Epizyme (EPZM) has announced today that it has extended its previous agreement with Celgene (CELG) for researching therapies for rare forms of cancers. The new agreement extends the collaboration for an additional three years. Celgene will have the option to license HMT inhibitors that aim at three pre-defined targets. With this new agreement Epizyme will now have enough cash to last until Q2 2017. 

These are the terms of the revised agreement shown in the Company Press Release: 

Epizyme will receive a $10 million extension fee from Celgene in return for an option to individually license global rights for two of the targets and ex-US rights for the third target.Celgene may exercise its option with respect to each of the targets at the time of the IND filing for an additional pre-specified license payment.

Epizyme will be responsible for leading and funding development for each target candidate through phase 1 clinical trials.Following the completion of phase 1, if Celgene chooses to continue its license for a specific target, it may do so by making an additional pre-specified payment.

Epizyme may earn total potential milestones of up to $610 million on the three targets, including up to $75 million in development milestones and license fees, $365 million in regulatory milestones, and $170 million in sales milestones

Epizyme also may earn a royalty of up to a low double-digit percentage on worldwide net sales for two of the product candidates, and on ex-US net sales for the third product candidate.

Epizyme will retain global rights to the remainder of its pipeline, as Celgene’s option to license ex-US rights for any other preclinical programs will terminate.

In addition, Celgene will retain its ex-US license to, and the companies will continue their ongoing clinical collaboration on, pinometostat (EPZ-5676), a HMT inhibitor targeting DOT1L. Pinometostat is in phase 1 development for the treatment of patients with acute leukemia with alterations in the MLL gene (MLL-r).

This extension of the collaboration agreement shows how strong Epizyme's novel Epigentics platform truly is. Epizyme is able to specifically target certain cancers by modifying a different approach for each. Epizyme's platform accomplishes this by controlling gene expression in cancers, without actually changing the entire gene. More specifically the company regulates the expression of enzymes to be more tightly controlled to reduce cancer expression. Celgene seems to see great value in this Epigenetics platform therefore investors should not be worried about long-term value here.