Infinity Pharmaceuticals Inc (INFI) 2008 Q3 法說會逐字稿

Good day and welcome everyone to the Infinity Pharmaceuticals third quarter 2008 financial results conference call. This call is being recorded. At this time I'd like to turn the call over to Mr. Steve Kafka. Please go ahead sir.

Thank you operator and good morning everyone. My name is Steve Kafka. I'm the vice president of finance for Infinity and here with me this morning are CEO Steven Holtzman, our chief scientific officer Julian Adams and our chief business officer, Adelene Perkins.

Before we begin this morning let me state that we will be discussing our recent R&D and business progress and review our financial results for the third quarter 2008. The press release detailing our results was issued yesterday evening and is available on our website at infi.com. The slides that we are using today to accompany this call can be accessed now on the events page in the investors section of Infinity's website. And a webcast of the call and the slides will be archived on our website for 30 days.

On the call today we'll be discussing our future discovery and development efforts, our collaborations, our financial position and other future expectations. These remarks constitute forward-looking statements for purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act. It is possible that our actual results may differ from what we project today due to the factors which are described in the Risk Factors section of our most recent 10Q which we filed with the SEC in August.

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 the statements in the future but we're taking an obligation to do so.

So with that, our CEO Steve Holtzman will now kick off the call.

Thanks, Steve, and thanks to all of you who are joining us on the call this morning. As you all know, Infinity's mission is to build a community and company capable of sustainably discovering, developing and delivering to patients innovate, important, new medicines that make a material difference in their health, well-being and lives.

But before we dive into our clinical update and financial results, I want to take a moment to acknowledge the recent promotion of Adelene Perkins from executive vice president to president and chief business officer of Infinity. Adelene's been a key leader of Infinity pretty much since we began the company and very simply, without Adelene we wouldn't be where we are or who we are today. I congratulate you, Adelene, on this well deserved promotion. But even more, on behalf of all of us with a stake in the success of Infinity in the achievement of our mission, I thank you for your tireless work on all of our behalf.

We sit here today with a late-stage oncology pipeline and we sit in a very strong financial position. Each of our innovative small molecule drug candidates, which Julian will describe, was discovered in-house and is being developed by our people. And all of them address areas of significant unmet medical need.

Our lead product, IPI-507 or Retaspimycin hydrochloride, is now in an international Phase 3 Registration study, he RING or Retaspimycin IN GIST trial. The accomplishment of starting this study has triggered a $15 million milestone payment from our partner, AstraZeneca. Importantly, we project completing this trial by the end of 2010. The fast-to-market strategy positions us to have the first-to-market Hsp90 inhibitor.

Beyond GIST in the RING trial there is a body of accumulating evidence growing every day that Hsp90 inhibition will prove an important new avenue for therapeutic intervention in a number of major cancers. Our clinical development program is exploring this broad, near-term potential.

And behind 504 we have a pipeline of additional drug candidates including our oral Hsp90 inhibitor, IPI-493, and our novel Hedgehog pathway inhibitor, IPI-926, both of which are now in the clinic. And behind those a pipeline of discovery programs as well.

Finally, I believe we have an unparalleled team and corporate culture at Infinity that enables our ability both to create and deliver on the promise of our pipeline. We've consistently been as innovative in our business strategy as we have been in our R&D and this capability, as well as our strong cash position, will serve us well particularly in today's turbulent times.

And with that, I'll pass the call over to Julian for a deeper dive into our clinical programs. Dr. J.?

Thank you, Steve, and good morning everyone. As Steve said we've made great progress with all our programs in the last couple of months. And it's important to remind you though that all of this has been achieved in five years. In the last five years we've discovered, developed and brought into the clinic three new candidates, all of which are home grown and exemplify our unique approach in productivity in drug discovery and development.

Let me begin with our Hsp90 program. We are employing a two-pronged approach for the development of IPI-504-on the one hand a fast-to-market strategy and on the other, a broad market penetration.

The RING trial is designed to help us achieve our goal to be fast and first to market with an Hsp90 inhibitor. We know that in order to realize the value in great science, you need flawless execution. Our team has done an amazing job in the design, development and execution of this study.

We have seven active site and enrolling patients. And anticipate up to 20 sites in North America by the end of this year. We will soon have sites open globally as well in Australia, Europe, Latin America and Asia. We are moving speedily and in the right direction and are on track to complete this study by the end of 2010.

In conjunction with the announcement of the RING trial, we launched a new website, ringtrial.com. ringtrial.com provides a place for patients, care givers and investigators to have easy access and valuable information on the study. I encourage all of you to have a look at this site.

Our belief in Hsp90 inhibition doesn't just stop at GIST. We strongly believe in the potential of IPI-504 in many large indications. Just yesterday we announced that we have expanded both arms of our Phase 2 study in patients with advance non-small cell lung cancer. We've had patients in each arm meet the criterion to expand, that is patients with the pathology finding of mutant EGFR and patients with wild type EGFR. This is particularly interesting in addressing a setting in which EGFR directed TKI therapy are unlikely to work.

We are now in the expansion phase of this study and will enroll an additional 19 patients in each arm for a total of 58 patients. And we will continue to enroll the study and let the data mature and anticipate publishing the data from the initial 20 patients as well as from the expansion phase at an appropriate medical conference in 2009.

We also continue to enroll patients in our Phase 1 study of IPI-504 in combination with Taxotere, a first combination study with chemotherapy. And we anticipate commencing additional studies by early 2009, so stay tuned.

Our industry leading portfolio of Hsp90 inhibitors is comprised of an IV agent and an oral agent. There is a strategic and complementary role for both products. Having both agents may provide the opportunity for additional therapeutic options, including flexibility of dose schedules in combination with potential with other IV and oral therapies.

We have now started a Phase 1 dose escalation study of oral IPI-493 in patients with advanced solid tumors. This study will assess safety and tolerability as well as identify the dosing schedule for further clinical development. We will also be evaluating biological activity by resist and other disease specific markers.

It's been recognized in the field that 17AG is the active and most potent species of the geldanamycin class. It has not been explored as a potential therapeutic because it has not been able to be formulated due to low solubility. So we have invented a novel formulation of 17AG which demonstrates excellent exposure in multiple species. This optimization of the combination of active 17AG and the delivery system is our proprietary agent IPI-493.

493 is the only oral geldanamycin analog in commercial development. It is also the first successful development of 17AG. In addition to oral availability, 493 has demonstrated selectivity for cancer cells over normal cells in preclinical antitumor activity in multiple models.

At the EORTC symposium last week we published our first preclinical data on IPI-493. A testament to the excellent properties of the molecule, we showed significant antitumor activity in a model of TKI resistant non-small cell lung cancer. In fact, we saw frank regression at well tolerated higher doses.

In summary, our program in Hsp90 features two drugs-on IV, one oral, both in the clinic including our Phase 3 Registration RING trial, which we believe gives us a great shot to be first to market in this important new approach to cancer therapy.

That's not all though. We're also cooking on our Hedgehog program. As you know, we just announced that IPI-926 is now in Phase 1 clinical development. This is a dose escalation Phase 1 study in patients with advanced and/or metastatic solid tumors. The study will evaluate the safety, tolerability and pharmacokinetics of 926. It will determine a recommended dose and schedule for subsequent studies. And we will also take the opportunity to evaluate potential antitumor activity of IPI-926 and examine pharmacodynamic markers of its biological activity.

IPI-926 is a terrific molecule and has demonstrated compelling pharmacological properties in a number of preclinical models.

But to take a step back, let me remind you why the community is so excited about the potential of Hedgehog inhibition for the treatment of cancer. There are several settings in which this pathway is believed to play an important role in cancer cell survival and growth. In particular, there are cancers in which there are specific genetic mutations and therefore Hedgehog pathway addiction.

Second and more commonly, the cancers where there is an aberrant Hedgehog ligand expression and pathway activation driving tumor stromal interactions. And lastly, we are also learning and investigating more and more about the potential of a subset of cells thought to be progenitor cells or cancer stem cells that support the propagation and asymmetric division, a defining property of the stem cell.

We have shown in preclinical antitumor activity of IPI-926 in these settings. For example, in an orthotopic model of medulla blastoma we showed survival in mice treated with IPI-926. We've also demonstrated that IPI-926 delays tumor growth following chemotherapy in a preclinical model of small cell lung cancer. We were able to debulk tumor with etoposide platinum, a standard treatment regime in this setting, followed by once daily oral administration of IPI-926. This led to a significant delay in tumor regrowth as compared to vehicle control.

And at EORTC last week we presented additional preclinical efficacy data of IPI-926 in a model of human pancreatic cancer. In a xenograph experiment of pancreatic cancer we observed tumor growth delay. However, we uncovered a very interesting aspect of the mechanism of Hedgehog signaling. In the data presented in Geneva, we showed that the administration of 926 results in rapid and sustained Hedgehog pathway inhibition not in the tumor, but rather in the adjacent stromal cells as a measure by complete blockage of GLI-1 expression.

GLI-1 is a downstream readout of the Hedgehog pathway signaling. This suggests that IPI-926 tumor growth--this suggests that IPI-926 inhibits tumor growth in a pamaquine fashion by down regulating Hedgehog signaling to tumor associated stroma. Simply put, there is a seed and soil hypothesis developing where the tumor is the seed and the surrounding tissue is the fertile soil supporting tumor growth.

What 926 achieves through down regulation of the Hedgehog pathway in the tumor is the to make the soil inhospitable for tumor growth. The mechanism is believed to be critical for growth in several cancers. These include pancreatic, colon, breast, ovarian and many others, suggesting that inhibition of a Hedgehog signaling pathway with 926 may be broadly applicable for the treatment of many, many cancers.

As you know, I am truly excited about our programs and the robust set of clinical and preclinical data we've generated so far. But there's really more to come. The team has done an amazing job and this is a great time to showcase the phenomenal work being done to discover and develop novel agents against these targets.

I believe we have three superb molecules in the clinic and a team equipped to navigate them down the right path in order to ultimately bring to market important new therapies that will really make a difference in the lives of patients.

I'll now pass the call on to Adelene to walk us through a business update and our financial results.

Adelene?

Thank you, Julian. Diving directly into our financial results for the third quarter of 2008, we ended the quarter in a really strong financial position with over $80 million in cash and equivalents.

Very importantly, with the $15 million milestone that we have now earned in conjunction with the start of our Phase 3 Registration trial with IPI-504, we expect potentially a zero net cash burn for the fourth quarter, such that we not only ended the third quarter with $80 million but we also expect to end the year with very close to $80 million.

For those of you who are quickly calibrating how our year end cash balance compares with the guidance of a $35 million to $40 million net cash burn that we have been providing all year, I can help you out.

We started the year with just over $114 million. So in ending the year with close to $80 million, we will be coming in within the range but at the very low end of the range of this year's guidance of a net cash burn of $35 million to $45 million. In the current market environment we've worked hard to be at the low end of the cash burn range and are really pleased to report that we've been able to accomplish this goal.

It's important to highlight that in managing our burn we have focused not only on managing our spend but have also managed our investment portfolio very closely. Our very conservative investment strategy has made it possible to generate annualized returns of over 3% while preserving our cash balance. This return is about 2% above an all-treasury portfolio and given the size of our current cash position, has added a couple of million dollars to our available capital. We also have no material debt.

Our revenue for the quarter was $2.5 million, which does not include the $15 million milestone earned in conjunction with the launch of the RING trial. That will be recorded as revenue in the fourth quarter.

Our 50/50 cost and profit share with AstraZeneca on our Hsp90 program has led to an R&D spend of $11.7 million for the quarter and reflects total R&D expenditures by Infinity of $15.9 million, less $4.2 million in reimbursable amounts from AZ.

To put our spend in context, we now have five clinical trials ongoing evaluating three innovative, home grown candidates for the potential treatment of a number of tumor types. This is a really significant achievement for the Company.

In addition, while managing our burn we have built an extraordinary, multifunctional organization that has enabled us to execute on the development of these programs in the focused manner that Julian just described.

In terms of runway, as I said earlier, we expect to end the year with approximately $80 million. So in the absence of any additional financing or business development activities, we have funds sufficient to support our current operating plan into 2010, which is a nice position to be in.

Yet, despite our current cash reserve, we are continuing to do what we have always done to ensure we remain well capitalized. First, we are continuing to bring innovative approaches to business development and financing to match the innovation in our science.

And second, we are remaining very focused on creating value in our product pipeline, which positions us to access capital on favorable terms.

To this end, we are pursuing in parallel multiple alternatives for accessing capital and are very encouraged by the enthusiasm for our products that is reflected in these discussions. So stay tuned.

And now I'll pass the call back over to Steve to wrap it up.

Thank you, Adelene and thank you Julian. To end the call as we do each quarter, I want to take a minute to remind you of our 2008 goals and give you an update on our execution against them, and I'll just cite the highlights.

We first, we have initiated the RING Phase 3 Registration trial of IPI-504 in refractory GIST, implementing on our fast and first to market strategy in the Hsp90 space.

Second, we have advanced IPI-504 into the expansion phase of our clinical trial in non-small cell lung cancer, expanding the market and exploring and expanding the market potential of this important new mechanism.

Third, we've initiated Phase 1 studies of our oral Hsp90 inhibitor, IPI-493.

Next, we've initiated Phase 1 studies of our novel oral Hedgehog inhibitor, IPI-926.

And last, we're on track to end the year with approximately $80 million in cash and essentially no debt, providing a runway even in the absence of new financing or business development transactions well into 2010.

Bottom line, we have and we are executing on all of the key value drivers we set out for ourselves and for you, our investors, at the beginning of the year.

I want to end the call now where I began. Infinity's mission is to build a community and company capable of sustainably discovering, developing and delivering to patients innovative important new medicines that make a material difference in their health, well-being and lives. Intrinsic to this mission is the deeply held belief that regardless of the challenges presented by the economic environment, the fundamental source of shareholder value creation in our industry is the efficient and effective creation of innovative medicines that benefit patients. That is our promise. That is our focus and that is what the Infinity team is delivering on.

With that, thank you and we'll now be happy to take your questions.

(OPERATOR INSTRUCTIONS) And we'll pause just a moment to assemble our queue. We'll take our first question from Eun Yang from Jefferies & Company.

Hi guys. It's [Lou Nge] in for Eun. You guys mentioned that you guys had enough cash into 2010. Does that assume additional milestone payments from AstraZeneca?

Thanks for the question. We, as part of our relationship with AstraZeneca are not able to disclose the specifics of milestone payments. What is important is that the relationship that we have has the potential for total milestones of $215 million but we're not able to disclose what those specific milestones are.

Until we record them as revenue, as we just have.

Right.

I'm just wondering in the guidance that you guys have enough cash into 2010, does that assume milestones from partners or is that purely based on the $80 million that you guys anticipate in having at the end of the year.

Based on the assumption that we continue on our relationship with AZ, which is a 50/50 cost share, all right? And also assumes reasonable progress on our programs, but as Adelene indicated, we're not allowed to indicate what specific milestones may or may not be encompassed by that progress until they're actually achieved.

And I just had another question on additional indications you guys want to pursue in 2009. Can you just comment on that a little further, if there are any particular cancers you guys are interested in pursuing, if you could give us a little more color on that.

I would love to. We've very busy in the lab actually building up a large data set around a number of different cancers and we will announce those as we start clinical trials in the coming year.

Our policy has been that we announce clinical trials when we actually dose the first patient as opposed to forecasting where we're going. And additionally I think Julian is fair to say with the now having 493 in the clinic as an alternative modality to 504, thinking through which--in which cancer, in which combination, becomes a really good opportunity for us.

Moving on we'll take our next question. That will come from Phil Nadeau from Cowen & Company.

Good morning. Thanks for taking my questions. Just a few more detailed questions on the RING trial. Have a disclosed what the powering assumptions are behind that trial?

What we've disclosed is that in the RING trial will be approximately 200 patients. It's a randomized controlled trial and as we reported at ASCO in June, we anticipate that the activity that we've seen there makes this trial of the appropriate power and size.

I should also mention to you that we've done--we've planned this trial as--in collaboration with our investigators around the world as well as having obtained special protocol assessment with the FDA and having gained scientific advice from the European agencies as well.

So we feel very confident that we are appropriately powered with approximately 200 patients to allow 504 to be first and fast to market in 2010.

Okay, but you're not going to disclose that, for example, 90% power to show a two month difference--

We haven't shared those kinds of details of the statistical analysis plan.

Okay. And what about interim analyses, are there any interim analyses planned in this study?

Once again, we haven't talked about--it's a small study as you know so for a study of this size, we--it would be hard pressed to learn anything from an interim analysis. Of course, there is constant analysis around safety and early stopping rules around safety, but that's not germane to the outcome of the trial.

Okay.

Once again, I think you can anticipate us looking to be first and fast to market.

Okay. And the last question is in your press release you note that the imaging with CT scans will be obtained at early time points. What are those time points? What's kind of the final place where you're putting the CT scans?

Again, this is--these are details in the protocol that we're not really sharing. Broadly, just suffice it to say that this is an intense effort in imaging with central (inaudible), very rigorously conducted with rapid turn around to endpoint positions in patients about what the next treatment options are and monitoring for progression through survival, which is the primary endpoint of this trial.

So stay tuned. I think you will see that this trial will have been conducted very rigorously and we anticipate again its outcome to be positive and to bring this trial--to bring IPI-504 to market as quickly as possible.

Fair enough. Thank you.

Moving on we'll take our next question from Derek Jellinek from SIG. Derek, your line is open.

Okay, no response. We'll move on and take our next question from Ted Tenthoff from Piper Jaffray.

Right, thank you very much. Good morning everyone. And thanks for providing that update outlook in terms of cash utilization and runway. I agree it's good to have cash in these markets.

My questions are kind of maybe more from a 30,000 foot view in terms of how you see opportunities of using Retaspimycin as an IV compound, as an oral compound. Obviously the path will be sort of tested in the clinic, but maybe you can kind of give us sort of--and clearly it's a benefit, but just put that in perspective for us. How could we see those two options used in treating cancer?

Ted, thanks for the question. Let me expand on some of the comments I made during the prepared remarks. As you know first of all 504 will be first and fast to market in refractory GIST. So I mean it has a clear path to--as sort of a gateway indication to explore the broader potential--its broader potential in a number of different, larger market indications.

We conducted this program and have thought about sort of life cycle management in terms of also creating an option with the oral agent, IPI-493. And as I said in my remarks, there are settings in which it's perfectly reasonable to expect that pharmacology of an IV agent can be preferred, for example, intermittent treatment, intermittent treatment in combination with chemotherapy.

Sure.

One would prefer the IV product. In addition, to have an oral product with a different pharmacology that has a lower maximal concentration initially, because it's given by the oral route, as well as it's convenient in terms of schedules, its combination with other oral agents, offers a whole different approach and strategy as to how we might deploy 493.

So right now we have the embarrassment of riches in having two products, the geldanamycin class-we strongly believe in this class, nature's solution, the inhibition of Hsp90, and we think that through very thoughtful clinical development strategies, we can optimize both products and they both have a very strong place in the market to be blockbuster agents.

Let me just finish, once again, with IPI-504 our strategy has been first and fast to market to establish ourselves as the leading position in this field, and that's what we intend to do.

Fantastic. Maybe just picking up on that last point, there has been a lot of development this year and recently new companies who are developing synthetic compounds. Can you just kind of touch on the competition in terms of, obviously looking in the rearview mirror here, what's standing out at you? Is there anything that makes you worried? Is there anything that you think people are doing a good job with? Just kind of paint the landscape as you guys are seeing it.

So it's very difficult for me to comment specifically on any particular competitor.

Understood.

What we've done here is done such a nice job in the science and clinical development here, is I think we've attracted a lot of new players to the field and everyone is watching us and maybe playing catchup with us, so there are a lot of folks that have developed oral agents. They are not of the geldanamycin class. They're all synthetic compounds.

The question is how are they differentiated from our lead molecules? And by and large what we tend to do is follow the field very carefully. If there's a published agent and we know its structure, we make it and profile it.

I can tell you what are my fears? I don't have any fears. I think, I believe in our team. I believe in our strategy and I think you'll see us first to market with IPI-504.

Great to hear, Julian. I appreciate the perspective and good luck. Keep it up.

Thank you.

Moving on we'll take a question again from Derek Jellinek from SIG.

Great, hear me now?

Yes, we hear you.

Oh great. Okay. I have a couple of questions if you wouldn't mind on the lung cancer trial for 504. First, would you specify how many patients or give us some color on how many patients that showed stable disease in each arm and the duration of disease control?

That is an exceptionally good question and that's precisely what we'll be announcing next year when we talk about the totality of the trial. We don't comment on individual patients or just subsets of patients because it's too early in the trial to just see what the trends are.

But absolutely we will be in a position to comment on the durability of the response and the nature of the response in patients. And again, I can just reiterate that we're encouraged and we're continuing the trial. We met the criteria for expansion because of durability and the nature of response.

So the only mystery now remains is why the wild type patients are responding as well as the mutant EGFR patients and that just suggests there may be other client proteins that we are heretofore unaware of and we're doing a deep dive into the scientific pathology of the tumors with wild type EGFR to try to understand both sides of this coin.

That's interesting, Julian. You actually talked about my second question. I was going to ask about outside those patients with EGFR status, other biomarkers of EGFR TKI resistance, have those been assessed, especially like c-MET amplification and if so, could you comment on any correlations there between that and stable disease that you've seen in the study so far?

I can't comment on the patients but certainly we've seen c-MET amplification in xenograph tumor models. We worked with [Passioni] at the Dana Farber Cancer Institute and we published an article on activity in that, so c-MET is certainly a [client] protein. There are other fusion proteins. There are other mutations in non-small cell lung cancers, clearly a much more complicated disease than we initially anticipated and we are doing a deep dive into the genetic heterogeneity of this disease to optimally position IPI-504 and eventually 493 as to what patients will and won't respond to, to this agent, to this approach.

(Inaudible)

There's more to come.

That's very intriguing about the mystery and the wild type. Could you--I know you're not breaking out the patients specifically but could you quantitatively say that there was equal patients in both arms stable disease or was there more weighting toward the more mutant form?

You're trying to bribe more information out of me. We will announce all of these data in totality. Again, the early arms, are 10 patients in each arm, it's too small a data set to actually say one is bigger than the other, but we will, if there's a trend there and we see it, we'll report on it next year in its totality.

Suffice it to say we saw enough to go forward in both arms and that's the exciting news.

Right. Do you think you can comment on the tolerability and safety of the compound that you've seen so far?

In general we feel very confident about the overall safety of the molecule. We've created upwards, in excess of 150 patients overall and we feel that we've learned a lot about the PK and tolerability. We always monitor safety and in general we feel very confident that this drug has a place in the human pharmacopeia to treat cancer.

Let me just go quickly, a couple more I have. I can appreciate the--this is back in the lung trial, sorry. I can appreciate the refractory nature of these patients but could you quickly just comment on your feeling on stable disease or relevance, clinical relevance of it in this setting?

So these patients are very heavily pretreated, typically stable disease that is not durable, obviously is not of great clinical benefit. The question is the duration of stable disease, and again, we'll be commenting on it. We have patients still on drug and so I can't comment on the durability until we've completed the study. And again, we'll be talking a lot about this next year.

So I want to wrap up by saying thank you to all of you for attending. We recognize it's turbulent times out there. It's not turbulent in here. It's exciting in here. We're late-stage oncology company. We're in an exceptionally strong cash position. Julian and his team are knocking it out of the park and the business side is going to come through equally to match them.

So thank you.

Thank you. That will conclude today's conference and thank you for your participation. At this time I would like to inform you, you may now disconnect.