There is a biotech company known as Epizyme Inc. (EPZM) that is creating therapeutics for patients with genetically defined cancers. Epizyme is making a breakthrough with their technology because their platform is based on a science known as epigenetics. Epigenetics are changes in the genetic code of a substance that are not a kin to DNA changes. Typically genes are manipulated through changing DNA sequences, but epigenetic changes are post-sequence changes.

Epizyme Technology Selection

Epizyme creates therapeutics by identifying genetic alterations in oncogenes -- cancer causing genes. Epizyme identifies in a particular patient where the genetic alteration occurs through the use of a diagnostic device. The company then is able to produce a counterpart molecule that goes against that particular oncogene rendering it null. This technology leads to the production of personalized cancer treatments. As such each patient's genetic causing cancer has a targeted oncogene. The company can investigate the patient's particular oncogene and create a therapeutic that will go against it.

From Technology Selection To Platform

With the creation of small molecule inhibitors, and through the study of epigenetics Epizyme has created a class of epigenetic enzymes known as histone methyltransferases -- HMTs. With these HMTs Epizyme has discovered the 96-member HMTome which contains an array of various oncogenes the company can use to target for personalized cancer therapeutics.

Some of the key features of this product platform include:

1. intellectual property of novel HMT inhibitors and biomarkers
2. unique crystal structures of HMT enzymes bound with Enzyme's own molecule inhibitors
3. A certain chemical library on HMT-biased compounds with different chemotypes
4. Expertise of biochemical assays -- qualitative or quantitative ability to measure functional activity of compound -- for family members
5. Understanding the biological nature of the HMTome platform

source: www.epizyme.com/epigenetics/about-epigen.../

DOT1L- Inhibitor

Epizyme has created a molecule inhibitor known as DOT1L inhibitor, and is using it to target patients with acute leukemia in which the MLL gene is rearranged. This rearranged MLL gene either has a cromosomal translocation -- MLL-r -- or a partial tandem duplication -- MLL-PTD. Since these genes are not regulated properly by the body patients receive an increase expression of genes that form a genetically defined form of leukemia. The company expects to run three different trials for the DOT1L inhibitor, which is also known as EPZ-5676.

The three different trials to be run in 2014 will be:

1. Adult MLL-r expansion stage
2. MLL -r in pediatric patients
3. MLL -PTD patients

In September of 2012 Epizyme initiated a phase I trial for EPZ-5676 which is a first in human clinical trial to be tested with the HMT inhibitor. The initial study is a dose-escalation study in which the company is trying to determine the maximum tolerated dose -- MTD -- possible without adverse events occurring. In November of 2013 Epizyme announced the initial preliminary results for EPZ-5676. The EPZ-5676 compound tested 16 patients in four dose cohorts. The 4 dose cohorts are as follows: 12, 24, 36, and 54 mg/m2/day. Patients were observed over one cycle or 21 days with the drug and 7 days off the drug regimen. The first key finding is that the MTD had not yet been reached, which means no dose-limiting toxicities were observed. Of the 8 acute leukemia patients in the study 4 of the patients had been shown to respond to the EPZ-5676 compound. The Chief medical officer Erick, Hendrick M.D. had stated that only 4 patients had responded to treatment out of the 8 acute leukemia patients, because it was too early to draw final conclusions as the phase 1 dose escalation study had not reached its MTD. As shown in this quote:

"The Observed safety and tolerability profile for EPZ-5676, along with the mechanistically consistent treatment effects in MLL-r patients, are strongly supportive of continued clinical development"

In the quote above Erick Hendrick,who is Epizyme's Chief Medical officer, believes that new studies can be initiated based off of this positive preliminary efficacy study with EPZ-5676. Since the MTD had not yet been reached Epizyme was able to initiate a higher dosing regimen for the acute leukemia MLL-r gene patient population. The company has expanded the study to include the dose cohort of 80 mg/m2/day. This time though the company expects that it will continue with one cycle all the way through with no drug holiday -- meaning no rest period -- and with uninterrupted continued dose increasing as long as no dose limiting toxicities are observed. The compound is in good shape and it seems to have the support of two big pharmaceutical companies. Epizyme has retained all rights for the compound in the U.S. but Celgene Corp (CELG) has an exclusive license to EPZ-5676 outside of the United States according to the exclusive license agreement. As part of the license agreement Epizyme had obtained $90 million dollars as an upfront payment for the partnership deal. On the flip side Abbott Laboratories (ABT) has agreed to form a partnership with Epizyme to form a companion diagnostic tool that will be used to identify patients with the acute leukemia MLL -r gene. What makes this EPZ-5676 compound even better is that it has already been granted orphan drug designation from both the EMA and the FDA.

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source: www.epizyme.com/programs/product-platform/

Catalysts For EPZ-5676

1. Initiate a phase 1b trial in pediatric patients with acute leukemia MLL-r gene in 2014
2. Initiate a phase 1b expansion cohort in patients with acute leukemia in MLL-PTD gene indication in 2014

EZH2 Inhibitor

Epizyme has created the EZH2 Inhibitor to treat patients with a rare form of non-hodgkins lymphoma. In this case it is a rare form, because these patients have an oncogenic -- cancer causing -- mutation gene known as EZH2. These patients with this type of cancer have a problem because the EZH2 gene is known to have complete control over cell proliferation -- cancer cell dividing -- but in this case the gene mutates out of control. This out of control mutation allows the cancer cells to divide at an uncontrollable rate, spreading the cancer throughout the patient's body at a quicker pace. Once again this gene was identified using Epizyme's HMT inhibitor platform. This EZH2 Inhibitor is coined by the company as EPZ-6438. Like the EPZ-5676 molecule, Epizyme has been able to establish a big pharmaceutical partner for the EPZ-6438 molecule as well. In April 2011 Epizyme entered into a license and collaboration agreement with Eisai to obtain worldwide rights to the EPZ-6438 compound -- Eisai has named the EPZ-6438 compound as E7438. Under the terms though Epizyme has the right to opt-in or be able to co-develop, co-commercialize, and share profits of the EPZ-6438 compound. Epizyme along with Eisai will target these three areas with the EZH2 inhibitor molecule:

1. Non-hodgkin's lymphoma
2. Synovial Sarcoma
3. Malignant Rhabdoid Tumors

The initial focus though will be on solid tumors, and relapsed or refractory B-cell lymphoma. In June of 2013 Epizyme initiated a phase 1/2 trial of EPZ-6438 in patients with advanced solid tumors, and patients with relapsed or refractory B-cell lymphoma. The trial will be broken down into two different parts. The first part of the study is to determine the MTD that patients can receive and could continue to receive without dose limiting toxicities. The dose Escalation stage per treatment cycle for each patient is expected to be around 28 days. Once the MTD has been established patients will receive the maximum efficacious dose possible which is part 2 of the study. This 2nd part of the study will determine the safety of the EPZ-6438 compound as well as preliminary anti-cancer activity. The phase 1 dose escalation study for EPZ-6438 was made possible due to the amazing pre-clinical results of the compound. These pre-clinical results were published in a medical journal known as "Molecular Cancer Therapeutics" with the title of "Selective Inhibition of EZH2 by EPZ-6438 Leads to Potent Antitumor Activity in EZH2 Mutant Non-Hodgkin Lymphoma". These Pre-clinical results are remarkable, and should help to further establish the HMT platform as being the go to platform for genetically defined cancers. Some key highlights of the pre-clinical results are as follows. First their was some evidence of lymophomagenic reversal of the gene expression. This means that the small molecule was able to stop the gene from completing its mutation. The Second result was the ability for the small molecule to inhibit cell proliferation -- cancer cell division -- in mutant EZH2 cell lines. The final result observed was the sustained tumor growth inhibition in animal models for the EZH2 mutant bearing non-hodgkin's lymphoma. One key thing to note about this final result was that the EPZ-6438 compound showed continuous anti-tumor effects even after the discontinuation of the compound.

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source: www.epizyme.com/programs/product-platform/

Management

There are a few members of Management that will propel Epizyme to new heights. These members of management have extensive experience in the pharmaceutical industry spanning for many years. One of the first managers to be discussed is the CEO of the company Robert J. Gould. Robert served as director to Epizyme since 2008, and then later became CEO of the company in 2010. Robert also served as a director of Novel Therapeutics which is the institute of MIT and Harvard. Robert has gotten most of his experience at Merck & Co. Inc., (MRK) where he served in a variety of leadership positions through his 20 years at the company. This manager seems to have developed excellent leadership capabilities throughout those years, and has had great success in the pharmaceutical industry. Thus Epizyme has chosen a great candidate to lead the company into new areas. The second member of management to be discussed is Robert A. Copeland who currently is established at Epizyme as Executive Vice President and Chief Scientific Officer. What makes this member of management essential for the company to have is that he has had prior executive positions in three big pharmaceutical companies. He served as Vice President at Glaxosmithkline (GSK) , and Scientific staff positions at Merck and Bristol-Myers Squibb(BMY). Two key academic achievements was that he received a B.S. in Chemistry from Stetson Hall University, and a P.H.D. in Chemistry from Princeton University. Epizyme should be in good shape to have a chief scientific officer with such extensive big pharmaceutical experience in the biotechnology industry. The final member of management also has had some extensive experience in the pharmaceutical industry. The final member of management to be discussed is Erick Hendrick who is the current Chief Medical officer for Enzyme. Prior to joining up with Epizyme Mr. Hendrick worked at Pharmacyclics Inc. (PCYC), and served two roles there. The first role at Pharmacyclics was Vice President of the Oncology division, and the second role was interim Chief Medical Officer. Although prior to joining Pharmacyclics Mr. Hendrick served as three different roles at Genetech they were: Medical director, Group Medical Director, and clinical scientist. Dr. Hendrick received his B.A. in biology from Boston University, and an M.D. from the University Of Maryland. All these members of management have a lot of experience in the biotech industry. Along with these experienced members of the management team, and the exquisite use of epigentics to tackle genetically defined cancers we believe this company has tremendous long term value.

Financials

According the 8-k Sec filing Epizyme has cash and cash equivalents of $157.2 million dollars. The company will end the 2014 year with approximately $170 million dollars in cash. With the cash on hand the company will be able to run its operations all the way until mid 2016. Investors shouldn't expect a dilution this year, especially since the pipeline is still in the early stages. Despite this though in 2015 Epizyme will have to obtain additional cash to keep operations going so investors should expect dilution to occur somewhere around the beginning of 2015. With this cash on hand Epizyme should be able to meet its catalysts of initiating additional clinical trials in 2014. The company may choose to expand to other trials on dose escalations for each study dependent on the way patients respond to the treatments. Despite this Epizyme is financially sound for 2014, and investors should be excited to see the clinical milestones met this year that will prove how powerful the Epizyme platform really is.

Risks

There are several risks that investors should be aware of before putting any capital into this biotechnology stock:

1. Long term share price appreciation is dependent on clinical trials, there is no way of knowing how the trials will turn out thus investors can either make a lot of money or lose their entire investment
2. Epigenitics has not been tried by many biotechs and as such has not seen much clinical testing. Investors should be aware that epigentics may fail to yield clinically positive results.
3. As epigenetics is new it may take more years to perfect the research behind the platform therefore investors should take a long-term approach investment thesis
4. The company is still in the early stages of phase I testing thus it will be many years before any drug is marketed by the company
5. Even if the compounds makes it through all clinical trials they will have to undergo regulatory approval from the FDA and several other regulatory bodies. That means there is no guarantee that the efficacy and safety seen in the studies will automatically allow for approval
6. In the short term biotechs have been falling in share price and the sector is seeing some type of correction. Therefore a spike down in the short term may be seen in the coming months

Additional Catalysts For Epizyme 2014

source Epizyme 8-k filing: amda-1rbic2.client.shareholder.com/secfi...

Conclusion

We believe that Epizyme has developed an excellent platform technology to produce multiple small-molecule inhibitors that can target genetically defined forms of cancer. The company has the executive team to pull off this new HMT small-molecule inhibitor platform. Eventually if these proof of Concept trials prove successful Epizyme may be able to create additional targets against genetically defined cancers that have a clear unmet medical need.