Infinity Pharmaceuticals Inc (INFI) 2012 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Infinity Pharmaceuticals conference call to discuss the Company's third quarter 2012 financial results. My name is Bethany and I'll be your operator for today's call.

At this time, all participants are in listen-only mode and 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 would like to introduce your host for today's call, Ms. Jaren Madden, Director of Investor Relations and Corporate Communications at Infinity. Please go ahead.

Thank you, Bethany, and good morning, everyone. Welcome to today's call to discuss our recent business progress and review our third quarter 2012 financial results. With me here today are Adelene Perkins, President and Chief Executive Officer; Julian Adams, President of R&D; and Larry Bloch, CFO and CBO. Following our remarks we will open up the call for Q&A.

The press release issued earlier today details our results and is available on our website at infi.com. Please note that during this call, we may make forward looking statements about our future expectations and plans, including clinical development milestones, the therapeutic potential of our drug candidates, and financial projections. It is 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 Annual Report on Form 10-K for 2011 and our subsequent filings with the SEC.

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 are not taking on an obligation to do so. Now I'd like to turn the call over to Adelene Perkins.

Thanks, Jaren. Welcome, everyone, and thank you for joining us on the call today. This is a very exciting and important time for Infinity. We are well-positioned with our PI3 kinase and HSP-90 program, both of which have significant near-term milestones.

We also have a solid financial base with cash runway into 2014, which, very importantly, takes us through the next key value inflection points for both of our clinical stage programs. The strength of our pipeline and financial position enables us to think strategically about how to maximize the value of our product candidates, either alone or in partnership.

With respect to our pipeline, we are really looking forward to presenting data from the ongoing dose escalation trial of IPI-145 in patients with hematologic malignancies at the American Society of Hematology, or ASH, meeting in December. We have continued to make considerable progress with this trial since our last quarterly call, enrolling 29 of 30 patients in an expansion cohort with chronic lymphocytic leukemia, indolent non-Hodgkin's lymphoma, and Mantle cell lymphoma cell lymphoma. We continue to be very encouraged by the evolving data and look forward to updating you on the trial next month.

Our ASH abstract, which includes preliminary data from the lowest doses in the trial, we published online yesterday. Julian will review the data in the abstract shortly. We also look forward to presenting our completed trial -- phase 1 trial of IPI-145 in healthy subjects at the American College of Rheumatology, or ACR, meeting on Sunday.

Finally, in our Hsp90 program, we have completed enrollment in our phase 2 trial of retaspimycin hydrochloride plus docetaxel in non-small cell lung cancer. We expect to report topline overall survival data from this trial in the first half of 2013.

In summary, we are better positioned than ever to realize our mission of building a community and Company capable of sustainably discovering, developing, and delivering innovative, important new medicine to patients that make a material difference in their health, well-being, and lives. With that, I'll turn the call over to Julian to review our pipeline.

Thank you. (technical difficulty) (inaudible) IPI-145 has a number of differentiating features, including high potency against delta, the ability to inhibit gamma, and dose proportional pharmacokinetics. We believe that these properties have the potential to translate into benefits to patients and establish IPI-145 as the best in class PI3 kinase inhibitor in hematologic malignancies as well as in inflammation.

We are excited to present initial data from this ongoing phase 1 dose escalation trial at ASH on December 10. There has been a great deal of enthusiasm about PI3 kinase inhibition in -- an increasingly validated therapeutic target. I will take a few minutes to review the data in our abstract and summarize the kind of information you can expect to see in our poster presentation next month.

As a brief overview of the data thus far -- as a brief overview, the data thus far has shown very promising profiles for IPI-145, including good tolerability with no maximum tolerated dose reached thus far and dose escalation continuing, activity seen even at the lowest administered doses, and importantly additional data to be available by the time of the poster is -- when presented at ASH. The abstract had a cutoff date of July 16 and therefore reports early activity as defined by objective response criteria at the lowest dose levels of IPI-145. This includes a partial response from the first patient enrolled in the study at 8 milligrams twice daily, or BID.

Among the patients evaluable for activity, we observed profound responses at every one of the lowest dose levels -- 8 milligrams, 15 milligrams, and 25 milligrams BID. Responses included two partial responses out of three CLL patients, one complete response out of two indolent non-Hodgkin's lymphoma patients, and one partial response in one patient with Mantle cell lymphoma.

Based on four of six evaluable patients, the CLL indolent non-Hodgkin's lymphoma and Mantle cell lymphoma, we initiated the enrollment of 30 patients (inaudible) to further explore the specific hematologic malignancy at 25 milligrams BID. We will provide an update on this cohort at ASH.

Of five evaluable patients with aggressive non-Hodgkin's lymphoma and multiple myeloma, we did not see responses at these low doses. However, we are enrolling patients with T-cell and other difficult to treat hematologic malignancies at doses above 25 milligrams BID in order to test our hypothesis that the greater inhibition of PI3 kinase gamma in conjunction with [consecutive] inhibition of delta, could lead to responses in these indications.

IPI-145 was generally well tolerated as evaluated by the investigators and our medical monitor prior to the initiation of each additional cohort in the escalation, with the goal of making optimal clinical decisions in the best interest of patients. The safety results include a single DLP of a transient grade 4 neutropenia and 15 milligrams BID resulting in the addition of three more patients at 15 milligrams BID prior to continuing the dose escalation in accordance with the 3+3 design in the protocol.

We have since continued to dose-escalate to 50 milligrams BID and beyond. Treatment-related adverse events occurred in 11 of 20 evaluable patients, with grade 3 and grade 4 events occurring in five patients. These included transient hematologic events in three patients experiencing stable disease or better who were medically managed by holding the dose with resolution of toxicity and restarting at a lower dose.

Two events, one grade 3 thrombocytopenia and one grade 3 ALP elevation, occurred in patients who experienced disease progression were subsequently taken off study. Neither event was dose limiting.

Next month our poster presentation will also include updated safety -- updated data on the safety, PK, and PD and activity of IPI-145 from the ongoing dose escalation phase, including doses above 50 milligrams BID as well as the initial patient data from the 25 milligram BID expansion cohort.

In order to provide the most complete information, we will have a data cutoff for this presentation later this month. In the presentation, you can expect to see the tolerability data from over 50 patients with more than 30 evaluable for activity. We will also provide data on the following.

Additional types of hematologic malignancies evaluated; the rapidity and depth of response, including initial analysis of lymphocytosis in CLL patients, activity observed in terms of nodal responses, partial responses, and complete responses.

And finally, updated information on where we are in the dose escalation. Immediately following the poster presentation on December 10, we will host an investor event with management and investigators from the phase 1 [HEEM] trial. We look forward to reviewing our data with you in greater detail at that time.

Beyond hematologic malignancies, we are also developing IPI-145 in inflammation. Our phase 2a trial in patients with mild allergic asthma is progressing well. This is a randomized double-blind placebo-controlled crossover study in which each patient serves as his or her own control.

It is designed to evaluate the safety, pharmacokinetics, and activity of multiple doses of IPI-145 in approximately 30 patients. The trial is intended as a signal finding study using antigen provocation to induce bronchoconstriction where the primary activity endpoint is improvement in forced expiratory volume in one second, or FEV1, a standard measure of lung function. We expect the report data from this trial next year.

We are also continuing to plan for the start of our phase 2 trial in rheumatoid arthritis. This double-blind, randomized, placebo-controlled trial will be designed to evaluate the safety and activity of multiple doses of IPI-145. We expect to provide further details on this trial once we have received feedback from the FDA on our proposed protocol.

On November 11, we will present data from our completed phase 1 trial of IPI-145 in healthy adult subjects at the ACR meeting in Washington, DC. This poster will include the preclinical rationale for the development -- for developing a PI3K delta/gamma inhibitor in rheumatoid arthritis. In addition to our clinical efforts, we are focused on identifying next generation PI3K inhibitors to build our PI3K delta/gamma franchise beyond IPI-145.

We are making strong progress in our understanding of the structure activity relationships of isoform cell activity. We expect to name our next PI3K development candidate and begin IND enabling studies by the end of the year.

I will now provide a quick update on two trials of our potent and selective Hsp90 inhibitor, retaspimycin hydrochloride. During the third quarter, we completed patient enrollment in our phase 2 double-blind randomized placebo-controlled trial of retaspimycin hydrochloride plus docetaxel in patients with non-small cell lung cancer. This trial enrolled 226 second or third line patients who are heavy smokers and who are naive to docetaxel treatment.

We have two co-primary endpoints -- overall survival in the total population and overall survival in patients with squamous cell histology. We will be also prospectively testing the relationship between survival and a predictive biomarker originally identified by our in-house molecular pathology group. Topline overall survival data from this trial is expected in the first half of 2013.

Our second trial is an exploratory phase 1b/2 trial evaluating retaspimycin hydrochloride plus everolimus in non-small cell lung cancer patients whose tumors have activating KRAS mutations. We are continuing to evaluate a range of doses and schedules for this combination. As a result, we now expect to report topline data from the phase 1b portion of this trial in 2013. We look forward to data readouts from both trials next year and continue to be enthusiastic about the therapeutic potential for Hsp90 inhibition.

Either of the phase 2 non-small cell lung cancer trials would lead to a pivotal (inaudible) phase 3 study.

In summary, we are making strong progress advancing our pipeline. We have worldwide rights to our entire portfolio and we are on the cusp of key data from the trials of IPI-145 and retaspimycin hydrochloride. In addition, we are pleased with the efforts that our discovery team is making towards identifying the next development candidate to enhance our PI3 kinase franchise.

We look forward to updating you on our continuing progress at ACR and ASH. And with that, let me turn the call over to Larry to review our financial results.

Thank you, Julian. Before reviewing our third-quarter financial results, let me remind you that the last quarter we initiated a process with the SEC which is known as preclearance, in order to seek feedback on the accounting treatments, specifically for non-cash items related to our previous strategic alliance with Purdue and Mundipharma, including the extinguishment of debt and sale and issuance of our common stock. This process was recently finalized and recorded a non-cash, one-time gain of $46.6 million in our P&L and increased equity on our balance sheet by $74.4 million.

We have not recorded any revenue during the third quarter of 2012. Our total revenue was $23.3 million for the same period in 2011, which was composed of $22.3 million for reimbursed R&D services performed under the strategic alliance, and $1 million from the amortization of deferred revenue associated with the grant of rights and licenses under the alliance.

R&D expense for the third quarter of 2012 was $21.5 million compared to $29.4 million for the same period in 2011. The decrease in R&D expense for the quarter compared to the same period last year was primarily related to the discontinuation of R&D activities for our hedgehog pathway program.

G&A expense for the third quarter of 2012 was $6.3 million compared to $5.5 million for the same period in 2011, and increase in G&A expense for the quarter compared to the same period last year was related primarily to a charge taken in connection with restructuring activities.

Net income for the third quarter of 2012 was $18.4 million, or a basic earnings per common share of $0.57 and a diluted earnings per common share of $0.52 compared to a net loss of $11.9 million, or a basic and diluted loss per common share of $0.45 for the same period in 2011.

As of September 30, 2012, we had total cash, cash equivalents, and available for sale securities of $189.4 million compared to $104.6 million at June 30, 2012. Cash inflows during the quarter include net proceeds of approximately $83 million from the completion of our equity offering. And we also received $27.5 million in cash and extinguished our long-term debt following completion of the sale and issuance of approximately 5.4 million shares of our common stock to Purdue. Additionally, all warrants held by Purdue and Mundipharma have expired.

Now with less than two months remaining in the year, I'll provide a quick update on expectations for 2012. We expect total revenue for the year to be $47.1 million, consisting of $45 million for reimbursed R&D services from Mundipharma and $2.1 million through the amortization of deferred revenue from our previous strategic alliance with Purdue and Mundipharma.

We expect operating expenses for the year to range from $125 million to $135 million, revised from earlier expectation of $135 million to $145 million.

We expect our net loss for the year to range from $35 million to $45 million, and we expect to end the year with a cash and investment balance ranging from $155 million to $165 million, increased from the earlier expectation of $65 million to $75 million.

In the absence of additional funding for business development activities and based on our current operating plans, we expect our current cash and investments provide us with a cash runway into 2014. Importantly, we have the financial resources required to use our ongoing trials to -- to see ongoing trials through the next key inflection points. Now let me turn the call back over to Adelene.

Thanks, Larry. I hope this call (technical difficulty) appreciate (technical difficulty) with a great opportunity (inaudible) (technical difficulty) I'd like to take a moment to acknowledge the contributions of our (technical difficulty). Steve resigned to avoid the potential for a conflict of interest with his work as the Executive Vice President of Corporate Development at Biogen Idec, which is developing its own inflammation program. Steve has, however, agreed to serve as an advisor to Infinity in non-conflicting areas and we are pleased that we will continue to benefit from his experience, knowledge, and insight.

There is no question that we would not be the Company we are today without his vision and inspiration. For me personally, Steve has been a great friend and is a great friend, mentor, and partner, and I look forward to his ongoing counsel as we continue to build the Company. The best is yet to come.

With that, I'll turn the call over to our operator for questions.

(Operator Instructions) Joel Sendek, Stifel Nicolaus.

Hi. Thanks a lot for going over all the details of the abstract. I guess a couple things I'm confused on for 145. The abstract lists 20 patients and you described the fact that you're going to have 30 more. Are those going to be all the 25 milligram dose or will they go up above 25, and how much higher? Thanks.

Thanks for your question, Joel. It's actually a composite of -- and I apologize for the confusion. It's a composite of the 20 patients included in the abstract. Additional escalations have occurred since that time, so we are in excess of 50 milligrams BID and we will report on data for those patients as well.

In addition, we opened the cohort of 30 milligrams BID. That's near completion. We have 29 of 30 patients enrolled. And to the extent that we'll have mature data in our database, we'll be able to report on safety of over 50 patients -- patients evaluable, roughly 30-plus patients which will include the dose escalation as well as the expansion cohort.

Okay. So it's going to be pretty much -- but the majority, then, presumed -- the majority of the additional patients will get presumably will be the 25, 35, 50 and higher, or pretty much just those three doses?

So there would be doses even beyond 50 and I misspoke before. It's the expansion cohort is [30] (technical difficulty) patients at 25 milligrams BID. So the maturity of the data is really dependent on when the patients were enrolled. But it will be a mix of both the escalation phase as well as the expansion phase.

Okay. So, sorry, just -- maybe I'm a bit obtuse here. But the 30 patients, those aren't all at 25 milligrams.

That's correct.

Okay.

The 30 just is an aggregate number of the escalation period as well as the expansion cohort to the extent that we have mature data and have cleaned the data in our database.

Got it. Okay. Thanks a lot.

(Operator Instructions) Wayne Rothbaum, Quogue Capital.

(technical difficulty) Joel's question. Is that 30 on the evaluable patients, is that on top of the 11 that you've already reported on or is it including the 11? So, in other words, will it be (multiple speakers)?

It's including.

So it should be 19 more evaluable patients, then?

That's correct.

Okay. So if we use this on a 3+3 basis, then, we probably would be talking about 10 patients that would be evaluable from the expansion cohort additional at 25 milligrams and maybe another 9, 10 patients from the dose escalation.

So, Wayne, let me be pretty clear about what we talk about as evaluable. So typically, we would like to see patients with at least two cycles of treatment so that they are fully evaluable. And as you know, two cycles of treatment would include a PET CT scan.

However, other patients are evaluable on the basis of their lymphocytosis, depending on the disease -- for example, in CLL, or a reduction in their lymphadenopathy by palpation, or if it's in the case of multiple myeloma, it's simple blood tests. Or in the case of T-cell malignancy, particularly cutaneous T-cell malignancies, there are visual observations as well.

So we will aggregate the data, make sure it's clean, make sure it's reviewed and in our database. And we'll report on as many patients as can be evaluated, which we estimate now will be around 30.

Thank you.

(Operator Instructions) Joel Sendek, Stifel Nicolaus.

Hi. Thanks for the follow-up. I did want to ask about also the transient DLT you got. Did it go away after you dose reduced? Or was it transient because you stopped dosing?

The answer is both. It was transient. We held the dose and then the neutropenia resolved and we continued treatment.

So at the time, when you're in dose escalation, we had to take the DLT seriously and manage the patient. When we -- this was at the [15] milligram BID cohort -- we actually added another three patients. In fact, we enrolled four patients. It was oversubscribed, basically the 3+3 escalation rules, and saw no further problems and we continued to dose escalate.

So in all cases, the neutropenias resolved. They're transient in nature and are not serious issues in terms of managing patients.

And is there any reason for why this occurred on a relatively lower dose? Was it any -- (multiple speakers) go ahead.

So, please appreciate, these are heavily pretreated patients. They are phase 1 patients that have had multiple prior lines of therapy. They have abnormal hematopoiesis because of bone marrow involvement of their disease. And this is irrespective of the malignancy, but this is very common to see in this patient population.

In some cases now we've allowed patients with grade 3 neutropenia to be actually enrolled in the trial. It's very common in these patients.

Okay. Thank you.

Michael Yee, RBC Capital.

Hey, Julian. Can you hear me okay?

Very well.

Okay. So, I'm sorry if you went over that, and I think maybe Joel touched on it. But can you just walk through -- did you think that the neutropenia was drug-related or you thought it was related to prior disease? Can you just walk through that one more time for me? I jumped on late.

And then another question is in regards to the rate of patients who actually continued on therapy. Can you walk through the patients who had dropped off and why? And then in regards to the median number of cycles, is the median number of cycles that were reported in the abstract [thought low] because of the number of follow-ups -- the (technical difficulty) follow-ups were just short?

You have three separate questions. One, on neutropenia, in general, this is a very well-managed phenomenon. Whether it's drug-related or not, it's very difficult to say. So when in doubt, we call it drug-related -- possibly drug-related because we default to the most conservative assessment.

When we have obviously a larger number of patients and when we are in randomized studies, we will actually be able to determine that, whether it's a disease-related phenomenon or whether there's an actual drug contribution to it. Patients -- could you repeat your second question?

The second question was on the number of people who stayed on -- in the trial versus the discontinuation rate. Why was the rate of discontinuation, I guess, a bit high?

So the only patients who discontinued were patients that had disease progression. And, as I said, this is an all-comers study. At these low doses, patients with myeloma and aggressive -- some of the aggressive lymphomas actually discontinued due to disease progression.

Okay. So there were no -- there was nobody that discontinued due to AEs.

That's correct.

Okay. And then the other question was the median number of treatment cycles was two, one through eight. Is it two because of a combination of the discontinuation rate as well as just lack of follow-up?

Yes. So -- no, no. There's a discontinuation rate for disease progression that occurred in five patients. So it's just such a small number, I'm not sure that the median is particularly instructive here. But the patients who had stable disease or better continued to stay on drug for long periods of time.

Okay. And last question, I promise. In regards to the neutropenia, if the grade 4 was just -- that's worth one sign of dose-limiting toxicity, and you've continued to dose much higher, is it reasonable to suggest that this is not a problem, then, if you've continued to dose at (technical difficulty)?

Yes. I think this is one of the more manageable issues in this patient population. Neutropenia is very common -- commonly seen. And it's very manageable by, first of all, holding the dose and allowing the neutropenia to resolve or stabilize, and then retreating at a lower dose.

And these are a physician sort of -- these are good judgment calls made by very expert phase 1 physicians who are very used to treating patients in this setting.

And, Michael, I'll just remind you, to your question about the median number of cycles, that this phase 1 trial started in November of 2011. So, by the July cutoff date, the maximum feasible that a patient could have been on was eight cycles. So that's just the gestation of the trial as it's maturing and some of the patients who were on for one cycle had only been on the trial for one cycle.

Right. Right, right, right. Okay. Perfect. Thank you.

Jason Kantor, Credit Suisse.

Thanks for taking the question. I just wanted to go from the details of the data to maybe something a little bigger picture, and there's a lot of data out there for other drugs and similar drugs. I'm just wondering if you can give us some sense of how you are looking forward at the pivotal type clinical development for this.

Is the idea to go as broad as possible to look at some very discreet patient subsets? Do you think you can move it rapidly into a pivotal study if the phase 1 shows robust efficacy, like it seems that it might be?

Jason, thank you. That's a very prescient question. First of all, let me talk about the features of our drug that we think are very, very important and allows it to differentiate from other agents in the space.

So, first, we are the first delta/gamma kinase inhibitor in the field, and so differentiates in terms of we have extreme -- extremely low -- I'm sorry, extremely high potency for the delta isoform. We can tune in gamma as we dose escalate and determined that that's tolerable. So we believe that the -- tuning in gamma is very important in achieving deep and durable responses.

And lastly, we have a nice dose-proportional increase in exposure with increased dose. So that places us in a very favorable position with early activity seen at even very, very low doses. The thinking here is to try to optimize the dose regimen such that we have tonic inhibition of delta; that we can tune in gamma as needed, depending on the malignancy. And given the totality of the data we have, albeit early, we see clear paths to multiple approaches in registration.

So we will go as broadly as needed, and as the data allows us to proceed. Obviously, it's a little premature to think about what's the exact registration path, but we're constantly thinking about this. We're in constant discussions with our investigators and we plan to hold advisory meetings on to disease-specific indications to chart out what is the best path for registration.

Okay. And if you could just explain exactly how that extra kick from the gamma is expected to give you the better efficacy, and on what measure, clinically, will you look to get confirmation that that set is actually truly playing out? Is that just the dose and response measure?

Yes. I mean, actually, the empirical data, of course, with different malignancies, allow us to make assessments of the strength of response, the depth and durability of that response, of course, by malignancy.

What's important here is delta signals through receptor tyrosine kinases. And gamma differs because it signals through GPCRs and chemokines. And we believe the interplay of delta and gamma, both on B and T cells, is very, very important in controlling the innate and adaptive immunity. So that's very important, of course, in inflammation. But it also is turning out to be very important in he malignancies.

And so what we are learning is that T cell is critically important to have, to see activity in the diseases we've indicated. But what gamma also allows for is the trafficking of cells, and particularly the homing back to the niche, mainly the lymph node. And we think that gamma is very important in abrogating that lymphocyte trafficking.

And all of which -- so if you combine the concepts of the innate and adaptive immune systems, both for inflammation as well as for he malignancies, we think that there's a strong interplay for delta and gamma.

Thank you.

I am showing no further questions. I would like to turn the call back to Adelene Perkins for any closing remarks.

Thank you, everyone, for joining us today. We look forward to providing you with further updates on clinical trials in the coming weeks and months. Have a good day.

Ladies and gentlemen, this does conclude your conference. You all may disconnect and have a good day.