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Epizyme Reports Second Quarter 2018 Financial Results and Provides Business Updates

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Conference Call to be Held Today at 8:30 a.m. ET

Epizyme,
Inc.
(NASDAQ:EPZM), a clinical-stage company developing novel
epigenetic therapies, today reported financial results for the second
quarter of 2018 and provided key business updates.

"In the second quarter, we presented encouraging new clinical data
regarding tazemetostat's anti-tumor activity and tolerability in
follicular lymphoma and mesothelioma," said Robert Bazemore, president
and chief executive officer of Epizyme. "As we enter the second half of
2018, we have focused the organization on several strategic priorities.
First and foremost, we are working diligently to resolve the partial
clinical hold and resume enrollment in tazemetostat clinical studies. In
addition, we are progressing tazemetostat toward a first NDA for the
treatment of epithelioid sarcoma, continuing to advance its development
in follicular lymphoma based on the strength of our clinical data, and
advancing our novel inhibitor of G9a, EZM8266, toward the clinic. We
believe the actions we have taken will allow us to capitalize on our
near-term tazemetostat opportunities while also extending our cash
runway."

Partial Clinical Hold Update

A partial clinical hold pausing the enrollment of new patients into
tazemetostat clinical trials was implemented in the second quarter of
2018 in the United States, France and Germany following a safety report
of a single pediatric patient who developed a secondary T-cell
lymphoblastic lymphoma (T-LBL). Epizyme has reconsented all patients in
its clinical trials and updated its informed consent form based on this
safety report. The company also reviewed the single T-LBL case in
detail, recently completed a comprehensive assessment of tazemetostat
safety data and clinical activity observed to date across clinical
trials, and convened a panel of external experts to review and validate
the assessment. This information will be included in a formal response
to regulatory authorities.

Epizyme plans to continue its engagement with the U.S. Food and Drug
Administration (FDA) in the weeks ahead and then finalize its response
to regulatory authorities, including changes that may be proposed to
study protocols. Once the company has gained alignment with regulators
in the U.S., France and Germany, it is anticipated that the partial
clinical hold would be lifted and that enrollment activities would be
allowed to proceed in those countries.

ES Program Update

At the European Society for Medical Oncology (ESMO) Congress in October
2018, Epizyme plans to present updated Phase 2 data from patients with
epithelioid sarcoma (ES) who are receiving tazemetostat as a
monotherapy. Enrollment in this trial was completed in July 2017. A
recent assessment of interim 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.
In addition, durability data from the cohort continue to mature.

Epizyme is continuing to prepare its first New Drug Application (NDA)
submission for tazemetostat for the treatment of patients with ES. 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.

DLBCL Program Update

Epizyme has been conducting a Phase 2 trial that is assessing
tazemetostat activity in cohorts of patients with relapsed and/or
refractory diffuse large B-cell lymphoma (DLBCL). These cohorts include
DLBCL patients with EZH2 activating mutations and with wild-type EZH2
who are receiving tazemetostat as monotherapy. The trial also includes a
cohort of DLBCL patients who are receiving tazemetostat in combination
with prednisolone. Epizyme has conducted an interim assessment of data
from this trial and concluded that the clinical activity seen in these
cohorts is not sufficient to warrant further development of tazemetostat
in DLBCL as a monotherapy or in combination with prednisolone. Epizyme
plans to present clinical data from each of these study cohorts at a
medical meeting in the second half of 2018. The company has two
additional combination studies in DLBCL ongoing and plans to evaluate
other potential combinations in this aggressive and difficult-to-treat
cancer longer term.

Recent Progress

  • New Chief Medical Officer: Epizyme recently appointed
    Dr. Shefali Agarwal as chief medical officer. In this role, Dr.
    Agarwal will oversee all of the company's activities related to the
    global strategic development of tazemetostat and additional pipeline
    candidates. A trained medical oncologist, Dr. Agarwal brings to
    Epizyme nearly two decades of clinical research and regulatory
    expertise as well as leadership experience in clinical development,
    clinical operations and medical affairs.
  • Positive Data in Follicular Lymhoma (FL): At the 23rd Congress
    of the European Hematology Association (EHA) in Stockholm, positive
    interim data were reported
    from the follicular lymphoma cohorts in Epizyme's ongoing Phase 2
    study of tazemetostat in non-Hodgkin lymphoma. The data as of May 1,
    2018 showed that tazemetostat continued to demonstrate meaningful
    clinical activity as a monotherapy and was generally well tolerated in
    adult patients with relapsed and/or refractory FL. An objective
    response rate (ORR) of 71 percent was observed in the cohort of FL
    patients with EZH2 activating mutations (n=28), with an interim median
    duration of response (DOR) of approximately 32 weeks. An ORR of 33
    percent was observed in the fully-enrolled cohort of FL patients with
    wild-type EZH2 (n=54), with an interim median DOR of approximately 76
    weeks. The median DOR figures in these cohorts continue to mature,
    with more than half of the responders still on therapy. After
    resolving the partial clinical hold, Epizyme plans to re-engage with
    the FDA to refine the company's registration plans for tazemetostat in
    relapsed and/or refractory FL.
  • Clinical Activity in Mesothelioma: At the American Society of
    Clinical Oncology (ASCO) Annual Meeting in Chicago, clinical data were reported
    from Epizyme's Phase 2 study of tazemetostat as a monotherapy in
    relapsed and/or refractory malignant mesothelioma patients with
    BRCA1-associated protein 1 (BAP1) loss-of-function. The primary
    endpoint in this trial was met with 51 percent of patients (31/61)
    having achieved disease control at 12 weeks, exceeding the
    pre-specified disease control rate threshold of ≥35 percent.
    Tazemetostat was generally well tolerated in this study.

Second Quarter 2018 Financial Results

  • Cash Position: Cash, cash equivalents and marketable securities
    were $215.6 million as of June 30, 2018, which compares to $247.9
    million as of March 31, 2018.
  • Revenue: Revenue for the second quarter of 2018 was $12.0
    million, which compares with $10.0 million in revenue for the second
    quarter of 2017. The increase is due to greater milestone-related
    revenue from the company's collaboration and license agreement with
    GlaxoSmithKline.
  • R&D Expenses: Research and development (R&D) expenses were
    $31.3 million for the second quarter of 2018, which compares to $27.3
    million for the second quarter of 2017. The increase is primarily due
    to greater tazemetostat manufacturing expense, increased clinical and
    regulatory activities associated with tazemetostat's development and
    preclinical studies related to the company's G9a inhibitor candidate.
  • G&A Expenses: General and administrative (G&A) expenses
    were $10.9 million for the second quarter of 2018, which compares to
    $11.2 million for the second quarter of 2017. The decline is primarily
    due to reduced consulting costs.
  • Net Loss: The company's net loss was $29.1 million, or $0.42
    per share, for the second quarter of 2018, which compares to a net
    loss of $28.0 million, or $0.48 per share, for the second quarter of
    2017.

Financial Guidance

Epizyme has extended its cash runway guidance based on changes that are
being made to its planned operating expenditures. The company now
expects that its existing cash, cash equivalents and marketable
securities will be sufficient to fund its planned operations into the
fourth quarter of 2019.

Conference Call Reminder

As previously announced, management plans to host a conference call and
webcast at 8:30 a.m. ET today to discuss the company's second quarter
2018 results and other business updates. To participate, please dial
(877) 844-6886 (domestic) or (970) 315-0315 (international) and refer to
conference ID 5734199. A live webcast will be available in the investor
section of the company's website at www.epizyme.com.
The webcast also will be archived on the website for 60 days.

About the Tazemetostat Clinical Trial Program

Tazemetostat, a first-in-class EZH2 inhibitor, is currently being
studied as a monotherapy in ongoing Phase 2 programs in certain
molecularly defined solid tumors, including epithelioid sarcoma and
other INI1-negative tumors; follicular lymphoma (FL); and combination
studies in diffuse large B-cell lymphoma (DLBCL) and non–small cell lung
cancer (NSCLC).

About Epizyme, Inc.

Epizyme, Inc. is a clinical-stage biopharmaceutical company committed to
rewriting treatment for cancer and other serious diseases through novel
epigenetic medicines. Epizyme is broadly developing its lead product
candidate, tazemetostat, a first-in-class EZH2 inhibitor, with studies
underway in both solid tumors and hematological malignancies, as a
monotherapy and combination therapy in relapsed and front-line disease.
The company is also developing a novel G9a program with its next
development candidate, EZM8266, which is targeting sickle cell disease.
By focusing on the genetic drivers of disease, Epizyme's science seeks
to match targeted medicines with the patients who need them. For more
information, visit www.epizyme.com.

Cautionary Note on Forward-Looking Statements

Any statements in this press release about future expectations, plans
and prospects for Epizyme, Inc. and other statements containing the
words "anticipate," "believe," "estimate," "expect," "intend," "may,"
"plan," "predict," "project," "target," "potential," "will," "would,"
"could," "should," "continue," and similar expressions, constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from
those indicated by such forward-looking statements as a result of
various important factors, including: uncertainties relating to the
company's ability to have the partial clinical hold lifted and resume
enrollment in its tazemetostat trials and the timing of such resumption,
and the impact of the safety finding in the company's pediatric trial on
enrollment of patients in ongoing and future trials of tazemetostat
following the lifting of the partial clinical hold and the resumption of
enrollment; uncertainties inherent in the initiation of future clinical
studies and in the availability and timing of data from ongoing clinical
studies; whether interim results from a clinical trial will be
predictive of the final results of the trial; whether results from
preclinical studies or earlier clinical studies will be predictive of
the results of future trials; whether results from clinical studies will
warrant meetings with regulatory authorities, submissions for regulatory
approval or review by governmental authorities under the accelerated
approval process; expectations for regulatory approvals to conduct
trials or to market products; whether the company's cash resources will
be sufficient to fund the company's foreseeable and unforeseeable
operating expenses and capital expenditure requirements; other matters
that could affect the availability or commercial potential of the
company's therapeutic candidates; and other factors discussed in the
"Risk Factors" section of the company's most recent Form 10-Q filed with
the SEC and in the company's other filings from time to time with the
SEC. In addition, the forward-looking statements included in this press
release represent the company's views as of the date hereof and should
not be relied upon as representing the company's views as of any date
subsequent to the date hereof. The company anticipates that subsequent
events and developments will cause the company's views to change.
However, while the company may elect to update these forward-looking
statements at some point in the future, the company specifically
disclaims any obligation to do so.

                   
EPIZYME, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA (UNAUDITED)
(Amounts in thousands)

June 30,
2018

December 31,
2017

 
Cash, cash equivalents, and marketable securities $ 215,624 $ 276,439
Total assets 239,325 289,359
Deferred revenue, net of current portion 3,806 28,809
Total stockholders' equity 205,578 235,371
 
EPIZYME, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Amounts in thousands except per share data)
 
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
 
Collaboration revenue $ 12,000 $ 10,000 $ 12,000 $ 10,000
Operating expenses:
Research and development 31,346 27,292 56,968 51,987
General and administrative 10,914 11,170 20,274 19,439
           
Total operating expenses 42,260 38,462 77,242 71,426
 
Loss from operations (30,260 ) (28,462 ) (65,242 ) (61,426 )
 
Other income, net   1,132     438     2,049     880  
           
Net loss $ (29,128 )   $ (28,024 ) $ (63,193 )   $ (60,546 )
 
Loss per share allocable to common stockholders:
Basic $ (0.42 ) $ (0.48 ) $ (0.91 ) $ (1.04 )
Diluted $ (0.42 ) $ (0.48 ) $ (0.91 ) $ (1.04 )
 
Weighted average shares outstanding:
Basic 69,490 58,377 69,438 58,298
Diluted 69,490 58,377 69,438 58,298

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