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Edited Transcript of EPZM earnings conference call or presentation 4-May-20 1:00pm GMT

·36 min read

Q1 2020 Epizyme Inc Earnings Call Cambridge May 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Epizyme Inc earnings conference call or presentation Monday, May 4, 2020 at 1:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Matthew E. Ros Epizyme, Inc. - Chief Strategy & Business Officer * Paolo Tombesi Epizyme, Inc. - CFO * Robert B. Bazemore Epizyme, Inc. - President, CEO, Secretary & Director * Shefali Agarwal Epizyme, Inc. - Chief Medical Officer ================================================================================ Conference Call Participants ================================================================================ * David Neil Lebowitz Morgan Stanley, Research Division - VP * Leland James Gershell Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst * Michael Jonathan Yee Jefferies LLC, Research Division - Equity Analyst * Mohit Bansal Citigroup Inc, Research Division - VP and Analyst * Peter Richard Lawson Barclays Bank PLC, Research Division - Research Analyst * Yaron Benjamin Werber Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst * Alicia Davis ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Hello, and welcome to Epizyme's conference call. (Operator Instructions) Please be advised that this call is being recorded at Epizyme's request. I would now like to turn the call over to Alicia Davis. You may begin. -------------------------------------------------------------------------------- Alicia Davis, [2] -------------------------------------------------------------------------------- Thank you, and good morning. Earlier today, we issued a press release outlining recent progress in our first quarter 2020 financial results, which can be found at epizyme.com. On the call with me is Rob Bazemore, CEO; Matt Ros, Chief Strategy and Business Officer; Dr. Shefali Agarwal, Chief Medical Officer; and Paolo Tombesi, Chief Financial Officer, will join us for the Q&A session. Today's discussion will include forward-looking statements related to Epizyme's current plans and expectations, which are subject to certain risks and uncertainties. Actual results may differ materially due to various important factors, including those described in the Risk Factors section of our most recent Forms 10-Q, 10-K and other SEC filings. These forward-looking statements represent our views as of this call and should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to publicly update these statements. Now let me turn the call over to Rob. Rob? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [3] -------------------------------------------------------------------------------- Thank you, Alicia, and thank you all for joining us today. We started out the first quarter of 2020 very strong with significant progress on all of our corporate objectives. This is particularly important given the challenges that our industry has faced amidst the COVID-19 pandemic. At Epizyme, our dedication is, first and foremost, to the safety of patients, to the health care teams who provide their care, to our employees and to the communities where we live and work. On behalf of the entire organization, I would like to extend our sincerest gratitude to the treatment centers, the medical professionals, caregivers and all of those on the frontline working to keep us safe. Their commitment is truly an inspiration. Despite the many uncertainties that have been created by this pandemic, we know that people with cancer and other serious diseases are also still in need of new treatment options, and we remain focused on maximizing the clinical and commercial potential of TAZVERIK, further strengthening our ability to impact patients' lives and create long-term value. Last quarter, we activated business continuity plans that were designed to allow us to maintain our momentum commercializing TAZVERIK and advancing our clinical programs and our early pipeline while minimizing disruptions to our business and ensuring the safety and well-being of our team and their families and our collaborators. We've not lost sight of our mission, and we continue to evaluate the situation on an ongoing basis, assessing the many uncertainties and potential impact that this could have on our business. And we will adjust our plans accordingly. In early March, we shifted the entire company to a remote operating model, except for a small number of essential labs and facilities personnel who have been working on rotation to minimize time in the office and away from home while keeping critical activities moving. Our team is safe and well, utilizing the many virtual methods available to them to stay connected and focused on our core objectives for the year. This is an important year for Epizyme with a number of transformative milestones. These were led, of course, by our successful transition into a fully integrated biopharmaceutical company in January following the accelerated approval of TAZVERIK for the treatment of adult and pediatric patients aged 16 or older with metastatic or locally advanced epithelioid sarcoma. This approval made TAZVERIK the first and only FDA-approved treatment specifically indicated for epithelioid sarcoma patients and the first and only approved EZH2 inhibitor on the market. It's still early in our ES launch, and we're pleased with TAZVERIK's commercial performance so far. Within a week of approval, prescriptions were being filled, and throughout February and March, we saw steady traction with physicians incorporating TAZVERIK into their treatment practices. We also saw an increase in inbound questions to our medical affairs hotline and request through our EpizymeNOW patient support program. Our medical science liaisons started in the field last August. And our educational efforts leading up to and immediately following the ES launch allowed us to reach all key treatment centers prior to the COVID-19 pandemic fully unfolding here in the U.S. Our field sales organization continues to do their work using innovative remote engagement methods to reach and serve our customers. This is complemented by other virtual personal and nonpersonal approaches Epizyme already has built into our launch plans. Overall, the COVID-19 impact on new and refill prescriptions among the broad oncology community appears to be modest so far given that some patients have been restricted to their homes based on shelter-at-home policies or have had limited access to academic sites and other treatment centers. Importantly, TAZVERIK is an oral outpatient medicine, and our commercial infrastructure utilizes the specialty pharmacy distribution network that delivers TAZVERIK directly to a patient's home. It's helping to eliminate the need for additional visits to their physician or to a hospital to receive treatment. We've been successful over the months since launch, securing coverage for TAZVERIK among targeted health plans. And our commitment is to ensure that all eligible patients have access. And during the last several weeks, we have continued to see both new prescriptions and refills for patients already on TAZVERIK. In addition to executing our ES program, we are quickly approaching the potential second approval for TAZVERIK, which would expand its label into an additional indication in a larger patient population within just 6 months from our initial approval. Our supplemental NDA for TAZVERIK for the treatment of relapsed/refractory follicular lymphoma patients who have received at least 2 prior systemic therapies is under priority review with the FDA. We're working closely with the agency, and we're well underway with our commercial expansion activity to ensure launch readiness ahead of our June 18 PDUFA target date. This will allow us to quickly make treating physicians aware of TAZVERIK upon approval in FL when it occurs. Our FL commercial team has been hired, and training of our field-based employees is complete. In preparation for launch, we have conducted extensive market research among hundreds of community and academic oncologists to understand how TAZVERIK would be used and adopted in the third-line FL setting. We have consistently heard that there is no standard approach to treating relapsed/refractory FL patients and the current treatment options are less than ideal. Duration of response continues to come up as an important consideration among physicians when choosing an FL therapy who want to provide long-lasting remissions for their patients. However, toxicities with the currently available therapies remain an issue, and many patients withdraw from therapy as a result. This feedback speaks to the unmet need in this patient population and the opportunity for a well-tolerated product with a meaningful and durable efficacy. Importantly, the feedback also tells us that physicians believe in the differentiated safety profile of TAZVERIK and the demonstrated activity in both EZH2 mutation and wild-type EZH2 FL populations, supporting their intended use once available. We recently conducted a virtual FL advisory board meeting with about a dozen community and academic physicians who represent some of the top oncology and lymphoma centers in the U.S., which reinforced all of these points. Based on this collective input, we believe TAZVERIK would be well positioned as a new treatment option for relapsed/refractory FL patients, and we are confident in its potential to satisfy their unmet needs. We've augmented our FL launch plans to include a variety of selling approaches either personally or virtually to physicians in key oncology and academic centers as well as nonpersonal promotion through web channels, social media and other digital forums. We will continue to assess the landscape, and we'll adjust our commercialization efforts as needed, but we expect to be fully prepared to execute this launch. Our confirmatory studies for TAZVERIK in both ES and FL are already underway as well as our combination trial in castration-resistant prostate cancer. Each of these studies is currently enrolling patients into the safety run-in portion of the trials, which require only a small number of patients this year. We're working to open additional sites so that we can complete enrollment as quickly as possible, and we're engaging with our study investigators for virtual site initiations and trial monitoring. We continue to expect to complete the safety run-in portions for these important trials this year and then move directly into the efficacy expansion stage. We also have a number of investigator-sponsored trials to evaluate tazemetostat in additional combinations and treatment lines for FL, which are being finalized or are already open for enrollment. In addition, we are preparing for multiple new studies of tazemetostat in additional indications and combinations, and these are strategically important to our ability to create value for both patients and for shareholders. Finally, we are in a strong financial position. We ended the first quarter with approximately $376 million in cash, cash equivalents and marketable securities. We recorded $1.3 million in net sales for TAZVERIK in ES from the first 2 months of commercialization, which is in line with consensus for TAZVERIK performance. As a reminder, our collaboration revenues aren't evenly divided quarter-by-quarter but are based on achievement of specific milestones. Our financial guidance therefore remains unchanged, and we stand well capitalized to fund our current operating plans into at least 2022. In closing, we started 2020 with an ambitious plan for the company, and we've not taken our eyes off of executing our goals for TAZVERIK and advancing our research efforts. Now more than ever, it's critical that we be flexible and, at the same time, be resilient. We built a robust business continuity plan in order to adapt our business and how we operate as necessary. We have a highly differentiated commercial-stage product in TAZVERIK with the potential to treat a range of additional cancers, including follicular lymphoma. And we have a number of encouraging early programs in the pipeline that we continue to pursue. We'll continue to update you on our progress as the year continues, virtually for now, and look forward to the next opportunity to see you face-to-face. Thank you all for joining us, and we'll now open the line for Q&A. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from Mohit Bansal with Citigroup. -------------------------------------------------------------------------------- Mohit Bansal, Citigroup Inc, Research Division - VP and Analyst [2] -------------------------------------------------------------------------------- Congrats on all the progress. [Maybe] if you can help us -- just quick question, helping us understand the dynamics of the launch so far. Could you talk a little bit about who is the early adopter right now? Is it academic centers or community? And how easy or difficult it is to convince doctors and patients at this point given the COVID environment to move patient to TAZVERIK right now? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [3] -------------------------------------------------------------------------------- Certainly. Well, as I said in my opening remarks, I'll start and then I'll ask Matt Ros to comment specifically on your question. I think, first of all, we've been very impressed with the launch so far. The sales that we booked based on 2 months of sales, our ability to execute being able to ship drug and seeing the first prescriptions come in, in just the first week following approval, all have been great things. I'll ask Matt to speak about -- a bit more about the specific question you raised as to who's using it and how are they using it. So, Matt, let me kick it over to you. -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [4] -------------------------------------------------------------------------------- Sure. Mohit, thanks for the question. We've observed, with regard to the ES launch to our expectation, the academic centers really being the place where the majority of prescriptions have been falling as it relates to epithelioid sarcoma. As a reminder, when patients are diagnosed with this disease, they often go to a multidisciplinary treatment center or academic center. There are approximately 60 of these centers around the United States that uniquely have seen this population of patients. And so the utilization thus far has proportionally been in those centers as we would have expected that to occur. -------------------------------------------------------------------------------- Mohit Bansal, Citigroup Inc, Research Division - VP and Analyst [5] -------------------------------------------------------------------------------- Very helpful. And then if I can take a -- have a follow-up. So moving to FL now, how those market dynamics are different from ES? If I'm correct, it is more a community-driven market. So what you can do differently there to make sure that COVID doesn't impact the large preparation? Or how do you plan to approach it? -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [6] -------------------------------------------------------------------------------- Sure. So you're absolutely right. In follicular lymphoma, the overwhelming majority of patients, up to 80% of those patients are actually observed in the community-based setting as compared to ES where the majority of patients go through these academic centers. With regard to the launch planning for FL, as we've spoken in the past, our plan has always been to leverage the insights and the infrastructure from the ES grouping to then quickly expand to FL. And our approach with regard to follicular lymphoma has been thoughtfully considered in the context of how we would engage either direct promotional engagement with our sales organization introducing other direct engagements with regard to promotional speaker programs or other matters in that regard. And now in light of things with COVID, we're now starting to think about pivoting those to more virtual engagements. So our ability to reach the physician community based on the talented organization that we've hired, the relationships that they have in the community, will be leveraged just a bit differently but not terribly inconsistent with our original thinking, which is we'll speak to the physician community and the health care prescribers in their practice, but we'll engage in that type of engagement through virtual methods until parts of the country start to reopen. -------------------------------------------------------------------------------- Operator [7] -------------------------------------------------------------------------------- Our next question comes from Michael Yee with Jefferies. -------------------------------------------------------------------------------- Michael Jonathan Yee, Jefferies LLC, Research Division - Equity Analyst [8] -------------------------------------------------------------------------------- Guys, appreciate the update. My question is a follow-up in relation to thinking about the pending approval of follicular. And the question is, how do you think about the feedback? And what kind of feedback did you get from your virtual meeting of a dozen community KOLs to the trajectory of uptake once it gets approved in the community setting and despite COVID? The reason I ask is because you look at some of the other sales comps in follicular, which I think some of the consensus has modeled after, like Zydelig, and I think they get to like $35 million, $40 million. So given that comp, how do you think about the utilization in a COVID environment? Maybe talk to that and whether that is a reasonable comp. I appreciate it. -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [9] -------------------------------------------------------------------------------- Certainly. Matt, would you like to start and then I'll add to your response? -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [10] -------------------------------------------------------------------------------- Sure. Absolutely. With regard to uptake and the feedback that we continue to receive with regard to the profile of TAZVERIK, we've sought the perspective of many physicians, particularly over the last 6 months where we've had significant level of engagements and interviews with both the community-based and academic-based groups. The feedback is very consistent. No standard of care, as Rob mentioned on the call. Currently available choices provide limited benefit. And these prescribers are looking for something new, particularly something that's safe and has the benefits of a durable and meaningful remission. So with regard to that, we believe that TAZVERIK is very well positioned, certainly, as an oral medicine where given the COVID situation, we believe that TAZVERIK fits in quite nicely with regard to that dynamic as well. With regard to your question -- with regard to Zydelig as a comp, keep in mind that when Zydelig was approved, it was actually approved for 2 indications, the CLL indication as well. So it's difficult to parse out expectations around their FL performance. We believe that the attributes of TAZVERIK with regard to what this molecule will provide will be meaningful. And physicians, based on their feedback, are looking forward to it to arrive into the market. -------------------------------------------------------------------------------- Michael Jonathan Yee, Jefferies LLC, Research Division - Equity Analyst [11] -------------------------------------------------------------------------------- To ask a follow-up, which is you get the anticipation or sense based on talking to them that there's patients identified or some sort of pent-up demand since the drug is already out there, and they should be aware of it? -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [12] -------------------------------------------------------------------------------- Well, there's certainly -- the level of awareness has been increasing over time certainly with, I think, quite frankly, starting back with our MSLs in the field in August, the unanimous ODAC that Shefali and her team facilitated for us. And then with regard to our performance with ES, we've certainly seen interest in FL that continues despite the predominant performance in ES with regard to prescription use. So we feel like we're going to be in a very strong position to have uptake come out in a meaningful way. -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [13] -------------------------------------------------------------------------------- Yes. Mike, I'll just add a couple of things -- I'll add a couple of things to Matt's response. I think they're probably also important. Our anticipation is that -- and Mohit asked the question about where the ES use has come from. It's been largely the academic centers, and we expected that's where those patients would go. It's probably also where access has been the most limited. We expect that we'll have more open access and probably earlier as states begin to open in the community practices compared to the academic centers. And so I think that will likely -- we'll have to see how this plays out. But my expectation is it will allow us access into the community office. It's probably earlier than some of the academic centers where many of the ES patients are treated. I think one of the other things playing in our favor is that we've been doing the work since the ES launch to gain access with our payers. And so we're now on those health plans that's been secured for most of the targeted players. And we don't have to go through that process other than the update of the indication once FL is approved. And then the final thing I would say with regards to how we see this impacting the launch. We closely study all of the prescription data, which I'm sure you do as well. It seems that the impact on oncology prescriptions, particularly targeted oncology prescriptions and orals, in particular, have been less impacted than some of the others that require patients to come in for their treatment or for their infusion. And so we've seen that just across the board, not looking at TAZVERIK, but just in general, those oral and targeted therapies for these oncology patients seem to not have been impacted nearly so significantly. So again, we don't -- we think that this -- because TAZVERIK is an oral product, it can be delivered and taken at home. Along with all of the other attributes that I went through and Matt went through that we found as we talked about the actual attributes of TAZVERIK in the market research, we think will be very favorable as we roll this out post the approval by FDA. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- Our next question comes from David Lebowitz with Morgan Stanley. -------------------------------------------------------------------------------- David Neil Lebowitz, Morgan Stanley, Research Division - VP [15] -------------------------------------------------------------------------------- When you look at the upcoming trials for R-squared and R-CHOP, how do you see, given current environment, recruiting for those trials and monitoring going forward for those studies? And how you might see the impact of when, I guess, data might be presented and when interim analyses might be? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [16] -------------------------------------------------------------------------------- Certainly, David. So let me comment at a high level and then I'll maybe turn it over to Shefali to talk about some of the specific things that we've been doing. Like our commercial efforts that Matt talked about, we've essentially moved all of our efforts on the clinical side to the ability to monitor studies, enroll new sites and do all of those things virtually. So that work has not stopped. It's just happening in a different way. For the confirmatory studies that you asked about, remember that the number of patients we actually need to enroll this year is actually fairly small because they're safety run-ins that have been informed the dosing for the larger efficacy portion of the study. And what we previously guided is that we would complete the safety run-in this year and make the transition. So we expect that based on the numbers of patients that we need to do that, we'll still be able to hit that objective for the year to have the safety run-ins complete and be able to make the transition to the efficacy expansion. Maybe I'll have Shefali talk a bit more about just how we're doing that and some of the specific work her team has done to ensure we can engage with the sites around both site start as well as monitoring of ongoing patients. -------------------------------------------------------------------------------- Shefali Agarwal, Epizyme, Inc. - Chief Medical Officer [17] -------------------------------------------------------------------------------- Yes. Thank you. So this is Shefali. So as Rob said, most of these studies, the 2 confirmatory studies are safety studies, and they require very small numbers this year. We have shifted to a virtual way of running and conducting these studies just to ensure that the patients can be enrolled and also monitor patients who are ongoing on the trial. Our goal is to basically use different methods of monitoring, whether it's virtual or using leveraging traveling nurses to conduct safety labs and procedures, allowing patients to do local labs and radiological scans at the places where they are instead of traveling to the main centers, and also doing remote procedures where feasible so that they can get smooth access to the drug per the protocol. Additionally, what we are also doing is opening additional sites so that we can complete enrollment as quickly as possible and engaging with our study investigators for virtual site initiations and trial monitoring. And as Rob mentioned, because these are mainly safety studies, we expect to complete these safety studies both for ES and FL this year along with prostate. And hopefully, once -- maybe present the data based on the timing, but not commit to the presentation at this time. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- Our next question comes from Yaron Werber with Cowen. -------------------------------------------------------------------------------- Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [19] -------------------------------------------------------------------------------- So I have a couple of questions about the ongoing ES experience maybe first. And I apologize if I missed it earlier. So we calculated about 43 patients just based on looking at the -- to first month of sales, but that's not assuming any gross-to-net discount. And my first question is, can you give us a little bit of a sense kind of are we thinking about a 15% gross-to-net discount, maybe 10%? Is that reasonable? And then I have a follow-up. -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [20] -------------------------------------------------------------------------------- Yaron, this is Rob. So I think what we guided at the beginning of the year probably hasn't changed much, and that is that we would expect the gross to net to be roughly between 10% and 15% over the first year. -------------------------------------------------------------------------------- Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [21] -------------------------------------------------------------------------------- Okay. All right. So that's reasonable. And then the initial patient experience, is it mostly patients coming from clinical studies or you actually brought into commercial already new patients? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [22] -------------------------------------------------------------------------------- No. Most of the patients in the clinical studies, because remember, we had long-term follow up on most of those patients, many of them had already come off of their therapy. So these are patients that we are mostly sourcing from the open -- from commercial from the open market. These are not clinical trial patients that we're converting over. -------------------------------------------------------------------------------- Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [23] -------------------------------------------------------------------------------- Okay. And do you have any sense -- obviously, there's a lot of initial pent-up demand, and then you sort of go into new identification. And any sense how many patients are currently diagnosed who are eligible for therapy? And has your thinking changed? Just so we can all model this accurately, because we would expect a pretty steep initial uptake and then probably a slowdown. -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [24] -------------------------------------------------------------------------------- Yes. Matt, do you want to -- would you like to take that question? -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [25] -------------------------------------------------------------------------------- Sure. So, I mean, the new -- we've seen certainly newly diagnosed patients come in, as Rob mentioned, with regard to new scripts. That has continued through the first quarter. And in fact, those new scripts have now transitioned into refill prescriptions as well. So we continue to see the right type of performance with regard to TAZVERIK in the epithelia sarcoma community, and we would anticipate that continuing into the second quarter and beyond. -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [26] -------------------------------------------------------------------------------- The other thing I would say about that number, Yaron, I think it's important to keep in mind, oftentimes, if you're launching a drug with a large indication over a large population, you'll see a lot of stocking that occurs very early on when the drug is first approved. And so you have to tease out stocking from actual demand. In our case, this is almost solid demand. But this being an ultra-rare type of tumor, we don't see pharmacies really stocking the drug. It's more of an on-demand purchase. -------------------------------------------------------------------------------- Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [27] -------------------------------------------------------------------------------- Okay. And what's the lag from, I would say, diagnosis to actually coming on therapy? And are they requiring the INI data? Is that -- or is that sort of typically already available? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [28] -------------------------------------------------------------------------------- Sure. So for the use of TAZVERIK, there is no labeling requirement for diagnosis of an INI1 negativity. As you know, most patients who have epithelioid sarcoma have INI1 loss, over 90% of patients who have that. But there's not a specific requirement for that in the label in order to use TAZVERIK. And we're seeing some utilization in other INI1-negative tumors. But for the most part, the sales that we're seeing are in patients who are -- who have diagnosed epithelioid sarcoma. -------------------------------------------------------------------------------- Yaron Benjamin Werber, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [29] -------------------------------------------------------------------------------- Okay. Terrific. And then maybe just a final question. In terms of follicular from your ad board, how do you see the initial demand going to be? Is it patients who are third-line who failed prior therapies and have been sort of follicular -- identified follicular patients for a while and have been off therapy for a while? And that's sort of the initial patient who's going to enroll into this drug? Or is it going to be patients who are recently relapsed/refractory, and it's going to be a switch from, let's say, second-line failure to third-line just given the amount of patients out there? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [30] -------------------------------------------------------------------------------- Certainly. Good question. Matt, I'll let you talk a bit about the experience we have both from our market research as well as from the advisory board as to where you think TAZVERIK will be used. -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [31] -------------------------------------------------------------------------------- Yaron, so the feedback from the advisory board that we recently conducted as well as the voluminous market research that we've executed continue to provide the same consistent level of feedback that physicians are encouraged and enthusiastic about TAZVERIK's profile, particularly the activity that's been observed, the duration of its activity as well as the safety profile that's associated with molecule. With regard to where we see patients coming from, I would offer that in the near term, we would certainly expect that patients who have progressed on 2 or more prior therapies, consistent with the label, would be eligible for TAZVERIK. So we certainly expect that population of patients to come in. But as we've talked about in the past, we've certainly had a hypothesis and thought process around, given some of the challenges of the existing treatment regimen, that some patients, in fact, will choose to opt out of therapy. And we believe that a new molecule with a better and differentiated safety profile may encourage them to come back in. So those patients that have perhaps had a challenging experience with one of their prior treatments, certainly with TAZVERIK's approval, could come back into the market and could come back in for treatment for a brand like this one. -------------------------------------------------------------------------------- Operator [32] -------------------------------------------------------------------------------- Our next question comes from Leland Gershell with Oppenheimer. -------------------------------------------------------------------------------- Leland James Gershell, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [33] -------------------------------------------------------------------------------- So I just want to ask a bit further on the market research that you've recently readout and also your ad board comments. Just as we think about uptake into those with EZH2 activating mutations versus wild-type, maybe if you could just share some more color as to what you think that trajectory may be. And how, if any, impact of COVID could play given that even though your label may -- you're going for the broad label that's agnostic to mutation, there may be physicians who still want to test for the mutation. And then I have a follow-up. -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [34] -------------------------------------------------------------------------------- Okay. Matt? -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [35] -------------------------------------------------------------------------------- Sure. So with regard to -- maybe I'll start with the COVID considerations first. I mean as an oral treatment, certainly, TAZVERIK, we believe, given the circumstances, is certainly well suited to manage the situation that the health care community is facing with regard to the COVID crisis. And the fact that we have built a very thoughtful distribution plan with specialty pharmacy, we believe that the ease in patients receiving this therapy is -- has been established. And again, for physicians who wish to use TAZVERIK in FL will be a very fluid channel for them to do so. With regard to the feedback on our research and our advisory board, it's been remarkably consistent to be candid. The acknowledgment that there's really no standard of care for patients living with relapsed or refractory disease, that the current therapies do provide limited benefit and that there is a desire for a new class. And a new option to address these patients consistently presents itself with regard to our research and the feedback from both our academic and the community advisers that we spoke with. With regard to uptake in either mutation only -- mutation patients as well as wild-type patients, we've yet to see a fundamentally disproportionate level of interest vis-à-vis one group having more use versus another at this point. We see that the profile tests well for patients with both wild-type and mutation, and we would expect utilization in both segments. -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [36] -------------------------------------------------------------------------------- I think the important thing about that, Leland, is that -- and this question has come up for us before. And what we see in the research that we've just done is there's not a strong desire among physicians to test our EZH2. It is available. It's available today. They can test through foundation medicine. Many institutions have their own way of testing even without the diagnostic that was used in our clinical study. But I think that is right. We're seeing that there isn't a strong desire to test. I think they look at the profile as one. It solves the issue. Some of the issue that I talked about is the unmet need. If they need sustainable remissions in these patients who have been through 1 or 2 prior rounds of therapy, many of which have toxicities, and they can't stay on the drug, and so therefore, they don't have long-lasting remissions. That's what they're looking for. And the durability of benefit in our patients is the same. Whether it's a patient with a mutation or a patient who has wild-type EZH2, the response rates are a bit different. But once a patient responds, the response looks the same. The durability of the response is very similar. And even in those patients in our studies who were wild-type, who didn't have an objective response, keep in mind that about 70% of those patients did have reduction in their tumor volume. So they're benefiting. It may just never get to the threshold of having an objective response. So I think when physicians see that data in totality, they see that it meets the unmet need that I talked about in my opening remarks which is a drug that is safe and tolerable. Patient can stay on it and provides a durable, long-lasting benefit. -------------------------------------------------------------------------------- Leland James Gershell, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [37] -------------------------------------------------------------------------------- That's helpful. And then just to ask, given the very favorable safety profile of TAZVERIK, would you expect that patients who may be on, let's say, a second-line regimen that does have toxicities, as a lot of these alternative options have, would simply switch out and go to TAZVERIK irrespective of the efficacy side of the regimen that they are on, in other words, not wait for a formal efficacy failure, but move to another agent that's maybe easier to take? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [38] -------------------------------------------------------------------------------- Yes, I think it's instructive, and I'll ask Matt to speak to it as well. But I think the research that Matt referenced, it's instructive to see that we have -- we see in the research, we did with patients and with the physicians who treat them, there's a proportion of patients who just come off therapy and they go off therapy completely, mainly related to toxicities or adverse events, and they don't want to come back on the treatments that are currently available. So we believe that type of a patient would be a good candidate. And given -- particularly in the patients who have an EZH2 mutation, the single-agent activity that we're seeing of close to 70%, we believe that's a reasonable thing if they whatever reason have either failed on a second-line therapy or not able to tolerate that. And again, our research shows that there are some of those people who sadly don't come on to anything right now. And we think this is a need that we can address with TAZVERIK. Matt, I don't know if you'd like to add anything further. -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [39] -------------------------------------------------------------------------------- No. That was well said. I mean I certainly agree. I mean the research has enlightened us with regard to that, regard about patients coming off of therapy because of these types of challenges and tolerability challenges. So to your point, given the profile of TAZVERIK, this is the potential for them to come back on to treatment and do well and do well in a safe and manageable manner. -------------------------------------------------------------------------------- Leland James Gershell, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [40] -------------------------------------------------------------------------------- Great. And then just one more, if I may add. Have you -- with the drug approved for ES and the data out there in refractory FL, have you -- could you quantify maybe any level of interest you've gotten from physicians to get hold of the drug for use in follicular patients ahead of the approval? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [41] -------------------------------------------------------------------------------- Yes. We have seen -- from the beginning, I think we described on our last call that one of the first prescriptions that came in was actually for a patient with relapsed/refractory follicular lymphoma. We continue to see some prescriptions in indications that were not epithelioid sarcoma. Some of those have FL. Some of those have been patients who have other INI1-negative tumors, other sarcomas. But for the most part, the predominant use that we've seen has been for patients who have epithelioid sarcoma. -------------------------------------------------------------------------------- Operator [42] -------------------------------------------------------------------------------- (Operator Instructions) Our next question comes from Peter Lawson with Barclays. -------------------------------------------------------------------------------- Peter Richard Lawson, Barclays Bank PLC, Research Division - Research Analyst [43] -------------------------------------------------------------------------------- Just kind of, I guess, a follow-up question around potential use. Are you seeing -- you get any details around what lines of use you're seeing in tazemetostat, if it's been used as mono agent, combo agent? And then any other color around the off-label use and which INI-negative tumors you'll see [in the end]? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [44] -------------------------------------------------------------------------------- Yes. Well, I'll ask if Matt can you speak a bit more to what we're seeing in the epithelia sarcoma use. Matt? -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [45] -------------------------------------------------------------------------------- Sure. Peter, the majority of utilization thus far with regard to TAZVERIK and ES has predominantly been associated with monotherapy use. And then with regard to your question around other INI1 malignancies, there have been a few INI1 sarcomas that have appeared to our understanding. -------------------------------------------------------------------------------- Peter Richard Lawson, Barclays Bank PLC, Research Division - Research Analyst [46] -------------------------------------------------------------------------------- Has that changed in any way in April, that trend? And it sounds like the majority of scripts are coming from ES use. -------------------------------------------------------------------------------- Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer [47] -------------------------------------------------------------------------------- Yes. I mean the performance with regard to what we're seeing through the month of April, now that we've finished the month, that hasn't really terribly changed much with regard to prescription utilization. As Rob mentioned earlier, you still see the predominant number of patients being ES patients, and these are both new patients coming on to therapy, but certainly, patients that were prescribed the drug in February are now starting to get their refills and starting to continue on therapy. -------------------------------------------------------------------------------- Peter Richard Lawson, Barclays Bank PLC, Research Division - Research Analyst [48] -------------------------------------------------------------------------------- Great. And then just a quick question for Paolo. It seems that there was a change in OpEx guidance going from GAAP to non-GAAP. Just if you could walk through that. Is that a milestone recognition change? -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [49] -------------------------------------------------------------------------------- So I think it was -- question was to Paolo, but I don't hear him. He may have dropped off. So I'll answer the question. There wasn't a change, Peter. We actually -- if you go back to the Q4 results, we reported both GAAP and non-GAAP. We are highlighting the GAAP in this case because we thought it's the cash expenses that affect the cash one way that people are most interested in. We did pay the milestone payment to Eisai for the approval of the $25 million milestone. That, however, was covered by the royal -- by the Pharmakon loan instrument that we used to cover that. So from a cash point of view, it doesn't affect our cash. It doesn't affect the non-GAAP. So that's a non-GAAP expense covered by the royal -- by the Pharmakon loan instrument. That will be the same. We'll have another onetime case like that coming up if we're successful with our approval in June for follicular lymphoma. We'll have another $25 million milestone we have that will be covered by the Pharmakon loan as well then. We report about it, but it's not [a theme]. We share both GAAP and non-GAAP. -------------------------------------------------------------------------------- Paolo Tombesi, Epizyme, Inc. - CFO [50] -------------------------------------------------------------------------------- This is Paolo. I was just on mute and waited for your intro Rob. But I think you answered perfectly the question. I don't know if there is any other follow-up. Happy to answer. -------------------------------------------------------------------------------- Operator [51] -------------------------------------------------------------------------------- I'm showing no further questions in queue at this time. I'd like to turn the call back to Mr. Bazemore for closing remarks. -------------------------------------------------------------------------------- Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [52] -------------------------------------------------------------------------------- Okay. Thank you so much. And thanks to all of you for joining today. Thanks for your questions. We look forward to keeping you updated on our activity as the year progresses. And we hope you all have a safe and healthy day-to-day. Have a great day. Take care, everyone. -------------------------------------------------------------------------------- Operator [53] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.