Epizyme Shares Mushroom on Milestone Payments for Cancer Drug Candidates

Less than three weeks from being added to the Nasdaq Biotechnology Index and moving to the Nasdaq Global Select Market as its stock price stagnated around $20, Epizyme, Inc. ($EPZM) found legs on Tuesday to leap more than 70 percent on cancer drug news that padded their bank account.  

Epizyme, a developer of drugs for genetically defined cancers, said that its drug EPZ-5676, which is being developed through a collaboration with Celgene Corp. ($CELG), performed well enough in a Phase 1 proof of concept clinical trial to trigger a $25 million milestone payment from Celgene.  In the fourth cohort of the dose escalation arm of the trial, cancer patients with translocations of the MLL gene (MLL-r) responded to treatment with EPZ-5676, according to Epizyme, although exact details were disclosed. Enrollment for the dose escalation stage is complete and patients are being enrolled for the MLL-r expansion stage.

Mixed lineage leukemia, or MLL, is an aggressive cancer stemming from a genetic defect that affects people of all ages and carries a very poor prognosis.  The small molecule EPZ-5676 is designed to inhibit DOT1L, a protein that is misregulated because of a genetic rearrangement, leading to increased expression of genes that cause leukemia.

EPZ-5676 is being developed under and Orphan Drug designation from the U.S. Food and Drug Administration.  Overseas, an advisory committee to European Medicines Agency recommended and orphan drug designation for the drug candidate in December.  Epizyme believes that EPZ-5676 is the first histone methyltansferase (HMT) inhibitor to enter clinical trials.

"We are very pleased with EPZ-5676's emerging clinical profile and progress as a potential personalized therapeutic for patients with genetically defined acute leukemias," said Dr. Gould.  Gould added that the company intends to present more information on the trial at a medical conference later this year.

Separately, Epizyme earned a $4 million payment as a development candidate milestone was reached for one of the HMT targets included in the company's collaboration with GlaxoSmithKline ($GSK).

With the new milestone payments, Epizyme estimates that it ended 2013 with about $145 million in cash and account receivables, topping its original forecast of $115 million.  The company plans to have up to five proof of concept studies going in 2014 for its drug candidates EPZ-5676 and EPZ-6438, and EZH2 inhibitor also currently in human trials.

The stock price took a pounding in November after outlining initial data from the trial of EPZ-5676 showed no response in non-MLL-r patients and only a 50-percent response MLL-r patients (4 of 8 MLL-r patients responded to the drug).  Investors reacted harshly to the information, although it wasn’t really that bad with no maximum tolerated dose achieved and no serious side effects observed.  As a speculative biotech with a market cap in excess of $1 billion (at that time), Epizyme is held to a different standard than other companies being valued nearly exclusively on pre-clinical data.  Most other developmental pharmas never reach that type of a lofty valuation, so investors are quick to critique – or praise – clinical data.

Shares of EPZM were trading around $32 each in November when the “average” data was announced, sending shares plunging to a low of $18.10.  Those losses have been erased with today’s resurgence, with shares printing $36 in early afternoon trading, for gains of 75.6 percent.  Epizyme went public last May, opening on IPO day at $20 per share and hit all-time highs of $46.72 in July.