Extension of Celgene (CELG) Collaboration Highlights Partner Interest in Epizyme (EPZM) - Leerink

Leerink affirmed Epizyme (Nasdaq: EPZM) at Outperform with a price target of $48 following new collaboration news issued Thursday.

Analyst Howard Liang, Ph.D, commented, We believe the extension of the research collaboration with Celgene (Nasdaq: CELG)(Outperform) announced yesterday highlights continued strong interest in EPZM's histone methyltransferase (HMT) programs by one of the industry's leaders in epigenetics and oncology. In addition, the restructured agreement providing CELG with options on 3 preselected HMT programs (two global, one OUS) at an early stage (IND) in exchange for options on ex-US rights to any of the unpartnered HMT programs at a later time point of clinical proof of principle fits well with EPZM's near-term need to focus resources on its promising first-in-class lead candidate tazemetostat (EZH2 inhibitor) while allowing EPZM to maintain a now clearly wholly owned long-term pipeline that includes compounds against at least 5 HMT targets, 1 additional preclinical HMT program with US rights, in addition to the 2 clinical stage candidates, tazemetostat and pinometostat (DOT1L inhibitor) to which EPZM has global and US rights respectively. In addition, the 2-quarter extension of cash runway through at least the end of 2Q:17 provides more time for the potentially informative Phase II data on tazemetastat in NHL both as a single agent and in combination to read out and mature, most likely in 2016. In the near-term, we expect the Phase I update on tazemetostat in INI-deficient solid tumors at ESMO on 9/26/15 to potentially draw significant investor interest, given the potential for an accelerated development path.

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