Q2 2021 Epizyme Inc Earnings Call

[music].

Hello, and welcome to empty the times conference call.

All participants are in a listen only mode there.

There will be a question and answer session. After the prepared remarks.

Please be advised that this call is being recorded at a design for your question.

I would now like the turn the call over to Craig West.

Vice President of Investor Relations you may begin.

Thank you the rent and good morning, everyone.

For those of you I have not yet net my name is Craig West and I recently joined at the time as Vice President of Investor Relations with over 2 decades of experience in the field.

Our contact information can be found on the bottom of the quarterly update press release at the time issued this morning.

The press release as well on slides to accompany today's call can be found in the investors section of the company's website at <unk> Dot com.

On the call with me today is Rob base more of designs current President and Chief Executive Officer Grant Bogle, our incoming Chief Executive Officer.

Ross Executive Vice President and Chief strategy, and business Officer, and Dr. <unk> Agarwal, Executive Vice President and Chief Medical and development Officer.

As a reminder, today's discussion will include forward looking statements related to <unk> 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-Q10-K and other SEC filings. These for.

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 Rob base for <unk>.

Thank you Craig and welcome <unk> and thank you everyone for joining us on this call. This morning.

Today, we have a robust set of updates from the quarter and on the business, including important updates regarding our <unk> launch.

The metastatic development advances to our research pipeline.

And the exciting collaboration efforts.

We will also be discussing changes that we're making to our operating plans to fuel our most important growth initiatives, while improving our capital position.

Before we get into the second quarter overview I'd like to start with an important for announced that the press release. This morning immediately following our second quarter release.

As you may have already seen we announced that I will be transitioning out of my role at <unk> as part of the thoughtful succession plan after serving as the company's President and Chief Executive Officer since 2015.

At the end of last year, following Pittsburgh U S approvals in epithelioid sarcoma, and Follicular lymphoma, and Finalization of the Companys next year of 5 year growth strategy.

Started discussions with the <unk> on board regarding the initiation of a succession plan.

This was an important decision for me to be able to redirect my energy towards things that I needed to be able to focus on personally and I felt that this represented an opportunity for a new CEO to lead the company's next chapter of growth.

As we moved into the first quarter and started to see signals that made us believe the effects of the pandemic may be improving.

We're not resumed these discussions.

At the same time, we also realized that there were some changes that we needed to make to improve our ability to access customers to drive adoption of pets, Eric in this challenging environment.

To ensure we maintain sufficient capital to continue funding our key growth driving programs.

Over the last few months I've been working closely with senior leadership of <unk> and our board of directors to develop a revised operating plan for 2021 of 2022 that reduces our operating expenses.

While at the same time remains true for the 4 pillars of our long term strategy as communicated in the next episode call. The March.

Our revised operating plan includes the strategy to accelerate commercial adoption of <unk> in the U S, including some important changes to the commercial infrastructure that we launched has barrick with.

And ensures that our resources are targeted at those programs that will provide the most significant value for the company.

As a result, we expect to reduce our non-GAAP operating expenses in 2021 from the previously communicated guidance of $235 to 255 million.

So approximately $220 million to $230 million.

This includes an approximate 40% reduction to our budgeted workforce. In addition to other important reductions in external spending.

We expect this plan to preserve our cash runway into Q4.2022 with multiple options available to us to further extend our operating capital as needed.

This was not just an exercise to reduce our expenses, but rather a thoughtful set of decisions to ensure that our resources are properly weighted and deployed.

<unk> for at the topline growth.

Sure that we can continue to fund our highest priority growth opportunities.

It's difficult to say goodbye to our colleagues who play such an important role in getting <unk> to the stage and I would like to personally thank them for all of their contributions.

As we finalize the revised operating plan that will work for us.

Discuss further on the call today. It became apparent that now was the right time to continue our succession planning discussions and for a new leader to take the reins of continue. This next chapter of growth Rep is on.

With this in mind.

We are fortunate to have found the trusted leader.

Someone intimately familiar with the <unk> story and family.

The board and I are extremely pleased the grant bogle and industry veteran as well as the NEP is on board member since 2019 will be stepping in as <unk> Chief Executive Officer.

The CEO grant will be creating a structure that allows them to be more closely involved with the commercial organization and their execution of the revised commercial strategy include.

Including dissolving the chief commercial officer role.

Grant brings deep commercial and operational leadership experience in oncology to his role the signifies the importance of the first pillar of the company's 5 year vision.

<unk> the adoption of Tesla Eric.

As the backbone of therapy in Es and FL.

While continuing to broaden our portfolio through new test Vera indications and bring the novel epigenetic treatments into clinical development.

Brand is the right leader.

For the right experience to <unk>.

The kovar at this very important stage and of <unk> growth.

Importantly.

Grant shares my passion for <unk> and he is aligned with our mission for both Eric and our long term vision for the company.

I am officially stepping down as CEO I will be intimately involved in ongoing strategy and integration serving as the consultant and a trusted advisor to the company into grant over the next 12 months as he builds and execute upon the <unk> patient.

On a personal note.

I am very grateful to our board, our executive leadership team and to <unk> employees for their dedication to our mission and to the patients that we serve.

Well I need to focus on my time and energy on other areas of my life that of become important to me.

It's incredibly gratifying at together.

<unk> is an organization that addresses the needs of patients suffering with cancer.

And I would not be leaving the organization now if I did not believe it was the appropriate time.

For the appropriate personnel in place.

With that I am thrilled to have grant with the with us on the call and to introduce him to you directly.

Please go ahead.

Thank you Robert and good morning, everyone.

I appreciate the warm welcome in the face that you and the board of placed in me to lead after that for the next phase of growth.

With my career immersed in commercial execution and working to ensure patient access transformational therapies.

I am incredibly excited to take a leadership role in the company that of such a promising platform and test Barrick and.

On a rich pipeline of important medicines.

As an episodic board member I am grateful to have established relationships with the senior leadership of the company and I've had the benefit of participating in the development and approval of the long term strategy.

I am fully committed to executing the 5 year strategic plan that FSAM, where all of that in March.

I also have a good sense of the challenges we have and continue to face since I've been providing support to Rob and the commercial team throughout the introduction of Taz Barrick in FL Mes.

In the near term as we continue to build up the xylem into a sustainable commercial stage company and accelerate the adoption of Casbah Eric I.

I will of deeply deeply involved with the strategic and organizational changes and the commercial team that Rob will be discussing later.

My experience in challenging competitive markets in different tumor types, coupled with my deep understanding of the oncology provider market.

We will hopefully add value so as to ensure <unk> achieves its full potential and has ferric becomes the backbone of therapy for patients with <unk> and potentially other hematologic and solid tumors.

Over the coming months I plan to invest time engaging with each of the functions within <unk>.

And gain a greater depth of understanding the about the important and exciting work they're doing.

I tend to listen to our talented employees and embrace their ideas as to how to continue to improve our ability to fulfill our mission.

In addition, I'll be spending time with other key stakeholders, such as investors analysts and provider organizations with the goal of sharing how we intend to accelerate the growth and development of <unk> on our pipeline of novel epigenetic targets.

We believe our R&D efforts led by cash Varick and now set the 2 of the potential to transform the treatment of cancer.

I look forward to meeting all of you in the near future and with that I'll turn the call back over to you Rob.

Thank you grant.

And I look forward to partnering with you as you take the Baton and continue leading <unk>, where we all of aspire to go.

As we look back on the last few months, we've made significant progress across several of the important pillars of our 5 year vision for growth.

Starting with our plans to expand the clinical development of Tazemetostat, our priority clinical trials exploring multiple combinations and new heme and solid tumor indications are progressing exactly as planned.

The expanded safety run in for our confirmatory study 302 in relapsed and refractory FL is now fully enrolled.

We are actively activating sites globally for the phase III portion of the study including in China for.

The IND received clearance in late July.

We're also taking steps to accelerate enrollment in study <unk> hundred 1 the important trial evaluating the combination of peds, Derek and Rituximab in patients with relapsed refractory FL and.

And finally, we received FDA clearance of the IND in late July to initiate the solid tumor basket trial.

Which will evaluate tazemetostat in various combination regimens in patients with solid tumors.

We plan to initiate enrollment in that trial this year.

We also made important progress across our pipeline.

We recently received FDA clearance of the IND application for <unk> before 1 for our novel inhibitor of <unk>.

And we will be initiating a phase 1 dose finding study from the second half of this year.

Is that the 2 represents an important pistol methyl transferase target that addresses of well understood multiple myeloma pathway that.

That is yet to be successfully drugs in the clinic and thus represents a novel differentiated oral investigational agent.

With which we have already demonstrated preclinical activity across a variety of hematological tumors.

We believe our novel set the 2 inhibitor has potential in several settings.

We're focusing our efforts on high potential research programs with the goal of bringing 3 new programs into the clinic over the next 5 years, starting with 72.

While maintaining the discovery research expertise that has allowed <unk> to build the leadership position in the development of targeted epigenetic therapies.

We've also been active in our efforts to make tazemetostat available to patients outside the U S. And you may have seen last evening that we were pleased to have jointly announced an important collaboration with hutch net to bring tests for patients in greater China.

In addition to licensing commercial and manufacturing rights to test <unk> in China.

<unk> will work with us to further expand the clinical development of Tazemetostat.

Hearing at the additional combinations with their own portfolio of cancer treatments across a range of tumor types.

This collaboration is also important and that it will provide access to patients in China for accelerating enrollment in our <unk> 3 of 2 study and other global studies that we're working on together.

We selected <unk> as an ideal partner committed to the long term commercial success and broad development of test Eric.

This collaboration will provide <unk> with an upfront and potential future milestone payments of up to $310 million over the life of the partnership.

In addition to royalties in the mid teens to low twenties on pads for Eric revenue in China.

In addition, we are providing <unk> for the $65 million on warrants to purchase <unk> stock so that they can share and the value. They create for the expanded development of passive Eric it's our portfolio fully aligning our objectives behind the partnership.

For those who are interested of touch med will be holding a call to provide further details on this collaboration.

130 am eastern time today.

Turning to our financials for the quarter.

<unk> achieved a combined total revenue of $13 million.

This is attributed in part 2 of $5 million of collaboration revenue from our Japan partner Eisai, Inc.

On 2 significant interest from a pharma company, which required for its planned combination clinical trials with an order of $3.2 million.

Commercial net revenues for <unk> of $4.8 million did not meet our expectations primarily related to a decrease in prescription demand in April and May.

The specific drop in revenue in April and May was driven primarily on lower revenues in academic centers, we think largely driven by the approval of car T therapies and increased clinical trial activity.

During the quarter, we also experienced the significant increase in utilization of our patient assistance program, which was roughly 25% of bottles for the quarter.

As a result.

Patient demand grew 3% from Q1 for Q2, our net revenue was negatively impacted by an increase from Pap utilization.

It is important to note that net revenue in June rebounded the commercial revenue returning to March levels in July revenues, reflecting the continued growth compared with June.

In addition to this return to growth in revenue.

The other encouraging takeaways from the quarter that reflect our commercial efforts.

We continue to add new prescribing accounts, and we're seeing continued growth on prescribing and large community practices.

Growth in these large community accounts is critical for us to achieve our launch expectations in the long term.

For market research completed in July reflecting physician recall of their treatment of FL patients has barrick now has the highest share of prescriptions written in third line and later patients with <unk> mutations.

Share for <unk> increased in wild type of an untested patients the third line and later as well.

These are positive signals for the continued intent to prescribe <unk>.

And for the adoption of pets Eric.

On our last earnings call in May we described what we believe to be some encouraging signals emerging in the market at the end of the first quarter that made us hopeful about of gradual return to normalcy for our Es and FL markets overall.

The reality is that oncology has been 1 of the slowest therapeutic areas to rebound.

Although we hear anecdotally that FL patients have started to return to their oncologist <unk>.

New prescription volume for all therapies in the second quarter remain down by about 20% to 30% compared to pre COVID-19 levels very similar to what we observed in Q1.

We are also not seeing a meaningful improvement in access to prescribers by our field based team.

While some accounts of reopening others of remaining closed the sales representatives, which is impact of test of Eric education efforts in both large community centers and academic institutions.

We believe this may be the new norm for interacting with oncology practices going forward.

In response to these challenges we continued to face since launch we're.

We're making some important changes to our commercial strategy and our commercial organization to more favorably impact <unk> adoption and continued to established has Eric that the backbone of the vessel therapy.

With this revised strategy, we're focusing on 3 key changes to drive growth.

We're specifically focusing on accelerating growth and adoption in the most important large community oncology clinics.

Second for.

For proactively promoting mutational testing as an important tool for making easy as to status.

Top of mind for physicians whenever of patient experiences relapse.

Capitalizing on our strength in patients with <unk> mutations, but also increasing adoption and the ECH too wild type and then tested patients as well.

And third we're adding specialized personnel and creating innovative programs to better access key decision makers directly at all levels of oncology accounts.

We're supporting these efforts with enhanced digital approaches to educate both physicians as well as patients.

In order to accelerate adoption and community clinics.

Taken of cross functional approach to partnering with these top accounts. This approach utilizes the support from the field marketing home office and medical.

In our coordinated effort to identify appropriate patients and educate providers on pads of Eric.

We're also fielding of new team of account specialist role it will be to engage with large oncology practices at the executive level the support of Eric adoption from the highest levels down into the clinical practice.

The MSL team is also refocusing their efforts on community practices to educate on the 10th of Eric data.

And to involve many of these practices in our combination clinical trials.

These community physicians typically use for <unk> and Rituximab based combinations repeatedly for the relapsed <unk> patients.

Our goal is to ensure that <unk> is top of mind as a drug with a novel mechanism of action.

On that they ultimately consider cadbury because of treatment option for these patients either as a monotherapy or in combination with rituximab or other treatments based on the data that we're generating.

Over time and with greater experience.

We believe the physicians will embraced has appeared given its efficacy safety and convenience of the Goto agent and earlier treatment lines translating into better patient outcomes and longer durations of treatment.

This brings us to the second strategy regarding reinforcing the importance of the H 2 testing proactively.

Our market research indicates that both the number of physicians testing as well as the percentage of patients tested for <unk> continued to increase since the approval of <unk>.

While most physicians have been able to readily access testing on that 1 third report that they are unsure of how to do so.

So to make the simple for physicians, we recently launched the collaboration with quest diagnostics to make <unk> testing readily available.

At no cost for the patient called <unk> now.

The issue now testing should help has gained more traction with physicians for 2 reasons.

First the more physicians are thinking about easy as to status in the relapsed refractory patients the more top of mind paths of Eric should be in their treatment consideration, regardless of mutant or wild type status.

The second utilization of the testing program requires physicians to contact our reps, which we believe will improve our access to both community and academic physicians.

As part of our refined strategy. We're also adding precision medicine specialists to our commercial organization to aid and educational efforts with regard to patient identification and to optimize utilization of the <unk> program.

Access to our customer has also been a significant challenge during the pandemic and while it's improved some we think this is probably the new norm and we needed to make aggressive moves to get our messages to providers.

Therefore in addition to leveraging the HQ now testing for adding a team of thought leader liaisons, specifically focused on engaging with clinical and business decision makers among the top of oncology accounts.

Since fielding of pilot group in this role we've already seen of tremendous increase in high level customer engagement.

We're also shifting resources to implement novel digital approaches to commercialization, which should improve our ability to reach for health care practitioners and patients directly.

Our direct to patient campaign will be fully launched in Q3 focused on empowering appropriate patients to discuss <unk> with their physicians and to better understand has very because of the treatment option.

The bullet now on the key changes that we're making in our commercial organization is for adding precision medicine specialist to aid educational efforts around patient identification and ECA 2 testing.

We're adding salt leader liaisons to improve our ability to access engage and educate clinical opinion leaders and business decision makers.

We're reducing the number of traditional sales roles, reflecting the access challenges that we've cited.

And overall, we're optimizing our traditional field sales team for the oncology market environment today, adding new personnel with complementary skills and backgrounds to augment access and support our customers.

This structure is now more focused on our growth opportunities for Eric.

We are optimistic that our refined commercial strategy, our expanded opportunities for customer engagement and increased patient physician interactions will all positively impact has very success.

Ultimately our goal is to continue to expand the universe of physicians consistently prescribing has of Eric irrespective of the mutation status.

In this regard we recognize the importance of generating new data from our ongoing clinical trials, combining <unk> with standard of care approaches such as Rituximab and R. Squared supporting our goal of advancing pads of Eric of the backbone of therapy NFL.

I'd now like to turn the call over to <unk>, who will provide an update on our Tazemetostat development efforts Charlie.

Thanks, Ross and good morning, everyone.

The book of clinical program to support the expanded utilization of Tazemetostat on.

Continue to make profit and we continue to receive a significant amount of inbound interest from potential of investigator looking for sponsor additional studies on the <unk>.

Highlighting this time of the community enthusiasm for the evaluating tazemetostat in the range of solid tumors and Hematological malignancies.

Also as head of about the opportunity to initiate the force clinical trial, all flash novel <unk> inhibitor in the second half of this year following the recent Ann Duignan.

Yes.

We believe this novel for Austin Chalk, even has the potential to provide a new treatment option for patients in need.

Liquid line of OMA and expanding fiber from debt.

Net.

Looking back on the second quarter the convenient.

Think of all of the inland equally necessary for the agreed upon on steady expansion in that EPS CAGR ladies.

Ladies MVC for latest study of <unk>.

In combination of its odd plant and the lack of fact the association.

The following these patients and listen later findings to FTE offer that as was seen on follow on.

Glad to initiate in Illinois, and the phase II portion of the time in the fourth bucket.

As you may recall during the.

Steve 1 of the deal.

The phase on the safety that the filing and for the fourth Phase III protocol the agency.

The question would be a few more patients in the 600 many of debt and 800 examples like the show.

The business of combining tazemetostat.

Just quick on the VAT tax rate given the relatively quick completion of our please specify based on the design without any dose limiting toxicity.

And the city on the FDA also for.

For the plan second interim analysis.

If successful will allow us to veto efficacy right of the completion of the trial.

I mean, the almost 40 patients non U.

Thank you.

On it.

Adding those who on the gypsum and the fact the end for 24 when you go day.

You do see of very high the phosphate among the evaluable patients and the.

The plan to provide an update on the safety and efficacy of finding these patients at ash this year.

Good day, the combination of Cathay net.

<unk> has been evaluated and participation in the phase 1 the <unk> portion of the ECA T as in time.

Safety profile of some of it Hasnt made this debt.

And the debt CIP.

Participants may satisfy the exit.

The rest of safety information document.

Most notably net EBIT for both of the highest 2 of the 800 milligram and did not see any diz's importing into the price cycle.

All of the Covid patient enrollment for 5000 stations of Evaluable.

Based on the availability of cash.

All of 17 patients responded to treatment the 6 patients having the complete response and 11 patients having the flash at this point.

This is of course, the Linda the activity like we have.

Very encouraged by the opportunity of pathway for this should the effects of widespread for.

All of the quantity of amortization of the duration on therapy has been in the range of between 2 and 10 months of therapy.

The study is currently ongoing and the appalling patient until April of EBITDA.

This is a smaller number of patients to see these trends include the status of this timing.

As we finalize the safety net any portion of the trial.

Using the time to activate as many sites of possibly moving essential begin enrolling the trial quickly.

The EPS for.

On 1 study evaluating cafe.

And the last discussed the association is actively enrolling patients and the new sites will be activated including the large network of from Andrea on the defensive.

By doubling the number of sites involved in the chart.

We would be able to generate the combination data more quickly.

The key to broaden the adoption annualize on the second day that all of our long term growth for Chesapeake.

We plan to share the full data set for the study at the Medical conference mid next year, and we look for like update on the <unk> profit of the turbine.

Available.

And the key or cohorts of the likes of study.

Catherine in combination with R. Chop in frontline FL and diffused large b cell lymphoma on JV.

To touch on <unk>.

And the applications for different for solid tumor basket study the seeds.

The kids in July and we remain on track to initiate the <unk> fastest study evaluating multiple combinations.

And he Mclaughlin of call it 2 months in the fourth quarter of the FDA.

And we expect the defined it back to the FDA submission later this year.

Let me to EPS 11, 1 study of Tazemetostat in metastatic castration resistant prostate cancer or <unk>.

The SEC has.

The <unk> well.

<unk> of the interest in Tazemetostat and for.

Addressing the specific population.

And now is over 1 pillar the newell.

He was president of data safety and efficacy data from the studies, Steve Lindsey safety, Devin, including DLR PFS modeled losses of setup the spike.

The proportion of presentation at ESMO in September.

The Red portion of the study is open label evaluating Tazemetostat in combination with included the Mike to answer the Mike Hello.

Now turning to US the detailed program <unk> for 1 for we have been of book take that into the clinic for <unk>.

Of the IV by BNP.

We're on track to initiate the first in human studies of this yet.

Sources of study start up including price escalation.

The study is intended to evaluate the safety and optimize the dose.

Thanks, Kevin of ECM leader for 1 in multiple myeloma and the DCM patients.

Lastly of optimize the dose.

Thank you for the furthest ahead of depreciation for.

Key for 14 multiple myeloma non.

R&D for <unk>, multiple myeloma and BNP kit.

As you can see with the revised operating plan as Rob described on yet.

Turning to fund and invest the program at the provides significant value to patients and to a share for the Chas introduced of steady stream of new data.

At this time I'd like to pass the floor to Matt Matt.

Thank you <unk> and good morning.

As Rob indicated we've taken further steps to streamline expenses and extend our operating capital to fund the most important value creating initiatives.

We ended the second quarter with $244 million in cash cash equivalents and marketable securities.

This of course does not include the upfront payment from our collaboration with <unk> that was just announced.

Our total non-GAAP operating expenses for the second quarter of 2021 for 71 to $71.2 million of which R&D and SG&A accounted for approximately $35 million and $34 million respectively.

<unk> recorded second quarter of 2021 revenues of $13 million.

Consisting of $8 million on product revenue and $5 million of collaboration revenue.

Product revenue included $4.8 million of <unk>, Es and FL commercial net revenue and.

And $3.2 million of <unk> net revenue related to an order from a pharmaceutical company for its planned combination trials.

As I am also recognized $5 million of collaboration revenue in Q2 from our agreement with ESI.

As part of our agreement with Hutch Med <unk> will receive a onetime upfront payment of $25 million in Q4.

We also anticipate receiving the first milestone payment from this collaboration connected.

Connected to initiation of enrollment of patients from greater China and to study 302 later this year.

Based on our refined operating plan and structure, we expect that our current cash will fund the operations into the fourth quarter of 2022.

We are lowering our non-GAAP adjusted operating expenses guidance for 2021 from $235 to $255 million to the new range of $220 million to $230 million and we expect that to have a greater impact on our full year budget for 2022.

We reduced our budgeted head count by 20%, including the 11% of our current employees, resulting in an estimated severance and termination costs of approximately $2 million.

We expect to record these charges in the third quarter of 2021.

As Rob mentioned earlier, we will make new investments with the stage gated approach based on the evolution of the test for Eric adoption and the progress of our clinical studies.

We are also a number of options available to us to enhance our cash runway to support our operating plans and value creating initiatives well into the future.

I'd like to turn the call back over to Rob for closing comments.

Rob.

Thank you Matt.

We shared a lot of information with each day.

Facing into the second half of the year, we've made some important changes to our commercial strategy and organizational structure.

We believe will be an effective response to the oncology market, we found ourselves launching <unk> <unk>.

Allowing us to bend the curve of test Eric adoption.

We also believe the additional changes we made to our operating plans should provide the capital flexibility to continue execution of the most important programs across the 4 pillars, we've laid out on our vision call March.

Which include maximizing commercial adoption of <unk> Eric.

Building on <unk> pipeline in the drug potential.

Expanding our pipeline and portfolio.

And collaborating to expand our reach to patients and building incremental value.

I am very proud of the work that we've done over my last 6 years here of the transform <unk> into a commercial stage company.

And to move our next program into the clinic.

I want to thank our board of directors and all of our shareholders for their support through the many ups and downs the companies like our space and express my profound gratitude to all of our employees for their Tyler tireless efforts on behalf of the patients that we serve.

I couldnt be more confident now to hand, the range over to a leader who I know.

He will make a very positive imprint on the next chapter of <unk> story.

Operator.

You May now open the line for questions.

Sure Sir at this time, we would like to ask the question. Please press star 1 on your telephone keypad.

Again that a star 1 on your telephone keypad.

Okay.

And your first question comes from the line of Peter Lawson from Barclays. Your line is open you may ask your question.

Hi, Robert.

Thanks for taking the questions what's been the pleasure speaking with you.

So the best for them.

Of course.

Just on the debt.

The deal last night.

The other deals that youll be contemplating for kind of international revenues that we should be thinking about and then on the $3.2 million in the quarter for <unk>.

For the pharma.

Revenues from who is that toolset to 1 policy on.

<unk>.

Anything you can disclose around that deal would be great.

Maybe I'll start with the second part of the question.

We have not been allowed to disclose who the partner is but as you know Peter we've talked about before there have been a number of companies who have been interested in partnering their compounds clinically with Eric and we are pursuing several of those.

The particular, 1 that we disclosed in this.

On this earnings call. It doesn't involve any of the Reits. This is purely a sale of product for them to be able to use as the combination.

Drug in combinations that they are developing but theres been a significant amount of effort and the interest in developing drugs along with heads of Ericsson is actually what goes behind managed net partnership.

As I mentioned on the call a big part of this is being able to get <unk> approved and commercialized in China.

But a big part of the deal for both companies for Us and for <unk> has been the ability to expand the clinical development of past, Eric you indications of new compounds for not developing today and new tumor types of new indications.

I've always been of company as you know who has used partnerships and collaborations as a way of building on our clinical development expertise for <unk>.

Derek can we've done that for some time. So we had indicated that once we were approved in the U S that we would shift our attention to being able to bring <unk> for patients outside of the United States. So this collaboration with Hutch net is an important step in that direction.

Thank you and then just on that the pharma partner revenues.

Is there any way you can kind of provide guidance around that if the.

Kind of a consistent number quarter by quarter expense just sporadic.

It's kind of hard to know Peter I mean, we have we have an idea of what they're planning to do but obviously.

It's controlled by a different company and so we never try to guide for those kinds of things are putting it into our cash runway, but I think it's 1 example that illustrates a significant amount of interest in being able to work clinically with heads of Eric and combinations.

Great. Okay. Thanks, so much.

Thank you Peter.

Okay.

Yeah.

And your next question comes from the line of Michael Yee from Jefferies. Your line is open you may ask your question.

Hi, Good morning, Thanks for the question and good morning of Robyn Grant.

Just had a question around the underlying sales and demand driven by the for 8 million specifically you said that.

So sort of declines in the back part of the quarter, but then rebounded and was higher than.

On the higher level for the highest level of Q2 can you just sort of revisit what you were saying about the trajectory and that is perfect and does that mean Q3 should be significantly higher in Q4 should be higher than that so maybe just talk about what happened. There on why you wouldn't expect of that could still be on ongoing headwind and what your cash.

For the rest of the year quarters. Thank you.

Yes. Thank you Mike it's of Great question. So what we said was the overall demand for <unk> increased by about 3% quarter on quarter from Q1 to Q2. However, the net revenue was down.

From that because of the impact of an increase in patient assistance program utilization, we saw an impact of patient utilization patient assistance program utilization of about 15% in the first quarter and of jumped to about 25%. This quarter. That's not unusual to see you can see spikes and troughs in the use of Pap, it's usually related to how much funding.

Is available on the independent foundations patients utilize those.

We've also been successful over the last year over the last months and being able to ultimately convert some of those pap patients into commercial utilization.

Activity with the convert some of those patients over.

Of the trend that we saw in Q3 and Q2.

It was largely due to a dip in demand in April and May and then we saw that return to growth in June.

And in April and May and specifically, we saw a dip in demand among the academic institutions, we think that largely came back and we looked at.

Market share is when we look at what's happening within those institutions.

Think that it was largely attributed to the spike in demand for car T. Let's say were approved car T therapies and also a big increase in demand for clinical trials number of patients being enrolled in clinical studies and as you know a big portion of our business has always come from the academic institutions. We are.

Encouraged though that.

All through that same period, we continued to see growth among the community counts we grew at about 22% in the second quarter among the community practices, which is a big.

Positive for us because thats necessary for the long term health and growth of.

<unk>. So we did see the rebound in June that we spoke about it was about a 38% growth from May and then we continue to see an increase in utilization in July.

Even though for June.

So I'm hesitant to predict as to what that's going to mean for the third quarter and moving forward. Obviously, there are a number of new dynamics that we're dealing with the Covid I think that we're all trying to realize just what impact that's going to have on our ability to access customers patients.

Patients getting in to see their physicians, but we were encouraged that the signs along with increases in market share for both our mutant patients as well as wild type and an untested patients all increased in the second quarter. So we believe that these are good signs that there continues to be adoption of pads there even in this difficult market that we're competing on.

Yeah.

Got it thank you.

And your net.

Mike I would say that just as an additional point the changes that we're making that we announced on the call today are actually designed to specifically address those challenges. So we believe that some of the things that I talked about things like accessing customers.

Likely is not going to change that much over the near term and so some of the new <unk>.

Holes that we created some of the things that we're doing and the new strategy is actually specifically targeted at addressing those challenges to further stimulate the adoption of <unk> going forward.

And your next question comes from the line of David Lebowitz from Morgan Stanley. Your line is open you may ask your question.

Davidson.

When you look at the demand for cash Barrick.

Most recently.

Is it being affected by limited just by doctors.

And the ECH and screening are they not give a consideration at this point too much wild take usage.

I'm curious to hear your thoughts.

I'll start and I'll, let <unk> add in as well from a clinical perspective, but I think what are the biggest challenges that we've had David is just educating physicians on the data and the label for <unk>.

Derek.

Physicians don't really have of working knowledge of really good understanding of the data for instance, things like progression free survival, which is actually 1 of the big benefits. It was consistent across of all types of immune patients. It's actually not in the label because that was the piece.

Time based endpoint and in the single arm study.

It's not allowed into the labels.

So really getting deep into the data on understanding the totality of the profile. It's important to have direct access to customers and we think between that as well as helping them understand the label that direct access was going to be very important and that's why some of these new roles that we're creating we're doing.

I think anytime you have a drug that launches in the space like this where you have many patients who failed many lines of therapy. Some of the first patients youre going to get or later line patients and those patients may not have the same benefit that earlier line patients Bill and they will have shorter durations of treatment.

Our continuing to see growth as well on the third line and even second line, particularly in patients who have <unk> mutations. So I don't think theres any 1 specific area I would say this is it's a factor of launching it into a very difficult.

Complex market as far as we have been impacted by Covid were.

The patients themselves are coming in for treatment of the prescriptions for oncology treatments in these <unk> patients overall is still down I was hoping to see coming out of Q1, we'd see that number of bounce back up but so far it hasn't actually look very similar to Q to Q1, and our access to physicians Hasnt changed and so that's why we're taking the steps I talked about on the call. So that we can directly.

The address those challenges and I'll, let <unk> speak further hi, David.

As Rob mentioned, the tops of neutral I think it's important for physicians to understand the data and.

As you think about pass rate of 1 of the misconception is that it's easier to mute the only need like if you look at the day guidance.

The totality of the benefit design for the mute and monetize and that the Utica PFS duration of response.

On our current safety profile. So I think 1 of the things that I am personally involved in the educating the physicians.

Talk to them day to day on trying to make them understand the value of data on both new debt line type as well as the.

Just understanding the label it sounds exciting growth of the things that the of Lucky on that slide.

Andy said that does that mean growth to be able to educate the physicians get familiar with the data on code that also have access to dispositions, although we say that changes Inc.

For the patients coming in but it's not such a big change that you can see cash flow sliding doors are something that we are focusing on efficacy.

Thank you very much for taking my question.

Yes.

Again, if you would like to ask a question. Please press star 1 on your telephone keypad.

Again that the star 1 on your telephone keypad.

Your next question comes from the line of Andrew Burns from Anthony The Leerink. Your line is open.

Hi, Thanks, just a couple of questions on the demand.

What percentage of the patients that got it has the scrip for easy.

The H 2 positive.

Negative or unknown and then.

What percentage of patients.

Being prescribed cancer earlier than the third line and then if you have some data on how long patients for staying on the drug on average that would be appreciated.

<unk>.

Thank you Andy.

With regards to the first question what percentage of patients are <unk> wild type and the unknown.

It's a difficult answer for us to get because remember a big portion of our prescriptions go through the specialty pharmacy.

Lot of others go through specialty distributors and that happens that goes directly to hospitals or it goes to the physicians. We don't have access to the data on the patients what we do realized and we do research where we ask the positions.

Their recall is of the patients that they're treating and what portion of patients are getting has fared.

And different patient types.

We have over a third share of the <unk> mutation population, which is actually very high considering where we are on the launch watching on a pandemic. So we have the highest share of all of treatments in relapsed refractory FL on patients who have <unk> mutations in the third line and later on about 13% in the patients who have wild type <unk> and Thats, the total share thats not new patient.

Sure. So those are pretty good numbers, considering that we launched in 2 of pandemic with limited ability to reach our customer.

We're also penetrating into the second line, we're seeing increased utilization we've seen our share go up there, but it's been predominantly in patients who have <unk> mutations as you might expect since it's being used mostly as monotherapy.

And then with regards to the duration of treatment when you put these out on <unk>.

<unk> part of it looks actually very similar to what we saw on the phase II study you have some patients who come on who stay on for a very long period of time.

You have some who come on and have a relatively short duration of treatment because they were late line there were very severely ill patients.

I actually think that we may be getting more of those patients now as of.

Industry, not just us in particular, because many of these follicular lymphoma patients are coming back after having been away from their physician's offices for many many months and physicians have told US. This so I think some of the patients that are coming back in for re treatment.

They are coming back in and getting treated on.

Are not the same type of severity as they would have been pre COVID-19, but overall if you look at the swim lanes. It looks very similar to what we saw in the phase II study that we use for registration.

Okay. Thank you very much I appreciate it.

Thank you Andy.

Your next question comes from the line of Peyton Bonczek from Cowen Your line is open.

Hi, This is for patent on for Joe Good morning, Thanks for taking our questions.

Wondering if you could provide a little more detail on the updated marketing strategy specifically 1 of the digital approaches look like are those just kind of be doing more of zoom calls.

And I know you mentioned in the prepared remarks, but you said it was going to be the direct to patient campaign will be fully launched in Q3 does this include the health care providers and patients or is this just patients for me and then I have a follow up thank you.

So it's a good question the for the digital approach to the health care practitioner or is this not just the zoom calls and that's actually been an approach that we've taken from the outset. We are finding that those are actually effective in some cases and less effective in some cases, because the health care providers have been inundated now these are actually better digital approaches to do direct education of <unk>.

<unk> and ways of provision.

Can get continuing education of credit Inc.

Gauges of directly in their offices or with groups. We've found the way to digitally communicate with physicians and larger groups of.

Essentially replacing what would've been a face to face dinner program with the digital version of doing that as well as finding different ways to get materials to them that they can read and look at it on their on time with regards to the patient effort. This is of targeted effort to be able to identify patients at the moment. They are seeking treatment. So in addition to educating them on pads.

Eric and educating them on but the sink.

Think about and look for in a relapse. So it should be seeing the physician keep in mind. Many of these patients have been seeing their physicians virtually.

And they may not bring up their symptoms, where they may not bring up signs that theyre relapsing with the physician because they don't know how to express dose of <unk>.

That doesn't happen the physicians didn't on invite them to come into the office. They will just continue to see them virtually and we know physicians typically don't change therapy.

Based on the virtual visit so there's those kinds of tools to educate them on what to look for how do you know your disease is progressing and then also.

So as to help identify patients that are getting close to the physician's offices in these of Geo targeting types of initiatives.

When they get close to their physician's office or 2 of hospital theyre automatically prompted with information about pest, Eric So it's top of mind when they go in so thats really interesting things that we're doing to make sure as Barrick is top of mind as theyre talking with their physician about the next treatment.

That's very helpful.

And then also it's kind of a follow up on Disney changed.

Commercial marketing strategy for this the global or is that something going to be in the U S.

We're implementing this in the U S.

The only country, where we are currently approved for <unk> Eric.

My guess is that <unk> would likely take advantage of some of the learnings that we've had is the launch in China. Once they have approval in China, but for now our approval is only in the U S. So all of the things that I talked about today or in the U S market.

Okay cool thank you.

Excuse me per centers, there on AUM or follow on questions you may continue.

Okay, well. Thank you all for joining US today, we hope that you all have a safe day and a healthy day and have a great day, everyone take care Bye bye.

This concludes today's conference call you may now disconnect.

Yes.

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Okay.

Thanks.

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Yes.

Yes.

Moving forward.

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On the messaging.

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Hello, and welcome to episodic conference call for.

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 the designs for quest.

I would now like the turn the call over to Craig glass.

The Vice President of Investor Relations you may begin.

Thank you the rent and good morning, everyone.

For those of you I have not yet net my name is Craig West and I recently joined up the time as Vice President of Investor Relations with over 2 decades of experience in the field.

My contact information can be found on the bottom of the quarterly update press release that the Saar.

Im issued this morning.

The press release as well on slides to accompany today's call can be found in the investors section of the company's website at <unk> Dot com.

On the call with me today is Rob phase more designs current president and Chief Executive Officer Grant Bogle, our incoming Chief Executive Officer.

Ross <unk> executive Vice President and Chief strategy, and business Officer, and Dr. <unk> Agarwal, Executive Vice President and Chief Medical and development Officer.

As a reminder, today's discussion will include forward looking statements related to <unk> 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.

It 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 Rob base for us.

Thank you Craig and welcome debt design and thank you everyone for joining us on this call. This morning.

Today, we have a robust set of updates from the quarter and on the business, including important updates regarding our <unk> launch as.

As the metastatic development <unk>.

Advances to our research pipeline.

And the exciting collaboration efforts.

We will also be discussing changes that we're making to our operating plan to fuel our most important growth initiatives, while improving our capital position.

Before we get into the second quarter overview I'd like to start with an important to announce that the press release. This morning.

Mediately following our second quarter release.

As you may have already seen we announced that I will be transitioning out of my role at <unk> as part of the thoughtful succession plan after serving as the company's President and Chief Executive Officer since 2015.

At the end of last year, following <unk> U S approvals in epithelioid sarcoma, and Follicular lymphoma, and Finalization of the Companys next year 5 year growth strategy.

We started discussions with the <unk> on board regarding of the initiation of a succession plan.

This was an important decision for me to be able to redirect my energy towards things that I needed to be able to focus on personally and I felt that this represented an opportunity for a new CEO to lead the company's next chapter of growth.

As we moved into the first quarter and started to see signals that made us believe the effects of the pandemic may be improving Gordon I resumed these discussions.

At the same time, we also realized that there were some changes that we needed to make to improve our ability to access customers to drive adoption of has the Eric in this challenging environment.

To ensure we maintain sufficient capital to continue funding our key growth driving programs.

Over the last few months I've been working closely with senior leadership of <unk> and our board of directors to develop a revised operating plan for 2021, and 2022 that reduces our operating expenses.

While at the same time remains true for the 4 pillars of our long term strategy as communicated in the next episode call on March.

Our revised operating plan includes the strategy to accelerate commercial adoption of has the Eric in the us, including some important changes to the commercial infrastructure that we launched has aeroquip.

And ensures that our resources are targeted at those programs that will provide the most significant value for the company.

As a result, we expect to reduce our non-GAAP operating expenses in 2021 from the previously communicated guidance of $235 to 255 million.

So approximately $220 million to $230 million.

This includes an approximate 40% reduction to our budgeted workforce. In addition to other important reductions in external spending.

We expect this plan to preserve our cash runway into Q4.2022 with multiple options available to us to further extend our operating capital as needed.

This was not just an exercise to reduce our expenses are rather of thoughtful set of decisions to ensure that our resources are properly catered and deployed.

<unk> for the topline growth to ensure that we can continue to fund our highest priority growth opportunities.

It's difficult to say goodbye to our colleagues who play such an important role in getting <unk> to the stage.

And I would like to personally thank him for all of their contributions.

As we finalize the revised operating plan that will work for others will discuss further on the call today. It became apparent that now was the right time to continue our succession planning discussions and for a new leader to take the range and continue. This next chapter of growth Rep is on.

With this in mind.

We are fortunate to have found the trusted leader.

Someone intimately familiar with the <unk> story and family.

The board and I are extremely pleased the grant bogle and industry veteran as well as the NEP is on board member since 2019 will be stepping in as <unk> Chief Executive Officer.

The CEO of grant will be creating a structure that allows them to be more closely involved with the commercial organization and their execution of the revised commercial strategy include.

Including dissolving the chief commercial officer role.

Grant brings deep commercial and operational leadership experience in oncology to his role the signifies the importance of the first pillar of the company's 5 year vision.

<unk> the adoption of <unk>.

As the backbone of therapy in Es and FL.

While continuing to broaden our portfolio through new test Barrick indications and bring the novel epigenetic treatments into clinical development.

Brand is the right leader.

For the right experience the take.

Over at this very important stage in <unk> growth.

Importantly, grant of shares my passion for <unk> and he is aligned with our mission for both Eric and our long term vision for the company.

All of them officially stepping down as CEO I will be intimately involved in ongoing strategy and integration serving as the consultant and a trusted advisor for the company into grant over the next 12 months.

T bills and executes upon <unk> vision.

On a personal note I.

I am very grateful to our board, our executive leadership team and to <unk> employees for their dedication to our mission and to the patients that we serve.

While I need to focus my time on energy on other areas of my life that of become important to me.

It's incredibly gratifying as together, we have built an organization that addresses the needs of patients suffering with cancer.

And I would not be leaving the organization now if I did not believe it was the appropriate time when the.

Preet personnel in place.

With that I am thrilled to have grant with the with us on the call and to introduce him to you directly.

Please go ahead.

Thank you Ralph and good morning, everyone I.

I appreciate the warm welcome in the face that you and the board of placed in me to lead after that for the next phase of growth.

With my career immersed in commercial execution and working to ensure patient access the transformational therapies.

I'm incredibly excited to take a leadership role of the company that has such a promising platform of <unk> Barrick on.

On a rich pipeline of important medicines.

As an emphasis on board member I am grateful to have established relationships with the senior leadership of the company and I've had the benefit of participating in the development and approval of the long term strategy.

I am fully committed to executing the 5 year strategic plan that emphasize more of that in March.

I also have a good sense of the challenges we have and continue to face some type of Vince providing support to Rob and the commercial team throughout the introduction of <unk> and <unk>.

In the near term as we continue to build up the xylem into a sustainable commercial stage company and accelerate the adoption of <unk> I.

Our deeply deeply involved with the strategic and organizational changes and the commercial team that Rob will be discussing later.

My experience in challenging competitive markets in different tumor types, coupled with my deep understanding of the oncology provider market.

We'll hopefully add value so, let's turn share <unk> achieves its full potential and has ferric becomes the backbone of therapy for patients with FL, and es and potentially other hematologic and solid tumors.

Over the coming months I plan to invest time engaging with each of the functions within <unk>.

On gain a greater depth of understanding about the important and exciting work they're doing.

I intend to listen to our talent employees and embrace their ideas as to how to continue to improve our ability to fulfill our mission.

In addition, I'll be spending time with other key stakeholders, such as investors analysts and provider organizations with the goal of sharing how we intend to accelerate the growth and development of <unk> of our pipeline.

Pipeline of novel epigenetic targets.

We believe our R&D efforts led by <unk> and now set the 2 of the potential to transform the treatment of cancer.

I look forward to meeting all of you in the near future and with that I'll turn the call back over to Europe.

Thank you grant and I look forward to partnering with you as you take the Baton and continue leading <unk>, where we all of aspire to go.

As we look back on the last few months, we've made significant progress across several of the important pillars of our 5 year vision for growth.

Starting with our plans to expand the clinical development of Tazemetostat, our priority of clinical trials exploring multiple combinations and new heme and solid tumor indications are progressing exactly as planned.

The expanded safety run in for our confirmatory study 302 in relapsed and refractory FL is now fully enrolled.

And we are actively activating sites globally for the phase III portion of the study including in China.

<unk> received clearance in late July.

We're also taking steps to accelerate enrollment in study <unk> hundred 1 the important trial evaluating the combination of <unk> and Rituximab.

With relapsed refractory FL.

And finally, we received FDA clearance of the IND in late July to initiate the solid tumor basket trial.

Which will evaluate tazemetostat in various combination regimens in patients with solid tumors.

We plan to initiate enrollment in that trial this year.

We also made important progress across our pipeline.

We recently received FDA clearance of the IND application for <unk> before 1 for our novel inhibitor of <unk>.

And we will be initiating a phase 1 dose finding study in the second half of this year.

That the 2 represents an important shift on metal transfer is target that addresses of well understood multiple myeloma pathway that is yet to be successfully drugs in the clinic <unk> represents a novel differentiated oral investigational agent with which we have already demonstrated preclinical activity across a variety of hematological tumors.

We believe our novel set the 2 inhibitor has potential in several settings.

We're focusing our efforts on high potential research programs with the goal of bringing 3 new programs into the clinic over the next 5 years, starting with 72 on.

While maintaining the discovery research expertise and has allowed <unk> to build the leadership position in the development of targeted epigenetic therapies.

We've also been active in our efforts to make tazemetostat available to patients outside the U S. And you may have seen last evening that we were pleased to have jointly announced an important collaboration with hutch met that.

<unk> has the Eric the patients in greater China.

In addition to licensing commercial and manufacturing rights to test <unk> in China.

<unk> will work with us to further expand the clinical development of Tazemetostat.

Hearing at the additional combinations with their own portfolio of cancer treatments across a range of tumor types.

This collaboration is also important and that it will provide access to patients in China for accelerating enrollment in <unk> 302 study and other global studies that we're working on together.

We selected <unk> as an ideal partner committed to the long term commercial success and broad development of task Eric.

This collaboration will provide <unk> with an upfront and potential future milestone payments of up to $310 million over the life of the partnership in.

In addition to royalties in the mid teens to low twenties on.

<unk> revenue in China.

In addition, we are providing such med for the $65 million in warrants to purchase <unk> stock. So that they can share on the value. They create for the expanded development of Tesla, Eric with the portfolio fully aligning our objectives on this partnership.

For those who are interested of touch med will be holding a call to provide further details on this collaboration at 930 am eastern time today.

Turning to our financials for the quarter.

<unk> achieved a combined total revenue of $13 million.

This is attributed in part 2 of $5 million of collaboration revenue from our Japan partner side.

And 2 significant interest from a pharma company, which required per Eric for its planned combination clinical trials with an order of $3.2 million.

Commercial net revenues for <unk> of $4.8 million did not meet our expectations primarily related to a decrease in prescription demand in April and May.

The specific drop in revenue in April and May was driven primarily on.

Lower revenues in academic centers, we think largely driven by the approval of car T therapies and increased clinical trial activity.

During the quarter, we also experienced the significant increase in utilization of our patient assistance program, which was roughly 25% of bottles for the quarter.

As a result of patient demand grew 3% for Q1 for Q2.

Our net revenue was negatively impacted by an increase in Pap utilization.

It is important to note that net revenue in June rebounded with commercial revenue returning to March levels in July revenues, reflecting our continued growth compared with June.

In addition to this return to growth in revenue.

There were other encouraging takeaways from the quarter that reflect our commercial efforts.

We continue to add new prescribing accounts and we're seeing continued growth of prescribing in large commodity practices.

Growth in these large community accounts is critical for us to achieve our launch expectations in the long term.

For market research completed in July reflecting physician recall of their treatment of FL patients has barrick now has the highest share of prescriptions written since the third line and later patients with <unk> mutations and.

The share for test Eric increased in wild type of an untested patients the third line and later as well.

These are positive signals for the continued intent to prescribe <unk>.

And for the adoption of pets Eric.

On our last earnings call in May we described what we believe to be some encouraging signals emerging in the market at the end of the first quarter that made us hopeful about of gradual return to normalcy for our Es and FL markets overall.

The reality is that <unk> has been 1 of the slowest therapeutic areas to rebound.

Although we hear anecdotally at FL patients have started to return to their oncologist <unk>.

The prescription volume for all therapies in the second quarter remained down by about 20% to 30% compared to pre COVID-19 levels very similar to what we observed in Q1.

We are also not seeing a meaningful improvement in access to prescribers by our field based team.

While some accounts of reopening others are remaining closed the sales representatives, which has impacted test Barrick education efforts in both large community centers and academic institutions.

We believe this may be the new norm for interacting with oncology practices going forward.

In response to the challenges we continued to face since launch.

We're making some important changes to our commercial strategy and our commercial organization to more favorably impact has barrick adoption and continue to established has Eric that the backbone of therefore therapy.

With this revised strategy, we're focusing on 3 key changes to drive growth.

First for specifically focusing on accelerating growth and adoption in the most important large community oncology clinics.

Second.

We're proactively promoting mutational testing as an important tool for making easy as to status.

Top of mind for physicians whenever patient experiences relapse.

Capitalizing on our strength in patients with <unk> mutations, but also increasing adoption in the ECH too wild type and then tested patients as well.

Third, we're adding specialized personnel and creating innovative programs to better access key decision makers directly at all levels of oncology accounts.

We're supporting these efforts with enhanced digital approaches to educate both physicians as well as patients.

In order to accelerate adoption and community clinics.

Taken a cross functional approach to partnering with these top accounts. This approach utilized the support from the field marketing home office and medical.

On a coordinated effort to identify appropriate patients and educate providers on the passive Eric.

We're also fielding of new team of account specialist role it will be to engage with large oncology practices at the executive level the support of Eric adoption from the highest levels down into the clinical practice.

The MSL team is also refocusing their efforts on community practices to educate on the Tandberg data.

And to involve many of these practices in our combination clinical trials.

These community physicians typically use for <unk> and Rituximab based combinations repeatedly for the relapsed <unk> patients.

Our goal is to ensure that <unk> is top of mind, the drug with a novel mechanism of action.

Under the ultimately consider cadbury because of treatment option for these patients either as a monotherapy or in combination with rituximab or other treatments based on the data that we're generating.

Over time and with greater experience.

We believe the physicians will embrace <unk>, given its efficacy safety and convenience of Goto agent and earlier treatment lines translating into better patient outcomes and longer durations of treatment.

This brings us to the second strategy regarding reinforcing the importance of E. The H 2 testing proactively.

Our market research indicates that the number of physicians testing as well as the percentage of patients tested for <unk> continued to increase since the approval of catheter Eric.

While most physicians have been able to readily access testing for about 1 third report the they are unsure of how to do so.

So to make the simple for physicians, we recently launched the collaboration with quest diagnostics to make <unk> testing readily available at no cost to the patient of <unk> now.

The issue now testing should help has there any more traction with physicians for 2 reasons.

First the.

The more physicians are thinking about <unk> status in the relapsed refractory patients the more top of mind test of Eric should be in their treatment consideration, regardless of mutant or wild type of status.

The second utilization of the testing program requires physicians to contact our reps, which we believe will improve our access to both community and academic physicians.

As part of our refined strategy. We're also adding precision medicine specialists to our commercial organization to aid and educational efforts with regard to patient identification.

And to optimize utilization of the <unk> program.

Access to our customer has also been a significant challenge during the pandemic and while it's improved some we think this is probably the new norm and we needed to make aggressive moves to get our messages to providers.

Therefore in addition to leveraging the HQ now testing for adding a team of thought leader liaisons, specifically focused on engaging with clinical and business decision makers among the top of oncology accounts.

Since fielding of pilot group in this role we've already seen of tremendous increase in high level customer engagement.

We're also shifting resources to implement novel digital approaches to commercialization, which should improve our ability to reach the health care practitioners and patients directly.

Our direct to patient campaign will be fully launched in Q3 focused on empowering appropriate patients. The discussed had barrick with their physicians and to better understand as barrick because of treatment option.

The bullet down the key changes that we're making in our commercial organization is for adding precision medicine specialist the 8 educational efforts around patient identification and ECA 2 testing.

We're adding thought leader liaisons to improve our ability to access engage and educate clinical opinion leaders and business decision makers.

We're reducing the number of traditional sales roles, reflecting the access challenges that we've cited.

And overall, we're optimizing our traditional field sales team for the oncology market environment today, adding new personnel with complementary skills and backgrounds to augment access and support our customers.

This structure is now more focused on our growth opportunities for <unk> Eric.

We are optimistic that our refined commercial strategy, our expanded opportunities for customer engagement and increased patient physician interactions will all positively impact <unk> success.

Ultimately our goal is to continue to expand the universe of physicians consistently prescribing tens of Eric irrespective of mutation status.

In this regard we recognize the importance of generating new data from our ongoing clinical trials, combining <unk> with standard of care approaches such as Rituximab and R. Squared supporting our goal of advancing <unk> because of the backbone of therapy NFL.

I'd now like to turn the call over to Charlie who will provide an update on our Tazemetostat development efforts Charlie.

Thanks, Rob and good morning, everyone of.

Across the book of clinical program to support the expanded utilization of Tazemetostat all continue to make profit.

We continue to receive a significant amount of inbound interest from potential investigators looking at the sponsor the short studies on the old highlighting this time of it from the MB enthusiasm for the.

Evaluating tazemetostat in the range of solid tumor and technological heading from here.

Im also lays.

On the opportunity to initiate the first clinical trial of <unk>.

Your line of agenda in the second half of this year following the recent and defend our IP.

We believe this novel Boston Patheon has the potential to provide a new treatment option for patients in need.

With line of online and expanding our business day.

Looking back on the second quarter.

All of the inland equally necessary, but the it.

Greed upon steady expansion in our EPS guidance.

Ladies NBC for ladies study of <unk>.

Good day in combination with <unk> and the lack of that the association.

The following these patients and this is the major findings to FTE offer that as was seen on follow on.

Glad to initiate in Illinois, and the safety portion of the time in the fourth quarter.

As you may recall during the FTE is 1 of the deal of a phase <unk> safety that the filing and the fourth phase 3 protocol.

The data quest to be a few more patients in the 600, many of debt and 800 and made them public.

Sure.

Combining tazemetostat.

While the VAT tax rate given the relatively quick completion of our please specify based on the design.

Any dose limiting toxicity.

And the city on the MTA ATA, Inc.

The the plan second interim analysis.

If successful would allow us to the efficacy right Foundation of.

The trial.

Now almost 40 patients now on.

On the phase 1 of the.

Thank you Donna and including those for the gypsum and the fact of the FY 'twenty for the continued to see a very high the phosphate among the evaluable patients.

Brian to provide an update on the safety and efficacy findings in these patients at the Ash later this year.

Good day, the combination of Cathay net asset.

Has been evaluated and participation in the space.

And let the legal portion of the EPS.

Thank you for Tazemetostat.

The SBA debt.

The persistence the status.

Right.

Of the investments safety information document.

Most notably the net EBIT for both of the highest 2 of the 800 milligram and did not see any <unk> in the first.

Michael.

All of the Covid patient enrollment for 517 patients evaluable for efficacy based on.

On the availability of cash.

All of the 17 patients responded to treatment the 6 patients having a complete thus far on 11th lesions, having the question. This morning.

This is of course, the preliminary activity, but we are very encouraged by the opportunity of pathway for this year.

All of the effects of widespread.

For August quantity of amortization.

The issue on therapy has been in the range.

At 10 months of therapy the.

The study is currently ongoing and we are for inflation adjusted EBITDA.

This is a smaller number of patients to see the strengthen of the status of the second.

As we finalize the safety portion of the trial.

The time to activate as many sites of profitable global essential begin enrolling the trial with Lavazza true.

The EPS for Dino 1 study evaluating cathay vis vis vis the mat and the last the fact the association.

Is actively enrolling patients and the new sites are being activated including the large network of from Andrea on the defensive.

By doubling the number of price in 1 shot.

But the generate combination data more quickly.

The key Youll go at it had great adoption annualize in the second day that offer the all of them for the Jackup fleet.

We plan to share the full data set for the study at a medical conference mid next year and we look for like an update on the study's profit of the EBITDA.

The.

But the key for rest of the likes of study.

In combination with R chop in frontline FL and diffused large b cell lymphoma organic.

Again the 2.

To touch on those.

On the R&D applications for different for solid tumor basket study the season.

From July and we remain on track to initiate the all of the core fastest study evaluating the combination.

Thank you Mclaughlin of volume in the fourth quarter of the VA.

In Europe, we expect the defined it back to the FDA submission later this year.

Please let me to EPS 11, 1 study of Tazemetostat in metastatic castration resistant prostate cancer or <unk>.

The SEC.

We know that the does that give of the interest of Tazemetostat.

Addressing the ticket the sulfonation and.

<unk> now has over 1 billion Joel.

He was president of data safety and efficacy data of the study the phase 1 safety Devin Inc.

So the <unk> CLI PFS biomarkers of setup for the.

A proportion of presentation at ESMO in September.

So that in my portion of the study is open label evaluating Tazemetostat, Inc Foundation with anthem of the demise of air to Andrews the mic.

Now turning to a subject your program is the <unk>.

Forward looking for we have been approved to take that into the clinic for the clinic.

Of the IV by the MTA.

We're on track to initiate the first in human studies of this yet.

For the study start up including price escalation the.

The study is intended to evaluate the fifth.

And the optimized the dose and schedule of ECM leader for 1 in multiple myeloma Mds the CF patients.

Lastly of optimize the dose.

Thank you for the further expanded the completion for key.

<unk> for 14 months of the liner on non.

Thank you for 14 multiple myeloma at the NBC.

Net.

As you can see with the device operating cash as Rob described on yet.

Continuing to fund an advanced the program at the provide significant value to patients and 2.

All of shareholders.

Does that produce a steady stream of new data.

At this time I'd like to pass the floor to Matt Matt.

Thank you for filing and good morning.

As Robert indicated we've taken further steps to streamline expenses and extend our operating capital to fund the most important value creating initiatives.

We ended the second quarter with $244 million in cash cash equivalents and marketable securities.

This of course does not include the upfront payment from our collaboration with <unk> that was just announced.

Our total non-GAAP operating expenses for the second quarter of 2021 for 71 to $71.2 million of which R&D and SG&A accounted for approximately $35 million and $34 million respectively.

At the Xylem recorded second quarter 2021 revenues of $13 million.

Consisting of $8 million on product revenue and $5 million of collaboration revenue.

Product revenue included $4.8 million of <unk>, Es and FL commercial net revenue and.

And $3.2 million of test for Eric net revenue related to an order from a pharmaceutical company for its planned combination trials.

As I'm also recognized $5 million of collaboration revenue in Q2 from our agreement with Eisai.

As part of our agreement with <unk> at the time will receive a onetime upfront payment of $25 million in Q4.

We also anticipate receiving the first milestone payment from this collaboration connected.

Connected to initiation of enrollment of patients from greater China into the study 302 later this year.

Based on our refined operating plan and structure, we expect that our current cash will fund the operations into the fourth quarter of 2022.

We are lowering our non-GAAP adjusted operating expenses guidance for 2021 from $235 to $255 million to the new range of $220 million to $230 million and we expect that to have a greater impact on our full year budget for 2022.

We reduced our budgeted head count by 20%, including the 11% of our current employees, resulting in an estimated severance and termination costs of approximately $2 million.

We expect to record these charges in the third quarter of 2021.

As Rob mentioned earlier, we will make new investments with the stage gated approach based on the evolution of the <unk> adoption and the progress of our clinical studies.

We are also a number of options available to us to enhance our cash runway to support our operating plans and value creating initiatives well into the future.

I'd like to turn the call back over to Rob for closing comments.

Rob.

Thank you Matt.

Shared a lot of information with each day.

Facing into the second half of the year, we've made some important changes to our commercial strategy and organizational structure.

We believe will be an effective response to the oncology market, we found ourselves launching pads of Ericsson.

Allowing us to bend the curve of task Eric adoption.

We also believe the additional changes we made to our operating plans should provide the capital flexibility to continue execution of the most important programs across the 4 pillars, we've laid out on our vision call March.

Which include maximizing commercial adoption of <unk> Eric.

Building on <unk> pipeline in the drug potential.

Expanding our pipeline and portfolio.

And collaborating to expand our reach to patients and building incremental value.

I am very proud of the work that we've done over my last 6 years here the transform <unk> into a commercial stage company.

And to move our next program into the clinic.

I want to thank our board of directors and all of our shareholders for their support through the many ups and downs the companies like our space and express my profound gratitude to all of our employees for their Tyler tireless efforts on behalf of of the patients that we serve.

I couldnt be more confident now to hand, the range over to a leader who I know.

We'll make them very positive imprint on the next chapter of that design story.

Operator.

You May now open the line for questions.

Sure Sir at this time, we would like to ask the question. Please press star 1 lingering telephone keypad.

Again that a star 1 on your telephone keypad.

Cool.

And your first question comes from the line of Peter Lawson from Barclays. Your line is open you may ask your question.

Hi, Robert.

Thanks for taking the questions or it's been a pleasure speaking with you on.

So all the best for them.

Yes.

Just on the debt.

On the deal last night.

The other deals that youll be contemplating for kind of international revenues that we should be thinking about and then on the $3.2 million in the quarter for <unk>.

For the pharma partner.

<unk>, who is that toolset to 1 policy on.

Anything you can disclose around that deal would be great.

Maybe I'll start with the second part of the question.

Not been allowed to disclose who the partner is but as you know Peter we've talked about before there'd been a number of companies who have been interested in partnering their compounds clinically with Eric and we are pursuing several of those.

The particular, 1 that we disclosed in this.

In this earnings call. It doesn't involve any of the Reits. This is purely a sale of product for them to be able to use as the combination drug and combinations that they are developing but theres been a significant amount of effort and interest in developing drugs along with <unk> is actually what goes behind managed net partnership.

As I mentioned on the call a big part of this is being able to get as Derek approved and commercialized in China, but.

But a big part of the deal for both companies for Us and for <unk> has been the ability to expand the clinical develop the past Eric through few indications of new compounds for not developing today and new tumor types of new indications we.

We've always been of company as you know who has used partnerships and collaborations as a way of building on our clinical development expertise from <unk> and we've done that for some time. So we had indicated that once we were approved in the U S debt, we would shift our attention to being able to bring Pat Barrett for patients outside of the United States. So this collaboration with Hutch net isn't it.

Portance step in that direction.

Thank you and then just on debt the pharma partner revenues.

Is there any way you can kind of provide guidance of railroad if debt.

Kind of a consistent number quarter by quarter expense just sporadic.

It's kind of hard to know Peter.

We have an idea of what they're planning to do but obviously.

It's controlled by a different company and so we never try to guide for those kinds of things are put it into our cash runway and I think it's 1 example that illustrates a significant amount of interest in being able to work clinically with Eric and combinations.

Great. Okay. Thanks, so much.

Thank you Peter.

Yeah.

And your next question comes from the line of Michael Yee from Jefferies. Your line is open you may ask your question.

Hi, Good morning, Thanks for the question and good morning, Robert Grant.

Just had a question around the underlying sales and demand driven by the for $8 million, specifically you said that.

Sort of decline in the back part of the quarter, but then rebounded and was higher than at the higher levels of the highest levels of Q2 can you just sort of revisit what you were saying about the trajectory and that is perfect and does that mean Q3 should be significantly higher in Q4 should be higher than that.

So maybe just talk about what happened there on why you wouldn't expect of that could still be on ongoing headwind and what you expect for the rest of the year quarters. Thank you.

Yes. Thank you Mike it's of Great question. So what we said was that the overall demand for <unk> increased by about 3% quarter on quarter from Q1 to Q2. However, the net revenue was down.

From that because of the impact of an increase in patient assistance program utilization, we saw an impact of patient utilization patient assistance program utilization of about 15% in the first quarter and of jumped to about 25% this quarter.

That's not unusual to see you can see spikes and troughs in the use of Pap, it's usually related to how much funding is available on the independent foundations patients utilize those.

We've also been successful over the last year over the last months and being able to ultimately convert some of those patients into commercial utilization.

Actively able to convert some of those patients over.

Of the trend that we saw in Q2 in Q2.

It was largely due to a dip in demand in April and May and then we saw that return to growth in June.

And in April and May and specifically, we saw a dip in demand among the academic institutions, we think that largely came back and we looked at.

Sure. So when we look at what's happening within those institutions.

Inc. That it was largely attributed to a spike in demand for Carty lets say were approved car T therapies and also a big increase.

And demand for clinical trials number of patients being enrolled in clinical studies and as you know a big portion of our business has always come from the academic institutions, we were encouraged though that.

All through that same period, we continued to see growth among the community counts we grew at about 22% in the second quarter among the community practices, which is a big.

Positive for us because thats necessary for the long term health and growth of <unk>. So we did see the rebound in June that we spoke about it was about a 38% growth from May and then we continue to see an increase in utilization in July.

Even though for June.

So I'm hesitant to predict is the what that's going to mean for the third quarter and moving forward. Obviously, there are a number of new dynamics that we're dealing with with Covid I think that we're all trying to realize just what impact that's going to have on our ability to access customers patients.

Patients getting in to see their physicians, but we were encouraged that the signs along with increases in market share for both our mutant patients as well as wild type and an untested patients all increased in the second quarter. So we believe that these are good signs that there continues to the adoption of has there even in this difficult market that we're competing on.

Yeah.

Got it thank you.

And your next in the pipe.

Mike I would say that just as an additional point the changes that we're making that we announced on the call today are actually designed to specifically address those challenges. So we believe that some of the things that I talked about things like accessing customers.

Holes that we created some of the things that we're doing and the new strategy is actually specifically targeted at addressing those challenges to further stimulate the adoption of <unk> going forward.

And your next question comes from the line of David Lebowitz from Morgan Stanley. Your line is open you may ask your question.

Davidson.

When you look at the demand for cash Eric.

Most recently.

Is it being affected by limited just by doctors.

And the ECH and screening are they not giving consideration at this point too much wild take usage.

I'm curious to hear your thoughts.

I'll start and I'll, let <unk> add in as well from a clinical perspective, but I think what are the biggest challenges that we've had David is just educating physicians on the data and the label for <unk>.

Eric.

Physicians don't really have of working knowledge of really good understanding of the data for instance, things like progression free survival, which is actually 1 of the big benefits that was consistent across all types of immune patients. It's actually not in the label because that was the piece.

Time based endpoint and in the single arm study.

It's not allowed into the labels, so really getting deep into the date on understanding the totality of the profile. It's important to have direct access to customers and we think between that as well as helping them understand the label that direct access was going to be very important and that's why some of these new roles that we're creating we're doing.

I think anytime you have a drug that launches in the space like this for you have many patients who failed many lines of therapy. Some of the first patients youre going to get or later line patients and those patients may not have the same benefit that earlier line patients Bill and they will have shorter durations of treatment.

We're continuing to see growth as well on the third line and even second line, particularly in patients who have <unk> mutations. So I don't think theres any 1 specific area I would say this is it's a factor of launching it into a very difficult.

Complex markets as far as we have been impacted by Covid were.

The patients themselves are coming in for treatment of the prescriptions for oncology treatments in these <unk> patients overall is still down I was hoping to see coming out of Q1, we'd see that number of bounce back up but so far it hasn't actually look very similar to Q to Q1, and our access to physicians Hasnt changed and so that's why we're taking the steps I talked about on the call. So that we can directly.

Addressed those challenges and I'll, let <unk> speak further hi, David.

As Rob mentioned Thats, absolutely true I think its important for physicians to understand the data and.

As you think of like pets right..1 of the misconception is that it's easier to me. It's only like if you look at the day day.

The totality of the benefit the signboards mute that might price.

Whether you look at PFS duration of response.

And our current safety profile. So I think 1 of the things that I am personally involved it is educating the physicians I.

Talk to them day to day on trying to make them understand the value of data on both mutant and wild type as well as the.

Just understanding the label it sounds exciting tours of the things that the lucky on that slide.

Andy said that does that mean growth to be able to educate the physician of December 11th the data and some of that and also have access to dispositions, although we see that as changes Inc.

For the patients coming in but it's not such a big change that you can see cash flow. So I think those out of some things that we are focusing on efficacy.

Thank you very much for taking my question.

Yes.

Again, if you would like to ask a question. Please press the star 1 on your telephone keypad.

Again that is star 1 on your telephone keypad.

Your next question comes from the line of Andrew Burns from Anthony The Leerink. Your line is open.

Hi, Thanks, just a couple of questions on the demand.

What percentage of the patients that got it has the scrip for easy.

The H 2 positive.

Negative or unknown and then.

What percentage of patients.

Being prescribed hazard earlier than the third line and then if you have some data on how long patients for staying on the drug on average that would be appreciated.

Yes.

Thank you Andy.

With regards to the first question what percentage of patients are <unk> wild type and the unknown.

It's a difficult answer for us to get because remember a big portion of our prescriptions go through the specialty pharmacy.

Lot of others go through specialty distributors and that happens that goes directly to hospitals or it goes to the physicians. We don't have access to the data on the patients while we do realized and we do research where we ask the positions.

Their recall is of the patients that they're treating and what portion of patients are getting has fared.

And different patient types.

We have over a third share of the <unk> mutation population, which is actually very high considering where we are on the launch watching on a pandemic. So we have the highest share of all of treatments in relapsed refractory FL on patients who have <unk> mutations in the third line of later about 13% in the patients who have wild type <unk> and Thats. The total share of Thats not new patient.

Sure. So those are pretty good numbers, considering that we launched in 2 of pandemic with limited ability to reach our customer.

We're also penetrating into the second line, we're seeing increased utilization we've seen our share go up there, but it's been predominantly in patients who have <unk> mutations as you might expect since it's been used mostly as monotherapy.

And then with regards to the duration of treatment when you put these out on <unk>.

<unk> part of it looks actually very similar to what we saw on the phase II study you have some patients who come on who stay on for a very long period of time.

You have some who come on and have a relatively short duration of treatment because they were late line there were very severely ill patients.

I actually think that we may be getting more of those patients now as of as of.

The industry not just us in particular, because many of these follicular lymphoma patients are coming back after having been away from their physician's offices for many many months and physicians have told US. This so I think some of the patients that are coming back in for re treatment.

They are coming back in and getting treated on.

Are not the same type of severity as they would have been pre COVID-19, but overall if you look at the swim lanes. It looks very similar to what we saw in the phase II study that we used for registration.

Okay. Thank you very much appreciate it.

Thank you Andy.

Your next question comes from the line of Peyton Bonczek from Cowen Your line is open.

Hi, This is for patent on for Joe Good morning, Thanks for taking our questions.

Wondering if you provide a little more detail on the updated marketing strategy typically 1 of the digital approaches look like are those just kind of be doing more of zoom calls.

And I know you mentioned in the prepared remarks that you said theres going to be the direct to patient campaign will be fully launched in Q3 does this include the health care providers and patients or is this just patient for me and then I have a follow up thank you.

So it's a good question for the digital approach to the health care practitioner or is this not just the zoom calls and that's actually been an approach that we've taken from the outset. We are finding that those are actually effective in some cases and less effective in some cases, because the health care providers have been inundated now these are actually better digital approaches to do direct education of <unk>.

<unk> and ways for emission.

Can get continuing education of credit Inc.

Gauges of directly in their offices or with groups. We've found the way to digitally communicate with physicians and larger groups.

Essentially of your pricing what would've been a face to face inner program with the digital version of doing that as well as finding different ways to get materials to them that they can read and look at it on their on time with regards to the patient effort. This is of targeted effort to be able to identify patients at the moment that they are seeking treatment. So in addition to educating them on pads.

Eric and educating them on the sink.

Think about and look for in a relapse. So it should be seeing the physician keep in mind. Many of these patients have been seeing their physicians virtually.

And they may not bring up their symptoms, where they may not bring up signs that theyre relapsing with the physician because they don't know how to express those.

That doesn't happen the physicians didn't on invite them to come into the office. They will just continue to see them virtually and we know physicians typically don't change therapy based on the virtual visit so there's those kinds of tools to educate them on what to look for how do you know your disease is progressing and then also.

Moving to help identify patients that are getting close to the physician's offices in these of Geo targeting types of initiatives. So when they get close to their physician's office or to a hospital theyre automatically prompted with information about pest, Eric So it's top of mind when they go in so thats really interesting things that we're doing to make sure as Barrick is top of mind as theyre talking with their physician about the Knicks treats.

Net.

That's very helpful.

And then also of its kind of a follow up just any change the sheer on commercial and marketing strategy for this the global or is this only going to be in the U S.

We're implementing this in the U S.

The only country, where we are currently approved for <unk> Eric.

My guess is that Hutch med with hopefully take advantage of some of the learnings that we've had is the launch in China. Once they have approval in China, but for now our approval is only in the U S. So all of the things that I talked about today or in the U S market.

Okay cool thank you.

Excuse me presenters there on AUM or follow on questions you may continue.

Okay, well. Thank you all for joining US today, we hope that you all have a safe day and a healthy day and have a great day, everyone take care Bye bye.

This concludes today's conference call you may now disconnect.