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Edited Transcript of EPZM earnings conference call or presentation 26-Feb-19 1:30pm GMT

Q4 2018 Epizyme Inc Earnings Call

Cambridge Mar 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Epizyme Inc earnings conference call or presentation Tuesday, February 26, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Matthew E. Ros

Epizyme, Inc. - Chief Strategy & Business Officer and Principal Financial Officer

* Robert B. Bazemore

Epizyme, Inc. - President, CEO, Secretary & Director

* Shefali Agarwal

Epizyme, Inc. - Chief Medical Officer

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Conference Call Participants

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* David Neil Lebowitz

Morgan Stanley, Research Division - VP

* Fang-Ke Huang

SunTrust Robinson Humphrey, Inc., Research Division - Associate

* Leland James Gershell

Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst

* Michael Jonathan Yee

Jefferies LLC, Research Division - Equity Analyst

* Robyn Karnauskas

Citigroup Inc, Research Division - Director and Senior Analyst

* Alicia Davis

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Presentation

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Operator [1]

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Hello, and welcome to Epizyme's Fourth Quarter and Full Year 2018 Conference Call. (Operator Instructions) Please be advised this call is being recorded at Epizyme's request. I would now like to turn the call over to Alicia Davis, you may begin.

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Alicia Davis, [2]

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Thank you, Kevin, and good morning. On the call with me today are our CEO, Rob Bazemore; Dr. Shefali Agarwal, Chief Medical Officer; and Matt Ros, our Chief Strategy and Business Officer.

Today's discussion will include forward-looking statements related to Epizyme's current plans and expectations, which are subject to 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 Form 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?

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [3]

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Thank you, Alicia, and good morning, everyone. Across all aspects of our business at Epizyme, we have made great progress toward our vision of rewriting the treatment of cancer and other serious diseases through the development of novel epigenetic medicines. We are pioneers in this area, exemplified by our progress with tazemetostat, our first-in-class oral EZH2 inhibitor, and we are excited to highlight for you today some of the exciting developments that we've made in the last year. 2018 was a year of many important milestones, and we continue to successfully execute on our Vision 2020, comprised of 4 ambitious goals, those are to: launch tazemetostat in both solid tumors and non-Hodgkin lymphoma; expand tazemetostat's benefit into earlier lines of treatment, combinations and additional tumor types; build a robust clinical pipeline with at least 3 new product candidates in development; and further establish our leadership in epigenetics.

As we look ahead, 2019 is poised to be the most transformational year for the company yet. We stand well positioned to deliver on our Vision 2020 and to enhance the value of Epizyme in the short, mid and long term. The most near-term opportunities are through the initial launches of tazemetostat for epithelioid sarcoma and follicular lymphoma, if approved. Mid-term growth will come through significant expansion of our tazemetostat program into earlier lines of treatment in FL and new indications as a combination agent.

Longer term, we're planning for additional value creation through the advancement of new assets, including EZM8266 and our earlier partner programs with Boehringer Ingelheim.

With tremendous progress made across all aspects of our business, I am confident in the future of Epizyme. Our team is hard at work preparing for the submission of 2 successive NDAs in 2019, an opportunity that few companies get, but one for which we are well prepared.

We're on track to submit our first NDA for accelerated approval of tazemetostat for ES in the second quarter, which if successful would mark the first ever commercial availability of an EZH2 inhibitor. Then, based on a positive FDA meeting late last year, we plan to submit an NDA for accelerated approval of tazemetostat for an all-comer third line or later FL patient population in the fourth quarter of the year. Once approved, this will lead to access to tazemetostat in a large patient population with high unmet medical need. We are executing our plans to expand the investigation of tazemetostat into earlier lines of therapy for FL with combination studies to be initiated this year. We're also preparing to initiate studies exploring tazemetostat's combination potential in additional indications, including castration-resistant prostate cancer and solid tumors that are resistant to platinum-based therapies.

We're underway with plans to begin clinical development with EZM8266, our novel G9a inhibitor in the second half of the year, for the potential treatment of another important indication, sickle cell disease, where today there are no disease-modifying therapies.

And finally, we're continuing to advance our earlier pipeline through our own research and established collaborations, which have contributed meaningfully to Epizyme's value. The first of our target indications for tazemetostat is an indication that is strategically very important for Epizyme. Epithelioid sarcoma is a rare sarcoma, with no specifically indicated treatments. If approved, tazemetostat would be the first ever treatment specifically indicated for ES patients. We believe tazemetostat could dramatically change the care of people with ES who have limited treatment options, which are also associated with challenging side effects. This aligns closely with our mission of rewriting the treatment of cancer in patients who have high medical need today.

In ES, our plans to make tazemetostat commercially available to physicians can be accomplished through an efficient and scaled commercial infrastructure. This approval would provide a platform from which to expand our medical and commercial presence to support the potential subsequent approval for FL. It can also make the preparation in review of subsequent regulatory submissions more efficient since many of the NDA modules would be common to both submissions. The opportunity to make a difference in the lives of patients with relapsed/refractory FL is also a very meaningful one to Epizyme. FL is an indolent cancer that is incurable today. People with FL are primarily treated with combination chemotherapies, which become challenging to use in later lines of treatment as patients become more heavily relapsed, making long-term chemo very difficult. Over the course of their disease, patients with FL will typically relapse and unfortunately, cycle through numerous therapies.

In the third line and later setting, the only currently approved therapies all work through the same mechanism of PI3K inhibition. These therapies are frequently associated with challenging toxicities and, as a result, are used less frequently. Today, about 75% of the patients in the third line setting are actually treated with recycle chemotherapy combinations, investigational or off-label medications. This further emphasizes the unmet need in this population, and where we see significant potential for a new treatment like tazemetostat. We know that the largest proportion of patients with FL are treated by community oncologists. These physicians want a medication that will provide long-lasting remissions and help stabilize patients. They also want treatments that are well tolerated and easy to take and do not create new problems that they have to manage in their patients. These are the factors which enable FL patients to benefit from therapy over an extended period of time. This is why we're so encouraged by the data we've generated to date with tazemetostat showing that the majority of FL patients treated have tumor reductions regardless of their EZH2 mutation status and have demonstrated durable responses. It's why we believe this oral small molecule treatment has the potential to play an important new role in how these patients are treated in the future. Based on the outcome of our meeting with FDA late last year and the strength of our data across all FL patients in our Phase II study, we plan to submit an NDA for accelerated approval in the fourth quarter. With the FDA minutes in hand, we feel confident in our submission for patients both with and without EZH2 mutations.

Let me ask Shefali to review key highlights of our tazemetostat clinical program. Shefali?

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Shefali Agarwal, Epizyme, Inc. - Chief Medical Officer [4]

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Thanks, Rob. As mentioned, we are quickly approaching the submission of our first NDA for tazemetostat for the treatment of adults with ES. ES is a very aggressive cancer that often affects younger individuals and for which there is no specifically indicated treatment. In our Phase II trial in this patient population, tazemetostat treatment resulted in a 15% objective response rate in the total population of both treatment-naive and relapsed/refractory patients. Notably, in the subset of patients who had no prior treatment, we saw a 24% ORR and durable responses of at least 8 months. The median overall survival has not yet been reached. In the subset of refractory patients, we also saw a prolonged duration of response out to 11 months and a very encouraging median overall survival of 20 months. Tazemetostat has continued to be generally well tolerated in ES patients with no patient discontinuing therapy due to treatment-related adverse events. Based on the strength of this data, which represents the largest assessment of any treatment, specifically in ES, we are well under way with our NDA preparations and are on track to submit for accelerated approval in the second quarter of this year with the request for priority review.

Turning to FL, we are also very pleased with the data from our ongoing Phase II study and with the productive discussion we had with the FDA late last year. We have aligned on a path for an all-comer submission for tazemetostat for patients with FL, both with and without EZH2 mutations, who have been previously treated by two or more prior therapies. This was reiterated in the minutes we received from the agency. As agreed with FDA, our NDA package will be based on the fully enrolled Phase II cohort, which includes 54 patients with wild-type EZH2 and 45 patients with EZH2 activating mutations.

At EHA last year, we presented interim data showing that tazemetostat led to durable clinical responses in both patients with EZH2 activating mutations and wild-type EZH2 with favorable safety and a very low rate of treatment discontinuation due to adverse events. In 28 EZH2 mutation patients, as of the May 2018 data cutoff, we saw a confirmed ORR of 71% with a median progression-free survival rate of 48.6 weeks and a median duration of response of 32.3 weeks. Notably, no patient had progressive disease adverse response.

Though ORR in EZH2 mutation patients have remained consistently high and we don't expect this to change appreciably, we do note that the durability of data in patients with EZH2 mutations are still maturing, since many of our patients were still relatively early in their treatment as of our last presentation at EHA.

As of the same data cutoff in 54 wild-type EZH2 patients, we saw a confirmed ORR of 33% with a median PFS of 29.9 weeks and a median duration of response of 76 weeks, meaning patients were able to stay on therapy for well over a year, something not seen frequently with today's therapies. Nearly 80% of wild-type patients demonstrated a reduction in tumor volume, even if they never reached the confirmed objective response and some of these patients continued on therapy even after trial-defined progression. With enrollment completed for wild-type EZH2 patients back in 2017, data from these patients are mature and we do not expect them to change in any meaningful way. Notably, 100% of patients with an EZH2 mutation and 78% of patients with wild-type EZH2, experienced a reduction in tumor burden, an effect we believe will be incredibly meaningful in the clinical utilization of tazemetostat, if approved. As we shared earlier this year, we're conducting the largest natural history study of its kind in patients with FL, which is 2/3 complete. The data from those patients was provided to FDA in our end of Phase II meeting in December and, thus far, have confirmed that patients with EZH2 activating mutations do not achieve a better treatment outcome in any line of therapy, compared with patients with wild-type EZH2. As such, we reached agreement with FDA that the responses we are seeing in our trials are due specifically to tazemetostat.

In addition, the frequency of EZH2 mutations recorded in our natural history study is the same as our previous understanding at 20% to 24% regardless of the line of treatment. We plan to present updated data from all FL patients at a medical meeting mid-year and that data would ultimately be included in our planned NDA submission. At the time of our NDA submission, approximately 90% of patients in our study will have had at least 12 months of response follow-up, with all wild-type patients out to 2 years or more. As a reminder, we're planning to conduct a confirmatory program for full approval of tazemetostat for FL that could expand its label into second line treatment population.

We plan to continue to engage with the FDA in the first half of the year to align with this program and initiate it ahead of our NDA submission. While we prepare for the ES and FL NDA submissions, we'll also be initiating new studies of tazemetostat to expand its use into earlier setting for FL through additional combinations.

We are finalizing plans for a trial of tazemetostat in combination with Rituxan for the treatment of patients with relapsed/refractory FL.

We believe this combination could be an accurate reflection of potential clinical practice for this patient population and will disclose final details upon study initiation.

And we're on track to start a triple combination study of tazemetostat with Revlimid plus Rituxan, a treatment regimen referred to as R2 in the second line setting. R2 is expected to emerge as a chemotherapy-free option in the management of second line FL. Data presented at ASH in December of last year showed that treatment with R2 resulted in positive clinical responses in patients with relapsed/refractory lymphoma, which was superior when compared with Rituxan alone. We plan to begin a study with this combination in 2019.

We're excited about the potential of both these combinations which would greatly enhance our treatment opportunity in FL patients. In addition, based on promising data on the combination of tazemetostat and R-CHOP presented by our partner, the Lymphoma Study Association, at ASH last year, we are evaluating the opportunity to expand the combination into front-line, high-risk FL patients providing us the opportunity to treat all patients with FL in the future. The data presented show that in high risk previously untreated patients with diffuse large B-cell lymphoma, the combination was generally well tolerated and resulted in an encouraging activity.

Beyond FL, we are advancing the development of tazemetostat in additional combinations for certain solid tumors based on scientific rationale and promising preclinical data. We plan to initiate a combination study with the current standard of care for castration-resistant prostate cancer in mid-2019. Also following impressive data obtained from a cohort of patients in our clinical trials with pre- and post-treatment biopsies, we plan to initiate a combination study with a PARP inhibitor for the treatment of platinum-resistant tumors, such as small-cell lung cancer, triple-negative breast cancer and ovarian cancer in the second half of 2019.

This is a very exciting time for the company and I'm proud of what the team has accomplished to get to this pivotal moment. I'll also like to thank the study investigators across our many different trials for their dedication to helping bring tazemetostat to patients. I look forward to seeing this hard work come to fruition in 2019.

Now I'll turn the call over to Matt to review the FL and ES market opportunities and our financial results.

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Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer and Principal Financial Officer [5]

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Thanks, Shefali. We strongly believe that tazemetostat has a significant opportunity to reach Follicular Lymphoma patients, irrespective of their EZH2 mutational status, starting first with those who have been treated with at least two or more prior therapies.

As we have learned from our market research efforts to address our target population in FL, we believe there are a significant number of eligible patients in the third line and later settings that could benefit from treatment with tazemetostat. Our research tells us that there are approximately 12,000 treatment-eligible patients in the third line or later setting in the United States. And about 8,000 in the EU5. With a treatment-eligible population of approximately 20,000 patients in that setting, if approved, tazemetostat would be poised to gain rapid adoption given the lack of a truly defined standard of care that exists for these patients today. We are also turning our attention to the broader FL market opportunity, with the potential for tazemetostat to be used in earlier lines of therapy.

In the U.S. and EU5, there are approximately 45,000 patients eligible for systemic therapy in the first and second line treatment settings, representing a substantial label expansion opportunity with this novel agent. Based on data generated to date and its mechanism of action, we believe tazemetostat is well positioned to be developed for both a front and second line treatment option by becoming a combination agent of choice with current or emerging treatments, such as Rituxan, R2 and R-CHOP.

As we advance our clinical development program with the new studies Shefali outlined, we expect tazemetostat's market potential will expand with it.

Moving to epithelioid sarcoma, the most near-term of our commercial opportunities. There have not been any meaningful advancements in the treatment for this rare tumor type. The only currently available options for systemic treatment include chemotherapies like Adriamycin, ifosfamide, docetaxel and gemcitabine with a multi-tyrosine kinase inhibitor, pazopanib.

The best literature suggests there are approximately 800 patients living with ES in the United States, of which roughly 300 have metastatic disease and would be eligible for treatment. We believe this figure underestimates the true prevalence of the disease given a lack of available treatment specifically indicated for ES patients and that it is often misdiagnosed. With a survival rate of less than 1 year once the disease has metastasized, the need for a new treatment for patients living with ES is real.

As we've mentioned before, our plan is to commercialize tazemetostat for ES in the United States by ourselves. I'm confident that we can do so with an efficient and scaled commercial infrastructure of about 25 professionals, given that these patients almost always end up in a specialized cancer treatment center once diagnosed. As we prepare for this, educating physicians on this rare sarcoma, so that they can make the correct diagnosis, is a top priority today. We believe tazemetostat would be a well-positioned option for patients with ES, if approved, and that the adoption by physicians would be substantial. We look forward to advancing this program to turn our hope into a reality.

Turning now to our financials. We ended 2018 with approximately $240 million in cash and cash equivalents, which includes $21.7 million in revenues over the course of the year recognized through upfront and milestone payments from our partners, Boehringer Ingelheim and GlaxoSmithKline, and approximately $80 million in net proceeds from our follow-on financing in October. As we shared back in January, we have extended our operating runway into the second quarter of 2020. We were able to achieve this by enhancing our operating efficiencies and focusing on executing our strategic priorities relating to tazemetostat, EZM8266 and our partner programs. This runway takes us through multiple important clinical and regulatory milestones, including both of our ES and FL NDA submissions, the first expected approval of tazemetostat for ES and the associated milestone payments to Eisai upon each of these achievements. We stand financially strong as we head into our most important year as a company with multiple options available to us to continue to fund the growth and evolution of Epizyme.

I'll now turn the call back over to Rob to wrap us up.

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [6]

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Thanks, Matt. As you've heard, 2019 is said to be a very important year as we prepare for 2 back-to-back NDA submissions and, if successful, for our first product launch. While we recognize that we still have a lot of work ahead of us, we are more prepared than ever to execute. I am enormously proud of the team and their dedication to advancing our pipeline and business. Lastly, we extend our deepest appreciation to the patients, physicians and the caregivers, who have participated in our studies and championed tazemetostat along the way. Without their contributions, we would not be where we are today. We're looking forward to a very exciting year ahead and to updating you on our progress along the way.

With that, we'll open up the line to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Michael Yee with Jefferies.

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Michael Jonathan Yee, Jefferies LLC, Research Division - Equity Analyst [2]

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Two questions. First was as you prepare for a filing in ES, maybe you could help frame what you think the approvability or regulatory question would be for that indication and what the precedent would be and how we should think about handicapping that approval? And the second question is when you give your update in follicular lymphoma for wild-type in EZH2, how much of that data changed from the last prior update? Is it just greater durability? I think the EZH2 patient population was pretty much mostly enrolled, so the denominator shouldn't change that much. So just framing response rates, that shouldn't change much. Is that correct? We should feel good about that midyear update?

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [3]

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So let me start with that question, Mike. I think it's the easier one to answer, about the wild-type. We don't expect that the data will change substantially. Keep in mind, the wild-type patient population was fully enrolled as of the first part of 2017, so we have about 2 years of follow-up. I think as of the last time, the data reported at EHA last year, there was only one patient left who had stable disease and still on drug. And so we don't expect those data to change. And in fact, what we presented to the FDA when we spoke with them back in the fourth quarter is likely to be very close to the filing package that we have when we submit the NDA for approval. With regards to ES, your question on the approvability in ES. So this is -- this ES cohort in our Phase II study represents the largest prospective study of ES that's ever been done, either retrospective or prospective. As you'd know, when we talked about this, there are no treatments that are specifically indicated in epithelioid sarcoma today, so there really isn't an established benchmark for success. Most of the drugs that are used to treat these patients are drugs that are approved more broadly in soft tissue sarcomas, but they have little to any published data in ES specifically. We did -- as we did with FL back in the fourth quarter of last year, in 2017, we had a positive interaction with the FDA, we had a similar end of Phase II meeting, where we were able to identify a path to submission for accelerated approval based on this 60-patient cohort. We expect the safety database for this will be rather substantial. We have over 800 patients that have been treated to date with tazemetostat that will be a part of the safety package that goes along with that. And we expect that the FDA's review will focus on the totality of the evidence, not only objective response rates but also some of the other data that we presented back at ESMO in September of last year, including overall survival, durability response -- durability and long-term sustained stable disease is actually very important in these patients. So based on the strengths of those data, we feel confident in our planned NDA submission for epithelioid sarcoma.

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Michael Jonathan Yee, Jefferies LLC, Research Division - Equity Analyst [4]

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Okay, so just to clarify, on the follicular lymphoma -- again, going back to the first question, in the EZH2 population, which was vastly majority enrolled -- there was still some stuff happening before you had the partial hold, how much that data changed, if at all, when you got to that midyear update to frame expectations there.

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [5]

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So I think the thing that you should expect when we present data midyear this year is: first, we'll have all the patients now, so all 45 patients with EZH2 mutations as well as all the wild-type patients will be included in the assessment. Last year, when we presented at EHA, we were still enrolling EZH2 mutant cohort, as you point out. The response rate has been consistently high no matter when we reported these data, so I don't expect that we will see any major changes in the objective response rate. The last time we reported, it was at 71% but it's been consistently high. I think the thing you should start to see improvement on when we report data this summer is duration of response because each time we've done interim data cuts, we've had new patients that have just been enrolled, they've been new responders and those pull down your median duration of response. Now that the study is fully enrolled, we don't have those new patients coming in, and so I would expect to see that begin to mature. And just from a mechanism of action point of view, we don't expect that the duration of response, ultimately would look different in the mutant than the wild-type patient population.

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Operator [6]

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The next question comes from Yaron Werber with Cowen.

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Unidentified Analyst, [7]

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This is [Leo] on for Yaron. My first question is on the combinations for taze in FL, what's the time line we should be thinking about for the earlier line study? Do you have any expectation on the timing of the data? And my second question is the clinical hold in Europe, has it all been lifted in Europe?

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [8]

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So I'll start with the question that you asked on the timing of the follicular lymphoma combination studies, we have 2 -- actually, 3 important combinations that we plan to look at this year. There's a combination with R2 that we're planning to conduct in the second line setting. We expect that, that study would initiate in the middle of the year. We're also expecting to begin a study that's an investigator-initiated study, studying tazemetostat with Rituxan alone. We again expect that study would start around midyear. And then the third study is the trial that we've been conducting with R-CHOP in frontline DLBCL, these are in high-risk patients, elderly patients with DLBCL. We are working with the Lymphoma Study Association to extend the study to also include front-line, high-risk FL patients. And our hope would be that, that would also begin in around midyear. We've not guided as to when we would expect data from those trials. Those are just the initiations of the studies. And then I'll ask Shefali to comment on where we are with regards to the partial hold.

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Shefali Agarwal, Epizyme, Inc. - Chief Medical Officer [9]

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Sure. So in terms of partial clinical hold for Europe, we're off hold in Germany. And in France, we've answered all the questions, so they're just looking at a last review process. We expect to be off hold very quickly in just very short time.

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Alicia Davis, [10]

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Leo, are you still there?

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Unidentified Analyst, [11]

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Yes. That's helpful.

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Operator [12]

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Our next question comes from David Lebowitz with Morgan Stanley.

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David Neil Lebowitz, Morgan Stanley, Research Division - VP [13]

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First, could you elaborate on the upcoming -- upcoming tazemetostat studies in prostate cancer and platinum-resistant tumors, specifically what's the rationale behind targeting those specific tumors? And one step further, how might you expect synergy with a PARP?

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [14]

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Certainly. I'll ask Shefali if she would answer those questions.

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Shefali Agarwal, Epizyme, Inc. - Chief Medical Officer [15]

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Sure. I'm going to start with prostate. Basically, for prostate, there's a lot of preclinical as well as clinical validation in castrate-resistant prostate cancer. So EZH2 protein expression is correlated with advanced disease progression and we believe that -- and we also have some preclinical data to say that if the EZH2 inhibitor is in cell lines have shown to improve the responsiveness to patients who are resistant to standard of care therapy in prostate cancer. So basically based on that factor and the preclinical data, we believe that we can do a study in castrate-resistant prostate cancer in patients who are resistant to standard of care therapy. In terms of PARP, we did a clinical study in solid tumor, where we did pre- and post-biopsies and looked at synergy in EZH2 pathway and the HRD pathway. And we saw there were a lot of enzymes like [serine kinase] and ATM, where there was synergy in the pathway. There's a lot of preclinical data that shows that PARP inhibitors actually inhibit action on EZH2, which increases EZH2 activity. And so in cell lines, what we've seen is EZH2 inhibitor and PARP inhibitor improve the PARP inhibitor responsiveness. And so we believe based on that preclinical synergy in patients who are platinum-resistant to PARP inhibitors and, as we have seen, that PARP inhibitors have shown modest activity in platinum-resistant patients, we will be able to combine and improve the efficacy.

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David Neil Lebowitz, Morgan Stanley, Research Division - VP [16]

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One additional question, are there any current plans to begin looking at taz in checkpoint inhibitors once again after the Tecentriq trial was halted last year?

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Shefali Agarwal, Epizyme, Inc. - Chief Medical Officer [17]

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Absolutely, we always are very encouraged. We have a lot of data in terms of PCR modulation in preclinical to talk about synergy between checkpoint inhibitors and tazemetostat. And I think we're very excited about that. We definitely would plan to look in non-small cell. Just to remind you, we did do -- within that MORPHEUS trial, we actually did DLBCL checkpoint combination as well and so we will be releasing that data with our partners mid of the year.

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Operator [18]

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The next question comes from Leland Gershell with Oppenheimer & Co.

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Leland James Gershell, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [19]

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I just wanted to ask in terms of milestone payments required for progress, if you could just review those for us over the next 1 to 2 years with filing and approval.

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [20]

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Yes, certainly. I'll ask Matt to review the Eisai.

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Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer and Principal Financial Officer [21]

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Leland, so with regard to the milestones under the Eisai agreement, so there's $10 million that's expected with regard to our ES filing. So as Rob pointed out earlier in the call this morning, that would occur at filing, which is in the second quarter. And then as we think about the FL filing in the fourth quarter this year, that would be another $10 million. And then upon approval in ES, we would have an expectation of the commitment of fulfilling $25 million.

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Operator [22]

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Our next question comes from Robyn Karnauskas with Citi.

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Robyn Karnauskas, Citigroup Inc, Research Division - Director and Senior Analyst [23]

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So I'm just thinking about like your cash. Certainly, so you've got a little bit over a year of cash. And you're talking about starting all these trials, some of which sound expensive to me. Can you just help us think through how much these trials will cost especially given that they're combos and how you're thinking about cash flows and how to maximize -- how much is your maximized cash that you have in running these trials?

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [24]

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Certainly, Robyn, thank you for the question. Let me start and then I'll ask Matt to add if I miss anything. I think generally, just in terms of how to think about our cash need for the year, they're not substantially different compared to 2018. Part of the reason for that is that some of the large Phase II studies that we've been running in follicular lymphoma, epithelioid sarcoma, DLBCL and so forth are all sort of wrapping up and the costs are coming down on those. At the same time that we're initiating some of these new combination studies, and the way we're looking at them is we're going into them as early proof of concept before we demonstrate definitive activity and then move into larger trials. And so the cost of those is relatively small this year. And then if you look at the commercial costs, as Matt has explained before, we think we can launch in the United States with a relatively small, efficient medical affairs and sales organization. And so we don't expect to make a significant investment in the commercialization of ES. We don't think it's necessary just based on the number of patients and where those patients reside. So just at a very high level, I would look at our cash needs for 2019 as being roughly similar to what we used in 2018 because of this offset. Matt, I don't know if I missed anything that you wanted to add?

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Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer and Principal Financial Officer [25]

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No, that was perfect. No, thank you, Rob. Again, I just -- from an R&D point of view, we expect to be relatively flat year-over-year, again, in large part due to what Rob has articulated and the fact that these early studies are just as we've shared early proof of concept, where we're starting out to see how effectively we can combine tazemetostat with these established agents. And then as those data evolve, then we'll move into the more broader development component.

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Robyn Karnauskas, Citigroup Inc, Research Division - Director and Senior Analyst [26]

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And just a follow-up, so I'm assuming you'll have to go to the market to get cash for beyond a year. Are you looking at any other avenues, any additional partnerships or different types of deals that might bring in any additional cash?

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Matthew E. Ros, Epizyme, Inc. - Chief Strategy & Business Officer and Principal Financial Officer [27]

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So we're certainly looking at all the different options that we have in front of us with regard to our efforts as an organization, and how we're pursuing that will be something that we'll always continue to evaluate. With regard to the partnership considerations, as you might imagine, given the fact that we have 2 near-term NDAs, there is certainly a level of strategic interest in how tazemetostat has been performing. And as we think about the partnership considerations, we believe that it has to have a lot of incremental value to how we're developing tazemetostat so that we can get there faster; and equally, how we can get greater lift on the commercial side. So we're active in thinking about those considerations as well.

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [28]

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The work that we've done on partnering, our early stage pipeline as well, Robyn, has been very helpful to us. It's helped to provide additional revenue. You saw that we've earned milestone revenues both from GSK as well as from Boehringer Ingelheim. We also expect additional revenues from achieving significant milestones this year, those are not baked into our cash runway. We don't count them until we recognize the revenue. So that would be an additional source of capital for us for this year.

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Operator [29]

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(Operator Instructions) Our next question comes from Peter Lawson with SunTrust Robinson.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [30]

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This is Huang on for Peter Lawson. I guess just a quick question about the confirmatory program that you guys will set up after that NDA submission. In your use of a natural history study, is that more towards like patients that -- exclusion criteria or would that be used like reduce the number of patients you guys would have to enroll? And I guess a little more color on whether you've met with FDA and talked more about the trial design in those programs.

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [31]

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Thanks for the question. And when you're talking about the confirmatory program in the natural history study, I'm assuming you're asking about how we plan to use that natural history study in epithelioid sarcoma for confirmatory emphasis?

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [32]

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Yes.

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [33]

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So I'll refer you to Shefali in terms of our thinking on how the natural history study might be used.

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Shefali Agarwal, Epizyme, Inc. - Chief Medical Officer [34]

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Sure. So the natural history study that we did was retrospective chart review. We have completed the study. As you know that ES -- as mentioned earlier, ES is a ultra-rare tumor type. In order for us to do a large confirmatory study would be highly difficult. So what we plan to do is use natural history study as part of a confirmatory evidence and submit that to FDA. We have a path of fast-track with ES and we would be engaging with FDA in the form of pre-NDA meetings and discuss and align on using this natural history study as a confirmatory evidence instead of a confirmatory trial.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [35]

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I see. So in terms of like any -- doing any trial -- cross-trial comparisons, it's going to be pretty straightforward. And we will put to use data from the natural history with the Phase II study to like compare patient populations and response and survival which increased between the 2 studies?

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Shefali Agarwal, Epizyme, Inc. - Chief Medical Officer [36]

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Yes, that's a great question. And absolutely, this is something that FDA is really opening up and talking about it in different aspects of rare tumor types, how you can use natural history studies. Our hope is to align with FDA and discuss how we can look at the data in natural history study because it's the largest of its kind and our study which is the largest prospective study, and use this data to compare that study and use it in a clinical context as well. Of course, we have to talk to FDA and align that in the pre-NDA meeting. But our hope would be to use this study as a confirmatory evidence instead of a trial.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [37]

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I guess last one, really quick. Do you have any updates on when you're presenting -- planning on presenting the natural history data this year?

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Shefali Agarwal, Epizyme, Inc. - Chief Medical Officer [38]

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We haven't guided on the presentation for the natural history study. But hopefully, mid of the year.

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Operator [39]

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And I'm not showing any further questions at this time.

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Robert B. Bazemore, Epizyme, Inc. - President, CEO, Secretary & Director [40]

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Okay. Well thank you, Kevin, and thank you all for joining us today. I think it's clear we have a very exciting year ahead of us, we have a lot of work to do but we're well prepared to execute on these and all of our efforts and excited to be in this place as a company. And we look forward to keeping you updated on our progress.

Thank you, everyone. Have a good day.

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Operator [41]

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Ladies and gentleman, that concludes today's presentation. You may now disconnect, and have a wonderful day.