Infinity Pharmaceuticals Inc (INFI) 2006 Q3 法說會逐字稿

Good day and welcome, everyone, to the Infinity Pharmaceuticals clinical update and third quarter financial results conference call. This call is being recorded. At this time I would like to turn the conference over to Mr. John Evans from Infinity Pharmaceuticals. Please go ahead, sir.

Good morning. This is John Evans, Manager of Investor Relations and Business Development of Infinity. With me here today are Stephen Holtzman, CEO, Julian Adams, President and Chief Scientific Officer, and Adelene Perkins, Executive Vice President and Chief Business Officer. We would like to thank you for your participation in this call and for your interest in Infinity. As we announced in two press releases last week, there are two main topics which we would like to discuss today. First, our third quarter results. And, second, the presentation last week of the first human clinical data for our lead anti-cancer agent, IPI-504, a Heat Shock protein 90 inhibitor. Both press releases and our 10(Q) filing are all available on Infinity's website at www.ipi.com. Additionally, this conference call will be archived on Infinity's website for 30 days.

Before we begin I would like to mention that we will be discussing our future discovery and development efforts, our collaborations, our financial position and other future expectations on this call. These remarks constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act and it is possible that our actual results may differ from what we project today as a result of a number of factors. These factor are described in the risk factor section of the 10(Q) that we filed with the SEC last week. While these forward-looking statements represent our views as of today, they should not be relied upon in the future as representing our then current views. We may update these statements in the future but we are not taking on an obligation to do so. With that said I would like to invite Steve Holtzman, Infinity's CEO, to provide an overview of the recent events and achievements at Infinity.

Thanks, John. Good morning and thanks to all of you for joining us today. As you know, Infinity is a drug discovery and development company focused on creating novel small molecule therapeutics for the treatment of cancer and related conditions. The last few months have been an extremely active and productive period for Infinity. I would like to recap for you some of our recent accomplishments. First, in August we entered into a major partnership with MedImmune around our two lead programs for the discovery and developments of inhibitors of Heat shock protein 90, or Hsp 90, and for inhibitors of the Hedgehog cell-signaling pathway. The terms of the collaboration include a significant up front license fee and significant milestone payments, 50/50 cost sharing, a 50/50 worldwide profit split, and Infinity co-promotion rights in the United States.

More importantly, our alliance with MedImmune has given us a partner who is equally committed to maintaining the forward momentum of our clinical and preclinical efforts for these programs. I would like to especially thank Dave Mott, Ed Mathers, Jim Young, Peter Kiener, Dirk Reitsma and the other members of the MedImmune team. You've already been great partners to date and we very much look forward to our continued collaboration going forward. Moving on, in September we announced the successful closing of our reverse merger with Discovery Partners International. Through the merger, Infinity gained approximately $78 million in cash and a public listing and as you all know, we now trade on NASDAQ under the ticker symbol, INFI. Now last week at the EORTC meeting held in Prague, we presented human clinical data on IPI-504, our most advanced oncology drug candidate.

In a Phase I trial in patients with gastrointestinal stromal tumors, or GIST, patients who are resistant to Gleevec and in most cases resistant to Sutent as well, IPI-504 has been well tolerated to date and has shown promising evidencing of biological activity. Julian Adams will discuss these results in detail with you shortly, including their implications for the future developments of IPI-504. Also last week we filed our first quarterly report as an independent public company. The 10(Q) reveals Infinity to be very healthy financially. We estimate that our current cash runway extends through at least the end of 2009. So in other words, in the absence of any additional financings or business developments activity, Infinity has well over three years of operating capital. Later in the call Adelene Perkins will provide additional detail on our financials.

Finally I want to stress that during these calls it is our intension to be as forthright and helpful as possible to you in discussing both our financial position as well as our progress in our product discovery and development programs. We will endeavor, today and in the future, not only to outline the facts but also to elucidate how and why we think as we do. We want you to better understand the logic behind our decisions and what we believe to be the fundamental drivers of our Company's potential. We look forward to an ongoing dialogue with you, our shareholders and partners, in the investment community. So with that said, I would like to ask Julian Adam, our President and Chief Scientific Officer, to elaborate on the clinical results announced last week. Julian.

Thank you, Steve, and good morning to everyone. As Steve mentioned, last week in Prague, at the joint meeting of the European Organization for the Research and Treatment of Cancer, the National Cancer Institute and the American Association for Cancer Research, the first preliminary results were presented from our Phase I trial of IPI-504 in patients with Gleevec refractory metastatic gastrointestinal stromal tumors, or GIST. The data were presented by the principal investigator, Dr. George Dimitri of the Dana-Farber Cancer Institute along with scientists from Infinity. Dr. Dimitri is an acknowledged world leader in the treatment of GIST and led the successful approval trials for two approved therapies in this indication, Gleevec and Sutent. Let me briefly recap Dr. Dimitri's presentation of the data. In the Phase I dose escalation trial, IPI-504 was infused in normal saline over 30 minutes by IV administration at dose levels up to 400 milligrams per meter squared. The drug was administered on days one, four, eight and 11, followed by ten days off, comprising a 21 day cycle of treatment. Subsequent cycles were allowed if patients were deriving clinical benefit.

As with all Phase I trials, the primary objectives are to evaluate safety and tolerability and to determine a suitable dose for future studies. In addition, our strategy of designing a disease focused and hypothesis driven Phase I study, also allows us to look for evidence of biological activity of 504 in GIST. Our investigator employed an imaging technique called positron emission tomography, or PET, to measure levels of metabolic activity in GIST lesions during treatment. To date IPI-504 has been well tolerated at all dose levels tested and a maximum tolerated dose has not yet been reached. In addition six of 15 patients evaluated, or 40%, received five or more cycles of IPI-504. Importantly, the drug demonstrated evidence of biological activity as observed by PET imaging. Let me provide a brief explanation of PET imaging and its significance in cancer research, particularly in GIST patients.

When a patient is imaged using PET, labeled glucose is injected intravenously into the patient. As the labeled glucose is taken up by the patient's cells, a PET scan reveals detailed, three dimensional images of the body depicting which tissues have accumulated high concentrations of the labeled glucose. The tissues with high uptake of the labeled glucose show up as bright spots on the PET image. Cancer cells consume more glucose than normal cells. As a result tumors are identified as bright spots on PET images. This is notably evident in GIST patients. So PET scans can be used to measure the tumors response to a targeted anti-cancer agent. When the lights of the PET image are out we can interpret a positive effect of that agent on the tumor. Otherwise said, putting the tumor into a metabolic coma. In seven of 17 patients, or 41% in this trial, PET scans revealed the lights going out, demonstrating a decrease in tumor metabolic activity. This decrease is indicative of a biological effect of IPI-504 in this disease.

In several cases following an initial PET response the lights come back on during the ten-day off period, or drug holiday, a phenomenon referred as a PET flare. In other words, tumor activity recovers when IPI-504 treatment is suspended. Then upon retreatment with IPI-504, the PET scans indicate tumor activity fades once again. This pattern of PET response further suggests a drug dependent effect on tumor metabolic activity. This gives us added confidence that the treatment effect, as measured by PET imaging, must be related to the administration of IPI-504. Because of the observations of PET flares in several patients, we hypothesize that the elimination of the drug holiday, thereby eliminating the opportunity for the tumor to recover, could improve the therapeutic benefit of 504. Moreover, the overall tolerability of 504 to date, in both the GIST trial and our other Phase I trial in multiple myeloma, allows us to propose an uninterrupted schedule of treatment.

We intend to initiate a second arm of the GIST trial on a new schedule in which 504 is administered twice weekly over a three week cycle without a drug holiday. This trial extension at the more intense dose schedule, which is expected to initiate shortly, will begin treatment at 150 milligrams per meter squared and escalate until we define our recommended Phase II dose. In summary, we are encouraged by the results in the GIST trial so far and, guided by PET imaging, hope to identify the optimal dose and schedule for the administration of IPI-504. Let me turn now to our other ongoing Phase I trial for IPI-504 in relapsed and refractory multiple myeloma. As already noted, consistent with our experience in GIST patients, the drug has been well tolerated in heavily pretreated patients with myeloma at doses up to 400 milligrams per meter squared. This has added significantly to our understanding of IPI-504s safety and tolerability, key requirements for any eventual regulatory filings.

With that said, to date we are not seeing a level of biological activity sufficient to warrant further development of IPI-504 as a single agent in multiple myeloma. We believe, consistent with the emerging preclinical data, that combination therapy would offer the highest probability of success in this indication. In the near-term, however, we intend to focus our resources on indications in which 504 appears most likely to be efficacious as a single agent therapy. We believe that this will offer the potential to a faster registration of IPI-504. We will provide an update on the Phase I trial in myeloma at the ASH conference in December. As always, at Infinity we make our decisions solely based on scientific interpretation of data and the best interest of patients. In this case, combined experience gained from these two trials has been instrumental in forming our plans for future development of IPI-504. GIST exemplifies a type of cancer in which, in a high percentage of patients, the tumor is addicted to a single mutated oncogenic protein for growth and survival. By contrast, multiple myeloma tumors are not associated with any specific oncogenic signature.

Many other types of cancer beyond GIST are driven by a single oncogenic protein, a phenomenon known as oncogene addiction. These oncoproteins are reliant on the Hsp90 chaperon to maintain their cancer causing effect. Such cancers include many forms of leukemia and solid tumors, including breast, prostate, lung, as well as renal cell carcinoma, and melanoma. Inhibiting Hsp90, the target of IPI-504, in these contexts may lead to the destabilization and degradation of the oncoproteins which causes the cancer cell to die. Moreover, in many cases, oncogenic client proteins have become further mutated and subsequently resistant to targeted therapies such as Gleevec. Gleevec resistant GIST is such an example and is even more reliant on the activity of Hsp90 for the cancer cells' survival. In the laboratory IPI-504 inhibits Hsp90 in Gleevec resistant GIST cells and potent to kill these cells.

We interpret biological the activity of IPI-504 in Gleevec resistant GIST as providing evidence for the broader client rationale of Hsp90 inhibition. At the ASH meeting in December we will also present preclinical data of the activity of 504 in Gleevec resistant chronic myelogenous leukemia, which is driven by BCR-ABL, another mutated oncogenic client protein of Hsp90. We conclude that the most likely successful therapeutic application of IPI-504 will be precisely in those cancers which display the molecular phenotype of oncogene addiction and harbor a single oncogenic client protein which relies on Hsp90 for survival. As I mentioned earlier, many solid and hematologic malignancies fit this paradigm and we, together with our partner MedImmune, intend to expand the clinical program for IPI-504 to address these tumor indications in the near future. Let me summarize. We are encouraged that IPI-504 has been well tolerated in both Phase I trials at all dose levels tested thus far. We have also witnessed the biological activity of the drug in GIST, as seen through the PET images.

Moving forward we will be collecting additional data for IPI-504 on a continuous twice weekly schedule throughout the first half of 2007. Based on these data, we will be in a position to design Phase II trials for 504, which we hope to initiate in the second half of '07. We will discuss these trials with the FDA and we'll explore the possibility of accelerated approval. Finally we continue to make excellent progress with an oral formulation of IPI-504 and anticipate that it will enter clinical development in late 2007.

Thanks, Julian. I'm now going to turn the program over to Adelene Perkins, our Executive Vice President and Chief Business Officer, to review our recently quarterly financials. Adelene.

Thanks, Steve. Let me begin by laying out the dynamics of Infinity's cash position and operating runway. We are now two months into our collaboration with MedImmune around our Hsp90 Hedgehog programs and both teams continue to be well aligned on the content scope and the direction of our R&D activities. Given this alignment with MedImmune on our likely investment and needs program, the closing of the reverse merger and the continuing maturation of our other alliances, we are well-positioned to estimate our future cash position and needs. As of the end of the third quarter, Infinity had approximately $125 million in cash and short term investments. You may recall from our previous conference call that our up-front payment of $70 million from our alliance with MedImmune was to be paid in two tranches. We received the first $35 million in September and will receive the second payment of $35 million in early January.

Based on reasonable assumptions about revenues, milestones and the progression of our major programs, we estimate that current and anticipated resources will be sufficient to fund operations through at least the end of 2009. So we have well over three years cash from this date forward even in the absence of additional financings or corporate development alliances. This financial runway creates the opportunity for us to achieve numerous value driving corporate and scientific milestones. For our lead program, these milestones would include entering pivotal trials for the IB formulation of IPI-504 and, in the event that accelerated approval is an option, the potential filing of an NDA. We also expect to make significant progress on the oral formulation of IPI-504, as well as on our Hedgehog pathway inhibitors, Bcl-2 antagonists and early discovery programs. Given the solid status of both our programs and our balance sheet, any financings or alliances we may choose to undertake in the next few years will be entered from a position of strength.

We have the strategic and financial flexibility to continue to make data driven decisions around our program that are based on the best interest of patients and the creation of long-term value, rather than on short-term market conditions. I would like to make a few comments on Infinity's financial results for our third quarter. We recorded $6 million in revenue from our strategic alliances, including the amortization of up-front license fees from our product based alliances with MedImmune and Novartis, reimbursable R&D services provided to Novartis as part of our Bcl-2 collaboration and additional payments related to our technology access alliances with Amgen and Johnson & Johnson. Our R&D expense for the quarter was $8.3 million. Any amounts that were reimbursed by MedImmune under the cost sharing provisions of our agreement are offset against our R&D expense. Therefore, our recorded R&D expense reflects total R&D expenditures of 9.3 million, less MedImmune's reimbursement of about $1 million for work done on the two programs between the signing of the collaboration in late August and the end of September.

Our G&A expense for the quarter was $2.5 million. This expense is well controlled, but will appear artificially high this quarter because we experienced several one-time costs associated with our alliance with MedImmune and our initiative to ensure compliance by year-end with the Sarbanes-Oxley act. Infinity's net loss for the quarter was 4.7 million. In summary, Infinity's a company capable of aggressively investing in our pipeline while maintaining a strong balance sheet and controlled burn rate. In early January, we will outline our goals for 2007. We look forward to providing you with even more detail on our corporate objectives for the year at that time.

Thank you, Adelene. As you've now heard, this is truly an exciting time for Infinity, both in terms of the evolution of our company and the growth of our therapeutic programs. As we stand today Infinity is a company with an attractive and competitive profile. We have programs focused on emerging important targets within oncology including our lead program, which as Julian detailed for you, has demonstrated biological activity, intolerability in humans in a disease specific setting. We have significant financial stability, helping to ensure that we will not need to undertake financings from a position of weakness over the next few years. But most importantly, Infinity benefits from the passion, dedication and integrity of our citizen owners, who continue to make profound contributions to the company's value with each day. So we thank you for your attention and your continued interest in Infinity and I will turn it back to John.

Thanks, Steve. I know many of you will have questions on some of the topics we have discussed today both financial and clinical so I will now turn matters over to our moderator for Q&A.

[OPERATOR INSTRUCTIONS] Our first question comes from Leland Gershell of Cowen & Co.

Good morning, thanks for taking my question and congrats on the great progress. Wanted to ask on the Phase I you are extending to a second arm now with different dosing. So you will continue to enroll the prior protocol until MTD and then have the second arm going as well?

We are completing enrollment at 400 milligrams per meter squared on the drug holiday schedule. And I think we will suspend a dosing at that schedule and open the schedule that I just described with uninterrupted treatment at 150 milligrams per meter squared. We are deliberately lowering the dose because we have to achieve a dose escalation with the new schedule.

I think that, Julian, you might want to explain why we are not driving to the MTD on the first schedule.

Indeed. It's a really good point. We haven't reached MTD and very thoughtfully in collaboration with George Dimitri, our investigator, we prefer to go to the more dose intense schedule and simply escalating the dose on a suboptimal schedule may provide C-MAX related toxicities which would not be informative in the drug development phase.

Would the number of patients being enrolled in that new protocol be similar to the prior, I think it was about 40 to 50 or 60 patients in the first one.

So we intend at each dose cohort to enroll three patients, so it's a standard three plus three enrollment until we do reach now the MTD on the new schedule and the more optimized schedule. And at that point we will expand to up to 20 patients to confirm the tolerability and activity of the drug on the new schedule.

Okay, great. Thanks. Just one more, it sounds like you are not going to proceed with Phase II for myeloma. Just wanted to ask what your outlook is on other indications for Phase II testing that you might have at this time?

Leland, I think we have outlined that. Our preference is to treat patients with single agents, having defined the recommended Phase II dose. And we are looking at disease indications where there's an oncogene addiction hypothesis and I've outlined in my comments that there are many leukemias as well as solid tumors that fit that bill. So we will be exploring those trials in the Phase II settings in multiple indications.

We will be coming forward with that next, an announcement of the next indication we expect early next year. And also coming back to myelomas, Julian, you might want to comment given your long history in myeloma what you think about the prospects for combination therapy.

Sure, Steve. You may also be familiar with our preclinical data in which we show that IPI-504 cooperates very well with VELCADE in the treatment of multiple myeloma in the laboratory. So given the protein homeostasis rationale that we were pursuing in the laboratory, IPI-504 may be an ideal drug in myeloma but only in combination therapy with VELCADE and possibly other agents. Okay, super. Great, thanks very much.

[OPERATOR INSTRUCTIONS] At this time there are no further questions from the phone audience. I would like to turn the conference back over to Mr. Evans for any closing and final remarks.

Thank you. I would like to thank you once again for participating in this call and for your ongoing interest in Infinity. As always, we are privileged to be working in an industry that takes as its mission the development of therapies that meaningfully improve the health of patients. We look forward to updating you again on the progress of our programs in the near future. Thank you for your time and attention.

That does conclude today's conference. We thank you for your participation. Please have a good day.