United States Securities and Exchange Commission Washington, D.C
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-35945 EPIZYME, INC. (Exact name of registrant as specified in its charter) Delaware 26-1349956 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 Technology Square, Cambridge, Massachusetts 02139 (Address of principal executive offices) (Zip code) 617-229-5872 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading symbol(s) Name of each exchange on which registered Common stock, $0.0001 par value EPZM Nasdaq Global Select Market The number of shares outstanding of the registrant’s common stock as of October 25, 2019: 91,073,942 shares. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ PART I — FINANCIAL INFORMATION Item 1. Financial Statements. — Unaudited 2 Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 2 Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2019 and 2018 3 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 4 Condensed Consolidated Statements of Stockholders Equity 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3. Quantitative and Qualitative Disclosures About Market Risk 29 Item 4. Controls and Procedures 30 PART II — OTHER INFORMATION Item 1A. Risk Factors 31 Item 6. Exhibits 61 Signatures 62 Epizyme® is a registered trademark of Epizyme in the United States and/or other countries. All other trademarks, service marks or other tradenames appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Forward-looking Information This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These statements may be identified by such forward-looking terminology as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding: • our plans to develop and commercialize novel epigenetic therapies for patients with cancer and other serious diseases; • our ongoing and planned clinical trials, including the timing of initiation and enrollment in the trials, the timing of availability of data from the trials and the anticipated results of the trials; • the timing of and our ability to apply for, obtain and maintain regulatory approvals for our product candidates; • our ability to achieve anticipated milestones under our collaborations; • the rate and degree of market acceptance and clinical utility of our products; • our commercialization, marketing and manufacturing capabilities and strategy; • our intellectual property position; and • our estimates regarding expenses, future revenue, capital requirements and needs for additional financing. All of our forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the Securities and Exchange Commission, or the SEC, could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q which modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10- Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q. Our management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared by us in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim periods and with Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. This discussion and analysis should be read in conjunction with these unaudited condensed consolidated financial statements and the notes thereto as well as in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, or our Annual Report. The three months ended September 30, 2019 and 2018 are referred to as the third quarter of 2019 and 2018, respectively. Unless the context indicates otherwise, all references herein to our company include our wholly owned subsidiary. 1 PART I – FINANCIAL INFORMATION Item 1. Financial Statements EPIZYME, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Amounts in thousands, except per share data) September 30, December 31, 2019 2018 ASSETS Current assets: Cash and cash equivalents $ 93,463 $ 86,671 Marketable securities 199,398 153,633 Accounts receivable 12,000 20,067 Prepaid expenses and other current assets 16,078 12,164 Total current assets 320,939 272,535 Property and equipment, net 1,827 2,057 Operating lease assets 9,368 — Restricted cash and other assets 2,063 909 Total assets $ 334,197 $ 275,501 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 5,354 $ 4,780 Accrued expenses 19,304 19,700 Current portion of operating lease obligation 2,964 — Current portion of deferred revenue 1,794 13,300 Other current liabilities 16 53 Total current liabilities 29,432 37,833 Operating lease obligation, net of current portion 7,183 — Deferred revenue, net of current portion 3,806 3,806 Other long-term liabilities 38 853 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.0001 par value; 5,000 shares authorized; 350 shares issued and outstanding (equivalent to 3,500 shares of common stock upon conversion at a 10:1 ratio) 37,432 — Common stock, $0.0001 par value; 125,000 shares authorized; 91,069 shares and 79,175 shares issued and outstanding, respectively 9 8 Additional paid-in capital 956,765 819,779 Accumulated other comprehensive income (loss) 149 (54) Accumulated deficit (700,617) (586,724) Total stockholders’ equity 293,738 233,009 Total liabilities