Infinity Pharmaceuticals Inc (INFI) 2007 Q2 法說會逐字稿

Please stand by. We're about to begin. Good day, everyone. Welcome to the Infinity Pharmaceuticals Second Quarter 2007 Financial Results Conference Call. Today's call is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Steve Kafka.

Please go ahead, sir.

Thank you and good morning. My name is Steven Kafka, Vice President of Finance for Infinity Pharmaceuticals. Here with me today are Stephen Holtzman, Chair and CEO; Julian Adams; President and Chief Scientific Officer; and Adelene Perkins, Executive Vice President and Chief Business Officer.

Today, we will be discussing our R&D and business progress and review our financial results for the second quarter of 2007. I hope you had a chance to review our earnings release, which we issued last evening. The release is also available on our website at ipi.com, and this conference call will be archived on our website for 30 days.

Before we begin, I need 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 factors are described in the risk factor section of our most recent 10-Q, which we filed with the SEC in May. 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, I will now turn the call over to our Chair and CEO, Steve Holtzman.

Thanks, Steve.

Good morning, everyone, and thanks for joining us on the call today. As you know, Infinity is a cancer drug discovery and development Company. We're dedicated to bringing innovative and important new medicines to patients. We have a pipeline of novel anti-cancer agents, a fantastic team led by Julian and Adelene, and a strong financial position.

Today we're going to share with you several exciting developments. These include, first, mounting evidence of the clinical activity and safety for our lead product, IPI-504, in its intravenous formulation. Next, progress in our oral Hsp90 program, including the addition of a second oral Hsp90 development candidate. Third, in our Hedgehog Pathway Program, the selection of a highly potent orally bioavailable clinical candidate. And, finally, the issuance of a patent broadly covering the composition of matter of compounds that inhibit the Hedgehog Pathway, including our newly named candidate.

Now, before Julian and Adelene share the details of our progress with you, I'd like to offer up some thoughts I had while participating on an industry panel a few weeks ago. The subject of the panel was, how can investors make money in early stage biotechnology companies in the current investment climate? The conclusion, at least for the venture investors in the room, was as follows. Investing projects undertaken by thinly staffed virtual companies managed by individuals looking for a quick liquidity and exit strategy. Well, I had to admit that as a short term investment strategy I am hard pressed to be critical of this approach. Nevertheless, I had a viscerally negative response to this prescription for building the future of our industry. Why was I bothered? Why did this way of thinking seem so foreign to me? As I thought about it, the answer is that of the truly great success stories in the 30-year history of our industry, the companies that have truly made a difference in patients' lives and provided significant shareholder returns. I submit to you that none of them would have been created or be here today had their leadership and employees had such a perspective. Let's face it, even with all of the breakthroughs of the last 3 decades, our knowledge of human biology, of medicine, and their intersection with chemistry remains rudimentary at best.

Consequently, the likelihood that a company built on a single molecule, dosed on a single schedule, in a single indication will succeed is vanishingly small. Great companies require individuals and teams who are passionately committed to making important new medicines, and those people have to be willing to persevere and innovate through the challenges that the science and the market send our way and, as we all know, those challenges will always come.

Now, the team here at Infinity, led by Julian and Adelene, consists of such passionate, committed, and innovated individuals. Now, to be sure, we never lose site of the need to be responsive to the near- and mid-term concerns of all of our stakeholders. Hence, we make significant investments and efforts designed to provide rapid progress in the near term and yet, at the same time, we aspire to be a creative force and significant contributor to the improvement of healthcare, not just now, but for at least the next several decades. Thus, we also invest to create long-term value for patients and shareholders, and we focus on creating a sustainable corporate culture. For example, our clinical development strategy for IPI-504 starts with a third line refractory setting that provides the opportunity for a rapid path to registration. But in addition, we will launch multiple additional trials and additional diseases and settings shortly.

Similarly, we are aggressively investing in the development of our oral Hsp90 inhibitors, and now we are developing two, not just one such molecule, in order to enhance physicians' long-term ability to use Hsp90 inhibition flexibly and broadly. And because we weren't as satisfied a year ago with our IND ready Hedgehog molecule, we put it on the shelf, worked diligently to improve analogs, and now have a significantly better clinical candidate.

And last, but not least, our culture of citizen ownership fosters an environment in which passionate, engaged, innovated individuals can realize their potential and grow through engagement with each other in the context of creating medicines that will make a difference in the lives of cancer patients.

I'll get off the soapbox now, and turn it over to Julian who will review our product development efforts, followed by Adelene who will provide a business update.

Dr. J.

Thanks, Steve, and good morning, everyone. I am delighted to share with you the progress we've made in the last quarter. As Steve has said, we are focused on our path to registration. Let me begin by reminding you of the development strategy for IPI-504. It is based on a client protein rationale. A unique and complementary approach to the direct inhibition of oncogenic tyrosine kinase proteins. The targets of TKIs such as Gleevec, Tarceva, and Nexavar. Mutant oncogenes including BCR-ABL, C-Kit, EGFR, HER2, B-Raf and others develop resistance to prior treatment to TKI therapies, but those oncogenes remain dependent, or even become hyperdependent on Hsp90 for the cancer promoting function.

We have the opportunity to address this high area of unmet medical need by pursuing single-agent therapy in refractory settings. But since the original oncogenes still rely on Hsp90 for their function, we also have much broader opportunity to move earlier in the treatment paradigm. In combination with TKIs, we can hit the oncogenes harder and delay the emergence of resistance and, thereby, extend clinical benefit for patients.

So, how are we executing on this strategy? Our trials in GIST and non-small cell lung cancer are in the refractory setting where, assuming continued encouraging results, we will pursue single agent registration paths. These trials are also informing our phase II dose and schedule.

With the phase II dose in hand, we will execute on the additional components of our strategy. To expand the market potential for IPI-504, we will pursue multiple signal finding trials in a broad range of malignancies and study 504 in combination with TKIs and chemotherapy and to provide maximum flexibility to physicians and convenience to patients that will advance the oral formulations.

So, with that path forward in mind, let me share with you some of the progress on our Hsp90 program over the past few months. As we reported at ASCO in June in our phase I study in GIST and other soft tissue sarcomas, 504 continues to demonstrate evidence of biological activity and good tolerability. As you know, we monitored patients using positron emission tomography, or PET, for metabolic activity of the tumor.

Let's begin by reviewing the PET data. Although not yet an FDA approvable endpoint, PET provides an early indication that the drug is having a biological effect on the tumor. At ASCO, we reported that of the patients treated on what we call schedule A, twice weekly treatment for 2 weeks, followed by a 10-day drug holiday, 15 of 18 evaluated patients, or 83%, achieved stable disease or better by the EORTC PET Response Criteria.

Of course, we are also monitoring patients using CT scans according to standard resistance criteria. On schedule A, 16 of 21 evaluated patients, or 76%, experienced stable disease. This is an important result. Let me tell you why. In a retrospective study of the Gleevec Pivotal's trial, overall survival benefit for those patients who experienced stable disease by resist is exactly the same as those who had a partial response. Furthermore, in Sutent's approval trial, where patients had failed Gleevec therapy, even though the response rate was just 7%, the median time to progression improved 4-fold compared with placebo. So, as patients experienced later lines of treatment ingest, responses as measured by tumor shrinkage are rare. The expected endpoint is stable disease, leading to an improved progression free survival.

How does this relate to IPI-504? Importantly, in the data reported at ASCO, the durability of clinical benefit was in evidence in the 35% of patients who received and tolerated 4 or more months of therapy. Bottom line, 504 continues to move full steam ahead. In the past few months, we have opened additional sites to speed accrual, and we continue to enroll patients toward defining a maximum tolerated dose and a recommended phase II dose. We're already in discussions with key investigators to design a phase II/III trial in GIST, with the potential to be a registration trial, and we will provide further updates as appropriate.

We have also made excellent progress in our phase I/II trial of IPI-504 in patients with advanced non-small cell lung cancer who are refractory to TKI therapy. This is another disease-focused trial designed to provide us with evidence of safety and to observe early signs of biologic activity. This advanced disease setting lacks effective therapeutic options and our approach underscores our strategy for rapidly moving to registration.

As I said earlier, an oral formulation is a key strategic goal of the Hsp90 program. This quarter we continue to make outstanding progress on our IND-enabling studies and our oral formulation of IPI-504. I am also pleased to announce that we have initiated IND-enabling activities for a second oral Hsp90 inhibitor, IPI-493. With extensive insights and experience in the chemistry of the geldanamycin natural product and its analogs, we discovered IPI-493, which like 504 is in the ansamycin class. 493 has demonstrated potent and selective inhibition of Hsp90 in preclinical models and provides us with additional opportunity to bring an oral Hsp90 inhibitor to market.

So, what's the path forward with these two promising oral compounds? We have begun and will continue over the next few months to compare preclinical results of oral 504 and 493 to evaluate which candidate or candidates we will take forward into the clinical studies? Pending the outcome of these comparative studies, we anticipate filing an IND on either or both candidates over the course of late 2007 through early 2008.

Finally, I'm delighted to report that we continue to make fantastic progress in our Hedgehog program. We have selected our leap clinical candidate, IPI-926. The molecule shows highly potent and selective inhibition of the Hedgehog Pathway in preclinical models. IPI-926 has good pharmacological properties, including excellent oral bioavailability and an extended half-life. We have data from a number of in vivo models that we will publish and share with you in the coming months. We have initiated IND enabling studies, and we anticipate entering the clinic with IP-929 in 2008.

The other great news for the Hedgehog program is that in June Infinity was granted a patent, broadly covering the composition matter of a genus of compounds, including IPI-926, useful for modulating the Hedgehog Pathway. As you know, our Hedgehog molecules are derivatives of the natural product cyclopamine. The achievement of being granted this patent highlights the creativity and dedication of our scientific team in tackling difficult medicinal and process chemistry problems.

So, in summary, it's been a great quarter. We continue to be confident about our drug candidates and their prospects for changing the lives of patients.

Adelene will now review our recent quarterly financials and progress on our business goals.

Adelene?

Thanks, Julian.

To echo Steve and Julian, I'm really excited about the progress we've made in the last quarter. We have a creative, passionate team that does a great job integrating with science and business, and we're in a real position of strength with our pipeline, our world class scientists, and our financial resources to create tremendous value.

I would like to start with a brief review of our financial results for the quarter. As of June 30th, we had over $122 million in cash and short-term investment. Our revenue of $5.7 million for the second quarter comprises the amortization of license fees received from MedImmune and Novartis; reimbursable R&D services we've provided for Novartis in conjunction with our Bcl-2 program; and the acceptance of compounds by Novartis under our technology access agreement.

Our R&D expense for the second quarter was $8.2 million. It is important to remind you that any reimbursable amounts from MedImmune under the cost-sharing provisions of our agreement are offset against our R&D expense. So, R&D expense reflects total R&D spending of $11.6 million, less $3.4 million of MedImmune reimbursement. As you might expect, as we advance our programs, Infinity's R&D expenses are growing in areas such as clinical, toxicology, and manufacturing, but the net impact is mitigated by the cost sharing with MedImmune.

Our G&A expense was $3.2 million, in line with the first quarter of 2007, and finally, our net loss was $4.2 million for the quarter, or $0.21 a share. This loss is up from $2.9 million, or $0.15 a share, in the first quarter of 2007, due primarily to increased R&D expense associated with advancements in the pipeline and the timing of revenue from our Novartis technology asset agreement.

We're reiterating today our guidance that we will end 2007 with at least $100 million in cash, and in the absence of any additional financing or business development activities, this capital is sufficient to support our operating plan through at least the end of 2009.

As our results and outlook go, we're in a strong financial position with a well-controlled burn rate. We can and will, therefore, continue to aggressively invest in our pipeline of internal candidates. At the same, we're always looking for end-license and acquisition opportunities to augment our pipeline with programs that fit our strategy of emerging targeted therapies for cancer. There is no doubt it is a competitive market, but I'm confident we have the business and scientific team in place to identify and execute against some great opportunities.

I do want to take a moment to address our collaboration with MedImmune on Hsp90 and Hedgehog. It is proceeding beautifully. As you know, AstraZeneca completed its acquisition of MedImmune last month. As we stated in our last call, all of our contractural rights and obligations have survived this change of control, including the 50/50 cross-sharing, the 50/50 worldwide profit split, and our co-promotion right. We're in communication with senior individuals at both MedI and AZ, and they've reinforced their commitment to the goals of the collaboration.

At the operating level, the MedI team working with us on Hsp90 and Hedgehog remains intact. These colleagues are fantastic collaborators, and we're making significant contributions across all disciplines. In fact, in the last 3 months since the announcement of AZ's intent to acquire, we've worked with MedImmune to complete detailed operating plans and preclinical support for the launch of new trials for IPI-504 later this year. The collaboration remains strong and, most importantly, it's helped us to accelerate our progress on both the Hsp90 and Hedgehog programs along the registration pathways.

Let me wrap-up this morning by summarizing our upcoming milestone. In the second half of this year, we expect to wrap-up enrollment in our phase I study of 504 in GIST and to identify our phase II dose. With our phase II dose in hand, we expect to initiate at least one phase II solid tumor trial and one combination study with IPI-504 IV, and we will be comparing preclinical data for our oral Hsp90 inhibitors to support decisions about which molecule or molecules to move into human clinical testing with the intent to file an IND for one or both candidates over the course of late 2007 through early 2008.

In terms of sharing our emerging data for IPI-504 with the public, we plan to submit abstracts for October's EORTC meeting in San Francisco covering updates on our phase I study in non-small cell lung cancer and for preclinical data in additional diseases. And depending on the timing of our dose escalation cohorts in the GIST trial, we anticipate further data updates in early 2008.

And with that, let me turn it back to Steve.

Thanks, Adeline and Julian.

So we've described for you today the excellent progress we've made this quarter on our pipeline. We're also on track to achieve important milestones in the second half of this year. We see a great future, and we look forward to continuing to discuss our progress with you on future calls. Finally, we appreciate your continued support.

And with that, we'd be glad to answer any questions you may have. Thank you.

Operator?

(OPERATOR INSTRUCTIONS).

We'll go first to Eun Yang with Jefferies & Co.

Hi. This is Molly in for Eun today. Congratulations on the quarter.

Thanks, Molly.

Thank you. A couple questions on the oral candidates you guys discussed and you've got in the press release. Is there anything -- if you were to bring them both forward into clinical development, is there anything that might differentiate them that you've seen in preclinicals so far as far as the different indications you might go after?

They don't distinguish themselves by indication because the mechanism remains the same, but they both have different, slightly different pharmacological properties and each have unique advantages and right now we're comparing those advantages and trying to discern them in preclinical models and eventually also in patients.

I think this is always the challenge in drug discovery and development. You want to get a clear advantage of one molecule early if you can, but if you can't you'll go as far with both of them as is necessary to pick a clear winner and we're fortunate that we're in a position with the resources and our many collaboration to be able to do this the right way.

Okay. Great. Thanks. And then one other quick question, with additional trials starting up in the second half year here for IPI-504, can you give any guidance as far as the ramp-up in your R&D spending?

The guidance that we've provided on the spending is consistent with our cash reserves that will have $100 million at the end of this year, and we haven't gone into more detail in terms of our projected spend.

The typical cost per patient if you want to think about it that way is consistent with a high-end phase I heavily monitored study with getting PET CTs and, of course, the longer the patients stay on for more cycles, the more expensive it gets per patient, but we do not have any guidance on the costs going forward.

Okay. Thanks very much.

We'll go next to Edward Tenthoff with Piper Jaffray & Co.

Great. Thank you so much for taking the question. Just a couple quick ones. First, on the plans for the phase II this year, you had mentioned one combo and one monotherapy phase II. Can you give us a little bit more color on that?

We are just getting those protocols ready and we will be giving guidance as soon as we file and enroll the first patients. We don't typically want to forecast when that's going to happen because of the unknowns of the IRB and FDA. So, we will announce that as soon as we dose the first patient.

I think, Ted, also, chemistry and biology aside, we think that creative clinical translational strategies represent a competitive -- a source of competitive advantage. And so, it really doesn't behoove us at this time to tip our hands of where we see are the best places to go. So stay tuned.

Okay. Great. Makes sense.

But you've also seen our presentation several times, Ted, to know where the client protein rationale makes sense and the list of indications from which we might choose which would include breast, prostate, the non-small cell -- the ones that you know that we're in.

Thank you.

We'll go next to Mike King with Rodman & Renshaw.

Good morning, guys. Can you hear me?

Sure.

We can always hear you, Mike.

Okay. Likewise, Steve. Right back at you. I guess for competitive reasons, I am going to ask anyway, but I would suspect that you're not going to tell us much about other than it's got differentiated pharmacologic properties of 493, how that differs from 504.

It has different pharmacological properties.

Thank you.

Thank you and they'll be a very interesting story.

Thank you for the added information. The IP position on it, can you say anything about that filings in preparation will more be revealed when those have gone on into the patent office?

We have filed, okay, recently. And this is the old challenge, Mike, of that since those filings are fairly recent they don't actually publish for 18 months, so we're going to go through the usual struggle of trying to provide the necessary information to engage investigators and to be right with the investment community while at the same time wanting to maintain the competitive advantage. So, don't expect to see the structure of 493 in the immediate future.

Okay.

We have revealed, however, as Julian said, we continue to be deep believers in the potential of the geldanamycin, the natural product pharmacophore --

Sure.

-- and that -- the application of creative medicinal chemistry really is maximizing that potential.

Okay. But it is a med chem -- you've done med chem on it. It's not a formulation?

That's correct. It's not a derivative of 17AAG, if that's what you're asking.

Yes.

It's novel compound.

Okay. Then, just back to MedI, AstraZeneca, Adelene, you said that you had helped MedI prepare for -- preclinical plans for new trials, but has there been a poststrategic review at the AstraZeneca level of all of the programs?

So, Mike, what has been definitively decided is that MedImmune will continue to be our partner on the Hsp90 program and that's really based on the fact that our collaboration is going so well and we're at such a key point that we will continue to collaborate with them. There is also the clear invitation that if MedImmune and Infinity feel that AstraZeneca had something to add that we can go and have those conversations to tap into the broader infrastructure and resources of AstraZeneca. We have not had those discussions with them at this time, but we know that those are resources that should we choose to tap into them we'll have those conversations.

I think also for those of you who are avid readers of SEC documents, because our agreement with MedI was filed, there is a process in there by which we together establish a rolling 3 year plan and budget. That has now been approved from today -- for the period through 2010.

Okay. All right. I'd say that's sufficient. Then, one more question on collaborations, we'd love to know when we could get greater visibility out of the Novartis collaboration. Will '08 be the year when things finally start to bloom out of that?

Sir, all I can report at this time is the collaboration continues to work exceptionally well. As you know, Novartis is here in Cambridge. So, our lab meetings occur literally in town, and we have cross fertilization of ideas and people continuously right here in town. So, we are making great progress in that arena as well.

Also, Mike, important to recognize that that was a discovery agreement which has built into it a handoff to Novartis which is actually scheduled to occur in the spring of 2008.

Okay.

Whether or not there is collaboration beyond that would be a function of whether that's useful to the molecules in the state they're in at that point. Once the handoff is effected, we're not necessarily -- it's up to Novartis in terms of what disclosures come forward from that point forward.

And then, you know, the value to Infinity having passed the baton to Novartis will be the receipt of milestones and royalties on Novartis' progression with the program.

Right. Yes. But it would be nice to know, you know, for the purposes of Infinity shareholders, what targets those molecules might be directed at so we can get a sense of the magnitude of -- you know, the opportunity, etc. I don't know how much can be said at that time once the handoff is made.

I think that's an important question, but I think that's left to Novartis since they will be running the clinical strategy for this molecule.

But having said that, at least in my experience with them, they're a sensitive partner. They recognize their partners have disclosure obligations that could be helpful, and as long as it doesn't impede their competitive position, I expect we'll be able to follow the progress of the molecule, report it in conjunction with announcement of receipt of milestones. Knock on wood.

Okay. Great. Thanks very much.

(OPERATOR INSTRUCTIONS).

And we'll go next to Leland Gershell with Cowen & Company.

Hey, good morning. Thanks for taking my question. Most of my questions have been asked and answered. I guess I just wanted to get an update on press enrollment of both the GIST sarcoma trial, as well as the non-small cell lung.

So, both trials are enrolling at a rapid pace. We increased the number of sites for the GIST and soft tissue sarcoma trial. The good news is the drug has been so well tolerated that we keep escalating the dose and so we can't conclude that we have reached the maximum tolerated dose yet. And I would say the same is true in the non-small cell lung cancer. We are also planning on enrolling other sites for the phase II portion of that trial where we'll expand the number of patients at the maximum tolerated dose. So, stay tuned.

Okay. Great. Sounds great. Thanks very much.

It appears we have no further questions at this time.

Great. Thank you, operator. We'd like to thank you, again, for joining us today and as always we are available to answer any additional questions that you have. We appreciate your continued interest in Infinity and thanks again. Have a great day.

And once again, that does conclude today's call. We do appreciate your participation. You may disconnect at this time.