Why This Tiny Massachusetts Biotech Could be a New M&A Target for Drug Giants Like Gilead and Celgene

June 16, 2017
By Alex Keown, BioSpace.com Breaking News Staff

CAMBRIDGE, Mass. – What a difference a day makes. While some investors and analysts may disappointed in this week’s positive results of Epizyme ’s diffuse large B-cell lymphoma (DLBCL) study, some companies may be eying the treatment as a potential acquisition target.

Leerink analyst Geoffrey Porges said in a note to clients that the positive Phase II results could attract big M&A game hunters such as Gilead Sciences , AbbVie , Celgene , Johnson & Johnson and Roche . Shares of Epizyme jumped more than 17 percent on Thursday, closing at $14.50. The stock is currently up more than 2 percent in premarket trading. That climb could repair some of the losses the company took earlier this month after some investors were disappointed tazemetostat only showed a 29 percent overall response rate in patients with DLBCL, as opposed to the 40 percent that some were expecting.

But that seemed to change when Porges released his note to client. Porges said Leerink views tazemetostat “as one of the more intriguing small molecules in the B-cell malignancy field,” according to The Street.

Epizyme’s tazemetostat is a first-in-class, oral EZH2 inhibitor. Earlier this week, Epizyme released interim Phase II data that showed tazemetostat provided a 29 percent ORR in DLBCL patients, as well as a 92 percent objective response rate in patients with follicular lymphoma with EZH2 activating mutations.

When the company released the interim data, executives hailed the results. Rob Bazemore, Epizyme’s chief executive officer, said the interim results “observed in patients with an EZH2 mutation exceeds what we have seen so far with wild-type EZH2.” That excitement seems to be echoed by Porges.

"Few cancer drugs have a 90 percent response rate, or a 100 percent clinical benefit rate, in any disease," Porges said, as cited by Investors. "And while investors might debate about how big that group of patients really is, and how long treatment duration will be, we would not be surprised to see Epizyme start to show up on potential takeout candidate lists."

The Street noted that tazemetostat could be complementary to several drugs in the pipelines of the (possibly) circling companies. Gilead, The Street noted, has Tirabrutinib in its pipeline, which it said has potential indication for B-cell malignancies. AbbVie has its own Phase II trials for Venclexta, which selectively inhibits B-cells. J&J’s Imbruvica could also be complemented by tazemetostat.

If tazemetostat wins approval for both indications, there could be a strong market for the drug. Approximately 25,000 patients in the U.S. and major European countries are diagnosed with FL every year, of which an estimated 15 to 20 percent have an EZH2 mutation. There are no approved treatments indicated for patients with FL with an EZH2 mutation. Approximately 45,000 patients are diagnosed with DLBCL in the U.S. and major European countries every year. Among patients with germinal center DLBCL, an estimated 15 to 20 percent have an EZH2 mutation.

For its part, Epizyme will continue to move forward with the Phase II trial and expects to meet with the U.S. Food and Drug Administration later this year to move the drug forward through the next round of clinical trials and possibly to commercialization.