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$EPZM - Epizyme

$EPZM – Epizyme

Overview:

Epizyme focuses on the treatment of cancer and other serious diseases through targeted epigenetic medicines with fundamentally new mechanisms of action.  Generating new medicines that are targeted at specific causes of disease and administered orally, tolerable, easy to take, and based on a deep understanding of the patients that will benefit from their use. The company has a total of five novel epigenetic therapies, three of which are in the clinical stages while the other two are preparing for IND-enabling studies.

Their epigenetic drug development is pioneered by tazemetostat in a number of cancer indications and treatment settings. Their unique scientific capabilities have enabled us to expand our platform into new epigenetic target classes likely to be highly important in disease biology. Their discovery research is yielding exciting new targets for which they are developing novel small molecule programs with the goal of creating a sustainable pipeline of clinical candidates to support their leading molecule tazemetostat. This includes their most recent drug development candidate, EZM8266, which will begin IND-enabling studies in 2018, for the potential treatment of sickle cell disease.

To really accelerate their portfolio and advancement, Epizyme has established a foundation of strategic collaborations with biopharmaceutical leaders.  These collaborations have provided $200 million in non-equity funding to the company while also managing to retain global rights and/or US rights for their products.  To highlight some of the strategic moves, the company has partnered with Genetech, Lysa, Eisai, Roche, GSK, and Celgene.  Many major names in the biotech industry which provide Epizyme with excellent positioning to become a successful company with a diverse pipeline.

Pipeline:

This company has 4 current products disclosed in their pipeline with 9 different indications.  Not only that, but they also have over 5 different undisclosed targets with partnered companies that they plan on launching into clinical development over the next few years. 

 

Tazemetostat – 6 different indications currently being studied ranging through Phase I and II.

Pinometostat – Phase I

PRMT 5 Inhibitor – Phase I

G9a Inhibitor – Research Phase / Preclinical

 

Specific Drug:

Our main focus currently is Tazemetostat which is expecting results from its Phase II study surrounding, which they were planning on submitting an NDA for the compound in the indication for epithelioid sarcoma in the second half of 2018.  There has been a bump in the road recently however.  The FDA has recently halted enrollment on clinical trials of tazemetostat in patients with various solid tumors and hematologic malignancies, according to Epizyme, including epithelioid sarcoma.  Previously enrolled patients without disease progression can continue on in the study. The FDA placed the partial clinical hold on the tazemetostat program after Epizyme provided a safety update detailing a pediatric patient with advanced poorly differentiated chordoma enrolled in a phase I trial who developed a secondary T-cell lymphoma.

The patient had been enrolled in the trial for around 15 months at the time of the update and had reached a confirmed partial response. Following the diagnosis of the secondary malignancy, the patient stopped tazemetostat and is now receiving therapy for T-cell lymphoma.  According to the company, this is the only incident of secondary lymphoma reported in over 750 patients in their clinical programs. 

In June 2017, the FDA granted orphan drug designation to tazemetostat for the treatment of adult patients with epithelioid sarcoma, the upcoming indication study results we are awaiting. The orphan drug designation program is reserved for the safe and effective treatment, diagnosis, or prevention of conditions that affect fewer than 200,000 people in the United States

Phase II data included 31 patients from an open-label, single-arm study who were treated with 800 mg of tazemetostat in continuous 28-day cycles until progression, unacceptable toxicity, withdrawal, or study termination.  Tumor response was evaluated every 8 weeks. Disease control rate (DCR), defined as objective response of any duration or stable disease lasting greater than 32 weeks, was the primary endpoint. Success at stage 2 required DCR in at least 5 of 30 treated patients. Fifteen patients (48%) had distal tumors. The remaining tumors were proximal.  The median progression-free survival was 5.7 months. DCR was 10% with a confirmed response rate of 13% and a stable disease rate of 19% at ≥32 weeks. Seven patients (23%) had disease progression.  The best overall response was partial response (13%), and there were no complete responses recorded. Thirteen patients remain on treatment, and DCR and ORR outcomes are expected to be updated soon.  24 patients experienced adverse events while taking the drug, which accounted for 77% of individuals, a high rate of occurrence of side effects.

At the European Society for Medical Oncology Congress in October 2018, Epizyme plans to present updated Phase 2 data from patients with epithelioid sarcoma who are receiving tazemetostat as a monotherapy. A recent assessment of data from the full 62-patient ES cohort in this study has shown that the objective response rate has remained consistent with what was observed in the initial 31 enrolled patients.

Epizyme is continuing to prepare its first New Drug Application (NDA) submission for tazemetostat for the treatment of patients with epithelioid sarcoma. In order to include more mature durability data in its submission and based on the potential impact of the partial clinical hold on the timing of the company’s pre-NDA meeting with the FDA, Epizyme now plans to submit its NDA in the first half of 2019.

The company has responded to the FDA recently, and hopes to remove the partial hold on their clinical trial and start enrolling additional patients into the studies.  We shall see the data they present in coming weeks and hopefully receive some guidance on the application of the NDA.

Current and Forcasted Market:

Epithelioid sarcoma is a rare, slow-growing type of soft tissue cancer. Most cases begin in the soft tissue under the skin of a finger, hand, forearm, lower leg or foot, though it can start in other areas of the body.  For the indication of epithelioid sarcoma, the disease only affects about one in every 2.5 million people and comprises of less than 1% of the entire soft tissue sarcoma market, making it fairly rare.  To put this into perspective, even when considering the high degree of mis-diagnosis of the disease as it takes two years or more to diagnose from development, between the years 2004-2008 there were only 229 diagnosis within the united states, about 55 per year.  This indication is extremely focused and small, leaving a small market with limited potential growth and revenues. 

Finances:

The company currently has a cash position comprised of cash, cash equivalents and marketable securities of $215.6 million, compared to $247.9 million from March of this year. Their revenues are up 20% YOY for the second quarter compared to Q2 2017, topping $12 million which is due mostly to the collaboration and licensing with GSK.  Their research and development expenses are increasing due to the demand of tazemetostat and clinical research activities associated with the studies around the compound.  All in, Q2 2018 the company saw a net loss of $29.1 million, or $0.42 per share, compared to a net loss of $28.0 million, or $0.48 per share, for Q2 of 2017.  Having recently extended its cash runway guidance, the company believes it has enough cash and cash equivalents to fund operations through Q4 2019. 

Review:

In my opinion, avoid for now.  While their pipeline is fairly robust and the drug tazemetostat does have several different indications that show great potential, the current state is shaky.  Having the partial clinical hold on their drug, the recent termination of the use of tazemetostat in diffuse large B-Cell Lymphoma, and the extended timeline they implemented for filing its NDA for epithelioid sarcoma, I don’t see much room for movement up.  Epizyme has cash on hand to push them through for more than a year and reducing the clinical costs from the halt and terminations might help them extend their reserves a little further.  That however is overshadowed by the recent negative news.  They are reporting greater losses than last year and hitting bumps in the road in their development of their primary candidate. 

I believe that even if they produce great updated Phase II data for their presentation to the EU, they will continue to drop.   With the delay in NDA filing, I think they will be waiting to file it in conjunction with Follicular Lymphoma to allow the data to mature a bit and knock out two birds with one stone by filing together.   Currently at around $10.00, we can see from the chart that $10 has held as a support level for the past two years or so.  Because of its current price and drop by 50% of the past 7 months, I might consider starting a small position.  Currently this is not the case, I will start buying shares if they drop to $9.75 however as I do see the company producing great results for other indications down the road and seeing greater revenues.  This partnered with the strategic collaborations will eventually lead to great success, however their recent misfortunes are warning me to steer clear for the next few weeks until after seeing the data presented at the European Society for Medical Oncology Congress this October.

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