Q2 2020 Epizyme Inc Earnings Call

Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.

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Hello, and welcome to Epizyme Conference call at this time all participants are lets you know they'll be a question and answer session. After their prepared remarks. Please.

This call is being recorded Epizyme directly.

I'd now like to turn the call over 22 Davis you may begin.

Thank you and good morning. This morning, we issued a press release outlining recent progress in our second quarter 2020 financial results, which can be found that epizyme dot com.

On the call with me as Rob save more CEO, not Roth, Chief strategy and business Officer, and Pallets Embassy Chief Financial Officer, Dr., Shefali, Aker Walsh, Chief Medical Officer will join us for acuity session.

Today's discussion will include forward looking statements related to Epizymes 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 factor section of our most recent form 10-Q 10-K and other SBC 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 now let me turn the call her to Rob Rob.

Thank you Alicia and thank you all for joining us today.

What do you 20 had been a landmark year for Epizyme now established commercial enterprise marketing has Derek in United States as a Standalone company for both solid tumor and Hematological cancer indications.

Just six months into the year, we delivered on a number of core objective and complex milestones to bring the first easy age two inhibitor to the market.

Back to back after you get approvals for cats Eric.

We recognize the special place we stand in our industry.

The opportunity to provide patients and physicians with a generally well tolerated and effective treatment for diseases, where new options were needed.

Directly aligned with their mission as a company.

So Eric approved in the U.S. for the treatment of patients with metastatic or locally advanced separate sealy weights arkoma and for patients with relapsed or refractory follicular lymphoma irrespective of their easy age to mutational status.

Yes, it's a rare and aggressive solid tumor cancer with a high mortality rate. It had no at the I indicated treatments prior to test VERYX approval.

Itself is also an incurable cancer today with a high rate of relapse.

Frequently called the patients to progress through many lines the treatment over the course of their disease.

As Derek is performing well in the market.

While watching them its cobot 19 is less than ideal.

Initiative that we put in place for yet have proven very helpful. As we launch test Eric NFL.

The commercial progress made as demonstrated by not just the sales we've achieved in the rare yes patient population.

It is how our commercial operations are executing across many important dimensions.

Our commercial team is adapting their efforts to stay engaged with our customers based on how big wants to be communicate.

And the uptake interest and enthusiasm for Cadbury can both yeah, NFL among academic and community physicians has been encouraging.

As we continue to navigate complexities that the pandemic has created for our industry and the physicians in the patients that we seek to serve.

I'm confident in our ability to execute on our launch plans and ensure that all eligible patients have access this has there.

I'm also confident in our ability to continue the clinical development of Tazemetostat in a range of additional indications and setting that we'd hope will allow an even broader group of patients benefit.

Has a mess that represents a true pipeline in a product opportunity.

We have an expansion program underway to investigate as therapeutic potential in early lines of therapy for FL, including several combination regiments its current FL treatment.

As well as another cancer indication.

These trials remain on track thanks to the incredible effort to shift our clinical activities to virtual engagement with our investigators and their institutions.

We remain well positioned financially the capital to support our commercial execution and yes NFL <unk>.

The expansion of our clinical development program for CASM Medicine.

The advancement of our early yet genetic pipeline through both our own research and our established collaboration.

In short.

When he 20 has been our best year yet.

I'm very proud of where we stand as we continue into the second half of the year.

Let me now pass the call over to match to review our commercial performance and then Palo will review our financial results.

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Thanks, Rob.

The commercial organization is performing very well using both personal and virtual engagement methods to engage physicians and execute our lunch plans for yep.

Ill.

Well, a small indication commercial execution and yes was critical in positioning ourselves to successfully execute the watching tests metric for the larger asphalt market opportunity.

As an oral at home medicine with a novel mechanism of action and a demonstrated favorable safety profile that supports its extended treatment use.

We fully anticipate that market adoption will continue to build in the quarters ahead.

Today. It is clear that we're reaching yes patients and physicians, who treat them and that tends Barrick is a welcome to treatment for disease. It prior to its approval.

No indicated therapeutic option it was associated with significant unmet needs.

As of the ended the second quarter, we've generated 3.5 million net product revenue for test Barrick since its launch in early February.

Positioning us to achieve the consensus estimates for yes product sales in 2020.

A critical dimension to our plan is to ensure that market access to test Americas seamless and that any barriers to access a removed.

We have delivered in that regard with more than 90% of patient lives covered by insurance providers to date.

And approximately 370 medical policies have been initiated protest American yes.

Additionally, we've been able to achieve prompt turnaround time to fill prescriptions to our specialty pharmacy with patients typically receiving delivery of tests mirror in less than seven days.

This performance encapsulates our proficiency to serve this patient community quickly once a treatment decision for tests Barrick is made.

Turning to ourselves with an approval at the end of the second quarter. We're now applying the same expertise in the initial phases of our launch.

Our field based teams were prepared early enabling us to hit the ground running.

Within one day of approval, we initiated engagement with the FL prescribing community.

Sharing how tests, Derek maybe able to fulfill the substantial unmet need in the relapse and refractory setting.

The physician responses to our label NFL had been enthusiastic.

And we fulfilled our first FL prescription on June 25th.

Just one week after approval.

To date, we've had multiple patient starts for test marakon itself.

And we expect to see steady traction in this new indication as our launch continues.

As with the yes, our commercial objectives for the FL launch are clear.

First is to rapidly generate awareness of tester, among the academic and community physicians, who treat FL and ensure a positive first experience we test merrick for both patients and physicians.

Second is to ensure seamless access to test viereck without any significant payer hurdles and third is to ensure the test varick is widely adopted by physicians as a treatment of choice, where the relapse refractory CLL patients.

To do this we're leveraging all appropriate direct and virtual avenues to ensure our marketing and promotional tactics threed enhance customer engagement.

Given that this is the disease that is largely treated in the community setting.

Our approach is focused on reaching in educating targeted community oncologists.

We have developed a broad promotional speaker program and are partnering with care wells to create champions for the brand.

And we are engaging the patient and caregiver community through educational programming and patient advocacy initiatives.

As the coping nike's situation evolves.

We will continue to do adapter approaches to reach and serve our customers.

So far our sales reps in medical science liaison have been effective in their efforts to increase the recognition of the benefit has barrick may provide two relapse or refractory FL patients based on its established clinical efficacy and safety.

Our truth label allows physicians to you test barrick broadly across relapsed refractory follicular lymphoma patients.

For those patients who have already relapse and an anti cdtwenty based chemo or immune based therapy, where physicians feel the alternatives aren't satisfactory.

We believe the tests varick can be a meaningful treatment solution.

Based on our early efforts.

Feedback from treating physicians, so far has been overwhelmingly positive.

Support that the approved label allows them flexibility and that tests Barrick is seen as a beneficial treatment option for relapsed or refractory F.L. patients regardless of easy age two steps.

We have been able to engage with many of our academic and community customers and the initial prescriptions that we have been seen are being written consistent with the label.

On the payer front.

That's very it was added to the NCCN guidelines just three weeks after approval as a category two way option for relapsed refractory Follicular lymphoma.

With or without easy HQ mutations.

This designation is particularly important because the payer community frequently turns the NCCN to support their medical policy development.

Relapsed or refractory I felt is not an actively manage category and payers in that space will typically rely on the label and NCCN guidelines to make policy determinations.

It's important to recognize that the reimbursement process takes time and it can take 30 to 90 days prepare policies to be updated.

So far this it had been issued are consistent with our label and the guideline.

The exceptional commercial progress made to date is a direct reflection of our planning and commitment to making tests varick available to the patients who have the potential to benefit from it.

And we look forward to providing more information as we garner additional end market experience.

I'll now turn the call over to Paulo to review our financial results.

Thanks, Matt.

As Rob noted we are in a very strong financial position today, we have many options available to further strengthen our balance sheet you choose to do so our financial results I'd be paid no. Thank you filing so I've summarized justice couponing for you today.

In some revenue we called the $2.2 million that's already for the revenue the second quarter, primarily due to say, yes, making for a total of $3.5 million net product revenue since launching in January of this year.

On the expense side, our second quarter non-GAAP adjusted operating expenses were primarily comprised of $23.4 million research and development expenses.

And 27.1 million dollar.

DNA expenses he bought simply the final my son of $25 million food aid side, what's that she need approval of personality, XL, which what school or by the third and final tranche of the 70 million don't facility, we find mcmullen buys.

Yeah, no additional milestone both a shot.

Although we think were $50.9 million non-GAAP adjusted operating expenses in the second quarter.

Right between which was in line with non-GAAP adjusted operating expenses.

5.7 million dollar for the first quarter 20 between.

As we look ahead, we expect our quarterly expenses will increase as we realized the full extent of all the launch of D.. So that's very well for economic formats and continue our clinical development, that's what's with the metal stuff, that's certainly consistent split between R&D and hedging expense.

Continue to expect that our non-GAAP adjusted operating expenses footprint between would be between hunting 35, and 255 million barrel.

Overall, we ended the second quarter 322 million dollar cash cash equivalents marketable securities, which we expect we fund our planned operations into at least 2022, not including any potential additional collaboration revenues my son or.

Business development activities.

I'll now turn to the going back overall grew up in truck.

Thank you Paolo.

As you've heard the first half the year as and when a tremendous progress led by the launches of test Derek but to cancer indications.

Now we are focused on ensuring the success of these launches in the second half of the year.

We are leaders and development of epigenetic medicines and look forward to sharing more with you and subsequent update I'm had VERYX potential in other indications and combinations as well as to progress, we're making on a research pipeline.

I'm incredibly proud of what the Epizyme teams achieved so far.

Excited for what the future holds for our company and for the patients caregivers and physician can we have impact.

Thank you all for joining us today.

I'll open the lines for questions.

Thank you.

Ladies and gentlemen, as a reminder to ask the question you may do so by pressing Star then one you touched on telephone.

Let's start wanting to ask the question to withdraw your question press the pound key.

Please standby, we compiled acuity Boston.

First question comes from a lot of Peter Lawson with Barclays. Your line is open.

Great. Thanks, taking my question just the wild type system, just where you'll see usage of inflict less than five I know, it's kind of early but any sense around the it'd be great.

Thank you Hi, Peter Thank you for the question. This is Rob maybe I'll ask Matt to speak to what we're seeing so far early in the uptake has Derek and molecular lymphoma, Matt.

Sure. Thanks, Good morning, Peter Thanks for the question.

Responses to the label have been quite enthusiastic as we referenced a few months ago. The first script was filled.

Literally within a week after the approval two dimensions I think that are important to to comment on first both in the academic and community setting physicians have identified patients where they have already initiated a prescription or intend to initiate further use and we've seen adoption thus far in both patients settings.

So both in the wild type Egfr mutation bearing population so.

We're very encouraged by this I'm very pleased the overwhelming response to the label and its enthusiasm is something we're continuing to follow closely and well continue to update you in kind.

Great. Thank you and then just in the sense of testing huh.

What do you see testing is each two and actually color.

Just yeah, how should we be thinking about that rolling out over the.

So you know certainly as Weve spoken in the past testing of the dimension that position certainly participate within with regard to the label and how the feedback has come into the company in the context of how physicians will continue to behave it's been quite frankly somewhat mixed and not surprisingly so.

Some physicians actually those whom are in the academic centers are testing, but regardless of the testing dynamic they see the value of test American both subtypes, both me and wild type patients and then a community.

Positions may have an expectation or an interest in testing to set the right type of expectations, but their patients, but they're not waiting for the test results to prescribed the brand. So you know this is very consistent with the behavior. We observed in our market research before the approval and it's certainly playing out as we bought it started our initial launch planning.

Our lunch work.

And then should we expect first the easy age to test accrues to the Aaron traction if those in their communities.

[noise] well I think all we know about is another in terms of another mutation bearing test I mean, we certainly know that the Roes Roche test was recently approved and that's a the latest news we have with regard to that.

Great. Okay. Thanks for taking the questions.

Thank you.

Thank you.

Our next question comes from a lot of yeah, when Weber with Cowen Your line is open.

Great. Good morning, everybody, maybe Oh, hi, good morning, a couple of questions maybe Matt just to clarify you mentioned if there was 390, yes medical policies have been put into place what do you mean by that and how does that translate into into you just talking.

About on the covered side the linked to the 90% coverage and then secondly, yes could go for it.

Yes. The so the first answer would be yes, that's related just to the policy coverage around the 90% of the lives that we've seen in yes, I think the important component for us and for you as you think about just the continued adoption and he asked is we've been very very successful in working with the payer community. They clearly understand the value of tests Barrick.

And when it provides to there to the to the patient communities. They serve and we had no barriers to access which is critical as we pivot into the ethanol indication.

Okay, and then just a quick I'm, what I'm, just remind us the gross to net discounts what what do you singing the market now and then I have one final question.

Yeah. This is how it would follow I don't Goodman Yep sure.

Sure I'm of course, it's too early to going to do the community dates of the gross to net what we had seen our plastics viewing season. They seem recognitions of market. We said gross connecting the range of 15% to 20% we don't see in any case at for us the need for it.

Aggressive discount so I think and regimen you can figure out something around twox to 215% could you have there at the beginning I can disclose it says it's a bit higher because there are some fixed component.

Now, let's say, Steve may have anything to be higher away, but overall, we're thinking about 12% to 16%.

Okay, and then or inventories within within the normal range and then finally, you mentioned that you're on track to hit the consensus numbers for yes, what do you view those could be.

So from a product inventory point of view, we're we're in terrific shape there has not been.

Stocking six.

Bulk stocking if you were to think about it in that regard and as it relates to the E.S. consensus estimates there on around four and a half to 5 million for the full year 2020.

Sure.

Thank you.

Very well.

Our next question comes from a line of <unk> been sold with Citigroup. Your line is open.

Hi, Thanks for taking my question.

Correct and the progress so just just.

A couple of quick question.

Oh, so income so patients who has talked to you don't and silica lymphoma. So slot would you. Please give us some kind of collecting them. So what percentage of those patients I butane versus non we didn't patients then I have a follow up.

Sure Matt do you want to start the answer to that.

Sure. Good morning mode. So, it's it's a bit too early for us to give you that flavor I think that what we feel most comfortable saying is that the enthusiasm around the label and its broad nature for both the meeting in wild type population is bearing itself out.

And as we continue to gain traction in the marketplace as we go into the third quarter.

We'll be able to provide a lot more details as we see more because the prescriptions come into the community.

Got you know that makes as well and then the other part is probably plus your body as that as Rob.

So they took some is actually a means to him.

The left to check you click lymphoma, even though you're trials that we did I was quiet combination.

Do you have any thoughts on running the trial.

Six cents less doesn't matter stat or at some point, even if it did that investigator sponsored study do you think what is why did the appetite of doctors to use this particular callable rather than us, but that's causing that.

Well I would you like started I'll wrap up.

Hi, Mike. Thank you for the question so.

We do have a trial that is ongoing and the ducks rabbit investigator sponsored trial is ongoing and its any shift it. So I'd be as you know we are trying to create value for tazemetostat across all lines of therapy. So we have ask what else is actually said in second line and and our odd study just that.

In closing I'd be on Additionally, we had also doing a study with Dod shop in front line. That's all livestock sold we basically have I'd be happy in front line second line and also a single agent art impact I'd add.

The tight I don't beyond.

[laughter].

It's about any husband.

Yeah, so basically to the other just to add onto that I think part of this strategy is that we would like to look at has very combined with a number of the things that physicians typically use in these relapsed refractory patients in many of those were doing it should probably said through.

Investigator initiated studies that adds to our work in the second line in the front line, which could be labeling indications, which is those were doing much more closely as company sponsored studies, but I think the rationale for the R. Squared study in the second line is we assumed that that would be the standard of care. It would become standard of care at a part of the goal for.

You know cheating a label would be you have to show that you either at two or you are better than the standard of care in that setting and that's why we chose our square where the confirmatory study.

In order to be able to attain the second line label there were looking for.

Do you think Dr. saw a doctor SaaS beginning to use 66 cents less doesn't need to satisfy the then do I'll start. This doesn't matter said I mean is that there's any willingness to combined these two agents for says she agents.

So I.

I think you can look at clinically you know physicians are combining with my colleagues instead, that's five ensuring as upside that we have combination. It all these indications I think I think that's my makes sense because that's how we're looking for my people have combined had a piece, but I think that's offset the task with its others had a piece as well.

And the and that's why it yet combining with coffee beans, and b cell products available. Okay that makes sense. Thank you very much.

Yeah, Mohit I think is just add to that I think there is there is a desire for physicians to use that combination infected the I.S.T. isn't I just because it was an idea brought to US hi, an investigator who wanted to look at that combination, but also I think it's why it's important to label that we have allows for the use of tests, Eric in relapsed refractory patients.

The physician field, there arent satisfactory alternatives because in many cases, either that combination or one component of that combination or other comedy components of other combination drugs physicians feel it may not be appropriate for an individual patient and they may substitute has barrick either as monotherapy or in combinations, where they would normally have used.

Something else. That's why we were excited about the label because it allows us flexibility to the physician.

Got it already has the thanks very much.

Thank you.

Next question comes home a line of Andrew beyond SVB Leerink. Your line is open.

Hi, Thanks, most of my question for you answered.

Hi, Rob most of the questions were answered regarding Gina typing and they'll do a test for the community.

Maybe just one I know it's early in the launch but I was wondering if you guys are seeing a warehouse.

Relapse refractory patients or waiting for approval of a novel Follicular agent.

Hi, Matt would you like to start but that one.

Sure. Good morning, Andy Thanks for the question as a matter of fact, the answer that is yes as we initially in the launch.

We've heard from physicians that Dave Dave Prospectively been able to identify patients within their practice that they believe test Barrick is well suited for and you know certainly the timing in the and the adoption will be certainly falling and we've seen some early successes. So that's something that we're going to continue to follow but.

Upon our engagement with the community a they've identified patients for the brand.

Great.

Thanks, a lot of appreciate congrats on the progress because.

Thanks, Jim.

Thank you. Our next question comes from a lot of Michael Yee with Jefferies. Your line is open.

Good morning. This is Andrew tie on for my.

First question can you talk about how investors should think about the second half sales curve or I guess, specifically how much of it.

Could impact the launch in second half in your view.

[laughter].

So that would you like start with that one.

Sure. So we continue to see.

Adoption and enthusiasm for the brand on new prescriptions and refills.

We we are going to continue.

Look as as we look at the larger ethanol market, we're going to be working carefully and seeing how the communities open bap backed up and allow access for our organization collectively we built plans to engage effectively with the customer.

Both right now in a more but virtual environment than in a face to face form and as a the cobot circumstances change we expected the engagement opportunity, we'll certainly change as well, but we've built that type of flexibility.

Into our promotional efforts to ensure that we can meet the needs of our customers.

Great and art and as far as sales goes I think attach a mass comment you know our we're pleased with where we are the yes. We think we're on track to hit our to the consensus BREP Sealy source sarcoma. Despite.

Because they're Toby pandemic, we've seen in the second quarter.

The response than we've seen to the label. The response that we've seen by payers. The NCCN guidelines all the key metrics and things that we've put in place to help guide our understanding of whether or not this is going to be a robust uptake in the ethanol market and what we were trying to drive a as Matt had said so far.

All of the all the needle seem to be pointing in the right direction. So we're very encouraged by where we stand right now and our focus is on executing this launch and making sure that whether we can access customers face to face as we're doing in some places or are we can't because there's still limitations to accept that we're able to launch the trigger effectively enough.

So.

Right, Okay, great and.

Actually just very curious can you remind us of patients who had been prescribed has as Eric will need to come back to the center from time to time for follow up saying like blood work or is this just a pure kind of patients can stay at home and take the truck.

And no need for to travel to the center. Thanks.

Maybe I'll ask your colleague to start with that when than the I can now.

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As shown so I think the defense of tests like it's the safety profile of the Dragon. So you don't get either quite do have oh that connect checkup likely would do with either I'd be happy other drugs that have a back into side effect profile that they have to ensure that there's a Catholic moderating. Okay for monitoring is not just that flat.

Detached likely you cannot you see I told my take the gross add basically that's one of the said for past bank and and I had said to be used a effectively into meaningfully at home.

Thank you.

Our next question comes from a lot of David Irene gotten Wedbush Securities. Your line is open.

Hi, Thanks for taking the question, that's a little bit of a combination of a couple of prior questions but.

Do you have a sense right now of the patients who are being referred for therapy. In other words are they being actively managed by community physicians for you know have they.

Kind of ceased therapy, and and you have gone home and the Doctor gives them a call I'm. Just curious you know from the patient pool. You know are you seeing patients switching from active therapies for.

End of a watch and wait are probably the cares situation and then coming onboard for tests or treatment effects.

So this is Rob I'll start and then I'll, maybe ask Matt to add any details that I missed fit.

I think one of the insights that we had early on from the researches that there are a group of patients who opt out of treatment at every at every level of treatment based on either they're just said satisfaction with the treatment or adverse events or just tolerability, but it's not the majority of patient awareness ours Mercury.

Search suggested it's about 10% of patients where that happened. So that means that you know to your first question. The majority of these patients are being actively manage by their oncologists.

That's that's what we believe the Soviet a case.

And in terms of the access to physicians. We've also been watching as we watch what's happened with prescription volume through the Coca dependent.

Are we seeing that you know oncology probably has.

Been hit the least in terms of reduced prescriptions.

But of the oncology prescriptions it seems to be the the Orals had been maintained the best in those literally the targeted oncology therapeutics have held up very well through the pembina, but we've also been looking at visit to physician to the oncology community resolved those were down a bit in the second quarter early on.

It's hard to know what that was because of it or if it was because of holidays and vacations.

What we've seen that even that seems to have normalize a bit. So we think that again. These patients are being actively managed send to Matt's point the feedback we've gotten from the oncologist that we called on spoken to about it had their approval. They are identifying patients in their practice that they can bring in who are ready for a change either because they are progressing work because they're not tolerating.

Her existing treatment very well, Matt is there anything you would add to that.

No I think we're you know Rob stated it quite well I mean.

Our view again very early and is that these are actively manage patients at the physicians have identified the test there could be a suitable treatment option for them and we're helping facilitate that within the launch.

Got it okay. Thank you.

Thank you.

I'm showing no further questions I would now like to turn the call back over to Rob for closing remarks.

Well I was just like to thank you all for calling in today. Thank you for all of your question. We look forward to keeping you updated on our progress and we hope you all are safe and healthy a day and have a great afternoon take care everyone. Thanks.

Ladies and gentlemen, this concludes todays conference.

Thank you for your participation you may now disconnect everyone have a wonderful day.

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