Edit: Issue still exists in 4.7p8.
Works fine in 4.6.1, however in 4.7p7 only the shadow textures appear. Actually, i noticed the yellow pencil does appear briefly at first, but never again. A little beyond me to debug.
UnrealStickFigure2D, clone/copy, open in 4.7p7. Play.
Press K to kill off character to show animation again(slight delay in how often you can press K).
Pencil death animation in 4.6.1 and Pencil death animation in 4.7p7
Erase the character BP section.