Earnings Transcript for IPN.PA - Q4 Fiscal Year 2021

Operator: Hello, and welcome to the Epizyme Fourth Quarter and Full Year 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. Please be advised that today’s call is being recorded. I will now turn the call over to Kristen Hilton [ph], Investor Relations. You may begin.

Unidentified Company Representative: Thank you, operator. This morning, Epizyme issued a press release providing a business update in addition to fourth quarter and full year 2021 financial results. That press release can be found in the Investors section of the company’s website at epizyme.com. On the call today are Grant Bogle, President and CEO of Epizyme; and Dr. Shefali Agarwal, Executive Vice President and Chief Medical and Development Officer. Joe Beaulieu, Vice President and Corporate Controller and Treasurer, will join us for the Q&A. As a reminder, today’s discussion will include forward-looking statements related to Epizyme’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 10-Q, 10-K 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, and we undertake no obligation to publicly update these statements. At this time, I would like to turn the call over to Grant Bogle. Grant?

Grant Bogle: Thank you, Kristen [ph], and good morning, everyone. It’s great to be here with you and to provide an update on our fourth quarter and full year 2021 results. On today’s call, I will review company results, including commercial performance of TAZVERIK and provide additional business commentary, insights on our cash position and updated guidance for 2022. Shefali will speak to our clinical development progress for tazemetostat and EZM0414, our investigational SETD2 inhibitor, in more detail. Following our remarks, we will open the line for questions. During the fourth quarter, we reported TAZVERIK net product revenue of $11.6 million, including $4.2 million related to the sale of TAZVERIK commercial product for third-party pharmaceutical company use in clinical trials. TAZVERIK commercial net sales for the fourth quarter of 2021 were $7.4 million, representing an increase of approximately 42% when compared with the third quarter of 2021. For the full year ended December 31, 2021, we reported TAZVERIK net product revenue of $30.9 million, including $7.4 million related to the sales of TAZVERIK commercial product for the third-party pharmaceutical company use in clinical trial. TAZVERIK commercial net sales for the full year 2021 were $23.5 million. Free goods from our patient assistance program represented approximately 29% of total end user demand for the fourth quarter of 2021 and approximately 24% for the full year of 2021. Total end-user demand in the fourth quarter increased approximately 14% over third quarter 2021 level, driven primarily by increased follicular lymphoma patient sales. We continue to make progress on our commercial efforts to drive prescription growth for TAZVERIK, as a monotherapy, as well as advancing our combination clinical studies, which we believe have the potential to significantly expand the value and reach of TAZVERIK among physicians and patients as the data matures. As we announced in our press release this morning, we continue to make necessary operational changes to reduce our expenses and extend our cash runway, all while strategically deploying our resources to areas we believe to be the highest impact for the company and its stakeholders. We’ve implemented a plan that reduces our workforce by approximately 12%, along with external spending. As a part of this effort, we have also reprioritized our pipeline, including discontinued enrollment in select studies, SYMPHONY-2 and EZH-1301. As Shefali will review in detail, we continue to study tazemetostat in combination with numerous other therapies for both hematological and solid tumor cancers through our ongoing company-sponsored studies and investigator-initiated studies. I want to recognize the contribution of the Epizyme employees that are being impacted today and to thank them for all their efforts to advance our company’s mission and vision. Their transition from the company is being handled appropriately to ensure that it is as smooth as possible. For those Epizymers who remain with the company, I also wish to thank them for their commitment and support, as we continue to focus and streamline the organization for the benefit of all stakeholders and the future of our company. These initiatives, along with the organizational and operational changes implemented when I joined as CEO last August, are designed to advance our vision of transforming the lives of patients living with cancer and helping establish TAZVERIK as a foundational therapy in FL and other cancers. Looking ahead to 2022, we plan to continue to educate providers and to align systems of care to support the growth of TAZVERIK monotherapy. While further advancing key clinical trial programs, we are pleased with the progress we are making in our development program, including the global initiation of the Phase 3 portion of our SYMPHONY-1 study, the near-complete enrollment in the LYSA study and the progress we are making in our Phase 2 prostate cancer study, CELLO-1. We look forward to providing updates on these important programs as well as other activities throughout the year. At this time, I’d now like to turn the call over to Shefali, who will speak to our clinical development progress. Shefali?

Shefali Agarwal: Thank you, Grant, and good morning, everyone. With the initiation of our SET-101 study, we now have two molecules in clinical development, tazemetostat and EZM0414, a novel SETD2 inhibitor. During the fourth quarter, we made key progress across our development pipeline. I’ll begin with tazemetostat. As we have previously discussed, we believe that tazemetostat has the potential to become a backbone of therapy in FL and potentially other hematological malignancies and solid tumors. Our clinical development program has been built with the aim of demonstrating the clinical utility of using tazemetostat across a variety of hematological and solid tumors, both as monotherapy and when combined with other therapies. We are excited that much of the work that began several years ago is beginning to mature, and we look forward to a steady stream of data in 2022 and beyond. Speaking as a clinician, we are very encouraged by the SYMPHONY-1 data we disclosed at the ASH Annual Meeting in December, and I’m pleased to report that we have completed the waiting period for the protocol amendment submitted to the FDA in December, specifying 800 milligrams twice daily as a tazemetostat dose for the study, which allows us to open the randomized portion of the study in the U.S. As a reminder, the Phase 3 portion of the study will evaluate tazemetostat in combination with rituximab and lenalidomide, which we call R2 in patients with relapsed refractory follicular lymphoma, who previously had been treated with at least one systemic therapy, including those who are rituximab refractory and/or have experienced progression of disease within two years, for 2024. We are actively engaged in global start-up activities, including sites in Greater China, with our collaboration partner, HUTCHMED. We are screening patients for the Phase 3 portion and expect to enroll the first patient in the first quarter of 2022. We expect to enroll approximately 500 patients in total across approximately 180 sites globally. In addition, we continue to follow the 40 patients in the Phase 1b safety run-in portion of the study and anticipate longer-term follow-up data to be presented at a medical conference later this year. Turning to the LYSA study, which is the Phase 1b/2 study of tazemetostat in combination with R-CHOP for a newly diagnosed DLBCL or high-risk FL patients, enrollment is now nearly complete for both FL and DLBCL study cohorts. This is a large Phase 2 study. And as of February 23, we have 111 out of 122 patients enrolled in the DLBCL arm and 61 out of 62 patients enrolled in the FL arm. The primary endpoint of the study is to evaluate complete response rate of tazemetostat in combination with R-CHOP. We, in conjunction with LYSA, anticipate presenting interim results from the study in DLBCL and FL patients in 2022. Moving to our solid tumor program, CELLO-1, an open-label randomized Phase 1b/2 study evaluating tazemetostat plus enzalutamide compared to enzalutamide monotherapy in metastatic castration-resistant prostate cancer patients is progressing nicely. The study is approximately 75% enrolled in the randomized portion toward a target of 80 patients, and we expect to complete enrollment in 2022. We anticipate presenting the updated data from the completed safety run-in portion and interim data, including radiological PFS and PSA50 from the Phase 2 portion of the study in the second half of 2022. We also recently initiated our tazemetostat hematological basket study, EZH-1501 of Phase 1/1b signal finding basket study, designed to investigate potential signals and safety, tolerability and activity of tazemetostat with various combinations of patients with relapsed/refractory hematological malignancies, specifically FL, diffuse large B-cell lymphoma, mantle cell lymphoma and multiple myeloma. We have entered into a clinical supply agreement with Roche for the bispecific cohort of EZH-1501. This cohort will evaluate the investigational use of tazemetostat in combination with mosunetuzumab, Roche’s investigational CD20xCD3 T-cell engaging bispecific antibody for patients with relapsed refractory follicular lymphoma who have received at least two or more prior lines of therapy. We plan to provide updates on EZH-1501, as it treats key enrollment milestones. We also plan to provide preliminary data from EZH-1501 in the second half of 2022. Additionally, as Grant mentioned, today, we announced reprioritization of our pipeline programs. Given the breadth of Epizyme’s current tazemetostat clinical development program, we have made the decision to discontinue enrollment in two studies, including SYMPHONY-2, which is the study of tazemetostat in combination with rituximab in third-line plus setting, as well as EZH-1301, the solid tumor basket study. The decision to discontinue these studies was based on evolving market dynamics and continued focus on optimizing our investments and eliminating potentially overlapping study. The company will continue to follow the patients who have already been enrolled in these studies. We remain committed to the development of tazemetostat in combination with other therapies for both hematological and solid tumor malignancies, both in ongoing company-sponsored studies, as well as investigator-initiated studies. Turning to our novel first-in-class oral SETD2 inhibitor development candidate, EZM0414. During the first quarter, we initiated SET-101 study, our Phase 1/1b study of EZM0414 in adult patient relapsed/refractory multiple myeloma and relapsed/refractory diffuse large B-cell lymphoma. EZM0414 has been granted Fast Track designation by the FDA in adult patients with DLBCL and have also granted orphan drug designation by the FDA for multiple myeloma. We shared preclinical data on EZM0414 along with SET-101 Phase 1/1b clinical trial design at the 2021 ASH Annual Meeting. We plan to provide updates, as the study reaches key enrollment milestones along with preliminary safety data expected from the study in 2022. As you can see, we continue to advance the development program for tazemetostat and EZM0414 and expect a steady cadence of data through the coming years. The data yielded will be important, as we develop tazemetostat beyond FL and ES, given its pipeline in a drug potential as well as potentially addressing high unmet need in multiple myeloma and DLBCL with a SETD2 inhibitor. At this time, I’d like to pass the call back to Grant.

Grant Bogle: Thank you, Shefali. We ended the fourth quarter with $176.8 million in cash, cash equivalents and marketable securities. In January 2022, we raised an additional $79.5 million in net proceeds in a public offering of common stock. This raise as well as the cost reduction measures outlined earlier, extends our runway into the back half of 2023. Total GAAP operating expenses were $62.9 million for the fourth quarter of 2021 and $275.4 million for the full year ended December 31, 2021. Total non-GAAP adjusted operating expenses were $54.7 million for the fourth quarter of 2021 and $243.4 million for the full year ended December 31, 2021. We have revised our full year 2022 operating expense guidance due to the expense reduction measures and operational efficiencies discussed today. We now expect 2022 total non-GAAP operating expenses of between $160 million to $180 million compared to the prior guidance of $170 million to $190 million disclosed in January of this year. In closing, I want to emphasize that all the activities discussed today, both from a clinical development perspective, as well as an operational and organizational perspective, continue to be guided by the four pillars of our strategy. These include maximizing commercial adoption at TAZVERIK, building on TAZVERIK’s pipeline and a drug potential, expanding our pipeline and portfolio, and finally, collaborating to expand our reach to patients and building incremental value. We are making difficult but necessary decisions to help ensure that we can deliver on our corporate imperatives. I’m pleased by the progress we’ve made and look forward to the growth and progress yet to come this year. With that, operator, you may now open the line for questions.

Operator: Thank you. [Operator Instructions] Our first question comes from Joseph Thome with Cowen. Your line is open.

Joseph Thome: Good morning and thank you for taking the question. Maybe the first one just on taz in terms of the commercial setting. As you look over the next year, maybe what are sort of the key drivers that will kind of determine increasing sales? And as you’re seeing it right now, compared to launch, are physicians using the drug in a different set of patients, maybe for longer duration or earlier in the treatment paradigm, kind of, how is that shaking out?

Grant Bogle: Thank you, Joseph. So in answer to your question, we continue to execute on the plan that we’ve laid out, and I’m seeing steady progress. I mean, in terms of really focusing on engaging with healthcare providers and the means that they want to engage. And that has changed as a result of the pandemic and many clinics and hospitals that used to be open now want to engage in a more digital way, which is fine. However, we are seeing clinics, in other parts of the country, and so forth open up. So we’ve adjusted our strategies to align with that reality. And as we’ve talked previously, we’ve brought on new associates into our organization that have skill sets more on the systems side of care delivery. So we are really aligning and working with leadership within these systems to ensure that if a provider wants to use TAZVERIK according to label that, it’s easier to do so by inclusion and, for example, order sets that support appropriate prescribing for patients in different settings. So those drivers of sales will continue to, I believe, strengthen our position and lead to continued growth within our current label. All the while, the clinical development program continues to move forward and we’re obviously going to talk – and have talked a fair amount about that. So I’m excited about that because that – again, we can’t promote on that – would not promote that information, but it does help inform clinicians that attend medical meetings and so forth, what the future potential of TAZVERIK may be.

Joseph Thome: Perfect. And then maybe, just a follow-up, probably for Shefali. But one of the basket studies solid was discontinued, but the other one is ongoing. I guess, can you give a little bit more information into this decision? Is it just based on kind of how the current standard of care is evolving? Or do you think TAZVERIK is better suited for – in tumors in terms of probability of success, kind of, what went into that decision? Thanks.

Shefali Agarwal: Sure. Thank you, Joseph. So in terms of the studies, the reason to discontinue these studies were based on changing marketing dynamics. It also – we want to optimize our investment as well as – the main – one of the big reasons is M&A potentially overlapping toxicities. If you remember the solid tumor basket study, that was in combination with PARP. We do have an IST that we are combining PARP in those indications. So our goal is to get that data, and we’ll be able to get that data from that IST. And that will actually be important, because once we know how it combines, we can think about next steps and starting a different trial in combination with PARP. Overall, we are very committed both in solid tumors and heme malignancies with TAZVERIK. That’s why we have the prostate cancer study as well. So we are committed to that and we believe that TAZVERIK is important, both for solid and heme malignancies.

Joseph Thome: Perfect. Thank you very much.

Grant Bogle: Thank you, Joseph.

Operator: Thank you. Our next question comes from Peter Lawson with Barclays. Your line is open.

Peter Lawson: Great. Thanks for taking the questions. Just thinking about revenues. What’s the average duration of use of tazemetostat? And I guess, where do you think it could get by the end of the year?

Grant Bogle: So Peter, we’ve not guided to that in the past. And it is – here’s what I can say that duration of use. It is, in a general trend, increasing quarter-over-quarter and we would expect that, mainly, for two reasons. One is the data matures. So the more patients we get on taz and the long that we follow them, obviously, the duration of therapy increases. The second is we do see trends in this – sorry, Joe, I didn’t answer this question directly when you asked it, but we do see trends in our tracking studies, the ATU studies that help us guide market shares, projections and so forth. We do see trends where physicians are tending to use taz earlier in the lines of therapy. Most of our use is third-line press, but we’re seeing even growing use within the second line setting, albeit, it is a small portion of the use today. So as they move to earlier lines of treatment, we would expect that those patients would stay on therapy longer. So it’s a journey. The trends are moving in the right direction. And so I believe we – there’s no reason we would think that it would not continue in that direction for a period of time.

Peter Lawson: Got you. Thank you. And then a question for Shefali, really around the basket study that’s been shut down. Should we read into that sort of particular indications that aren’t showing a benefit from tazemetostat? Anything you can kind of help us kind of guide us to where you potentially see a beneficial activity for tazemetostat?

Shefali Agarwal: Sure. Thank you, Peter. Yes. So in terms of looking at TAZVERIK, right, I think based on the mechanism of action, and we have presented some preclinical data, we believe TAZVERIK can combine with many of the agents, both in heme and solid tumors. We have shown that in combination with our job. We’ve shown that with R2, we have shown that with doxorubicin in heme malignancies. And then in solid tumors, we have shown with abi and enza as well in prostate. In terms of that basket study, what I would – it was more an effort to how we optimize our development. And if there is an overlapping study, how do we get data irrespective? And that’s why, as I mentioned, we have an ongoing study that is enrolling patients in combination with PARP and we would get data from that study as well. But I believe that based on the prostate study as well as other ISTs and our heme studies in combination, there’s a potential in both of that indications.

Grant Bogle: Peter, if I might add because this is, I think, really important for those on the phone to take away. The changes we’ve made to our operating expense guidance really have been done with the goal of streamlining the organization, removing complexity, removing some layers of management where appropriate, but that also involves simplifying certain things that are underway, especially when we can get the data in a more efficient way, which is what really drove us in the heme – I mean, excuse me, in the solid tumor basket study as well as, quite frankly, SYMPHONY-2. Then if you look at the use of single-agent Rituxan in the third-line setting plus, it is not significant. In fact, it’s going down. So we felt that this was the most efficient decision and should no way be viewed, especially on the solid tumor area that we’re not excited about taz’s potential there, but we’ve got not only a large Phase 2 trial underway in terms of CELLO-1, we’ll continue to read out in prostate cancer. We’ve got other work underway in that with ISTs and so forth. So I hope that puts it a little bit more into perspective.

Peter Lawson: Great. Yes. Thank you. That really helps. Just on SYMPHONY-1, final question. We get updated data this year. Is that kind of a year-end update that we should be thinking about?

Shefali Agarwal: So in terms of SYMPHONY-1, as you know, that we presented data in ASH last year for the safety run portion of the study. And as you know, it’s in second line and beyond. So we’ll continue to follow those patients and we provide data this year. We haven’t really guided on exactly the timing, but we’ll continue to provide in conferences this year as the data matures for SYMPHONY-1 for the safety run in portion of the study. I think the important part is, Peter, that I want to highlight is that we have gotten clearance in terms of submitting the protocol amendment for 800 milligrams BID in the Phase 3 portion of the study, and we are actively in the global start-up and screening patients for the randomized portion of the study as well.

Peter Lawson: Perfect. Thank you so much. Thanks for the updates.

Operator: Thank you. Our next question comes from Michael Yee with Jefferies. Your line is now open.

Unidentified Analyst: Hey, good morning. This is [indiscernible] on for Michael Yee. Thank you for taking our questions. And I know it’s challenging to move the company forward in this environment. I have two questions. The first is going to be on EZM0414. You guys initiated the first-in-human study. What do you expect will be or should be good data in DLBCL and multiple myeloma? And then do you fully expect responses in those two pathologies? And what’s the bar that you’re looking for that would be pleasing to move the study forward?

Shefali Agarwal: Yes. Sure. So I mean, just kind of reminding where we are for EZM0414. As you know, we are starting our first in-human study. The dose escalation part of the study where we will escalate in both multiple myeloma and DLBCL. We initiated the study last year. We are screening patients and hope to enroll a patient very quickly. The goal in the first in-human portion this year is to get to a dose that is safe and get preliminary activity in biomarkers. And once we have that dose, then we plan to expand into cohorts where we would like to evaluate, especially the t(4;14) translocation. We have shown some preclinical data at ASH last year, which showed specifically our activity in t(4;14) multiple myeloma, which is a big unmet need in myeloma. And so our goal is to evaluate in that particular biomarker, which could be a faster path for registration in that portion of the study. Additionally, if we look at non-t(4;14) multiple myeloma as well as looking at how we do a DLBCL look at biomarkers and things like that. So the goal is for us to get to a dose, which is safe and then eventually expand in myeloma and evaluate DLBCL if needed.

Unidentified Analyst: Okay. Great. Thank you. And then you had mentioned that you had updated data from CELLO at some point in 2022. Could you give a little bit more guidance as when we can expect that? Is that going to be at ASCO? Is that going to be at a GU Conference? Where can we expect that?

Shefali Agarwal: So the CELLO-1, just in terms of the status, we had presented the data for the safety run in the 21 patients at ESMO last year. We continue to follow those patients, including radiological PFS, PSA50, time to PSA50 progression. Our goal is to provide that data second half of this year. Additionally, we also mentioned that we have enrolled about 75% the patient the randomized portion of the Phase 2 study, our goal is to provide some interim data second half of this year as well. So as we continue enrolling patients, as we have more follow-up, we’ll guide more further on the timing – that timing of the presentation.

Unidentified Analyst: Got you. Thank you. And just one small last question. You mentioned that you initiated the global Phase 3 study in collaboration with HUTCHMED. Were there any milestone payments given to Epizyme was at the start of that enrollment?

Shefali Agarwal: No.

Grant Bogle: Go ahead.

Shefali Agarwal: So I think in terms of the start-up activities, we are in the process of starting activities, both globally in terms of opening sites. As you know, it’s a big trial. And it’s about – our goal is to get the sites up, and we are screening patients right now. So that is the status both in China globally and in U.S., but let me pass on to Grant in terms of milestone.

Grant Bogle: So in terms of the collaboration, remember, we received a $25 million upfront payment, of which that was at signing of the agreement. And we’re working on the global Phase 3 start-up within China, and there are further milestones and also, expense assets that would occur upon commencing of that. But that’s really where we’re at right now.

Unidentified Analyst: Wonderful. Thank you for taking our questions.

Grant Bogle: Thank you.

Operator: Thank you. [Operator Instructions] Our next question comes from David Nierengarten with Wedbush. Your line is open.

David Nierengarten: Hi, thanks for taking the questions. I have two. First off, for LYSA. Have you surveyed doctors or had discussions with folks on what would be – I hate to say “convincing” but kind of a convincing overall response rate that would maybe, increase acceptance or use in earlier lines of therapy? And then for SYMPHONY-1, could you just remind us if you had an interim look planned on that as part of the trial design? Thanks.

Shefali Agarwal: So answering your first question, David, the first question in terms of LYSA, as you know, this is a frontline trial in high-risk FL and DLBCL patients. In terms of looking at the endpoint, we normally look at CR rate in upfront trials. And so based on the data published with LYSA, the CR rate in high-risk DLBCL is about between 60% to 70%, and that’s how we have designed the trial. So the goal is to enroll. As you know, we are almost enrolled, nearly completely enrolled in that trial. So the goal is to be able to get that data – interim data this year and report on that. And we have talked to LYSA has a big database where they look at patients who are high risk in FL and DLBCL because both are big unmet need. And so the goal is to be able to inform physicians about that data and think about the next steps in terms of front line high-risk patients in both the indications. In the second question regarding SYMPHONY-1, we do have two interims planned in the study. The first interim, as we’ve guided is basically based after 100 responders, which is about 100 patients based on how we are seeing a response rate and which is a futility interim. The second interim is based on 65% of PFS events. So those two – and the second interim actually is important because you have an opportunity to claim efficacy, as we’ve aligned with the agency as long as we meet the protocol defined criteria.

David Nierengarten: Got it. Thank you.

Operator: Thank you. And there are no other questions in the queue. I’d like to turn the call back to Grant Bogle for any closing remarks.

Grant Bogle: I just would, once again, like to thank everyone for joining us today, and I’d like to thank the colleagues both, Shefali and Joe as well as the entire Epizyme team for their hard work and dedication to moving our organization forward. We look forward to providing updates in the coming months and speaking with many of you at the upcoming Cowen Conference next week. Have a great day. Thank you, operator.

Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.