Infinity Pharmaceuticals Inc (INFI) 2009 Q2 法說會逐字稿

Good day ladies and gentlemen. Welcome to the Infinity Pharmaceuticals second quarter 2009 conference call. Please be aware today's conference is being recorded. At this time I'd like to turn the call over to Chief Executive -- my apologies -- I'll turn the conference at this time over to Mr. Steve Kafka. Please go ahead, sir.

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

In the call this morning we will be discussing our recent R&D and business highlights and reviewing our financial results for the second 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's possible that our actual results may differ materially from what we project today due to the factors described in the Risk Factors section of our most recent 10-Q.

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.

So with that, let me now turn the call over to Steve Holtzman.

Thank you, Steve, and good morning everyone. Thank you for joining us on the call today. So before Julian and Adelene provide an update on both our product pipeline and our financial results, I'd like to comment on developments in two arenas and how these may relate to Infinity.

First, while, as you folks are all aware, we're seeing some loosening in the biotech capital markets, valuations remain very low for companies with early-stage clinical programs, not an ideal time for financing in my opinion. And second, it appears very likely that Congress will pass healthcare reform legislation.

Now while cost containment is a clear goal in the [central forum], I for one remain confident in innovative new medicines that make a meaningful contribution to the well being of patients, will continue to be recompensed [debenture] with the value they deliver, however, the bar on what will be considered a meaningful contribution will certainly be raised, thereby affecting the targets all of us in the industry will need to achieve in clinical developments.

Now you put these together and I believe this heightened borrowing in combination with the challenging capital markets for companies with early-stage clinical assets will continue to result in company restructures, product licensing and M&A activity. In this environment, companies that feature secure, long term cash runways, synergistic partnerships, great teams and evidence of progress is key programs are precisely those who will emerge from this challenging economic period as the consolidators.

Infinity today is fortunate to possess all of the hallmarks of such a company. We have significant cash on our balance sheet and access to additional capital under our alliance with Purdue and Mundipharma. Together, these support our operating plan with some features in corrective investment in our pipeline into 2013.

Our pipeline features innovative product candidates that are showing promise in a range of disease settings where there is tremendous medical need. In addition, we have the potential for significant shareholder value creation. I say this because we're not a mere royalty player. We possess ownership of the US marketing rights to all of our oncology assets. We have a healthy double digit royalty on x-US sales of our partnered products and we have worldwide ownership of our most mature Hsp90 chaperone inhibitor program.

So the bottom is this. We have the capital, we have the team, we have the innovative programs, we have no need to engage in near term dilutive financing and we have the commercialization rights and financial structure that positions us to create long term shareholder value. This is a very strong Company.

With that as backdrop, let me turn the floor over to Julian to talk about our R&D progress. Dr. J?

Thanks Steve. Let me remind you first of our pipeline development strategy and then cover some recent highlights from the quarter. We believe the new Hsp90 chaperone inhibition represents an important new mechanism for cancer therapy and has broad potential.

Today with our IV Hsp90 chaperone inhibitor, IPI-504, we are particularly focused on showing potential in solid tumors, mainly non-small cell and breast cancers. In addition, we expect to explore additional indications with IPI-504 and are continuing the early clinical development of our oral inhibitor, IPI-493.

As we think about our development strategy in non-small cell lung cancer, while looking at the response rate, we're seeing mutations with wild type EGFR expression. These data are indeed intriguing. We've now undertaken a deep dive to understand the underlying genetic profile of tumors in responding patients. These efforts are ongoing and based on these analyses, we anticipate being able to write out for you the next steps in this disease later this year.

Another important component of our development plan for IPI-504 is our ongoing Phase II study of 504 with Herceptin in HER-2 positive metastatic breast cancer. This study may enable us to move forward not only in the refractory setting, but in earlier lines of treatment as well. We initiated this trial earlier this year and anticipate reporting data out of it in 2010.

As you know, we have amended the protocol for this and all of our Hsp90 studies. We are confident that we'll resume enrolling patients in our Hsp90 studies beginning in the third quarter.

A third element in our Hsp90 development strategy is to evaluate the potential of combination therapy in many indications. Our first foray into this with our Phase I study of IPI-504 in combination with chemotherapy, notably Taxotere. We've reported preliminary data showing that combination regimen has generally been well tolerated to date. Additionally, IPI-504 has not affected the clearance of Taxotere and conversely there has been no change in exposure to 504. Simply put, no drug-drug interactions.

We are now in the expansion portion of this trial evaluating patients with non-small cell lung cancer and plan to evaluate 504 on additional schedules of administration.

Finally our oral Hsp90 inhibitor is moving ahead. We are in a Phase I safety and tolerability study of IPI-493 with a goal of identifying an optimal dose and schedule for future studies.

Moving beyond our Hsp90 program, our Hedgehog Pathway inhibitor program is garnering a lot of enthusiasm in the community. Our oral inhibitor, IPI-926, is progressing in a Phase I study. Presentations on 926 have been made throughout the year at annual meetings of the American Chemical Society, AACR and ASCO, and recently two papers were published featuring 926 in high profile journals, namely "Science" and "The Journal of Medicinal Chemistry."

Let me spend a moment on the results presented in the "Science" paper, which demonstrated the important role that Hedgehog Pathway inhibition may play in combination with chemotherapy in pancreatic cancer.

This paper, authored in collaboration with colleagues at Cancer Research in the UK, suggests that Hedgehog Pathway inhibition with 926 may actually improve access of chemotherapeutics to tumors by altering the architecture of the tumor stromal microenvironment. These data suggest with Hedgehog inhibition it may be actually possible to treat cancers for which there are limited treatment options. I'm really excited to see the potential realized with IPI-926.

Our team is also advancing our program in neuropathic pain. Our clinical candidate IPI-940 targets fatty acid amide hydrolase or FAAH. IPI-940 is moving well through the IND enabling studies and we are on target to enter the clinic in early 2010.

Finally in our discovery organization, we are evaluating interesting targets to further diversify our portfolio and enhance our clinical stage pipeline. Some of the areas we are most interested in include cancer cell metabolism, energy sensing pathways and apoptosis, all newly emerging areas of cancer research. I look forward to updating you on our efforts as we nominate new clinical candidates in the future.

Let me conclude by saying that I believe medical breakthroughs and success in this industry requires the relentless pursuit of innovation. With Infinity's pipeline, our solid financial foundation and unparalleled team, I truly believe that we are poised to bring innovative new medicines to patients.

With that, let me pass the call over to Adelene.

Thanks Julian. Infinity's business and financial profile is very strong. We have successfully secured flexible, non-diluted sources of funding to enable the development of our full portfolio of product candidates.

We ended the quarter with approximately $150 million in cash and investments. In addition we have access to a $50 million line of credit with no principle or interest payable for ten years and which is usable for any corporate purpose through our relationship with Purdue and Mundipharma. This $200 million will be used to fund our wholly owned Hsp90 chaperone inhibitor program and to support our ongoing in-licensing efforts to further enhance our portfolio.

Beyond this $200 million, Purdue and Mundipharma fully fund all of the programs in our portfolio other than Hsp90, which includes Hedgehog, FAAH and our discovery efforts.

We reiterate today that we expect the 2009 net burn of $20 million to $30 million. We will therefore end the year with a cash balance in the range of $127 million to $137 million in cash or $177 million to $187 million in available resources including the line of credit. In addition, Purdue and Mundipharma have committed up to $65 million in R&D funding for 2010.

With that, our financial position is even stronger as we expect to begin 2010 with approximately $245 million in existing and committed capital.

In order to deliver on the promise of our pipeline, we continue to evolve our organizational capabilities. In recent years we've built world-class teams and clinical, regulatory, and process and product development to complement our discovery, preclinical and business team.

As we look forward to a robust set of Phase II trials in both our Hsp90 and Hedgehog programs, we've most recently added marketing expertise to ensure we develop products with truly differentiated and competitive profiles.

As Steve highlighted earlier, the bar on what will be considered meaningful differentiation is likely to be raised to help prepare the form and value based pricing. We are preparing ourselves to meet this challenge.

Of the many factors that come into play in drug development, understanding the needs of our customers, patients, providers and payers is essential to getting it right. We believe that developing true insights into and balancing the needs of our customers will enable us to bring the same level of innovation to our commercial practices as we have brought to our R&D business efforts.

As we look to our organizational needs through 2010, with the exception of a small number of hires with specific expertise and in the absence of an in-license, we now have the people and the infrastructure in place to effectively prosecute our pipeline.

To best allocate our resources, both human and financial across the full pipeline, we are rigorous in holding ourselves accountable to stage-gated development plans. We have and will continue to make our development and investment decisions based on clinical, scientific and market data as they're generated.

We pride ourselves on being able to act quickly and nimbly to ensure our valuable resources are always applied to highest value creating activities.

In summary, we have a robust pipeline and the resources needed to advance them. With that, I'll turn the call back over to the operator to open it up for questions.

Thank you. (OPERATOR INSTRUCTIONS) We'll pause for just a moment to assemble the callers.

We'll take our first call from Simos Simeonidis with Rodman & Renshaw.

Good morning everyone. Thanks for taking the question. Could you give us the latest guidance in terms of when we're going to have some more data on what happened with the GIST trial?

Yes. I'm assuming you're referring to the RING trial. As you know we have committed to publishing the full account of the RING trial. We are still processing queries from the various sites and getting all of the information on all patients treated and hope to have a clinical study report shortly, and then we have to select the appropriate venue to present these data.

So I think it's likely to project into early 2010 when we will find a suitable conference where we will be able to present the full scientific data surrounding this trial.

Okay. The other question I wanted to ask is given what happened with RING, and you were forced to make the decision to change the doses in the lung and breast trials, one of the concerns that actually could be that you end up finishing these trials and because of the -- you were forced to make a different dosing decision, you might not necessarily see a strong enough signal.

And what I'm getting at is could you see a situation where you might have to go back and potentially redo these trials with a different dosing schedule?

I'm glad you brought that up. Indeed you are right. We have modified the dose and schedule for certain trials. I've gone back and reviewed all of our data in over 250 patients treated and looked at both the PK exposure and affects on our biomarker, namely Hsp70, and we feel very confident that what we have learned thus far feels very good about improving the therapeutic index, such that we will be at a biologically active dose but a much better tolerated dose in future patient populations.

So we're very mindful of that fact and feel actually emboldened by our approach to lower the dose and explore different schedules while still maintaining activity.

I will remind you that we have reported that we have had frank clinical responses, namely partial responses, in lung cancer, in GIST and in other sarcoma patients at doses as low as 150 mg/m2 and 225 mg/m2, so we feel we're still in a very safe therapeutic range with this approach.

And Julian, do you have any visibility on when you might see the next set of data from either the lung, breast or the Taxotere trial?

Yes, I think it's, as discussed in the prepared remarks, I think we will see data emerging at appropriate conferences in early 2010.

Okay, and the final question for Adelene, you said you're going to end the year, you guided for $127 million to $137 million and you have the option for the $50 million line of credit. First of all, it doesn't expire any time soon. Do you have the option to go in -- it doesn't expire right?

Simos, you're asking about the option to pull down the line of credit?

Yes.

No, we have that for the next -- for three years from the start of the deal, which was at the end of 2008.

All right. Thank you very much.

We'll take a question from Phil Nadeau from Cowen & Company.

Good morning. Excuse me. Thanks for taking my question. It's -- the first question is on the lung cancer study. You mentioned that you will decide what to do in lung cancer later this year. I think we've seen about a 14% response rate so far in the data that's been presented. Could you tell us where that would fall should that be the final data and would that cause you to keep going forward or would you want to see a higher response rate in order to continue to develop retaspimycin in lung cancer?

You have been following our trial very carefully. Indeed we reported a 14.2% response rate in EGFR wild type patients and no response in the mutant EGFR population. So as you can imagine, we're concentrating on the EGFR wild type population to further understand that response rate.

It's certainly very intriguing to us and what I described in the call and maybe I will amplify on that, we are undertaking an extensive molecular profiling of archival and fresh tissues to understand that there are other cofactors, either clinical or through molecular gene profiling that would underscore the response rate in this population.

So obviously the hope is that we might find some other biomarker that would be able to enhance that response rate and do something higher than 14%. But I think the 14% signal is a very real signal and in discussions with our investigators, I think they believe that it's an important signal that needs following up.

So our decision to press forward really is a data driven decision depending on our analysis that we're conducting and in consultation with our scientific KOLs in the field and the well put forward strategy of the Company.

And let me just say I'm cautiously optimistic at this point.

Okay. Maybe just a follow up on that. If memory serves me, the original Phase II trials of I think like SUTENT and Nexavar certainly, maybe Tarceva and maybe Avastin, all had 10% response rates in Phase II but of course that was in all comers population, not called down genetic status. So if 10% is fine to go forward in an all comers population, does that number necessarily have to increase if you're looking at a specific genotype of disease or is the 10% still probably about the right hurdle for moving a drug forward?

It's a terrific question. I think a 10% response rate is I would say interesting. Let me remind you, the meta-analysis of Taxotere is about 8.8% response in the second line of treatment.

Our trial that we described at ASCO is a heavily pretreated population for patients with four to six lines of prior treatment, so one has to consider the line of treatment, the patient population in terms of patient demographics, and then finally the molecular profile, the genetic profile of the tumors that we're treating.

So we're trying to personalize this approach as much as possible and I think that 10% would be the sort of minimal standard with which we would consider going forward but by no means will we be satisfied with 10%. I really think that the 10% -- or 8.8% response rate of Taxotere with a 2.3 month PFS is marginal clinical benefit. I won't say it provides no benefit but we're trying to beat that standard.

And I think, Phil, just coming back to some of what we spoke about in our prepared remarks, what was good enough five years ago for cancer may not be good enough now in terms of reimbursement, worth going after a crowded field and so I think that needs to be taken into consideration.

And then the second thing is with increased personalization, as Julian said, with more the targeting, being able to choose your target population, you can't push on the other hand to be too far to where you start finding such a small population you've got four selection factors and you're down to only 10% of the lung cancer patients.

So what we're trying to do here is walk that line of finding a well characterized subset if you will but large enough to be meaningful and yet at the same time have a meaningful impact on the disease. So that's where we're at, at the moment, and we'll move ahead in lung if, but only if, we see an opportunity of that nature.

Okay. That makes sense. And on the Taxotere trial you mentioned that there are additional dosing schedules that you're going to look at. Are those simply higher doses of retaspimycin or are there other things that you're doing to --

No, actually they're based on the schedules frequently used by Taxotere, so we are examining IPI-504 in settings where Taxotere is used on a Q3 week basis, on a weekly basis and so forth.

Okay.

And then looking at different diseases.

Okay, great. Thank you.

We'll now take a question Andrew Vaino with Roth Capital Partners.

Hello. Thank you for taking my call. I just had a quick question. You mentioned that the FDA is reviewing the data that you'd resubmitted for retaspimycin. Does that mean that they've signed off on it and it's okay or are they still reviewing it?

We have a full green light and we are -- the FDA -- we have been in constant contact with the FDA following the RING closure and continuously update the agency both on all regulatory requirements as well as any insights we might have so we have a very continuous dialogue with the agency. So we are a full green light to continue enrolling patients.

Okay, so can we expect that patients start being dosed again later in Q3 or closer to say middle --?

You got it exactly right.

Okay, excellent. Thanks very much.

And it appears that does conclude our question and answer session and at this time I'd like to turn the conference back over to Steven Holtzman for any closing remarks.

Well thank you operator and thanks for all of you today on the call. As you've heard, Infinity today is in an exceptionally strong position. I'm confident in our current programs and I'm really optimistic about our future. As Adelene articulated, we're exceptionally well capitalized. As you heard from Julian, we have an innovative pipeline of product candidates and we're going to invest wisely in this. We're not just going to pour money into any and all programs. We're going to make sure they're programs that have significant potential. And we have the team of citizen owners that is absolutely passionate about and committed to bringing new and better medicines to patients and as always, we believe that is the answer to how to really create significant shareholder value.

So thanks again for joining us. Enjoy the rest of your summers and we'll see you in the fall investment banking circuit. Take care. Bye-bye.

Once again ladies and gentlemen this does conclude today's conference call. We do thank you for your participation.