Infinity Pharmaceuticals Inc (INFI) 2010 Q4 法說會逐字稿

L>> OperatorLadies and gentlemen, thank you for standing by. Welcome to the Infinity Pharmaceuticals conference call to discuss the Company's fourth quarter and year end 2010 financial results. My name is Javon and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at Infinity's request. At this time I'd like to introduce your host for today's conference call, Ms. Jaren Madden Director of Investor Relations and Corporate Communications at Infinity. Please go ahead.

Thank you Javon and good afternoon everyone. Welcome to today's call. I'm Jaren Madden, Director of Investor Relations and Corporate Communications at Infinity. With me here today in Cambridge is Julian Adams, President of R&D. Adelene Perkins, President and Chief Executive Officer and Gerald Quirk, Vice President of Corporate Affairs, are joining the call from Miami, Florida, where they will be presenting at the Barclay's Capital 2011 Global Healthcare conference tomorrow.

The press release issued earlier today details our results and is available at our website at Infinity.com. Please note that during this call we may make forward-looking statements about our future expectations and plans including call 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 the Form 10-Q A for the third quarter of 2010 that we filed this afternoon.

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 are not taking on an obligation to do so. During today's call we will discuss our recent business and R&D highlights, review our 2010 financial results, and detail the restatement we have made regarding the recognition of the loan commitment from Purdue. Following our remarks, we'll open up the call for Q&A. Now I'd like to turn the call over to Adelene.

Thanks, Jaren and good afternoon, everyone. Thank you for joining us today. 2011 is a very important year. As we leverage the considerable progress made across our business in the past several quarters. We have what I believe to be one of the strongest Phase I/lI portfolios in the industry. A stellar team that can drive this portfolio through the clinic and to patients.And a strong balance sheet, providing the capital to conduct a robust development program.

We have tremendous momentum in our programs and the opportunity to demonstrate the activity of our drugs in controlled trials across multiple indications. Our success with these trials will help realize the commercial potential of our drugs and further our mission of building a sustainable, fully integrated biotechnology Company. I'll briefly outline our priorities this year that are integral to achieving our long-term goal.

First, we're focused on advancing trials of IPI-926, that can generate proof of concept data and pave the way to registration. The recent initiation of two Phase II trials highlights the important progress we are already making in this program. Each of these studies is rigorously designed and each has a clinically relevant end point that will give us confidence to invest in Phase III development and registration. We also expect additional trials of IPI-926 to begin this year.

Second, we are focused on completing ongoing trials for our Hsp90 program that will enable us to outline the future of this program over the next several months. We have four trials ongoing, two for IPI-504 and two for IPI-493.Our R&D philosophy has always been to go where the data lead us and this is exactly how we're approaching our Hsp90 program. We're right on track to have that data by mid-year and expect to provide a program update this summer.

Lastly, and very importantly, we continue to advance and expand our early stage pipeline. This includes moving IPI-145 into the clinic and identifying a new development candidate. Beyond our internal discovery efforts, we are actively evaluating business opportunities that leverage our team and financial strength and complement our product portfolio.

While we look at drug candidates at all stages of development and across a spectrum of indications, our therapeutic focus is mainly on the areas of oncology and inflammation.We are looking for product candidates that have generated proof of concept data or that are on track to demonstrate proof of concept by the end of 2012.

Underpinning our R&D efforts is a strong financial profile. We entered 2011 with just over $100 million in cash and investments, $195 million in committed R&D funding from Mundipharma and a $50 million line of credit that may used for any business purpose. We view our capital as a tremendous asset that places us in a truly unique position among strong -- small biotech companies. Our relationship with Purdue and Mundipharma has been highly productive, providing us with the financial resources and independence to aggressively pursue our goal of developing our pipeline of novel drug candidates and giving us the opportunity to commercialize our own products in the US.

In summary, with our robust pipeline, a talented team and our financial strength, we're beautifully positioned for a strong 2011.We're excited about the opportunities we have to create shareholder value and to make a meaningful impact on patient's lives.With that, let me turn the call over to Julian for an R&D update.

Thanks, Adelene. I, too, am very excited about the year ahead for Infinity. We've already made significant progress this year.

Our lead development candidate is IPI-926, our oral molecule that targets the Hedgehog pathway by inhibiting Smoothened. We are pleased to lead the way in better understanding the role of the Hedgehog pathway in cancer, and we're now rapidly translating our scientific insights into the clinic. Today, I will focus on the details of our progress with 926, and touch briefly on the progress you can see -- you can expect to see in our other programs.

We recently completed the Phase 1b portion of our trial of 926 in patients with metastatic pancreatic cancer. The Phase 1b successfully evaluated escalating doses of IPI-926 administered once daily, in combination with the standard dose of gemcitabine. We've transitioned into the Phase II portion of the trial, which is designed to establish proof of concept and give us confidence going into the Phase III development.

This is a multi-centered, double blind trial in approximately 120 patients randomized one to one comparing IPI-926 in combination with gemcitabine, versus placebo and gemcitabine. The primary end point of the study is overall survival, and secondary end points include progression free survival, time to progression and overall response rate. Given that the median survival is approximately six months for patients receiving gemcitabine alone, the standard of care, we believe that 926 has the potential to be a game-changing therapy. We look forward to presenting data from the Phase 1b trial later this year.

We also initiated a Phase II trial of IPI-926 in chondrosarcoma, a life threatening malignancy of the chondrosites or cartilage. Patients with un-reacceptable disease, there's currently no standard of care or treatment option. Based on our scientific insights and consultation with experts in the sarcoma community, we designed a rigorous international multi-center trial which will enroll approximately 100 patients with locally advanced or metastatic inoperable disease.

Our trial is designed to measure progression free survival in patients randomized two to one, comparing 926 versus placebo. At progression, patients on placebo will have the option to cross over to IPI-926. Secondary end points include progression, overall survival, overall response rate, and the duration of response. The fact that this is the first randomized trial in chondrosarcoma underscores our commitment to developing drugs in areas of significant unmet need and where the science is strong.

Due to the paucity of epidemiological data and historical information in chondrosarcoma, we have met with both FDA and the European Medicines Agency for scientific advice together with our clinical advisory board to pressure test the feasibility and appropriateness of this trial design. We have also received orphan designation from the FDA and are seeking the same from EMA. In addition to the high unmet need, we are pursuing chondrosarcoma because there is a strong scientific rational for treating this malignancy by inhibiting Smoothend.The Hedgehog pathway is strongly implicated in the remodeling of bone and cartilage and is malignantly reactivated in chondrosarcoma.

Interestingly, in chondrosarcoma, the tumor cells secrete Hedgehog ligand, which in an autocrine group signals back to the malignant cells to activate Smoothened and provide growth and survival stimuli. Margaret Reed, the Product Development leader for our Hedgehog program, will present additional details on the rational for developing IPI-926 and chondrosarcoma during a Hedgehog pathway symposium session at the upcoming AACR meeting.The symposium session will take place on Sunday, April 3rd, from 1.00 to 3.00 PM Eastern standard time, and I encourage anyone attending the meeting to not miss this talk.

In addition to these ongoing Phase II trials, we have already demonstrated on-target activity in our basal cell carcinoma study and plan to present follow-up data from that trial later this year. We are planning additional trials for IPI-926 this year in areas where the pre-clinical science is strong and the unmet need is great.

As Adelene mentioned, 2011 will be a busy year for Infinity. Throughout the year, we will be focused on further defining the path forward for our programs and advancing our clinical trials. I will finish up by highlighting the pipeline milestones you can look forward to this year.

In our Hsp90 program, we are completing studies of IPI-504, and IPI-493. We plan to present data from the 1b -- Phase 1b study of IPI-504 in combination with docetaxal in a cohort of patients with non-small cell lung cancer.Data from our Hsp90 studies combined with market insights and our growing understanding about dose, schedule, and the role of Hsp90 in tumor growth and progression in specific patient populations, will form the basis of our future development plans. ¶ In our FAAH program, we expect our partner, Purdue, to start Phase II studies of IPI-940 in pain this year. Purdue has significant expertise in developing and commercializing therapies for pain, and we view them as the ideal partner for IPI-940. Turning to our earlier stage pipeline, we expect to advance our PI3 Kinase inhibitor, IPI-145, into Phase I in the second half of this year.This opens the path to development in inflammation as well as oncology indications. There's a great deal of enthusiasm about the therapeutic potential of PI3 Kinase Inhibitors as evidenced by the recent acquisition of Calistoga in a deal valued up to $600 million.

We believe that IPI-145 has superior qualities over other PI3 Kinase inhibitors in development including [picamola] potency and dual specificity for both delta and gamma isoforms of PI3 Kinase.With the emerging profile, we're very excited about 145, and will provide additional details about the development plans once Phase I begins.

While we have amazing data, but do not provide details on our early discovery efforts until we officially name a development candidate, I'm absolutely thrilled with some of the early data from molecules targeting unique pathways in cancer. We plan to name a new development candidate this year and I can't wait to share additional details with you in the coming months. With that, I'll turn the call over to Gerald to wrap up with a review of our financial results.

Thanks, Julian. As Adelene and Julian just described, we're in a very strong position. And before I turn to our 2010 year end financial results, I want to provide some context around the change in our accounting treatment for the $50 million line of credit from Purdue, which we announced in today's press release and 8-K filing.

This line of credit has very attractive terms including below market interest and favorable repayment terms. Purdue's commitment to make this loan to us is an asset and we recorded the fair value of that asset which is $17.3 million in a separate line item on our balance sheet. Because we recorded an asset, we needed to record a corresponding entry to balance the books. We initially recorded that entry to additional paid in capital.

As a result of a routine review of our 2009 Form 10-K by the SEC, we concluded that we needed to change where the offset to the loan commitment asset is recorded on our balance sheet. Put simply, the $17.3 million has moved up our balance sheet from additional paid in capital to deferred revenue, and we will be amortizing that deferred revenue to revenue over 14 years. This results in an increase in our recorded revenue of roughly $300,000 per quarter. This is a non-cash item and total cash and cash flow from operations are unaffected.

Consequently, total revenue for 2009 is now $50.8 million, compared to the $49.5 million previously reported. Total stockholders equity on our balance sheet as of September 30, 2010, is now $61.2 million, compared to the $76.2 million previously reported. And with that, let me now review our top line financial results for 2010.

We ended the year with $101 million in cash and investments and no debt. Our total revenue for 2010 was $71.3 million, all of which relates to our alliance with Purdue and Mundipharma on the development of our Hedgehog pathway, FAAH inhibitor, and PI3 Kinase program, as well as our discovery pipeline. Our R&D expense for 2010 was $99.2 million, including amounts reimbursed by Purdue and Mundipharma and R&D associated with our Hsp90 program. Also included in our 2010 R&D expense is the $13.5 million license fee to acquire our PI3 Kinase program.

G&A expense for 2010 was $21.1 million, and our net loss for the year was $49 million. We continue to stand behind our financial guidance, of ending 2011 with total cash and investments of between $60 million and $70 million. This excludes the 2012 funding commitment for Mundipharma of $110 million and the $50 million line of credit from Purdue.

This guidance corresponds to an anticipated cash burn for 2011 ranging from $30 million to $40 million. Aside from any business development activities, our plan gives us cash runway into 2014, enabling us to advance our pipeline to key value inflection points without the need for additional dilutive financing. With that, let me turn the call over to Jovan to open up the line for Q&A.

Thank you.

(Operator Instructions).

Our first question comes from Phil Nadeau with Cowen & Company.

Good afternoon. Thanks for taking my questions. First, Julian, one for you. You were pretty clear in your prepared remarks that the two Phase IIs for 926 are kind of proof of concept studies. You set the table for moving into Phase III.But, both of those are well designed, rigorous, controlled trials with low verified end points. Is there any chance that you could actually file on that data?

Phil, that's a great question. There is no plan, currently, to file on -- these are not registrations studies. Rather, they are rigorously designed, as you say, to measure the magnitude of benefit. Now, it is always possible that if we see blow-away data, we will approach the agencies and have the appropriate discussions about a more aggressive filing option.

Okay. And, when can we expect to see data from those two studies?

We're guiding that by the end of 2012, that we expect to complete those studies.

So, both data sets will be out about the same time?

Approximately. Roughly. It really depends on enrollment and it's not something we can completely gauge, but we feel pretty confident that we have a very well designed clinical operations team and plan to enroll those trials.

Okay. And, on the Hsp90 program, it seems like you have the vast majority of data already in-house, and maybe you're just waiting for the non-small cell lung cancer trial. Can you give us some sense of which way you're leaning with those programs, as far as next step?

So, we have filed abstracts for major medical meetings and we're not going to guide as to where, until those abstracts are actually accepted. We will then guide what those meetings are and we'll be completely forthcoming with our strategy.

Thanks for taking my questions.

Sure.

(Operator Instructions).

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

Thanks very much for taking the question and congrats on a good year. Looking forward to a lot of data in 2011. I guess maybe starting out with the Hedgehog program and the Phase II studies, when will you be reporting the 1B data in combination with Gem I think it was. And, maybe you can kind of take us to a little bit higher level on this program. Clearly, there's been some positive progress with Hedgehog inhibitors and also some setbacks, so you guys are starting to really broaden this program. Where, ultimately, do you see other opportunities maybe to explore Hedgehog and how do you balance that with resources?

So, that's a lot of questions, Ted.

It's one when you cram it all together like that.

So, first and foremost, we are guided by very careful science. Laboratory science and pre clinical models that we have a high degree of confidence, as well as patient samples, where we look for where the Hedgehog pathway is not just up, but it's signaling. So, our choices of pancreatic and chondrosarcoma represent sort of the first two experiments, clinical experiments, where we think that the pre clinical data are strongest.

And, we continue to explore and examine other potential indications where we think the data really is extremely compelling. In the case of pancreatic, we know that the tumor itself is producing the Hedgehog ligand and it's signaling to the stroma. So, there's a tumor micro environment interaction that's very unique. And, as I've described in the past, and as has been published in our science article, in collaboration with Dave Tuveson and Ken Olive that the [desma] plastic or very fibrotic nature of the micro environment that encases the tumor provides for a niche for the tumor to grow in a very unique way.

This is in sharp contrast to chondrosarcoma where, as I just finished describing, the tumor itself is producing the ligand and in an autocrine loop, otherwise said in a feedback group is signaling back to the tumor itself, so there's a [polyges] signaling in the case of chondrosarcoma.So, again, there are many subtleties and facets to the Hedgehog pathway and we examine them very carefully. And, as to when we're going to describe these phenomenon in greater detail, as I've said, we've submitted abstracts and once those abstracts are accepted, we will be forthcoming in guiding as to which medical meetings and the level of detail, we'll be very forthcoming in sharing our theories and our experimental data and prospects for the future.

I very much look forward to that. Maybe as a quick follow-up question, if I may, on the FAAH program with Purdue. I agree with your assessment that they're a great partner here. As often is the case with a larger partner, what kind of updates should we anticipate coming out of Purdue? In other words, will they be motivated to present data based on the Phase II studies and how long should we anticipate those will take?

So, Ted, thanks for that question. We're, as you know, we're really excited about Purdue's decision to carry the program forward. We're in the process of passing the baton from our completion of the Phase I to their initiation of Phase II. And, I think the right people to ask about when they'll be sharing data is Purdue. So, I think it's better to speak with them directly on that.

Fair enough. And, then if I may, a last one. You pointed to the excitement about PI3K and I agree that the selectivity here, I think is going to be really very important. Due to this excitement in the area and the deals from Exelexis, Calistoga and others. Is this something you would potentially consider partnering earlier? Or how would that kind of -- what would your partnering strategy be around PI3K assets that you've gotten from -- in collaboration with Intellikine.

Right. Well, fortunately, because of the structure of our relationship with Purdue and Mundipharma, the PI3 Kinase program is already included in that relationship. And so it's structured the same way that the rest of our programs are, where Infinity is responsible for the global development and registration of the PI3 Kinase program. Purdue is fully funding the program and on successful registration we will commercialize in the US. They will commercialize outside the US. And, we will receive royalties on their sales outside the US that go up to 20%, and we will pay royalties on our US sales that go up to 5%. So, it's included in our existing relationship.

Okay. Awesome. Well, keep up the great work.

Thank you, Ted.

Our next question comes from Eun Yang from Jeffries.

Thanks very much. I think you guys mentioned this already. But, could you remind us when you did the deal with Intellikine, what was the reason not to in-license the oncology asset from them?

Are you speaking to their torque one, torque two program?

Yes, and even PI3 Kinase inhibitor, there is interest in cancer, so just wondering why you guys might have said it already but in the past, why you guys were focused on autoimmune diseases.

No, no, thank you for that clarification. We -- for the PI3kinase inhibitors, which are delta and gamma specific, we have licensed those rights both for oncology and inflammation and autoimmune.

I see. Okay, so it's --

So, it's not field restricted to autoimmune. I see. Thank you. And, then Phase I that is slated to begin in the second half of this year, is that in oncology or in autoimmune disease? I can tell you that given our enthusiasm for developing this in both oncology and autoimmune, we will be developing it in both those area. But, we have not yet decided the sequencing and we haven't provided guidance on whether that's going to be the two in parallel, one in front of the other. And so we'll let you know as we provide formal guidance on the development plan for the program.

There is about $25 million in development milestones Intellikine.When you start the Phase I, have you disclosed what the amount would be?

We've not disclosed those milestones. As you can imagine, they start low and then work their way higher as you get closer to Phase III development.

Okay. Thank you.

At this time, I'm showing no further questions. I'd like to turn it over to our speakers for any closing remarks.

Thank you, operator. In closing, we're pleased with where we are and excited about the opportunities we have this year. We're keenly focused on generating the data we need to articulate the paths forward for each of our development programs. With our novel pipeline of potentially break through candidates and strong financial foundation, we're well positioned to build a sustainable, fully integrated biotech company. We're committed to achieving this goal and look forward to updating you on our progress. Thanks for calling in today.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.