Epizyme Inc. has agreed to a broad pact with Japan's Eisai Co. Ltd. around EZH2, a preclinical epigenetic enzyme expected to yield treatments for lymphoma and other cancers in genetically defined patients.

The company stressed that the deal was distinct from one it signed in January with GlaxoSmithKline.

Under its deal with Eisai, Epizyme will receive $6 million upfront and can earn up to $200 million in research, development and sales milestones and up to double-digit royalties. The Japanese pharma will cover 100% of R&D costs through human proof-of-concept, at which point Epizyme can opt in to share equally both development costs and U.S. commercialization costs and profits.

The much bigger GSK alliance, in contrast, centers on a defined but undisclosed package of histone methyltransferases (HMTs). GSK paid $20 million upfront with the potential for up to $630 million in milestones plus double-digit royalties (Also see "GSK Teams Up With EpiZyme To Develop Epigenetic Drugs" - Pink Sheet, 10 January, 2011.). The deal is basically a "handover" of the related assets to GSK, whereas Epizyme could be poised to move forward in a full partnership for its lead program with Eisai, said Epizyme CEO Robert Gould.

"The GSK deal involves a select but undisclosed small number of targets for which we will be doing the preclinical drug discovery work and then hand off to them for subsequent preclinical development and development work," he explained. Post-handoff, Epizyme could receive downstream milestones and royalties but leaves control of all future activities to GSK.

By contrast, Gould said, the collaboration with Eisai will involve 50/50 decision-making, even though the pharma is picking up all R&D costs through Phase II.

If Epizyme elects to opt in after proof-of-concept, it would co-commercialize the resulting drug in the U.S., while Eisai would retain development and commercial rights for the rest of the world.

"In the GSK deal, we specifically excluded what we consider to be our lead and most advanced programs, which were EZH2 and DOT1L" added Chief Business Officer Jason Rhodes. "The strategic value in GSK could be viewed as allowing us to expand our platform in a very significant way, whereas with Eisai because the focus is on a specific program, what it allows us to do is to drive that program ahead with more capabilities and more funding than we probably would have been able to put behind it ourselves and at the same time retain half of the U.S. rights."

Eisai Seen As Ideal Partner For Multiple Reasons

Epizyme, which said it considered multiple offers, agreed to Eisai as a partner partly because of the companies' shared belief in the potential value of epigenetic therapy in genetically defined cancer patients, Gould said (Also see "Epizyme Emerges From Stealth Mode" - Pink Sheet, 23 March, 2009.).

Eisai is already a strong player in the oncology space and has an epigenetic drug on the market in Dacogen (decitabine), a DNA methylating agent approved in the U.S. for myelodysplastic syndromes, blood and bone marrow cancers.

Finally, Gould said Eisai has U.S. R&D operations near Andover, Mass., providing a convenient milieu for collaboration. Furthermore, in January, the Japanese pharma announced it is committing $200 million initially to hatch a new next-generation oncology company in Cambridge called H3 Biomedicine. (Also see "Eisai Revises Global Sales Strategy; Slashes U.S. Staff, Finds Ways To Retain Chinese Workers" - Scrip, 10 March, 2011.).

"Eisai is both serious about working with and investing in small companies, as well as serious about oncology, targeted therapeutics and epigenetics as an opportunity to help patients' lives and quality of life," Gould said.

Unable to meet the sales goals outlined in the Dramatic Leap Plan unveiled in 2005, Eisai recently cut staff and announced plans to move away from failed broad development programs and focus more on targeted therapies.

Misregulation Of Epigenetic Enzymes Implicated In Various Diseases

Epigenetics is a high-profile field of emerging science, which, in addition to Eisai's Dacogen also includes Merck and Co.' s histone deacetylase inhibitor Zolinza (vorinostat), approved to treat cutaneous T-cell lymphoma. The class of drugs revolves around the molecular modifications affecting the packaging of DNA into chromosomes, which allows individual cells to dial up or dial down the activities of different genes in a highly specific manner. Misregulation of epigenetic enzymes are though to result in disease, particularly cancer, metabolic disorders and neurodegenerative diseases.

Founded in 2007, Epizyme is backed by several high-profile venture capital investors. Most recently, it raised $40 million in a two-tranche Series B round in late 2009, led by new investors Bay City Capital, Amgen Ventures, Astellas Venture Management, New Enterprise Associates and including participation by existing investors Kleiner Perkins Caufield & Byers and MPM Capital ([See Deal]).

Between those financings and recent partnerships, Epizyme has brought in about $86 million, Gould said. This gives the company the flexibility to think about its long-term strategy, such as whether to try going public.

"We're certainly very well capitalized; we feel like we're in a very good position to pursue multiple programs that address specific genetically defined patient populations," said Rhodes.

-Joseph Haas (j.haas@elsevier.com)

Eisai Deal Puts Epizyme In Position To Advance Lead Program

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