230 million for 2021, with additional cost savings planned in 2022. During the third quarter, we reported total revenue of $5.2 million from TASBERIC net product sales. In the second quarter of 2021, we recorded net product revenue of $8 million, or $4.8 million on a non-GAAP basis, which excludes a $3.2 million sale of commercial product to a third-party pharmaceutical company for use in its combination clinical trials. Importantly, total patient demand for TASVERIC grew 22% in the third quarter over the second quarter, driven primarily by FL patient sales. Free goods from our patient assistance program accounted for approximately 25% of total demand for the quarter, in line with what we had reported in the second quarter. During the third quarter, we saw an increase in new accounts prescribing TASVERIC, and volume growth among existing accounts, both in the community and academic settings. And this growth was well dispersed across the country. We made progress partnering with several large integrated provider organizations to improve the integration of TASVERIC into their systems of care, such as their electronic medical record, or EMR, in a way that makes TASVERIC and the EZ-H2NOW test easier to access within the workflow. This is part of our strategy to focus on system-wide integration to augment our efforts to educate individual physicians. It is important that Tasveric be incorporated into provider systems and workflows. So when a provider encounters a relapsed or refractory FL patient, Tasveric is positioned consistent with our label and guidelines, making it easier to write a prescription when the physician believes Tasveric is the appropriate treatment choice. For example, At one of the large group practices in the southeast, while TASVERIC was available in the EMR, it was not tied to the recommended treatment plan for relapsed or refractory FL patients. During the third quarter, this group practice made the decision to ensure TASVERIC was appropriately positioned as a treatment option for relapsed or refractory FL patients. In addition, the practice decided to incorporate the application form for the EZH2 now test within the same EMR platform to facilitate physician ordering of the test. Educating provider organizations about the importance of ensuring that TASVERIC is appropriately positioned within their systems and workflow, consistent with our label and guidelines, will continue to be a priority for us going forward. We expect this strategy will help assure that TASVERIC is considered as an appropriate treatment option by providers throughout the health system when a relapsed or refractory FL patient progresses and needs a new treatment option. Our field teams continue to evolve their strategies and tactics to engage customers in person, virtually, or both, according to our customers' preferences. During the third quarter, this resulted in our field teams having more in-depth discussions as some clinics reopened to industry representatives as our newly created field roles allowed us to engage healthcare professionals and other non-physician decision makers at a deeper level. Overall, more than 90% of Tier 1 and 75% of Tier 2 accounts were called upon in the quarter, despite the reduction and reorganization of our field teams in August. In addition to physician education, we believe we have an opportunity to directly address patients as well, Our market research shows that physicians frequently respond to patient requests for appropriate treatment options. This research shows that FL patients only make treatment requests around 15% of the time, but when they do make a request for a therapy, the requests are often granted. In an effort to educate and empower appropriate patients to participate in their treatment decisions, we have just launched a branded, highly targeted direct-to-patient campaign which we believe can make a meaningful impact in keeping TASVIR top of mind when a relapsed or refractory FL patient and their physician are considering treatment options. In addition to the branded campaign, we have been working closely with a group of FL patient advocates and advisors to develop an online disease education tool called In My Blood to empower people living with FL to proactively engage in their treatment decisions. This unbranded resource, which we launched last week, features a first-of-its-kind interactive tool that provides personalized guidance and advice for patients based on where they are in their FL journey. We put out a press release on November 1 that includes more details on the In My Blood program. Through both of these programs, our goal is to educate and activate patients to proactively engage with their physicians to select the best available treatments. All of the commercial initiatives discussed today are helping to advance our vision of transforming the lives of patients living with cancer and in helping establish TASVERIC as a foundation of therapy in both FL and ES. To further advance this vision, we are making great progress on our key clinical trials to provide additional data and evidence of TASVERIC's potential, not just as monotherapy, but in combination with standard of care treatments. We believe the data pertaining to TASVERIC combinations in FL and other heme and solid tumor indications is just beginning to emerge from important clinical trials that are underway. As you'll hear from Shefali in a moment, we're making good progress with these combination trials for TASVERIC. Consistent with the third pillar of our strategic plan, we're excited to have announced last week a major milestone for epizyme. where we received fast-track designation for DLBCL and initiated the first in-human clinical trial of our first in-class oral CETD2 inhibitor, EZM0414. As leaders in pioneering novel epigenetic therapies, bringing EZM0414 to the clinic is an important advancement as we work towards our vision of making this therapy a possible treatment option for patients living with devastating cancers such as DLBCL and multiple myeloma. At this time, I'd now like to turn the call over to Shefali, who will speak to our clinical development progress for Tazometastat and EZM-0414 in more detail. Shefali?
spk07: Good morning, everyone. As Grant alluded to, clinical development across our portfolio of programs remained a top priority for Epizyme. Our clinical programs supporting the expanded potential of Tasveric all continue to move forward as planned, and investigator requests to sponsor additional studies are regularly received. The scientific community's enthusiasm enhances our own excitement for the drug's full potential, which we continue to believe is very promising and just beginning to be understood. During the third quarter, we advanced numerous important clinical programs. We progressed our active tazometastat clinical trials and received FDA clearance to initiate two new basket studies, evaluating tazometastat combinations in solid tumors and hematological malignancies, and expect the first patients to be dosed in fourth quarter 2021. We have also shared data from multiple clinical programs during the quarter, such as updated safety-running data from our prostate cancer trial, CHALA-1, at ESMO in September. we remain committed to producing a steady cadence of clinical data over the course of the next few years. In addition to our tethymetastatic studies, we are happy to announce today that we have received IND clearance from FDA to initiate the first-in-human study of our first-in-class oral SEDD2 inhibitor, EZM-0414, in multiple myeloma and DLBCL. The FDA has also granted asset designation for EZM 0414 in the LBCL. This is a significant milestone that will provide important diversity to the F-design portfolio. The phase 1A portion of our EZM 0414 study is open, and we are actively screening patients. For a deeper dive, let's start with our active studies of tazometastat in patients with FL. We have completed the phase 1B safety run-in portion of our Symphony 1 trial commonly referred to as EZS-302, and have submitted the finding to the FDA for review. To date, the safety profile observed with tazometastat plus R-squared is consistent with that described in the respective reference safety information document for the individual products, even at the highest tazometastat dose of 800 milligrams. We plan to share an important data update to the phase one safety run-in portion of the trial at ASH in December. which will include updated safety data, longer follow-up duration, clinical pharmacology, and preliminary activity data for nearly 40 patients now enrolled. We remain excited by the response rate and safety profile of the combination, which are both consistent with what we have previously reported. As we await response from the FDA, we have initiated global site activation in the preparation for the phase three portion of the Symphony 1 trial, including in China, with our HudgeMed collaboration partner, and we plan to begin enrolling the randomized portion of the study in the fourth quarter. The Phase III portion of the study will include 500 patients across global sites in the US, China, and Europe. You may recall that as part of our discussion with the FDA earlier this year, we have aligned on an important change to the Phase III protocol, whereby the second interim analysis will include an efficacy evaluation, 165% of progression-free survival, or PFS events have occurred. This allows us to read our efficacy data earlier than previously expected and may provide an opportunity to stop the study early should the predefined treatment effect be realized. We will provide a periodic update on this important study as key enrollment milestones are reached. Separately, our Symphony 2 Phase 2 trial, formerly EZH1401, evaluating tazometastat tristatexin in a lab refractory FL continues to move forward as planned and is actively enrolling. All sites are currently active, including the large oncology network accounts, amongst others, that were recently added to accelerate patient accrual. Additionally, a collaborative study with Lysa in frontline FL and diffuse large PCL or DLBCL are both nearly fully enrolled, and we look forward to sharing updates once available. We remain optimistic about Thesmetastat's potential as a backbone of therapy in FL, and we continue to generate important clinical data to support its potential combination with other therapies. Beyond FL, we plan to generate important Thesmetastat combination proof-of-concept data in new hematological and solid tumor indications over the next 12 months. We presented updated safety and activity data from the safety run-in portion of our metastatic Castration-Resistant Prostate Cancer Study, or MCRPC, as part of the poster presentation during 2021 European Society of Medical Oncology Congress in September. CELLO1, formerly referred as EZH1101, is evaluating thazometastat plus enzutamide compared to enzutamide alone. Notably, a median PFS8 has still not been reached as of July 22nd data cutoffs, which would have been approximately 21 months, and the six-month PFS was 61.7%. Additionally, 11 of 21, or 52% of patients, experienced a PSA decrease of 50% from base 9, with one patient having a decrease and also having a partial response. Based on the Phase 1b data, Epizyme initiated enrollment in the Phase 2 efficacy portion of the study, which is evaluating the combination of 160 mg enzolidamide and 1,200 mg tazometastat twice daily in 80 MCRPC patients. The primary endpoint of the study is PFS, and the study is powered to see PFS difference of six months. The Phase D portion of CELLO1 study is already nearly half enrolled. Investigators continue to remain enthusiastic about tazometastat's potential in this difficult-to-treat population. Moving to plant studies. we're excited to announce that we have received IND clearance from FDA for our heme basket study, EZH1501. This basket study will evaluate thasmatostat safety and efficacy across multiple hematological malignancies. Using this approach, we plan to study multiple combinations with current standard of care therapies and other therapies with novel mechanism of action in an effort to expand the potential of thasmatostat. With this announcement, Both of Epizan's basket studies in heme malignancies and solid tumors have been cleared to proceed, and we plan to initiate enrollment of patients in both studies by year end. In addition to our studies discussed today, all other clinical trials of tazometastat continue to advance. All of these studies are intended to provide a steady stream of important data and insights in the coming quarters regarding the development of tazometastat when combined with other active agents in an effort to significantly broaden its therapeutic potential in both hematological and solid tumors. Beyond tazometastat, I'm excited to share that we are making progress with our novel first-in-class oral CETG2 inhibitor, EZM-0414. We have open sites for enrollment and are currently screening patients for Phase I-1B first-in-human study. We expect to dose the first patient before the end of 2021. The study is intended to evaluate the safety and optimize the dose and scale of EZM-04114 in multiple myeloma and DLBCL patients. Our innovative approach to intervention in this pathway, which has not been successfully drugged to date, demonstrates the utility and potential of our epigenetic approach to oncology research and the productivity of Epizan's platform. SED-2 inhibition has been shown to have clinical potential in multiple settings, including high-risk T414 multiple myeloma and DLBCL as monotherapy, and in combination with existing and emerging therapies, including tasmetastat. Once we have optimized the dose, the phase 1 study will be expanded to three pre-patient cohorts, T414 multiple myeloma, non-T414 multiple myeloma, and DLBCL. Finally, our partnership with Hajmet is advancing. We are working collaboratively to get Symphony one size activated in China, and Hajmet is already working on proposal for additional combination trials with Tasmetastat that could produce meaningful new data. As you can see, we continue to execute across our existing and plan clinical trials as we look to develop Tasveric, not just as a foundation of therapy in both FL and ES, but to expand on its pipeline in a drug potential. These clinical trials are intended to yield a steady cadence of clinical data results from Ash in December to the coming years, and we look forward to sharing regular updates. At this time, I'd like to pass the call back to Grant.
spk05: Thank you, Shefali. We ended the third quarter with $221.3 million in cash, cash equivalents, and marketable securities. This includes $25 million received from HutchMed as part of the upfront payment from our TASVARIC collaboration in China, which we announced on the Q2 earnings call. Our total non-GAAP operating expenses for the third quarter 2021 were $61.9 million, of which R&D and SG&A accounted for approximately $32.3 million and $28.5 million, respectively. Based on the changes to our operating plan and the structure announced during our second quarter earnings call, we expect our current cash will fund operations into the fourth quarter of 2022. We believe it is sufficient to sustain operations for at least the next 12 months. We remain on target with a revised non-GAAP adjusted operating expense guidance of between 220 to $230 million for 2021. And we expect the changes previously announced on the second quarter earnings call to have a more significant impact on our full year budget for 2022. As you recall, we reduced our budgeted headcount by 20%, including 11% of our current employees, resulting in estimated severance and termination costs of approximately $2 million. These charges were recorded in the third quarter of 2021. Overall, after reflecting on my first quarter as Epizyme CEO, I'm pleased with the company's receptivity to change, the tenacity with which the team has been willing to take action, and the results we're already beginning to see from these changes. While early, we expect the changes we have implemented to continue to bear fruit as we move into 2022. We continue to be guided by the four pillars of our strategy announced during our vision call in March. and made important progress against each. Number one, maximizing the commercial adoption at TASVERIC. Number two, building on TASVERIC pipeline and the drug potential. And three, expanding our pipeline and portfolio. And finally, number four, collaborating to expand our reach to patients and building incremental value. The Epizyme team is incredibly dedicated to the patients we serve and we believe we are on the right track. Operator, you may now open the line for questions.
spk06: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Peter Lawson from Barclays. Your line is now open.
spk01: Hey, thanks for taking the question. I guess maybe on the set D2, Just with the progress you've made there, just where you think that could fit into the landscape in multiple myeloma, DRBCL, and kind of how you think about combination use and, you know, if there's good candidates for combination use, or do you think you could actually see single-agent activity? Thank you.
spk05: Thank you, Peter, and good morning. Thanks for joining us. I think that's probably best answered by Shefali. So, Shefali?
spk07: Yeah, thank you, Peter, for the question. So, as you know, SEDD2 is a histone methyl transferase, and one of the strengths of this is that it's actually the first of its kind, a SEDD2 inhibitor. There's none in the clinic. And what's exciting is that it plays an important role in T414 multiple myeloma, which is a big unmet need. you know, there is poor prognosis in that patient population. So although we realize multiple myeloma is comparative, there is a subset of patient population where we really see, based on preclinical data, that there is a great effect. However, we do see effect in non-CEDD2 patients as well. So the way the study is designed is we will first find the dose, and once we have the dose, we will open the study into three expansion cohorts. The first expansion cohort is in T414 multiple myeloma. The second one is in non-T414 multiple myeloma, and the third one in DLBCL. Our approach would be to first get monotherapy data, and then eventually, definitely test combinations. We have done multiple combinations in multiple myeloma and DLBCL in our preclinical models, and we plan to evaluate that.
spk01: Gotcha. Thank you. And then just as we look ahead to Ash, What do you want to see in that data from the 40 patients from the phase 1B?
spk07: Sure. So I think, you know, in terms of, you know, for the Symphony 1 study, it's a rather big phase 1 study, right? It's about 40 patients. So we are looking at consistent response rate that we have shown. If you remember that we showed almost 100% response rate in the last earnings. So we plan to show a consistent response rate. We are looking for, you know, more safety, clinical pharmacology that we can combine at the highest dose, as well as, you know, more follow-up. So it is important because it's a big data set, unlike other smaller safety-running studies. And I think it's important that we're working, you know, really working hard to get our phase three ready globally, including China, to start a randomized portion planning this year.
spk01: Okay. Thank you. And then I may have missed this, Shefali, but the When do we see the next update for prostate?
spk07: So, you know, it's an open-label study. The safety-running data was presented at ASMO, Peter, and it really was encouraging because you saw that we didn't reach median PFS even after 21 months of follow-up and combined with ENSA. And so we will provide more updated data for safety-running next year. But the other thing that we'll be looking at is the randomized portion of the study, We are actively enrolling and nearly half complete in that study. It's an open-label study, so we plan to present interim data next year, and we'll provide more guidance as the study enrolls as to when we will be able to do that.
spk01: Gotcha. Do you think beginning of this year, beginning of next year, 22, we'd get more measured timelines around data readouts from various trials? Yes.
spk07: I think so. I think as we enroll, we'll be able to provide more update next year, early next year probably, because we know we are doing a lot of studies. We are doing the basket study, which is open-labeled both for heme and solid tumors. You know, we have the LISA trial that I said nearly complete. In frontline high-risk FL and the LBCL, we have the updated data for 302, as well as, you know, the SETD2, which is also open-labeled. So we are looking forward to providing a constant stream of data in the next couple of years.
spk01: Great. Thank you so much.
spk06: Thank you. Our next question comes from the line of Michael Yee from Jefferies. Your line is now open.
spk04: Hello. Thank you. You have Kalechi Chigurhion from Michael Yee. Just one question from us here. I'm wondering if you could provide any more color on what's driving organizations to actually optimize their workflow with TASC. does it occur after a certain number of interactions that particular healthcare system has with your sales team? And I guess if that is the case, do you have a sense of how many interactions are needed in order to really drive workflow optimization on that front? Any color there would be really helpful. Thank you.
spk05: Thank you. That's a great question. And each organization is different, but let me start at a foundational level. Number one, it's important to develop advocates for TASVERIC within the account, and our sales team has been doing that from the start. So getting physician advocates that really want to optimize use of TASVERIC is critical. The next step is then engaging not just with the physicians individually, but then with the leadership, both the physician leadership and then the operational leadership within these organizations, with this physician advocate or physician advocates and looking at the workflow and basically helping them understand that there may be opportunities to improve it. And, in essence, if the organization comes to that conclusion, and, of course, we're supporting them in helping them get there to that conclusion in an appropriate way, then the steps to optimize it vary by organization, but it's not that much work to do once they've made that decision. But understand that given all the different things that are going on in health care and these organizations and so forth, unless this becomes a priority and someone actually looks, it just doesn't always get done. And so that's really the process. It takes several calls. And it takes different touch points within the organization. So it's a matter of months probably to get it done. It's not something you do in a single call. But they've been very receptive. I must say that the organizations want their patients to have access to what they consider a very important treatment option. And they realize that this is a way to help ensure that physicians have all the information available to them when they're in front of a relapsed or refractory patient to help them make the appropriate decision.
spk04: Got it. Thank you very much.
spk06: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Our next question comes from the line of Peyton Bonsack from Cowan. Your line is now open.
spk02: Hi, guys. Good morning. This is Peyton on for Joe, and thanks for taking our questions. I guess I'm just really quick on the basket studies and the collaboration with HEDMED. You mentioned on the call that you're going to do possibly some additional collaborations with HEDMED. Will this include the basket studies for Tadveric, or are these going to be separate studies mostly with HEDMED's other oncology drug portfolio?
spk07: So the basket study that talked about that actually a biome clearance for human solid tumors, is in U.S. to begin with. Of course, we are collaborating with Hachmed, and we see how it proceeds. At the moment, it's U.S. only, and we are ready to start the study and get the first patient in as quickly as possible. You remember in those past studies, we are doing multiple combinations and indications with the Bayesian method to be able to get more proof-of-concept data. In terms of HatchMet, they have a big pipeline, as you can see. They basically are going to do innovative combinations further more than what we are doing in a basket form as well. So we are excited that we'll be able to get the data not only in what we are doing, but also what HatchMet will do with multiple different combinations like Wedgef and others that are in their pipeline.
spk02: Great. Awesome. Thank you. And then kind of secondly, for the CETGQ study, are you guys doing any exploratory analysis on biomarkers, like looking at any differences in H3E36 methylation? And is there any plan to develop a compliant new diagnostic test if anything comes out of these biomarker exploratory analysis that's being conducted?
spk07: Yeah, so that's absolutely it. As a company, we are very committed to translation medicine. We are actually looking at all of those, including H3K36. study to overexpression and mutation. So we are looking at all those things in our study. The goal is to first find the dose. And then eventually, when we do the expansion, we'll be looking at PK biomarkers. We also have optional biopsy there as well. So collect that data and understand. In terms of companion diagnostic, I think we'll have to see how it goes. Our goal is to be able to study this in both T414 and non-T414. And depending on how we see the activity, we'll think about whether we need a diagnostic or not.
spk06: right now we'll be studying in all the patient population cool thank you thank you as a reminder to ask a question you don't need to press star 1 on your telephone to withdraw your question press the pound key At this time, I'm showing no further questions. I would like to turn the call back over to Grant Vogel for closing remarks.
spk05: Thank you, operator. And I just want to say on behalf of all of us here at Epzyme, we're excited about the progress we're making and look forward to continuing to report steady steps to improve the lives of patients that are facing many of the devastating disease and fibroma and myeloma and other areas that we're exploring. I also want to thank you all for joining us this morning, and I look forward to further interactions in the months ahead. Thank you, operator.
spk06: This concludes today's conference call. Thank you for participating. You may now disconnect.
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