Epizyme Inc (EPZM) Q4 2020 Earnings Call Transcript

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Epizyme Inc (EPZM)
Q4 2020 Earnings Call
Feb 23, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello and welcome to Epizyme's Conference Call. [Operator Instructions]. There will be a question-and-answer session after the prepared remarks. Please be advised that this call is being recorded at Epizyme's request. I would now like to turn the call over to Bill Slattery, Jr. You may begin.

Bill Slattery -- Senior Director, Investor Relations, W2O Group

Thank you, operator. This morning, Epizyme issued a press release providing a business update in addition to fourth quarter and full year 2020 financial results. That press release as well as slides to accompany today's call can be found in the Investor Section of the Company's website at epizyme.com.

On the call with me today is Rob Bazemore, President and Chief Executive Officer; Paolo Tombesi, Chief Financial Officer; and Vicki Vakiener, Chief Commercial Officer. Matt Ros, Executive Vice President, and Chief Strategy and Business Officer and Dr. Shefali Agarwal, Chief Medical Officer, will be joining us for the Q&A session.

As a reminder, today's discussion will include forward-looking statements related to Epizyme's current plans and expectations, which are subject to certain risks and uncertainties. Actual results may differ materially due to various important factors, including those described in the Risk Factors section of our most recent Forms 10-Q, 10-K, and other SEC filings. These forward-looking statements represent our views as of this call and should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to publicly update these statements.

At this time, I would like to turn the call over to Rob Bazemore. Rob?

Robert Bazemore -- President and Chief Executive Officer

Thank you, Bill, and thank you all for joining us today. 2020 was a pivotal year for Epizyme and encompass remarkable progress toward our mission of rewriting treatment for cancer through novel epigenetic medicines.

I'd like for history to reflect that achieving two back-to-back FDA approvals within five months, enrolling our clinical trials, and launching TAZVERIK, all while working entirely remotely through a pandemic, the likes of which none of us on this call has ever had to experience, reflects the level of execution that signals to people living with cancer, to the physicians treating them, and to our shareholders that our mission at Epizyme is something we take very seriously. For that, I'd like to thank our incredible employees here at Epizyme.

Our sales, clinical and research teams all quickly adapted to our new environment. And it's because of their efforts that we were able to execute across all of our 2020 initiatives. Despite the many challenges the global pandemic brought to physicians, people living with cancer, and our ability to access them, we successfully transitioned Epizyme into a fully integrated commercial enterprise, as we launched our first product, TAZVERIK following our accelerated approvals of epithelioid sarcoma, a solid tumor cancer and follicular lymphoma, a common heme malignancy.

From a clinical perspective, we advanced the development of Tazemetostat to support label expansion in FL, and in additional solid tumor indications. In fact, all of our 2020 clinical initiatives were achieved on time, or ahead of schedule. We also continue to progress our early stage pipeline, which you can expect to hear more about this year. In addition, we raised sufficient cash to fund important growth initiatives and extend our operating runway into 2023 based on our current operating plan.

Our two approvals last year made TAZVERIK the first and only treatment specifically indicated for ES patients, and the first and only FDA approved EZH2 inhibitor on the market. The clinical utility of TAZVERIK was quickly acknowledged by the oncology community and payers alike. Within three weeks of both approvals, TAZVERIK was incorporated into the NCCN clinical practice guidelines in ES and FL. Today, TAZVERIK is covered in over 90% of insured lives in the U.S. for use in both ES and the FL indications.

Earlier this month, the NCCN guidelines for relapsed refractory FL patients were amended to recommend TAZVERIK for patients whose EZH2 status is unknown. This revised recommendation reinforces that there is no requirement to test for EZH2 status before prescribing TAZVERIK, which is in line with our current label and supports that our education efforts are reaching the KOL community.

In the face of the COVID pandemic, the launch of TAZVERIK has been anything but conventional. Our commercial team has continued to adapt to the virtual environment, ensuring that TAZVERIK reaches all eligible patients as quickly as possible by finding new ways to engage with academic and community physicians.

As expected, we saw the greatest initial adoption of TAZVERIK in large academic centers. So we're now seeing broader adoption among the many community practices as physician awareness and understanding of our label improves. While the resurgence of COVID-19 cases in the fourth quarter extended the challenges that we described last year, adoption of TAZVERIK in ES and FL continues to expand.

TAZVERIK net revenues for the fourth quarter were $4.5 million, a 31% increase over Q3, driven primarily by increased adoption in FL. Beyond revenue, we continue to see positive signs of our commercial execution and novel approaches to overcoming these challenges and ensuring patients have access to this drug.

During the fourth quarter, monthly new prescriptions for TAZVERIK continued to grow and we observed a 50% increase in new prescribing accounts, our largest quarter-over-quarter increase to-date. Overall, I'm encouraged by how we executed given the circumstances and I remain enthusiastic about the long-term potential for TAZVERIK in ES and FL.

I'm pleased to be joined today by Vicki Vakiener, Epizyme's Chief Commercial Officer, who will elaborate on our commercial success momentarily. As I noted earlier, we've also made progress throughout 2020 advancing our clinical programs to further develop tazemetostat completing all trial milestones on time or ahead of schedule. We completed enrolment in the safety run-ins of our ES confirmatory trial evaluating tazemetostat plus doxorubicin in frontline patients and for our FL confirmatory trial evaluating R2 plus tazemetostat in second-line and later patients. We're now moving forward to initiate efficacy expansion portions of both of these studies.

Our first marketing commitments for ES and FL also remain on track. We also completed enrolment in the safety run-ins portion of our metastatic castration resistant prostate cancer study evaluating Tazemetostat in combination with enzalutamide or abiraterone. We plan to report safety and early activity data from all three safety run-ins this year. Scientific interest in this novel mechanism has also grown, and in 2020, enrolment was initiated in several investigator sponsored trials and collaboration studies of tazemetostat with many others being approved or currently under review.

Studies such as the trial of tazemetostat in frontline diffuse large B cell lymphoma and FL, which we are working on in collaboration with the Lymphoma Study Association continued to enroll patients as expected. As we look forward into 2021, and beyond, we believe that there are four pillars necessary to driving enhanced and sustainable long-term growth for Epizyme. The first, maximizing our commercial effectiveness to ensure adoption of TAZVERIK in as many appropriate FL and ES patients as possible.

As importantly, building tazemetostat pipeline into drug potential to benefit people living with cancers well beyond ES and FL. We will also expand our pipeline, bringing novel oncology therapeutics into clinical development and transforming Epizyme into a true oncology portfolio company. And finally, working collaboratively and leveraging all available options to expand patient reach and increase shareholder value resourcefully and responsibly.

Our today's call will focus on our fourth quarter results and the first of these four pillars. We're excited to announce that we'll be hosting a call to unveil the next episode for Epizyme, next Tuesday, March 2nd, at 10 O'clock AM Eastern Time. During this call, we'll speak further to our next five-year strategy, provide updates related to our TAZVERIK development plans, and provide further detail regarding the advancement of our epigenetic pipeline.

Because of this, we'll be deferring much of the discussion relating to ongoing and planned clinical trials, along with pipeline expansion plans to next week. The vision [Phonetic] call we will provide insights into how we're thinking about our pipeline, milestones, potential new data and focused areas over the next five years. You should expect to see more information about this call in the next 24 hours, and we look forward to your participation.

And with that, I'd like to turn the call over to Vicki, who will provide additional color on our ongoing launch efforts, followed by Paolo, who will briefly review our fourth quarter and year-end financial, before we open the call for Q&A. Vicki?

Vicki Vakiener -- Chief Commercial Officer

Thanks, Rob, and good morning everyone. TAZVERIK continues to gain traction, and we're seeing encouraging prescription and awareness trends in epithelioid sarcoma, and we are pleased with the uptick we're seeing in follicular lymphoma given the challenges we faced with COVID. This morning, we will go into greater detail on our progress in both indications.

After a long career in Big Pharma, I decided to join the team here at Epizyme and I came here specifically because of the focus on the science of epigenetics as an interesting and promising way of addressing cancer. But more importantly, I came because I recognized that this specific medicine, Tazemetostat had the potential to help people with cancer in both solid and hematologic tumors. And now, as Epizyme's Chief Commercial Officer, it's a privilege to lead our efforts to bring TAZVERIK to patients.

We've launched TAZVERIK as the first and only treatment specifically indicated for people who have epithelioid sarcoma, or ES, after receiving an accelerated approval from the FDA in January 2020. ES is an extremely rare disease affecting people primarily in their 30s and 40s. We estimate that there are approximately 800 people in the U.S. who have been diagnosed and are living with ES, of which 300 or so have metastatic disease and are eligible for TAZVERIK.

We observed strong adoption in ES during the first half of 2020, driven by the significant medical need in this rapidly progressing cancer, along with the fact that we started introducing TAZVERIK traditionally roughly two months before we experienced the full effects of the COVID-19 pandemic. This provided us with the opportunity to initiate an in-person dialogue with our priority accounts before the environment shifted to the virtual world we have all become quite familiar with.

As we transition to the second half of the year, growth in ES began to plateau. While we continue to see new patients starting therapy in the third and fourth quarters, some of the early patients treated in later lines of therapy began to cycle off treatment. Patients with multiple relapsed refractory disease have shown an average duration of therapy with TAZVERIK between four and five months consistent with our Phase II clinical data for second line and later patients.

While we're seeing utilization of TAZVERIK across all lines of therapy in ES, the majority of initial usage has been in second and third-line or later patients due to the significant need for new treatment in the setting. As physicians become more familiar with TAZVERIK and are reporting positive initial experiences, we expect that utilization will expand to earlier lines of therapy. Thanks to the ongoing education efforts of our team, awareness of TAZVERIK among physicians to treat ES has grown to over 80% as of Q4. This is exactly where we want to be in the months following approval.

To wrap-up, ES, I want to emphasize that this year, we are continuing the focus on bringing this medicine to patients in the first line setting where our clinical data showed more favorable efficacy, providing the most benefit for these patients with limited treatment options. As use of TAZVERIK in earlier lines of treatment expand, we expect duration of therapy will increase as well.

Now, let's turn to our follicular lymphoma or FL progress since approval. Last June, we obtained a second FDA accelerated approval for TAZVERIK to treat adult patients with relapsed refractory FL. Unlike our launch in ES, the FL launch was completely virtual from the start. Launching any oncology medicine during this pandemic has required overcoming a number of obstacles. For our team, there have been two distinct challenges.

First, patients are visiting their doctors with less frequency, which is accentuated in FL compared with other cancers due to the indolent nature of the disease and the general age of the patient population. While patient visits remain down compared to pre-COVID levels, during the fourth quarter, physicians and practices reported that they have recently started to encourage in-person visits again.

However, we continue to see a 20% to 30% reduction in new FL patient treatment starts on any therapy in the fourth quarter compared to pre-COVID level, which is understandable, as most physicians are reluctant to change therapies without seeing their patients in-person. This obviously has had an impact on our ability to gain new patient starts for TAZVERIK following our approval, but we believe this will eventually improve with broader vaccination and given that many of these patients have been without a treatment change for some time now.

The second major hurdle has been our field teams' limited face-to-face access with treating physicians and their staff. To-date, our launch in FL has been almost entirely virtual. While our teams have been able to reach all of their top tier accounts, frequency of access to physicians is challenging, and our ability to reach other accounts stakeholders have been less efficient in the virtual setting. So here's the thing. It is taking more time to get traction with physicians than might otherwise be the case in person.

And compounding this while our approved label allows for very broad use of TAZVERIK in patients with relapsed refractory FL, it can require some explanation given the two unique indication statements. To address these challenges, we have initiated a number of educational programs and non-personal promotion programs to support the team's efforts with physicians. We've adapted with novel tools for field interaction and focused on innovative peer-to-peer programming in multiple formats, such as virtual speaker events, local workshops, and medical education program.

We've partnered with patient advocacy groups to support programs focusing on disease awareness that empower patients to be an active participant in their care. We have also increased our digital presence by investing in a diverse mix of media, traditional online and social that are all focused on reaching healthcare professionals and patients.

As a result of our efforts, TAZVERIK use is coming from all lines of relapsed refractory therapy. The largest growth in share has been in the third-line and later patients where we exited December with the highest share of new patient starts with any individual treatment. But we also see growth in the second-line setting especially in patients with EZH2 mutations. We recorded our highest number of new prescribing accounts in the fourth quarter, which grew over 50% from the third quarter.

In the context of the pandemic, we are pleased with this sequential growth. While revenue grew 31% in the same period, TAZVERIK total bottle demand, including free goods grew 42%. Free goods were from our Patient Support Program EpizymeNOW, which provides TAZVERIK free of charge to eligible patients without the means to pay for therapy.

We're committed to helping patients in need, and in December, it is common to see some increase in free goods, which was accentuated by the economic conditions created by the pandemic. Even with this December increase, the overall percentage of free goods was in line with our Annual Patient Assistance Program utilization assumption for 2020.

Overall, we are pleased with the team's performance given the ongoing challenges presented by the COVID-19 pandemic. The ability to reach healthcare providers has been severely impacted for all companies. But our new field team of seasoned professionals has achieved the highest share of voice in person and virtually relative to others working in FL.

TAZVERIK awareness has increased more than 60% since approval and physician intent to prescribe remains high, irrespective of the patient's EZH2 mutation status. Our teams continue to adjust their approach to reach prescribers and have shown remarkable tenacity and creativity. TAZVERIK prescriptions for FL are now being written for patients with EZH2 activating mutations, wild-type EZH2, as well as in untested patients. Utilization is continuing to grow in academic accounts, and more importantly, we're seeing large community prescribers expanding their adoption of TAZVERIK.

With the recent amendment of NCCN guidelines for relapsed refractory FL patients earlier this month that recommends TAZVERIK for patients with no satisfactory treatment options, and whose EZH2 status is unknown, we expect we will continue to see increased TAZVERIK utilization and usage by physicians as they reengage with their patients.

What's more, payer coverage has continued to be very positive and reflective of our clinical data generated for TAZVERIK supporting broad use by physicians. Over 90% of insured lives in the U.S. are currently covered for TAZVERIK in both ES and FL indications. And the majority of prior authorization requirements are aligned to the patient population in our label. While we expect some challenges to persist in 2021 due to the pandemic, we are focusing on what we can control.

Growing new accounts and prescribers, educating academic and community physicians about TAZVERIK's attractive safety and tolerability profile, continuing to identify appropriate patients who can benefit from TAZVERIK, and ensuring a positive physician experience.

Now, I'll pass the call over to Paolo to talk about our financial results. I look forward to addressing your questions during Q&A. Paolo?

Paolo Tombesi -- Chief Financial Officer

Thank you, Vicki, and good morning, everyone. We closed the year in a very strong position financially with $373.6 million in cash, cash equivalents and marketable securities. Our total non-GAAP operating expenses for 2020 were $209.6 million below our guidance as we manage spending carefully and continue to see a reduction in travel and other expenses due to the majority of employees working virtual. Non-GAAP R&D and SG&A operating expenses for 2020 were approximately $101.3 million and $106.2 million respectively.

Turning to revenue, we recorded full year 2020 revenue of $15.8 million, which includes $11.5 million of TAZVERIK ES and FL net sales and $4.3 million of collaboration revenue. For the fourth quarter, we recorded revenue of $8.4 million, which included $4.5 million in TAZVERIK net sales revenue and $3.9 million of deferred collaboration revenue, which was recognized following the termination of the collaboration agreement with Celgene.

Our cash position was strengthened in the fourth quarter through a $150 million expansion of our loan facility with Pharmakon Advisors which was executed in November. This additional tranche further strengthened our balance sheet and will find a number of critical growth initiatives for Epizyme including continued TAZVERIK commercial execution, ongoing and planned tazemetostat development new indications in combination regimens, and advancing our research efforts and early pipeline. As a reminder, we retained the option to expand the loan facility by an additional $150 million following mutual agreement with Pharmakon.

We expect non-GAAP adjusted operating expenses to be in the range of $235 million to $255 million for 2021, to support additional clinical development and continued investment in our commercial launches, including investment in manufacturing capabilities to ensure uninterrupted supply of TAZVERIK for commercial patients in our clinical trials.

Finally, we're well financed today with cash and cash equivalents to support our current operating plans into 2023. We're not providing for the moment any revenue guidance given that our launches are in the early stages and uncertainty related to the evolving COVID-19 pandemic.

I'd like to turn the call back over to Rob for closing comments. Rob?

Robert Bazemore -- President and Chief Executive Officer

Thank you, Vicki and Paolo. While not without its challenges, 2020 was a remarkable year for Epizyme where we executed exceptionally well all things considered. We're encouraged by our progress in the ES and FL launches and remain confident in the long-term potential of TAZVERIK to change the lives of patients living with cancer.

As a reminder, we hope that you'll all join us next Tuesday, March 2nd, for our call to discuss the next episode for Epizyme where we will be elaborating further on our next five-year vision for Epizyme. And we'll now open the call to your questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions]. Our first question comes from the line of Michael Yee with Jefferies. Your line is now open.

Michael Yee -- Jefferies -- Analyst

Hey guys, good morning. Thanks for the update, Rob.

Robert Bazemore -- President and Chief Executive Officer

Hi Mike.

Michael Yee -- Jefferies -- Analyst

I have two quick questions. Yeah, one is appreciate the color on the launch. When I think about a launch, usually it's physician prescribing patients demand or reimbursement are really the keys. Do you think out of all the information you just gave us that one of those is most important that you think that you need to better block and tackle around it to get things to pick up a bit? Maybe just talk about that.

And then the second question is a finance question. You gave some nice opex guidance, you have current cash, I think I can do some math around where you might be at the end of the year. Can you just remind me on that $150 million credit line? How does that work? Is it just really available? There is no real financial criteria, you have to hit to be able to do that? Can you just maybe remind us about that credit line? Thank you so much.

Robert Bazemore -- President and Chief Executive Officer

Yeah, Mike certainly. Let me start with the first question. So with regards to how we're performing in the market right now, what's driving demand and where we see it today, thing that's needed to unlock this.

First of all, yes it is patient access continues to be terrific. We announced in the opening remarks that we have over 90% of lives covered for both FL and ES, those payer policies cover according to the label. So it allows for use as early as the second line according to the label without requirement for testing, all of the things that our label says. We were encouraged that earlier this month, the NCCN guidelines were updated to reflect that that there is no requirement for testing even in the second-line setting.

So patients, who choose to use TAZVERIK in either multi mutant patients or those who are unknown, can do that without testing and payer policies cover that. Second, I think with regards to the uptake and the adoption, we're seeing, we're actually very pleased with that. We said on the call that in the third-line, and later setting, which is where the predominance of our data is, we actually exited the year at a higher share of new prescriptions than any other product in the category in that line of patients. And we're also seeing growth in the second-line setting as well predominantly in patients who have EZH2 mutations.

So we feel that that's a really great place to be six months into a launch, where we've had a difficult time communicating with the physicians. And I think, so there comes the challenges if patients aren't coming in to see their physicians. We're still seeing that patient visits were down. In the fourth quarter, it was not substantially different than the third quarter. And so in the third-line setting, if -- patient new prescription starts for any product and we need that new patient start in order to get a prescription for TAZVERIK in the third-line setting that remained down about 40% in the fourth quarter compared to pre-COVID levels.

Overall, if you look at the relapsed refractory population, it's 20% to 30% in the second-line and later. So we have to have the opportunity for a new prescription to be written for TAZVERIK to be written. And so a lot of that will correct itself, as we've said before, this isn't forever, we believe that this year with the wider use of the vaccines, many of these patients have been away from their physicians for quite some time, physicians are calling now and trying to get these patients back in so they can see them and initiate a new therapy if they need it, if they're having a bad experience, if their disease is progressing.

And that really is the key to unlocking the growth of TAZVERIK in the way that we envision. But it's really more about that than execution. We're quite pleased with where we are, five or six months into the launch. Your second question had to do with financing. So we're in a strong position going into the year as we said, our cash position remains into 2023. We're in a solid financial position. The extra $150 million that you asked about the loan facility, this is purely an option. There is no specific criteria that has to be triggered for that, it's upon mutual consent between us and Pharmakon should we decide to use it. But there are not specific criteria that have to be satisfied in order to use the second tranche of that.

Michael Yee -- Jefferies -- Analyst

Okay, great. Thank you and appreciate it.

Robert Bazemore -- President and Chief Executive Officer

Thanks Mike.

Operator

Thank you. Our next question comes from the line of Yaron Werber with Cowen. Your line is now open.

Yaron Werber -- Cowen -- Analyst

Great. Thanks for taking my question. So Robert, I got maybe a couple. The first one is sort of following Mike's question on -- can you give us a little bit of a sense in third-line do you have any sense how many patients are sort of failing standard of care annually, so we can kind of put in context, I mean, volume is obviously down because of COVID. So if we get a sense kind of where you are on new starts relative to the overall opportunity. That, on the one hand, your team is -- to your point, your team is actually doing pretty well getting the message out there in this environment and those that you're putting up are encouraging and impressive.

And then secondly, just on SG&A, the $125 million give us a little bit of a sense, kind of maybe, if you can, how are you -- how much wiggle room do you have with that? And how are you spending that money right now overall maybe based on the few buckets? Thank you.

Robert Bazemore -- President and Chief Executive Officer

Yeah. Yaron, let me start and then maybe I'll ask Vicki as well to add a bit of color on the patients that we're getting. So the market size, we've always said this market size is around 12,000 last refractory patients of which 5,000 or so plus of those are in the third-line and later setting. We don't expect that there any differences there. It's a matter of how often those patients are coming in.

As we said, we close the end of the year with a new prescription share getting a higher share of those patients than any other single agent in the space. We're getting more of the mutant patients than wild-type, and you would expect that just based on our data, I think we've always expected that our share would be higher in the mutant patients and in the wild-type. And in fact, that's what we're seeing.

But we're also seeing, as I said, use in the second-line patient population as well predominantly in the EZH2 mutant patients where our data was the strongest. And so that's generally speaking where the patient volume is coming from. And I'll ask Vicki to add a bit more color in terms of what we're seeing so far. Vicki?

Vicki Vakiener -- Chief Commercial Officer

Yes, that's great. Nice to meet you, remotely here. Just to add to Rob's comments, we -- I know in the third quarter we shared our estimated new patient share at the time it was about 8%. And we're estimating for this -- for the fourth quarter that we're between 15% and 20% of new patient share, which, as Rob said, was the fastest growing new drug or not new drug or therapy, in terms of the utilization. So we're very pleased with that that we're continuing to see that growth. And... [Speech Overlap]

Robert Bazemore -- President and Chief Executive Officer

That -- the 15% to 20% is the average over the quarter.

Vicki Vakiener -- Chief Commercial Officer

Right, average over the quarter.

Robert Bazemore -- President and Chief Executive Officer

So obviously higher than that.

Vicki Vakiener -- Chief Commercial Officer

Right. So we're pleased with that. The other thing I want to mention is where these patients are coming from, because I think as you know, early on, we were seeing more academically based on the institutions were prescribing more. And another really positive signal that we've seen in the fourth quarter is the community practices that are starting to come online and utilizing TAZVERIK to the point now that our split of academic to community based prescriptions is about a 60:40 split, which is 60% academic and 40% community, and that's continuing to increase.

So just the fact that we're finally seeing that share of voice as high as it is and the intense prescribe and we're getting to the community that's going to -- that's really important for our continued growth. So we feel very pleased with that.

Robert Bazemore -- President and Chief Executive Officer

And then on the expense question, I'll start and then maybe ask Paolo to talk specifically to the SG&A component. But just a reference point for the expenses. We had already managed our expenses pretty tightly in 2020 to reflect the uncertainties about the pandemic, and also the remote working environment that eliminated a lot of our travel related, field-related expenses.

So we had managed 2020 down pretty tightly because of that. We expect some of that to return in 2021. And also, in 2020, the FL launch was is -- we had a six month basically investment in the launch of follicular lymphoma with the June PDUFA date, this year we'll have a full-year of launch. But that being said, we've held flat most of our fixed costs, we've held flat -- in fact, we've actually reduced G&A in 2021 compared to 2020, and now 2021 accounts for a full-year launch expense for follicular lymphoma.

So the areas that we will grow in 2021, largely is in the area of clinical trials, new investments in our clinical studies as our safety run-ins transition into the full Phase III efficacy expansions, and then also manufacturing to support our commercial need and to support our clinical trial demand, right.

Paolo, I don't know if you'd like to add a bit more color on the G&A portion of Yaron's question.

Paolo Tombesi -- Chief Financial Officer

Yes, sure. Even though you already answered most of the questions. So basically, as Rob said, we already managed quite well in 2020. So if you look at the exit rate, we just this morning announced that Q4, and so really there is not a significant increase on 2021. The only difference is the one full-year of launch activities. We reduced that still, but we still invest in the launch because we still believe on the full potential of the product. Our sales force is now the full 12 months, last year started in March. But further SG&A has been actually reduced compared to last year.

Yaron Werber -- Cowen -- Analyst

All right. Thanks so much. Appreciate it.

Robert Bazemore -- President and Chief Executive Officer

Thanks, Yaron.

Operator

Thank you. Our next question comes from the line of Mohit Bansal with Citigroup. Your line is now open.

Mohit Bansal -- Citigroup -- Analyst

Great, thanks for taking my question and thank you for providing all this... [Speech Overlap]

Robert Bazemore -- President and Chief Executive Officer

Good morning.

Mohit Bansal -- Citigroup -- Analyst

Good morning. So maybe -- so just trying to do some math there. So looking at $4.5 million number for the quarter analyzing at about $18 million obviously, it is early. But if you think about this being a 15% share of new market, new patient market that only gives me about $120 million annual run rate, even at 100%. And if I -- even it's increased by 30% to 40% accounting for COVID, I still get to $170 million COGS. So I'm just trying to understand, does this mean the market opportunities still like sub $200 million in this patient segment? How should we think about that? Because I mean, it seems like everything is going in right direction, but it is not translating into sales.

Robert Bazemore -- President and Chief Executive Officer

Hi, Mohit, thank you for the question. And no, in fact, our view of the market hasn't changed at all, with respect to the attractiveness of TAZVERIK in this market, or the market size. Again, keep in mind, the market is 10,000 to 12,000 and considering that, so just look in the third-line alone. The third-line portion of that patient population is about 5,000 patients. We estimate that those patients on average tend to turn over roughly once a year on average. So that means that of those patients, they're always drug treated at some point, because they have changes of therapy. That's the number that if you use that as the market size would be the appropriate size, just a third-line and later if you annualize revenues.

Keep in mind the numbers that we're reporting are over the course of an entire quarter. So some of those patients don't have the benefit of three months of sales, they came at the end of the quarter. But even if that -- if you assume that, patient population in the third-line and later is roughly 5,000, that's roughly 400 plus patients per month that would normally be cycling through a new therapy. That's the number that's down by 40%. It remained down by 40%. It was down more than that earlier in the year. But it remained down by 40%.

So those are patients that if they're not coming on to a new treatment, we don't have access to them, but it also affects the overall size of the market. But it's not a size, it's not -- it doesn't change the size of the market. We expect those patients will eventually come back. Again, as I said, many of the patients have been away for many months. Physicians are starting to indicate that they're trying to bring those patients back in now because they realize they need to be seen, they need to be brought back and assessed. And I'll let Shefali talk a bit more about conversations that she's having with them, right.

When you look at it that way and look at the total annualized value of that size of that patient population, it's consistent with what we've already said. But it also was a part of the limitation of why getting to total share takes a bit longer if you have a 40% reduction in the new starts that are happening on a month-by-month basis, because the patients just start coming in.

Shefali, maybe I'll ask you to speak to some of the conversations you are having with physicians that they're having with their patients now.

Shefali Agarwal -- Executive Vice President, Chief Medical and Development Officer

Sure. Good morning, Mohit. I think it's an important question, because I talked to the physicians, both community and academics because of COVID, the number of visits as you know, especially around April, May, June, was very, very low. It actually increased a little bit in the third quarter, a little bit, but then, again we had the second surge.

So the number of -- these are elderly patients, it's an indolent disease, it's not like an aggressive tumor like DLBCL and because of that, these elderly patient don't want to go to the clinic or to the hospital, physicians have daily visits and you know, they talked to them only if they're symptomatic, and they're progressing they would go into the clinic.

But now it is a tumor, it is cancer, so physicians try to see and encourage the patients to come in. And so what we expect is, as the COVID vaccination is increasing, these patients are getting now based on the category vaccination we hope to see the increase of these patients coming into the clinic. And it's an important factor for us to access that, because they have to come to the clinic for us to be able to access or change the therapy.

So again, I think it's going to change as the COVID environment changes. And we're very encouraged by that.

Mohit Bansal -- Citigroup -- Analyst

Very helpful. Thank you very much for this. One other question, to the extent of physician who has been detailed by you is prescribing or not prescribing TAZVERIK, what are the reasons why physicians to choose something else over TAZVERIK at this point especially in third-line setting?

Vicki Vakiener -- Chief Commercial Officer

Yeah, that's a great -- Rob is looking at me. That's a great question, Mohit, and nice to meet you again. We -- we typically -- I think it's a couple factors, right, and we do a lot of advisory sessions in talking to physicians and what we hear from them often believe it or not, is, especially in a COVID environment, they say there are creatures of habit. And in the community setting, believe it or not, we see a lot of Rituximab therapy used, which is surprising, and they use it over and over and over again.

The good news is that now they have another option. And so, like I said, it just takes us in my prepared remarks, I made the point about frequency right. We've reached all these counts, we've reached over 60% of our top tier physicians, top-two tiers. But it takes frequency right of getting that message across multiple times for them to change habit.

And so we're doing a lot of things from the peer-to-peer perspective, as I mentioned to get in front of them in different ways because it is challenging for the field team. Some of these accounts are still closed. So we're providing them novel tools, like I said, the peer-to-peer engagement, doing other things to help with the educational piece of the label.

And it's -- once they get an experience, what we're finding is that they really are like wow, they get that they want to use the drug again. So getting that first experience is really important.

Mohit Bansal -- Citigroup -- Analyst

Very helpful. Thank you very much. Sorry, go ahead, Shefali.

Shefali Agarwal -- Executive Vice President, Chief Medical and Development Officer

No, and Mohit, one thing more that I don't think it -- using it over TAZVERIK -- TAZVERIK over a therapy like I think I'd want to go back, especially in the situation is just getting the chance to change therapy. It's an important point that for these patients right now, I don't think they're choosing some other drug over TAZVERIK at this moment. I think that they're just not going in the clinic and trying to have a change for therapy. So it's important to remember that during this situation.

Mohit Bansal -- Citigroup -- Analyst

Very helpful. Thank you very much. Really, really appreciate it.

Operator

Thank you. Our next question comes from the line of David Lebowitz with Morgan Stanley. Your line is now open.

David Lebowitz -- Morgan Stanley -- Analyst

Thank you very much for taking my question. Given the nature of the environment, is there, I guess any way that we could see, I guess a -- you guys getting closer to a normalized launch in the current environment as you get more used to running with the virtual launch? Or do we really need to wait until the pandemic kind of runs its course into 2022, until we can kind of see the launch get more normalized?

Robert Bazemore -- President and Chief Executive Officer

David, thank you for the question. Let me start and I'll ask Vicki to add if I miss anything. There's couple of parts to your question. First of all with respect to how we're executing and does it need -- does the market needs to return to somewhat normal for us to be able to be effective, I think we're taking a completely different point of view. We've taken the point of view that we don't know how long the pandemic will -- and the effects of the pandemic will be here. So we are adapting everything we're doing to be even more effective in this current environment working remotely the way that we are.

The challenge is the frequency is harder to get to, and when you have a new product, and you're educating on a new mechanism, frequency does matter. But we're finding ways to do that. Some of the really interesting peer-to-peer work we're doing. It's physicians who've actually used the product in front of other physicians who haven't, especially in the community setting, and we're finding those very effective in helping physicians understand, they label the data and when and how to use TAZVERIK.

We're certainly not waiting for the environment to change. We are learning how to work more effectively in this environment actually thinks some of the things that we've done differently because of it will help us be more effective going forward because I'm not sure that access to institutions will completely go back to normal, some of the institutions were starting to limit access anyway.

But with respect to the patients coming in, because that's really the big -- the big trigger, we are starting to see that change, it didn't change in the fourth quarter, and we talked about that on the call. We haven't seen a big change in the first quarter of this year. But again, the vaccinations really are starting to just be rolled out to the next wave of patients. But we expect it with two things, the vaccinations being more fully distributed. Number one, and number two, these patients, as Shefali was saying, they've just been waiting now for so long. These are patients that although they were told upfront, it might be better to take a watchful waiting approach. That works for a few months, but they can't go many, many months without seeing their physicians. These are cancer patients.

And because of that, the physicians are now starting to ask these patients to come back in and they want to see them. So we expected that will start to change this year. The only reason we're not giving revenue guidance for the year is a rate to which that happens is just it's completely unclear. We do expect that it will begin to change for the reasons that I said wider vaccination and the fact that these patients ultimately need to be seen by their physicians.

Vicki Vakiener -- Chief Commercial Officer

Yeah. And I would just add to that, David. That was why we -- we're trying to focus on what we can control. We can't necessarily control, it's hard for us impact patients coming back in although we are doing some work with advocacy to see if there's an opportunity there to help with that.

But we need to focus on controlling what we can directly control which is getting, educating the physician, getting new patient starts focused on getting new accounts to get experience with the drug. And that once they -- like I said, once they have experience, we believe and based on that experience they're going to use more. So that's what we're focused on what we can control at this point.

David Lebowitz -- Morgan Stanley -- Analyst

That makes sense. When it comes to, I guess doctors typically like to see their patients before making a change in therapy, doesn't that also mean they would typically like a comfort level of knowing the physician, the patient will be able to come in subsequent to that point, given that if the patient has a tolerability issue, that they might need to see the patients in relatively short order at a subsequent point to that. So they -- they don't just need to see the patient initially, but they need to know they'll be able to see the patient subsequent to that in the coming months?

Shefali Agarwal -- Executive Vice President, Chief Medical and Development Officer

Yeah, this is Shefali. Let me address it. So absolutely, I think what happens is they have televisits, and I'm hearing that from the physicians, they have initial televisits, and they discuss the symptomatic progression of that is happening something. And if they feel that there is symptomatic progression, they absolutely ask the patient to come in, they do their scans, they understand if the patient is progressing, and if they are, they change the therapy. There is frequent follow-up initially to ensure that there is no safety issues, especially if they're changing into new drugs. But knowing the profile of TAZVERIK as you know, I think that concern is very low, right. So the monitoring is and that's the strength of TAZVERIK, you don't require that kind of monitoring, if you're giving an IV therapy or something like that, of course you require monitoring and IV administration. But I think that's -- that's where we feel TAZVERIK has an -- is important business safety profile and requires less monitoring.

Robert Bazemore -- President and Chief Executive Officer

It was a part of the answer.

David Lebowitz -- Morgan Stanley -- Analyst

Thank you for taking my questions.

Robert Bazemore -- President and Chief Executive Officer

Yeah, David. It was actually a part of the earlier question too was what's the barrier to a new prescription and part of it is what you referenced is, even with a drug that has a profile, that you should be ideal in this situation, because patients don't have to come in and get infused [Phonetic]. It's a mechanism or drug that they don't have experience with, if they're not seeing their patient, initially they may be more reluctant to try something new, if they don't understand. But what we're hearing from the physicians, once they've tried it, they're seeing that the drug is very well tolerated. They're seeing great responses in their patients. And they're much more open to writing in many more patients once they have the opportunity.

So, as Vicki said, it really just takes that first opportunity and despite the peer-to-peer programs, we're doing have been so effective because they're getting to hear now directly from peers who've written the drug as a surrogate for their own experience, to give them comfort in using TAZVERIK in their patients as well.

David Lebowitz -- Morgan Stanley -- Analyst

Thanks for taking my questions.

Robert Bazemore -- President and Chief Executive Officer

Thanks, David.

Operator

Thank you. Our next question comes from the line of Peter Lawson with Barclays. Your line is now open.

Peter Lawson -- Barclays -- Analyst

Hey. Thanks for taking my questions. Just a follow-up from that last dialogues, any sense of the script renewals you've seen?

Robert Bazemore -- President and Chief Executive Officer

Yeah. Let me start Peter, and then maybe I'll ask Vicki to comment further. But, for some of the prescriptions, we have to go through the specialty pharmacy channel. We have a lot more visibility as scripts are refilled for those that go through the specialty distributor channel, we don't, we sell them to the channel and they distribute to the accounts. But from what we can see so far with the FL patients, we're seeing great persistence on the drug. And we would have expected that.

Remember, the average duration of response in our Phase II study was about a year for those patients. And we expected that the duration of response might actually be higher in the clinical setting. So we've seen that a majority of the patients in FL who've been written going all the way back to June, when we got the approval are actually still on therapy.

So we're very pleased by that. Also, with regards to just compliance, we've not seen any issues with compliance. Patients are very compliant with their therapy. Again, in the Phase II trial, we saw a very high rate of compliance there as well. So we didn't expect to have compliance issues. In epithelioid sarcoma, some of the earlier patients dropped off after, as Vicki said, I think an average of about five months but remember, the first patients that we got on drug in the ES launch were those patients who were second, third, fourth line. And those are the patients who tend to have a much shorter survival because of the severity of their disease.

That's why our focus this year is really beginning to push more upstream, getting those patients in the first-line setting where we saw a higher response rate and a higher duration of treatment in the Phase II study.

Peter Lawson -- Barclays -- Analyst

Great. Thank you. And then just -- is there any way of kind of breaking out ES versus follicular revenues or scripts that -- is that kind of like 50-50 at the moment?

Robert Bazemore -- President and Chief Executive Officer

[Indecipherable] the factors that I talked about, with the way the scripts, how much of them go through the specialty pharmacy channel and the specialty distributor channel, we have less visibility into the ES. But I can tell you that our view is that the majority of the growth that we saw in the fourth quarter all came from follicular lymphoma.

Peter Lawson -- Barclays -- Analyst

Okay, thank you. And then just a final question just on the last, or the first few weeks of 1Q, you've seen a similar kind of trend and traction for tazemetostat and have you started seeing an impact from the NCCN guideline change?

Robert Bazemore -- President and Chief Executive Officer

Let me address this separately. I think the NCCN guidelines, because it's the first time the question has come up, first of all, the label already allowed for that. So the NCCN guideline isn't new. I think it's good for us in that it reinforces the lack of requirement for testing for some physicians, if they might have had some confusion about the label. But the label already allows for that and for the physicians who've used TAZVERIK, one of the comments has been they really appreciate the flexibility that the label provides them. So we think the NCCN guidelines just reinforces that, it's actually not something new that didn't exist before.

But with regard to the first quarter, the trends are positive. As I said, we're not giving specific guidance on first quarter, but some of the larger trends around patients coming in. We've not seen a major difference in first quarter, but we didn't expect to, we expected it would be after the vaccinations began to take hold more. But with respect to physician adoption, we continue to see kind of trend that we saw coming out of the end of 2020.

Peter Lawson -- Barclays -- Analyst

Great, thank you so much. Thanks for taking the questions.

Operator

Thank you. Our next question comes from the line of David Nierengarten with Wedbush Securities. Your line is now open.

David Nierengarten -- Wedbush Securities -- Analyst

Hey, thanks for taking the question. So looking pre-COVID, right, my question is about how many times did these patients go in to see the doctor so that we could maybe think about going forward? Are the patients going to, in your opinion, as COVID recedes, see the doctors or see their physician with the same frequency or might there be a bit of a rush to get an appointment to reset therapy or again, would it go back to kind of the pre-COVID frequency, whatever that was? And if you knew what that was I appreciate knowing that their frequency of doctor visits. Thanks.

Robert Bazemore -- President and Chief Executive Officer

Yes, David, this is Rob. So let me answer. There are two parts. Let me talk about the frequency with which patients are getting treatments changed. And then I'll turn it over to Shefali to talk about what would be a normal regular cycle of how often these patients tend to see their physicians.

In the third-line and later patients we expect that they -- you know, just based on historical trends based on the data and other drugs that have been approved in the third-line setting, because duration of treatment, duration of response tends to be about a year, we typically see that they turn over their therapy on average, about once a year.

With respect to how often they actually see their physician in the course of the year, I'll let Shefali to speak to that.

Shefali Agarwal -- Executive Vice President, Chief Medical and Development Officer

Yeah, hi, David. So normally or ideally, it depends on the line of therapy, and also if we look at third line and beyond, based on the insurance coverage and the number of scans they do, it's ideally every three months that they go to visit the patient -- to the patient, to the doctor and they just check for scans and things like that. Unless there's a safety issue, and you have certain drugs that are IV, initially they would go high, like for example, I'll give you R2, it's given every -- it's given -- it's given for a year, it's an IV administration. So you go more frequently, because you're getting IV and things like that. But normally, for a normal checkup, it's every three months.

David Nierengarten -- Wedbush Securities -- Analyst

Got it. And do you think that like I said, I don't want to say it bullish, but you think that there will be a temporary blip or whatever you want to call it, a temporary increase in those visits as it recedes or because it's kind of receding gradually or patient perception will recede gradually, do you think it kind of returns to just a regular [Indecipherable] May countdown.

Shefali Agarwal -- Executive Vice President, Chief Medical and Development Officer

So I think it all depends on -- lot depends on the COVID vaccination and how frequently, how everybody's covered. But I think overall, I still believe that, as I talked to physicians, they're talking to the patient, they're trying to get them in. So I don't expect that all the patient would come at one go. I think it will be gradual, and the hospital themselves will open gradually, right. It's not going to happen, like everybody gets vaccinated and the hospitals become just normal right away. I think it's going to take time to adapt to normal. I think that's what...

David Nierengarten -- Wedbush Securities -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Andrew Berens with SVB Leerink. Your line is now open.

Andrew Berens -- Leerink Partners -- Analyst

Hi, thanks. Rob in your prepared comments, I think as you mentioned that you're going to get uptake in the second-line setting. But the uptake is predominantly in EZH2 positive patients. So I have a few questions on that observation. Does that encourage you to promote testing awareness among the docs? And I guess, what is the status of EZH testing now as a stand-alone test, and part of a panel? And have you seen the number of patients being tested for EZH2 status going up? And then you may have said this, but what percentage of patients treated with TAZVERIK for follicular lymphoma are wild-type versus EZH2 positive?

Robert Bazemore -- President and Chief Executive Officer

So there are a lot of parts to that question. Let me walk through them one-by-one. Thanks for the questions. And if I miss anything, I'll let Vicki fill in.

First of all, let's talk about EZH2 testing, because I think it's relevant to your question around second line. We have seen an increase in testing for EZH2 as we had expected that we would following the approval. We are -- from the market research that we do, it looks like about 50% of physicians are testing for EZH2 today; it's up a bit from the pre-launch levels.

What we understand from that is they're not testing necessarily as a decision point about whether to use TAZVERIK or not. They just want to understand the type of disease their patient has and they want to be able to set expectations with their patients, but many times they're ordering the test, at the same time they write the prescription. So they're not actually using it as a condition for prescribing TAZVERIK.

In the second-line setting, I think it probably is used more that way. Because most of the use for TAZVERIK has been monotherapy, that's the label, physicians are expressing a lot of interesting combinations and experimenting with different combinations, the most of what we've seen so far, commercially has been as monotherapy.

So in the second-line setting, again given the stronger data in mutant versus wild-type, it makes sense to that's where more of the use would be coming as a monotherapy in the second-line setting. So did I answer your two questions on those?

Andrew Berens -- Leerink Partners -- Analyst

Right, OK. So, you are saying about 50% of the patients that get TAZVERIK tested for EZH2? Or is the 50%... [Speech Overlap]?

Robert Bazemore -- President and Chief Executive Officer

Yeah, about 50% of the physicians that we've -- did market research with said they are testing for EZH2, not necessarily 50% of the patients, but about 50% of physicians now say they're testing.

Andrew Berens -- Leerink Partners -- Analyst

Okay.

Vicki Vakiener -- Chief Commercial Officer

Getting at that -- and getting at that number is quite challenging, because obviously we do buy claims data, but the claims data doesn't include whether they were tested or not. So we don't have good visibility to that number, although we know that in the third-line cost setting, we're seeing more mutant utilization as well based on the market research that we have.

Andrew Berens -- Leerink Partners -- Analyst

Okay. Then what percentage... [Speech Overlap]?

Vicki Vakiener -- Chief Commercial Officer

The share is higher than in the unknown or untested or wild-type.

Andrew Berens -- Leerink Partners -- Analyst

Okay. So just as a follow-up, what percentage of patients in follicular that get the drug are EZH2 positive, I would think you have that number available?

Robert Bazemore -- President and Chief Executive Officer

We don't have a good breakdown on that, again, because of all, the part of the product, which is over half of the scripts go through the specialty distributors. So we actually have to do retrospective research to get an understanding of how we think the drug is being used on things, it's not captured through the specialty distributor. But anecdotally, the feedback we're getting in through market research, all three are growing, both mutant, wild-type, and untested, which is actually a pretty big part of the market where physicians don't test at all, all three of those are growing.

And as Vicki said, we're getting roughly over the average of a quarter of 15% to 20% of all the patients in the third-line setting in new prescriptions. We exited higher than that, that's the average for the quarter. So that's more than double where we were in the third quarter in terms of new patient starts. But across those, it's mutant, it's wild-type and it's patients who were untested, which is a pretty large group of the total.

Andrew Berens -- Leerink Partners -- Analyst

What is the availability of the EZH2 test as a stand-alone test?

Robert Bazemore -- President and Chief Executive Officer

It's pretty widely available. Remember, the label allows for any FDA approved, FDA test for EZH2 is sufficient. And what we're hearing from the payers is that they also allow for local testing. So there are many institutions have their own tests that they can use. Also, EZH2 is included on panels with both Quest and other commercial diagnostics, there are panels that include EZH2 in them. So there are many ways that physicians can access EZH2 testing. We think that's a part of the reason that testing rate has gone up among physicians has gone up from 30%, 35% pre-launch to around 50% today.

Andrew Berens -- Leerink Partners -- Analyst

Okay. Thanks for answering all the questions. Appreciate it.

Robert Bazemore -- President and Chief Executive Officer

Thank you, Andy.

Operator

Thank you. There are no further questions. I would now like to turn the call back to Rob Bazemore for closing remarks.

Robert Bazemore -- President and Chief Executive Officer

Thank you, operator. And thank you all for joining us today and for all of your questions. We hope you can join us for our call to discuss the next episode for Epizyme on March 2nd next Tuesday, and that you all stay safe and healthy. Have a great day.

Paolo Tombesi -- Chief Financial Officer

Bye everyone.

Operator

[Operator Closing Remarks].

Duration: 60 minutes

Call participants:

Bill Slattery -- Senior Director, Investor Relations, W2O Group

Robert Bazemore -- President and Chief Executive Officer

Vicki Vakiener -- Chief Commercial Officer

Paolo Tombesi -- Chief Financial Officer

Shefali Agarwal -- Executive Vice President, Chief Medical and Development Officer

Michael Yee -- Jefferies -- Analyst

Yaron Werber -- Cowen -- Analyst

Mohit Bansal -- Citigroup -- Analyst

David Lebowitz -- Morgan Stanley -- Analyst

Peter Lawson -- Barclays -- Analyst

David Nierengarten -- Wedbush Securities -- Analyst

Andrew Berens -- Leerink Partners -- Analyst

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