Infinity Pharmaceuticals Inc (INFI) 2009 Q1 法說會逐字稿

Good day, and welcome, everyone, to the Infinity Pharmaceuticals first quarter 2009 financial results conference call. This call is being recorded.

At this time I would like to turn the call over to Mr. Steven Kafka, Vice President of Finance. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Thanks for joining us on the call today. My name is Steve Kafka, Vice President of Finance at Infinity, and with me on the call today are Steve Holtzman, Chair and CEO; Julian Adams, President of R&D and Chief Scientific Officer; and Adelene Perkins, President and Chief Business Officer.

In today's call we will be discussing our recent R&D and business developments and reviewing our financial results for the first quarter of 2009. The press release detailing our results was issued yesterday evening and is available on our website at INFI.com.

I'd like to remind you that during today's call we may make forward-looking statements about the Company's future expectations and plans, including clinical development milestones and financial projections. It is possible that our actual results may differ materially from what we project on the call today due to the factors described in the Risk Factors section of our Form 10-K filed with the SEC in March. 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.

To kick us off, let me now turn the call over to Steve Holtzman.

Thank you, Steve, and good morning, everyone. We appreciate you joining us on the call this morning.

2009 has thus far been a year full of significant strides forward for Infinity. It has also, however, been one that has presented us with a significant challenge. So let me tell you where we stand today.

Infinity has built an innovative pipeline of product candidates targeting key areas in cancer research. Our pipeline includes three product candidates in continuing clinical development -- IPI-504 and IPI-493, our IV and oral Hsp90 chaperone inhibitors, respectively, as well as IPI-926, our oral Hedgehog pathway inhibitor. We are making progress, in addition, with our preclinical and discovery stage programs, including one in neuropathic pain targeting fatty acid amide hydrolase with our oral molecule IPI-940. This is a strong pipeline that we are committed to moving forward.

On the business side, we have a strong relationship in place with our colleagues at Purdue Pharma and Mundipharma for the development of our early clinical and discovery stage programs. With more than $150 million in the bank, access to a $50 million line of credit on very attractive terms and full R&D funding for our Hedgehog and earlier stage programs, we are in a position of considerable financial strength, one that enables us to aggressively pursue the development of all the product candidates in our pipeline. And we have sufficient capital to fund our impressive operating plans into 2013.

But perhaps most importantly, we have a team of scientists and businesspeople who have well-established track records in discovering, developing and bringing to market important new therapies and building successful, value-accretive businesses. Infinity today is a very strong company with a team in place to take us across the goal line.

Having said that, we did announce recently a challenge in the development of our IV Hsp90 chaperone inhibitor, namely IPI-504. Our decision to stop our RING trial, an international Phase 3 study of IPI-504 in patients with refractory gastrointestinal stromal tumors, or GIST. We initiated this study in October of 2008 under a special protocol assessment or SPA agreement with the FDA, also pursuant to the scientific advice of the European agency and, most importantly, based on the results that we observed in the Phase 1 study of IPI-504 in patients with refractory GIST.

Now, there's no denying stopping the RING trial was a tough blow. But we firmly believe it was the right thing to do. I don't have to tell all of you that drug discovery and development are hard, very hard. The low success rates that characterize our industry are daunting. Yet despite these statistics, or perhaps even motivated by them, we at Infinity work tirelessly in the pursuit of discovering, developing and delivering to patients important new medicines that will make a meaningful difference in their health, wellbeing and lives. This is our mission. In our effort to achieve it, we evaluate all aspects of the clinical and scientific data and make the sometimes tough calls in the best interest of both patients and shareholders in order to move Infinity forward to develop new medicines.

So, while we did experience a setback last month, we believe we are making the best scientific and business decisions every day, and we're in a very strong position to continue to do so and build shareholder value. Most importantly, we remain committed to and confident in our ability to achieve our mission.

So with that, let me pass the call over now to Julian, who will take you through recent developments in our pipeline.

Julian?

Thanks, Steve.

While it is disappointing to us to stop the RING trial, I am proud, very proud of the science being done at Infinity and our unfailing commitment to being data driven in our decisionmaking.

So why did we stop the RING trial?

RING, as you know, was a double-blind placebo-controlled randomized study evaluating IPI-504 in patients with refractory GIST -- that is, patients who had experienced and become refractory to at least Gleevec and Sutent, with no limit to the number of prior therapies they had received. At a quarter of the way through enrollment we detected a higher than anticipated number of serious adverse events.

Because we were blinded to the data, we asked our independent data monitoring committee, or IDMC, to convene on April 14 and review the safety data up to that point. The IDMC unblinded themselves and reported to us that they observed a higher than expected mortality rates among patients in the treatment arm. The IDMC then made the recommendation to halt the trial.

We then unblinded ourselves as well in order to review the preliminary data. That evening, after initial analysis and many discussions, we made the difficult decision to stop the trial. Doing our best by patients is our top priority, and we acted expeditiously. We reported this news to you the following morning, at which time we were also in contact with our various investigators, sites and the FDA to notify them of our position.

Admittedly, the results were unexpected, particularly in the light of the encouraging Phase 1 data we had accumulated for IPI-504 in refractory GIST. Analysis of the Phase 3 data is ongoing. We don't have all the answers yet. However, our analysis thus far suggests that a contributing factor to the result might lie in the patients in the Phase 3 having more advanced disease than those in the Phase 1. While our enrollment criteria for the Phase 3 study were essentially the same, our preliminary review of the data indicates a greater percentage of patients in the Phase 3 had experienced more than three prior therapies and a longer time since initial diagnosis.

So where are we with the trial today?

We have stopped enrolling new patients in the study. However, physicians may request continued treatment for patients they deem to be receiving clinical benefit through a single-patient IND. This option has been utilized in the United States.

It will take us some time to fully collect, validate and analyze all the data. Rest assured, once the analysis of the full data set is complete, the results from the RING trial will be presented in detail at an appropriate scientific conference.

Whatever the complete answers turn out to be, I want to restate today that the RING trial was, in our judgment and in the judgment of many KOLs and investigators with whom we are working, a well-designed and well-executed study. We believe it will contribute to a better understanding of how to evaluate our Hsp90 shock [protein] inhibitors in many cancer indications.

We are committed to ongoing clinical development of our Hsp90 program. And let me walk you through the status of each of our trials in more detail.

First is our trial in non-small cell lung cancer, for which we have completed enrollment. This is a two-arm study evaluating 504 in two patient populations, one with known EGFR mutations and one with wild-type EGFR. In the first portion of the Phase 2, we had patients in each arm meet the criterion to expand. We then expanded both arms of the study per protocol.

A number of patients are still on study and may continue to receive IPI-504 at 225 mg/m2 on our standard schedule of twice weekly dose administration for two weeks followed by one week off. From previous studies we know that 225 mg/m2 is a biologically active dose as demonstrated by biomarkers and tumor regressions. The Phase 2 data are looking good, and we look forward to presenting the preliminary results at the upcoming ASCO meeting in Orlando later this month.

Our second Phase 2 study is one we initiated earlier this year -- that is, IPI-504 in combination with Herceptin in patients with HER2-positive metastatic breast cancer. HER2 has been shown to be a highly sensitive client protein of Hsp90, and Herceptin is a mainstay treatment for patients with metastatic disease.

Infinity has built a robust preclinical data set, including new data we recently presented at AACR. Based on these data, we launched a Phase 2 international multicenter breast cancer study. We have temporary stopped enrolling new patients while protocol amendments are being submitted and reviewed. Patients currently enrolled in this study may continue to receive IPI-504 at 225 mg/m2 on the standard schedule. We believe Hsp90 chaperone inhibition may be a key component of the treatment of HER2-positive breast cancer.

Our third trial is a Phase 1 safety and tolerability study of IPI-504 in combination with Taxotere. This study began in patients with advanced solid tumors. Last year, we expanded it to focus on patients with advanced non-small cell lung cancer, a setting in which Taxotere has been shown to be effective. We are amending the protocol for this trial as well, and expect to resume enrolling new patients once modifications have been reviewed and approved. And at ASCO we will be presenting preliminary data. So stay tuned for more in Orlando.

Finally, with our oral agent, IPI-493, we are evaluating multiple doses and schedules in Phase 1 dose escalation. Our goal is to determine a Phase 2 dosing schedule for future trials. We plan to evaluate additional schedule of administration, and we are currently amending the protocol and intend to resume enrollment once it has been approved.

I'll remind you, we've presented data on 493 in a number of preclinical models and are very encouraged by what we've seen -- excellent oral bioavailability, selectivity for cancer cells over normal cells, and significant antitumoral activity. While it's early in Phase 1, we are making progress. We anticipate presenting preliminary data in 2010.

So let me turn now briefly to our next most advanced program targeting the Hedgehog pathway. Our inhibitor, IPI-926, is in the Phase 1 development on a schedule of daily oral administration. Last year we presented an extensive set of preclinical data demonstrating the attractive pharmaceutical properties of IPI-926 as well as significant antitumor activity in a number of preclinical models.

At the recent AACR meeting we presented additional preclinical data indicating that elevated Hedgehog ligand expression could provide a survival advantage to a subpopulation of tumor cells following chemotherapy. These exciting data support the evaluation of IPI-926 in cancers that are initially chemo-responsive but eventually result in the relapse of the tumor.

We are building an increasingly robust set of preclinical data with IPI-926 in multiple cancer settings, and the potential of inhibiting the Hedgehog pathway is huge. I look forward to updating you on the clinical progress of 926 as we move through the year and into 2010.

So let me finish by saying that at Infinity we make our decisions with integrity and based on clinical and scientific data. We have a very special team who is working in collaboration with KOLs on cutting edge science in all areas of drug discovery and development. I believe we are doing a great job and are getting closer to developing new treatments that will make a real difference for patients.

Now I'll turn it over to Adelene.

Thanks, Julian.

Steve began the call today emphasizing Infinity's position of strength, and Julian has highlighted our commitment to moving our pipeline forward despite the RING trial setback. I'd now like to put our current position in the context of how we have built and are continuing to build the Company from a strategic perspective.

There are two fundamental challenges one must deal with in building biotech companies. First is the inevitable complexity of developing treatments for [menacing] human disease. The second is the vagaries of the capital markets, which must be navigated to fund important research and development.

Infinity's strong position today results from our strategy of tackling these scientific and business challenges head on. This approach has been put to the test in dealing with both our clinical developments of the past few weeks and the market [turmoil] of the past year, and our strategy has served us well. The first leg of our strategy is to build a portfolio of product candidates. The second is our strategy for financing our products, which allows us to evolve our portfolio in response to data while building shareholder value.

Given the time and expense associated with drug development, developing a pipeline of agents has taken great resolve over the years. We've resisted the temptation to extend our initial capital by focusing our resources on the pursuit of any single one of our product opportunities. In addition, given the breadth of possible clinical applications for each of our product candidates as a result of their underlying mechanism, we've refused to pursue the kind of rifle shot approach that's been tried and failed many times over. Our approach ensures we have a diverse pipeline and the infrastructure necessary to prosecute it.

We believe that building a product portfolio is absolutely essential to building a sustainable enterprise capable of attracting both capital and the people necessary to execute on it. Clearly, commitment to building a sustainable company requires that we secure minimally dilutive and maximally flexible sources of funding, our second strategic challenge. Our refusal to allocate company resources solely to any one product or indication coupled with our focus on creating shareholder value necessitates that we have a balanced financing strategy involving financial investors as well as strategic partners. Our current financial position reflects this balanced approach.

Let me remind you of how the various components of our portfolio are funded. Our current cash balance of $154 million, in addition to a $50 million line of credit usable for any corporate purpose, provides the capital necessary for us to fund our wholly owned Hsp90 program into 2013. In addition, our strong balance sheet positions us well in seeking in-licensing opportunities to expand our portfolio while minimizing further equity dilution.

The remainder of Infinity's pipeline is included in and fully funded through our partnership with Purdue and Mundipharma. This includes our Hedgehog, FAAH and all of our discovery programs. As a result of our multipronged financing strategy, we expect a 2009 net burn of between $20 million and $30 million, ending 2009 with a cash balance of $127 million to $137 million, not including the $50 million line of credit, which will allow us to fund the entire company into 2013.

Building on our financial strength, the Purdue-Mundi relationship was explicitly designed to allow for seamless reallocation of resources across [products] within the partnership in response to data. This flexibility to evolve our partnership's focus reinforces Infinity's data-driven decisionmaking and is a critical aspect of ensuring the partnership's success. Infinity retains US commercialization rights to all of our oncology programs, thereby ensuring the opportunity for meaningful value creation for Infinity shareholders.

In summary, our current strength is a reflection of the strategy we have been executing on for years and to which we remain committed. We are well positioned to achieve our mission. Our portfolio and financing strategies are well integrated. We can shape our pipeline over time, optimally managing risks and opportunities. At the end of the day, we believe this improves the odds for successfully developing medicines that will make a meaningful difference in patients' lives and for creating value for shareholders.

So let's stop here and answer some of your questions.

Operator, can you please open the line for Q&A?

Thank you. (Operator Instructions)

And our first question will come from Simos Simeonidis, from Rodman & Renshaw.

Yes, good morning. Thanks for taking the question. In response to what Julian said about the -- your plans for the three 504 trials that are ongoing, you said these patients that have already enrolled may continue to be treated, and in the press release you said potentially at a lower dose. I understand that you're being very careful and that's the right thing to do, but do you think that potentially you could be doing these trials at a less than efficacious dose if you decide to dose them at levels below 225 mg/m2 or if you, on the other hand, if you end up delaying it and you end up compromising your ability to analyze the data? Can you address that, please?

Yes, it's a great question, and one we've wrestled with very seriously. So first let me tell you that we have seen activity at 225 mg/m2, so this is not a dose that we just pulled out of the hat. In the dose escalation studies we recorded partial responses in GIST, lung cancer and in a liposarcoma patient. So this is a biologically active dose.

The challenge for us was in developing an Hsp90 inhibitor, should we be treating at the maximum tolerated dose, which we established to be 400 mg/m2, or what we are now thinking may be the biologically optimal dose? It's a slightly different concept for targeted therapies that I think may prove more utilitarian.

And obviously the main concern here is for the safety of patients. So while I agree it will confound certain analyses, this will establish a safe and much better tolerated dose as we go forward and think about developing the optimal biological dose in future patients.

And I know it's only been three weeks or less since the -- since you guys found out, but do you have any sense on three weeks later how long it might take to get to just a preliminary conclusion on what to do in terms of dose?

So we've come to the conclusion of what to do with dose. We're just filing amendments, updating our investigator brochure and filing amendments and -- with the agencies and with IRBs to implement enrollment, future enrollment.

Okay. The --

[It'll be eight weeks.]

Right. A quick financial question, in your -- when you gave guidance at the beginning of the year, you said you anticipate to end the year with between $122 million and $132 million in cash. And on yesterday's press release and today you amended that to increase it by $5 million in savings, meaning you said you're going to end up with $127 million to $137 million. Given that you're not going to have the majority of the Phase 3, the GIST expense, where is the rest of the cash going to be used?

Yes, Simos, as you would imagine, closing a trial requires significant follow-up, and so we will be continuing to employ our full clinical development team for many months in terms of collecting the data to conduct the analysis that Julian's referring to. So that's why the reduction is not as significant as you might have expected in 2009. We'll see a bigger reduction, obviously, in any RING-associated expenses in 2010.

But just to refresh my memory and make sure I have this right, you have only treated a quarter of the patients that you originally are planning to, correct?

That's correct.

Okay. Thank you very much.

And we'll take our next question from Eun Yang, with Jefferies & Co.

Hi. Thanks for taking my question. This is concerning your partnership with Mundipharma. Since you guys halted the RING study, have you guys discussed your strategic path forward with your partner in terms of getting their opinion on the outcome of the RING study?

Well, what's important is that the Hsp90 program is not part of our Purdue-Mundipharma relationship. Infinity owns 100% of worldwide rights to the Hsp90 program. So --

I mean, I understand that, but they are a significant shareholder now in your company.

Yes, oh, absolutely. Oh, we're in very regular contact with our colleagues at Purdue and Mundipharma to provide updates both on the specific programs that are in our relationship as well as the overall position of strength for the Company.

So I guess what I'm trying to tease out is does stopping the RING study affect the partnership in any way at this point?

No, it does not.

Okay. Thank you.

And our next question comes from Edward Tenthoff, with Piper Jaffray.

Great, thank you very much, and thanks for the thorough update. When it comes to these, I think, prudent decisions that you're making with retaspimycin, how long of a delay could this actually cause for the ongoing studies? And I know it's probably still early to see this, but when do you think we'll actually get the final Phase 2 data, Phase 1b data and ultimately kind of get a new path towards regulatory approval?

Ted, I assume you're referring to the lung cancer study and the breast cancer study?

Lung cancer, breast cancer, Taxotere -- basically the --

(Inaudible-multiple speakers)

Yes, the stopping the enrollment of new patients and dosing at lower doses. I'm just trying to gauge how big of a delay this might actually be.

So, let me just reiterate, patients who are currently receiving drug, were receiving drug, at 400 mg/m2 are now dose-reduced to 225. And at the option of the patient and the treating physician, they will continue to receive 225 mg/m2 until they progress.

The tactical issues around modifying protocols and making changes and getting them through IRBs and so forth, it's a matter of weeks to do the paperwork on our end. And then we think that we will be up and running very shortly thereafter. And then we will continue to prosecute those studies.

I should mention that the enrollment -- again, mention again, the enrollment for the non-small cell lung cancer is complete. So we'll have a partial update at ASCO. We'll also have a partial update on schedule exploration in the combination with Taxotere. The breast cancer data are still too immature to report on, but we'll be talking about that, I'm sure, towards the end of the year or possibly into 2010.

Thank you.

And our next question comes from Phil Nadeau, with Cowen & Co.

Good morning. Thanks for taking my questions. First is on the protocol amendment. It seems clear that one part of the protocol amendment is on changing the dose. Can you discuss if there's anything else meaningful in the protocol amendments, any new monitoring that's being instituted or any changes in enrollment criteria?

Yes, what I think we've learned is that we want to institution additional PK and PD monitoring to better understand the pharmacodynamics of the drug, and we still believe that this -- we are on the right schedule. We just want to understand much more clearly about the PK relationships with the drug.

Okay. And on the RING trial itself, a few weeks ago when you announced the suspension of the trial you weren't at that time prepared to give data on exactly what the analysis were between the arms. Are you prepared to give that data today, so how many deaths or SAEs were there in the drug arm versus the control arm?

It's a fair question. We are not prepared to discuss any of the data of the RING trial today other than what we've said. And the reason for it is we are analyzing all 250 patients studied in both the Phase 1 and Phase 2 and Phase 3 studies, and we are trying to better understand the causal relationship to drug as opposed to disease progression.

Deaths we've seen in general are very complex cases and require deep analysis and bringing in experts to actually determine whether we are going to attribute a death to the drug. So our decision to stop the RING trial was based on a mortality rate. Whether it was causal to drug or not is irrelevant to us. Our primary concern was patient safety.

Okay. Fair enough. Thank you.

And our next question comes from Andrew Vaino, with Roth Capital.

Hey, thanks for taking the call. Just not a question, necessarily, but the adverse events in the Phase 3 study, can you comment on the average number of prior treatments for both the placebo and treatment group in that trial?

So we know the entry criteria that a patient had to be refractory to Gleevec and Sutent, at least, but not limited to. So we had patients that had progressed on three or more prior therapies. And so the percentages are still being worked out, because we're still collecting data from sites in the US and in Europe.

Okay. Thank you.

And this concludes today's question-and-answer session. At this time, I would like to turn the call back over to Mr. Steve Holtzman for any additional comments.

Once again, thank you everyone for joining us this morning.

Reiterating, Infinity is in a position of great strength today. As you've heard from Julian, we continue to pursue the development of our Hsp90 chaperone inhibitor programs in multiple clinical trials and are pushing forward with the rest of our innovative pipeline. Studies with 504 will be back up and running in a matter of weeks. Patients currently getting benefit in the trials from the drug have the option of continuing on drug.

And, as you've heard from Adelene, we've positioned ourselves with several years of capital to enable the aggressive advancement of our product candidates.

And I want to conclude by stressing that we have an extraordinarily talented and committed group of citizen owners who will achieve our goals. I know I speak for Julian, Adelene and the whole Infinity team in saying that we are committed to and confident in our ability to achieve our mission to bring important new medicines to patients and thereby deliver value to our shareholders.

Have a good day, and thank you very much.

And this concludes today's conference. We appreciate your participation.