Epizyme, Inc. (Nasdaq: EPZM), a Cambridge, Mass.-based late-stage biopharmaceutical company developing novel epigenetic therapies, closed funding agreements that, in aggregate, could bring in up to $270m in capital.
The backers were Royalty Pharma and its affiliate Pharmakon Advisors. As part of the transactions, Pablo Legorreta, founder and chief executive of Royalty Pharma, will be appointed to Epizyme’s Board of Directors.
The funding can significantly strengthen the company’s financial position and extending its operating runway into at least 2022.
As part of the agreements, Royalty Pharma will make an upfront payment of $100 million for shares of Epizyme common stock based on a price of $15 per share, representing a 27% premium to the prior trading day’s closing price. Epizyme also has an 18-month option to sell an additional $50 million of its common stock to Royalty Pharma at then prevailing prices, not to exceed $20 per share, and Royalty Pharma has a three-year option to purchase an additional 2.5 million shares of Epizyme common stock at $20 per share.
Epizyme and Royalty Pharma have also agreed to reduce the existing royalty rates owed by Epizyme to Royalty Pharma on worldwide sales of tazemetostat outside Japan at specified annual net sales levels. This reduction follows Royalty Pharma’s acquisition of certain future royalty streams on sales of tazemetostat in all regions except for Japan, which Epizyme previously owed to Eisai as part of their April 2015 amended and restated agreement. In addition, Epizyme has assigned to Royalty Pharma the future royalty streams on tazemetostat sales in Japan previously owed to Epizyme by Eisai.
Under a separate agreement, Epizyme has established a $70 million loan facility with Pharmakon Advisors, an affiliate of Royalty Pharma, which will fund the regulatory milestones owed to Eisai for the NDA submissions and U.S. approvals for tazemetostat for epithelioid sarcoma and follicular lymphoma. The facility may be drawn down in up to three tranches in conjunction with achievement of the milestones and is expandable by up to $300 million following approval of tazemetostat in follicular lymphoma, subject to mutual agreement.
Led by Robert Bazemore, president and chief executive officer, Epizyme is broadly developing its lead product candidate, tazemetostat, an oral, 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 exploring development candidates in its novel G9a inhibitor program.