SEC Filing | Epizyme, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35945

EPIZYME, INC.

(Exact name of registrant as specified in its charter)

Delaware

26-1349956

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

400 Technology Square, 4^th Floor Cambridge, Massachusetts	02139
(Address of principal executive offices)	(Zip code)

617-229-5872

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value	EPZM	Nasdaq Global Select Market

The number of shares outstanding of the registrant’s common stock as of August 4, 2021: 102,249,517 shares.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements. — Unaudited	5

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020	5

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020	6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020	7

Condensed Consolidated Statements of Stockholders Equity	8

Notes to Condensed Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3. Quantitative and Qualitative Disclosures About Market Risk	43

Item 4. Controls and Procedures	43

PART II — OTHER INFORMATION

Item 1A. Risk Factors	44

Item 6. Exhibits	46

Signatures	47

Epizyme^® and TAZVERIK^® are registered trademarks of Epizyme, Inc. in the United States and other countries. Epizyme, Inc. has also submitted trademark applications for Epizyme™ and TAZVERIK™ in other countries. All other trademarks, service marks or other tradenames appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

Forward-looking Information

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These statements may be identified by such forward-looking terminology as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

•

our plans to develop and commercialize novel epigenetic therapies for patients with cancer;

•

the ongoing commercialization of TAZVERIK;

•

our sales, marketing and distribution capabilities and strategies, including for the commercialization and manufacturing of TAZVERIK and any future products;

•

the rate and degree of market acceptance and clinical utility of TAZVERIK and any future products;

•

our ongoing and planned clinical trials, including the timing of initiation and enrollment in the trials, the timing of availability of data from the trials and the anticipated results of the trials;

•

the timing of and our ability to apply for, obtain and maintain regulatory approvals for tazemetostat in epithelioid sarcoma, follicular lymphoma and other indications and for any future product candidates;

•

our ability to achieve anticipated milestones under our collaborations or to enter into additional collaborations;

•

the impact of the COVID-19 pandemic on our business, results of operations, and financial condition;

•

our intellectual property position;

•

our ability to successfully implement and execute on our changes to our commercial strategy and organization, adjustments to our operating plans, including operating expense reductions, and leadership transition announced in August 2021; and

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing.

All of our forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information as a result of various important factors. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, or our Annual Report, or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the Securities and Exchange Commission, or the SEC, could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q which modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.

Our management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared by us in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim periods and with Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our management’s discussion and analysis should be read in conjunction with these unaudited condensed consolidated financial statements and the notes thereto as well as in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report. The three months ended June 30, 2021 and 2020 are referred to as the second quarter of 2021 and 2020, respectively.

Note regarding certain references in this Quarterly Report on Form 10-Q

Unless otherwise stated or the context indicates otherwise, all references herein to “Epizyme,” “Epizyme, Inc.,” “we,” “us,” “our,” “our company,” “the Company” and similar references refer to Epizyme, Inc. and its wholly owned subsidiary, Epizyme Securities Corporation.

In addition, unless otherwise stated or the context indicates otherwise, all references in this Quarterly Report on Form 10-Q to “TAZVERIK (tazemetostat)” and “TAZVERIK” refer to tazemetostat in the context of the commercially-available product for which we received accelerated approval from the United States Food and Drug Administration in January 2020 for epithelioid sarcoma and in June 2020 for follicular lymphoma, as more fully described herein; whereas, unless otherwise stated or the context indicates otherwise, all references herein to “tazemetostat” refer to tazemetostat in the context of the product candidate for which we are exploring further applications and indications, as more fully described herein.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

EPIZYME, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands, except per share data)

	June 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	80,164		$	168,215
Marketable securities		163,842			205,391
Accounts receivable, net		7,119			3,105
Inventory		1,074			10,461
Prepaid expenses and other current assets		20,289			17,921
Total current assets		272,488			405,093
Property and equipment, net		1,872			2,152
Operating lease assets		15,213			17,305
Intangible assets, net		44,926			47,002
Restricted cash and other assets		18,050			2,021
Total assets	$	352,549		$	473,573
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,295		$	10,163
Accrued expenses		28,669			28,572
Current portion of operating lease obligation		4,929			4,665
Total current liabilities		40,893			43,400
Operating lease obligation, net of current portion		12,832			15,409
Related party long-term debt, net of debt discount		216,052			215,670
Other long-term liabilities		—			21
Related party liability related to sale of future royalties		15,143			14,176
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized; 338 shares issued and outstanding (equivalent to 3,378 shares of common stock upon conversion at a 10:1 ratio)		36,127			36,127
Common stock, $0.0001 par value; 225,000 shares and 150,000 shares authorized, respectively; 102,250 shares and 101,627 shares issued and outstanding, respectively		10			10
Additional paid-in capital		1,154,844			1,137,470
Accumulated other comprehensive income (loss)		(2	)		3
Accumulated deficit		(1,123,350	)		(988,713	)
Total stockholders’ equity		67,629			184,897
Total liabilities and stockholders’ equity	$	352,549		$	473,573

See notes to condensed consolidated financial statements.

EPIZYME, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(Amounts in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue:
Product revenue, net	$	7,984		$	2,234		$	14,175		$	3,519
Collaboration and other revenue		5,026			233			6,466			303
Total revenue		13,010			2,467			20,641			3,822
Operating expenses:
Cost of revenue		2,492			1,022			5,346			1,637
Research and development		34,858			26,352			67,561			51,516
Selling, general and administrative		33,891			32,659			70,303			59,584
Total operating expenses		71,241			60,033			143,210			112,737
Operating loss		(58,231	)		(57,566	)		(122,569	)		(108,915	)
Other (expense) income, net:
Interest (expense) income, net		(5,581	)		(569	)		(11,057	)		187
Other expense, net		(54	)		(15	)		(44	)		(64	)
Related party non-cash interest expense related to sale of future royalties		(497	)		(301	)		(967	)		(596	)
Other (expense) income, net		(6,132	)		(885	)		(12,068	)		(473	)
Net loss	$	(64,363	)	$	(58,451	)	$	(134,637	)	$	(109,388	)
Other comprehensive income (loss):
Unrealized (loss) gain on available-for-sale securities		(8	)		535			(5	)		441
Comprehensive loss	$	(64,371	)	$	(57,916	)	$	(134,642	)	$	(108,947	)
Net loss per share attributable to common stockholders:
Basic	$	(0.63	)	$	(0.58	)	$	(1.32	)	$	(1.09	)
Diluted	$	(0.63	)	$	(0.58	)	$	(1.32	)	$	(1.09	)
Weighted-average common shares outstanding used in net loss per share attributable to common stockholders:
Basic		102,053			101,104			101,922			100,360
Diluted		102,053			101,104			101,922			100,360

See notes to condensed consolidated financial statements.

EPIZYME, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)

	Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(134,637	)	$	(109,388	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,595			1,362
Stock-based compensation		13,733			14,802
Amortization of discount (premium) on investments		665			(362	)
Amortization of debt discount		382			169
Loss on disposal of property and equipment		—			19
Non-cash interest expense associated with the sale of future royalties		967			596
Changes in operating assets and liabilities:		—
Accounts receivable		(4,014	)		820
Inventory		(6,629	)		(9,864	)
Prepaid expenses and other current assets		(2,109	)		(5,468	)
Accounts payable		(2,886	)		(4,221	)
Accrued expenses		(59	)		(499	)
Deferred revenue		—			128
Operating lease assets		2,092			1,758
Operating lease liabilities		(2,313	)		(595	)
Other assets and liabilities		(33	)		47
Net cash used in operating activities		(132,246	)		(110,696	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities		(170,659	)		(94,120	)
Maturities of available-for-sale securities		211,539			131,616
Purchase of intangible asset		—			(50,000	)
Purchases of property and equipment		(221	)		(329	)
Net cash (used in) provided by investing activities		40,659			(12,833	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of commissions		1,534			—
Payment of offering costs		(105	)		(79	)
Proceeds from the issuance of debt		—			45,000
Payment of debt issuance costs		—			(93	)
Proceeds from the issuance of common stock in connection with the exercise of the Put Option, net of financing costs		—			49,915
Proceeds from stock options exercised		916			5,810
Issuance of shares under employee stock purchase plan		1,191			646
Net cash provided by financing activities		3,536			101,199
Net (decrease) increase in cash, cash equivalents and restricted cash		(88,051	)		(22,330	)
Cash, cash equivalents and restricted cash, beginning of period		169,724			140,991
Cash, cash equivalents and restricted cash, end of period	$	81,673		$	118,661
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	10,785		$	2,182
Unpaid offering costs	$	154		$	—
Property and equipment included in accounts payable or accruals	$	18		$	181

See notes to condensed consolidated financial statements

EPIZYME, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(Amounts in thousands, except share amounts)

	Common Stock				Preferred Stock						Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Income (Loss)			Equity
Balance at December 31, 2019		97,783,476	$	10		350,000		$	37,432		$	1,050,695	$	(757,019	)	$	19		$	331,137
Issuance of common stock in connection with the exercise of the Put Option (net of financing costs of $85)		2,500,000		—		—			—			49,915		—			—			49,915
Issuance of common stock in connection with the conversion of series A convertible preferred stock		122,000		—		(12,200	)		(1,305	)		1,305		—			—			—
Exercise of stock options and vesting of restricted stock units		579,919		—		—			—			3,140		—			—			3,140
Stock-based compensation		—		—		—			—			6,475		—			—			6,475
Issuance of shares under employee stock purchase plan		60,576		—		—			—		646			—			—			646
Issuance of shares of common stock in lieu of board fees		1,404		—		—			—			35		—			—			35
Unrealized loss on available for sale securities		—		—		—			—			—		—			(94	)		(94	)
Net loss		—		—		—			—			—		(50,937	)		—			(50,937	)
Balance at March 31, 2020		101,047,375	$	10		337,800		$	36,127		$	1,112,211	$	(807,956	)	$	(75	)	$	340,317

Exercise of stock options and vesting of restricted stock units		—		—		—			—		$	2,670		—			—			2,670
Stock-based compensation		414,150		—		—			—			8,257		—			—			8,257
Issuance of shares of common stock in lieu of board fees		—		—		—			—			35		—			—			35
Unrealized gain on available for sale securities		2,229		—		—			—			—		—			535			535
Net loss		—		—		—			—			—		(58,451	)		—			(58,451	)
Balance at June 30, 2020		101,463,754	$	10	$	337,800		$	36,127		$	1,123,173	$	(866,407	)	$	460		$	293,363