Infinity Pharmaceuticals Inc (INFI) 2014 Q2 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 second-quarter financial results. My name is Kevin and I will be your operator for today's call. (Operator Instructions) Please be advised 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, Kevin, and good morning, everyone. Welcome to today's call to discuss our recent business progress and review our second-quarter 2014 financial results. With me here today are Adelene Perkins, President and Chief Executive Officer; Julian Adams, President of R&D; and Larry Bloch, EVP, CFO, and CBO. Following our remarks, we will open up the call for Q&A.

The press release issued earlier this morning 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 product candidates, and financial projections. It is possible that our actual results may differ materially from what we project today due to the considerations described in the Risk Factors section of the quarterly report on Form 10-Q for the first quarter of 2014. 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 would like to turn the call over to Adelene.

Thanks, Jaren. Good morning, everyone, and thank you for joining us. Over the past quarter we have continued to advance our clinical development program for IPI-145 to achieve our vision of having the best-in-class PI3-kinase medicines. Our first priority is to enable rapid path to approval as a monotherapy in indolent non-Hodgkin lymphoma, or iNHL, and in chronic lymphocytic leukemia, or CLL, through our DYNAMO and DUO studies, respectively.

The second component of our clinical development plan is to develop chemo-free regimens for patients with hematologic malignancies. To this end, we are planning to initiate DYNAMO+R, a Phase 3 study of IPI-145 in combination with Rituxan in patients with relapsed follicular lymphoma. We expect DYNAMO+R to start by the end of the year.

While eliminating the need for chemotherapy would represent a significant advance, patients remain in need of a cure. Combining IPI-145 with new therapies in development has the potential to further transform the treatment landscape, beyond liberating patients from chemotherapy. As such, the third component of our plan is directed toward achieving more curative outcomes by evaluating IPI-145 in combination with recently approved novel therapies and novel drugs in development, and we look forward to sharing the details of the trials with you in the coming months as we move forward with these studies.

Our belief in the potential of IPI-145 to become the best-in-class PI3-kinase inhibitor is reflected in the investments we are making both with respect to our clinical development plan and in our strategic agreements. Yesterday we announced that we purchased an option to buy out all future royalty payments to Millennium for worldwide sales of IPI-145 in oncology.

We are pleased with the flexibility and upside potential that this buyout option provides. Larry will review the amended agreement shortly.

We think encouraging data and worldwide rights to IPI-145, we are continuing to assess value-creating strategic partnerships. We are pleased with the nature of the conversations that have taken place and continue to work toward finding the right partner who shares our vision and commitment to improving outcomes for these patients and who brings the strategic, financial, operational, and commercial resources necessary to accelerate the global development and optimize potential of IPI-145.

In summary, we are pleased with the progress we are making across the Company and look forward to providing additional updates over the coming months. Now I will turn it over to our President of R&D, Julian Adams, to briefly review our development program.

Thanks, Adelene. Our vision is to establish IPI-145 is the best-in-class PI3-kinase inhibitor, delay or obviate the need for chemotherapy, and further improve outcomes for patients. Our initial indications are follicular lymphoma and CLL, hematological malignancies in which we have generated very encouraging data.

DYNAMO is our first study designed to enable registration. This Phase 2 study is expected to enroll approximately 120 patients with refractory indolent non-Hodgkin lymphoma, which includes follicular lymphoma, small lymphocytic lymphoma, and marginal zone lymphoma. We expect the majority of patients enrolled to have the follicular histology.

IPI-145 is being administered at a dose of 25 milligrams twice daily, and the primary endpoint is the overall response rate. If we are able to confirm the response rates that we have reported in our Phase 1 study, we believe we will have a compelling rationale to seek an accelerated approval on the basis of the DYNAMO data.

Later this year, we expect to initiate DYNAMO+R, a Phase 3, randomized, double-blind, placebo-controlled study comparing IPI-145 in combination with rituximab, versus placebo-plus-rituximab, in patients with relapsed follicular lymphoma. DYNAMO+R has the potential to serve as the confirmatory study for DYNAMO.

To further expand the potential of IPI-145 in iNHL, we plan to begin a Phase 2 combination study in treatment-naive patients later this year. In addition to the DYNAMO+R and frontline study in iNHL, we expect to initiate a third study of IPI-145 in hematologic malignancies by the end of the year. We will provide additional detail about these trials in the coming months.

Moving to CLL, IPI-145 has shown encouraging activity in the relapsed and refractory setting, as well as interesting early data in the treatment-naive setting. We are currently enrolling DUO, a Phase 3 randomized, open-label study in approximately 300 patients with relapsed or refractory CLL. This registration-supporting study is designed to evaluate the safety and efficacy of IPI-145 administered at 25 milligrams twice daily, compared to ofatumumab, with progression-free survival as the primary endpoint.

Looking across our program and the field more broadly, I continue to be encouraged by the potential for a total paradigm shift in the treatment of hematologic malignancies. At Infinity, in addition to evaluating the potential clinical benefit of IPI-145, we are working to advance our understanding of the underlying biology of these diseases. Specifically, we are focused on more fully elucidating the role of PI3-kinase-gamma inhibition as well as identifying synergistic combinations of targeted therapies so that we can better leverage the unique profile of IPI-145 with the hope of providing deeper and more durable responses for patients.

In September, I will present some new and evolving the data supporting the importance of PI3K-gamma inhibition at the AACR special conference targeting the PI3-kinase mTOR network in cancer.

We hope to present further mechanistic insights emerging from our preclinical and translational research at ASH in December. We are also submitting clinical abstracts to ASH which would provide incremental updates on our Phase 1 study in hematologic malignancies.

Turning to IPI-145 in inflammation, our clinical studies in rheumatoid arthritis and asthma are ongoing. The ASPIRA trial is our Phase 2 double-blind placebo-controlled study of IPI-145 plus methotrexate in approximately 300 patients with moderate to severe rheumatoid arthritis.

We are also conducting an exploratory Phase 2a randomized, double-blind, placebo-controlled crossover study of IPI-145 in patients with mild allergic asthma. We expect to report top-line data on both of these trials in the second half of this year.

Beyond IPI-145, our scientists are dedicated to building a portfolio of additional PI3-kinase-delta and/or PI3-kinase-gamma inhibitors. IPI-443, our second PI3K-delta/gamma development candidate, gives us strategic optionality to position our PI3-kinase-delta/gamma franchise in oncology and inflammation. After we analyze the data from our ongoing inflammation trial, we plan to determine our development strategy for IPI-443.

In summary, we are very excited by the promise of IPI-145 and believe in its potential to become the best-in-class PI3-kinase inhibitor in hematologic malignancies. We are emboldened by the regulatory precedent set by the recent FDA approval of the first PI3-kinase inhibitor; and we hope to confirm the benefit of combined PI3-kinase-delta and -gamma inhibition in our DYNAMO and DUO trials.

These two studies are just the beginning for us. We aspire to achieve chemo-free regimens for patients and enable deeper and more durable responses. We continue to augment our understanding of the biology of PI3-kinase-delta and -gamma and novel synergistic combinations, with the aim of providing even better treatment regimens for patients.

Beyond hematology, we anticipate data readouts from both of our trials in inflammation by year-end. With that, I will turn over to Larry to discuss our financials for the quarter.

Thanks, Julian. We continue to be in a strong financial position to execute on our strategic development plan, and our investments reflect our belief in the broad potential of IPI-145. Yesterday we announced that, in exchange for a one-time upfront payment of $5 million, we now have the option to terminate our obligations to pay Millennium future royalties which range from 7% to 11% of net sales on IPI-145 in oncology.

We have the ability to exercise the option on or before March 31, 2015, by paying a one-time exercise fee of $52.5 million. If we do not exercise the option, our royalty obligations in oncology will remain in effect. We are pleased to have the flexibility of this option, which has the potential to provide long-term value to our shareholders.

I would now like to provide an overview of financial results for the second quarter of 2014. As of June 30, 2014, we had total cash, cash equivalents, and available-for-sale securities of $141.7 million, compared to $172.1 million at March 31, 2014. In addition, we have in place a $100 million debt facility with Deerfield that provides important financial flexibility by allowing us to access these funds through February 2015, but without any obligation to do so. And to date we have not drawn down any funds from this facility.

R&D expense for the quarter was $28.2 million, compared to $26.1 million for the same period last year. The increase in R&D expense reflects higher clinical investment in IPI-145.

G&A expense for the quarter was $7.1 million, compared to $6.7 million for the same period last year. The increase in G&A expense was primarily due to increase in early commercial development costs.

Interest expense for the quarter was $2.9 million and is a non-cash item related to the amortization of the loan commitment asset recognized on the debt facility with Deerfield. There was no interest expense recorded for the same quarter last year.

Net loss for the quarter was $38 million, or a basic and diluted loss per common share of $0.78, compared to $32.6 million or basic and diluted loss per common share of $0.68 the same period of last year. Our financial guidance for 2014 remains unchanged.

In closing, we are in a strong position with registration-enabling clinical studies underway, a validated path to regulatory approval, a vision to liberate patients from chemotherapy while further improving patient outcomes, and strong IP protection into 2030. All these components together provide a solid foundation on which we are building a fully integrated biotech company.

With that, we will open the call for Q&A.

(Operator Instructions) Michael Yee, RBC Capital Markets.

Hey, guys, thanks. Good morning. Just a few questions. On the Phase 2 iNHL study that is ongoing, that could serve as a pivotal study, can you give us a little more details on how that enrollment is going, whether you think you could complete that in first-half 2015?

You think you can get data by the end of 2015? Is that what you are thinking?

Second question is, with the announcement yesterday in amending the Millennium deal, can you help us understand what events or what things would happen before March 31 that would trigger your decision to do that? And how would you pay for that?

Then the third question is obviously Gilead's drug just got approved, so we have a label. We have all seen that label. What do you think you would have to show in your studies, particularly that Phase 2 iNHL study to perhaps not have a black box? Thanks.

Michael, let me handle the first and third; and Larry will talk to you about the Millennium question. first of all, we haven't provided any specific guidance on enrollment.

Enrollment is going well. We are at many different sites, including in the US and in Europe. And your general assumptions are not beyond consideration, but we haven't provided specific guidance on enrollment.

With regard to the label from Gilead, obviously we have seen the label as well. I think it is way too early to speak about class effects in terms of categorizing adverse events.

Patient safety is paramount to our drug development. First, do no harm, of course. And we continue to monitor the aggregate safety database.

What I can say is, from our Phase 1 where we have enrolled over 200 patients, we are generally very pleased with the safety profile and find that most of the adverse events are either asymptomatic or very manageable with dose interruptions and interventions -- common interventions in medicine.

And we can retreat those patients at full dose and maintain patients on study, so we feel very good so far about our safety. But obviously, the Phase 3 data will have to be looked at and scrutinized appropriately when we complete the study.

Before Larry answers that other question, just to follow up a little bit more on that, typically the FDA can be conservative as it relates to class effects. I think any -- experience shows that.

But on the other hand, I think it suggests that that black box is really related to specific deaths related to some of those events. So do you feel that if you didn't show those types of deaths, which obviously it didn't really appear to happen in Phase 1, that would be something that makes a compelling argument?

Indeed. Of course, nobody wants to have drug-related deaths and, obviously, we continue to basically manage the treatment of our patients, and that is what we have focused on in the conduct of the study, both in terms of inclusion/exclusion criteria for patients, but also if -- the actual management of patients in their adverse events, which we now know from the Phase 1, the extensive Phase 1 body of data, we think that and hope that we have a favorable safety profile.

And if our efficacy profile continues to hold up the way we saw it in Phase 1, then I think we have clearly a very palpable approach to an accelerated filing and accelerated approval.

Mike, I would just add more broadly, the approval of new drugs in these heme malignancies has obviously gotten the entire investigator and patient community excited. There is a lot of enthusiasm for bringing new mechanisms to bear, and there are a lot of people who share our enthusiasm for what a delta/gamma inhibitor can bring, not only as a monotherapy, which we hope to show in the DYNAMO trial, but then as an agent that can be combined with some of the other novel therapies to really get to more curative outcomes.

So our clinical team and med affairs team is out and continues to be enthused by the support of our investigators. And particularly in our DYNAMO study, given -- as Julia mentioned -- we have had in the indolent non-Hodgkin's Phase 1 over a 70% response rate and CRs that, because it is a single-arm trial, patients know that they will be getting 145 and that is a very -- that helps a lot with enrollment.

Okay. Then Larry?

Morning, Mike. Just to be clear, the March 31 is an arbitrary timeline; there is no magic to it. It happens to be the end of most Japanese companies' fiscal years.

But your question is: What could we potentially accomplish in advance of that? And how might we finance that option, should we exercise that option?

In terms of the -- what we could accomplish prior to that, in terms of clinical data readouts, the only thing we have guided to in 2014 is the RA and asthma readout. which we have reiterated we expect to happen by year-end. We'll obviously be instituting some -- initiating some additional studies in that same time frame as well.

In terms of how we might finance it, we always look at evaluating the cost of capital point when a decision is being made. But I know, as you are intimately aware, we put in place a financing option with Deerfield to be able to call down up to $100 million by the end of February of 2015; and this Millennium restructuring that we announced yesterday is an additional real option.

So we are really able to consider using one option to effectuate another option. But it is not the only financial instrument we might consider at that point in time.

Thank you.

If I can just add, we are in -- obviously to spend dollars to re-acquire the royalty rates, that reflects our emboldened position that we really believe 145 is a winner.

Yes, so we obviously wouldn't even be allocating the $5 million to purchase the option if, as Julian and Adelene said in their opening remarks, we didn't believe even more so now than in the past, based on evolving data and the evolving competitive landscape, that we think we have the potential for IPI-145 to be the best-in-class PI3K inhibitor in hematologic malignancies.

Okay, great. Thanks.

Cory Kasimov, JPMorgan.

Hi, good morning. This is Whitney on for Cory. Can you guys hear me okay?

Yes, we can, Whitney.

Yes, coming through great.

Okay, great. So with all those, I think most of my questions have been answered. So I guess I will ask about the incremental update at ASH.

Can you remind us, as of the last update, if there were any unevaluable patients? So should we be expecting some incremental updates on response rate, or is it mostly just a duration update?

I would say on both counts there would be an incremental update on both response rate. This obviously depends on which disease, because we have multiple disease subtypes. But there will be incremental information on response rates for patients who have been longer on study, as well as durability. So on both counts, yes.

Got it. Thanks for taking the questions.

Mike King, JMP Securities.

Thanks for taking the questions. Good morning, guys. A couple things.

Just curious about the option on 145. I think it is the first time that I have seen a payment to acquire an option, which makes me think perhaps that your agreement didn't previously allow an approach to Millennium to buy down the royalty.

I am just curious about why the two-step process, instead of just approaching them when you thought the time was right and asking them if you could buy down the royalty.

This is Larry. Nice to talk to you, Mike. From our perspective, the value of optionality is it puts the decision-making explicitly in the hands of Infinity over a time frame that we think is relevant. So as opposed to waiting until some later date, we are big believers in doing things that are strategically important ahead of time, so to get our ducks in a row.

So in general, I think this meets our philosophy of management, which is: take variables and turn them into constants.

Okay. In your view, is this a way to facilitate or enable partnership discussions? And do you have any update on that front?

As you know, Mike, partnerships have been an important part of building Infinity to date and it has provided a source of nondilutive capital. As we go forward, this is the first time that we have had the luxury of having a Phase 3 asset with good data in an exciting field.

So there has been a high level of interest. We are gratified that prospective partners share our belief in the potential for a dual delta/gamma inhibitor and for doing combo studies.

So independent of the Millennium buydown, we are engaged in a number of discussions, and it is a competitive process. There aren't many good Phase 3 assets, and this is the latest-stage PI3-kinase that is available for partnering.

So we do not believe that we needed to do the Millennium transaction in order to engage in a partnership. We are now evaluating who we think brings the most strategic, financial, and operational assets to bear.

And also we are looking at, for whom do we believe 145 can really be a strategic value driver for them, so that we enter a partnership where developing 145 is really important to both parties? So while of course, we can't -- it wouldn't be wise to provide guidance on when we will enter that partnership or our expectations, you can rest assured our expectation is that we will be developing 145 in partnership.

And as soon as we have finalized and executed on that decision, you all will be the first to hear.

Okay. Well, appreciate that. (multiple speakers) I'm sorry, go ahead.

I said you specifically, Michael. We will make sure that you hear it (multiple speakers) everybody else.

Yes, please do that. Definitely before the market closes, too. (laughter)

I can't promise that.

Just on autoimmune, it seems to be dragging on. I know last quarterly call you guys got asked about it; and I forget exactly what language you used, but it had to do with analysis of the data. It just seems like the data is taking an awful long time to analyze.

So what are the last remaining gating factors in opening the envelope on those two programs? Thank you.

The Phase 1 data, we have completed enrollment, and it is really continuing to curate the data because patients continue on study. We have patients out over two years and still on study, and so it is a continuous duration of the data. So that would be reflected in abstracts submitted for ASH.

In addition, on our in-plan studies, the RA data has -- there has been no reguidance on that. That has been our plan, to share the data by the end of the year.

On asthma, we did decide to add an additional cohort to that study, which is why we are also guiding that we will provide that data at the end of the year.

Regarding the RA, obviously that is a large, 316-patient study, and there is a 12-week period for evaluation. So we are confident that we can reiterate our guidance that 2014 is when the data will be presented, top line.

Ian Somaiya, Nomura Securities.

Hi, this is actually Do Kim in for Ian. Thanks for taking my questions. A couple of them.

First, I was wondering if you could comment on how you are prioritizing your cash utilization.

Second is a little more hypothetical, looking forward past your current studies, if you had any thoughts on potential accelerated development strategies for frontline CLL. In particular, whether the FDA and EMA could accept MRD-negativity as a surrogate endpoint for PFS and survival.

Great, this is Larry. I will take the cash question. It is very much our top priority to allocate and husband our cash carefully to maximize the ability to develop IPI-145. We said that we're investing between $170 million and $180 million this year; and to a first approximation, that is focused on IPI-145.

We are obviously continuing to bring IPI-443 along. There is additional work being done in Julian's team in terms of developing earlier-stage programs, some within the PI3K family, some outside of the PI3K family.

But the short answer to your question is our top priority by a long stretch is optimizing the development and accelerating development of IPI-145.

With regard to your question on MRD-negativity in CLL, no drug to date has been approved on that basis. However, the FDA is very interested in using new technology. The flow cytometry assessment of MRD negativity is akin to a complete pathological response in breast cancer; so I think the FDA is very open to seeing those kind of very deep responses.

But they also need to be linked to durability. So we are obviously following that. It is the case that no drug as a single agent can achieve that kind of endpoint to any significant extent with durable responses.

So this is about optimizing for CLL what are the meritorious combinations. Hopefully we can also get away from chemo regimens that are commonly associated with younger patients in CLL. So we are looking at all of these parameters, and clearly have MRD-negativity as a goal.

And I think eventually the FDA has shown itself to be very up to speed with the improvements in scientific assessments. And we hope to be part of that cadre of companies that can bring new therapies from patients on new and better endpoints that reflect the long-term durability of eradicating the disease.

Great, thank you.

Katherine Xu, William Blair.

Hi, good morning. My first question is on the restructuring of the agreement with Millennium. Just curious. By just buying down royalties now versus by March of next year, what incremental information are you going to get to actually push you to do this buydown during this period, in terms of data or other areas, if it is not being pushed by a partnership decision?

Also, maybe if you could comment on how -- whatever rationale you've had or Millennium had to actually reach this $52.5 million number?

I will take the second one first. That is a negotiation, and there is -- everybody has their spreadsheets and just cash flows. Ours is driven by our strong belief in the potential for IPI-145 to be the best-in-class PI3K program in hematologic malignancies.

And so you have your own model for what that means, and what 7% to 11% of royalties could mean on a net present value basis. So you probably could negotiate it just as well as we did.

In terms of the actual data stream between now and the end of the next three quarters, as I said, based on public guidance perspective, the only clinical data readouts that we guided to are the RA and asthma studies. We will be initiating additional hematologic malignancy studies.

We will be presenting additional data in terms of some of the underpinnings of the gamma hypothesis as well as additional data. We hope -- because we will be submitting abstracts for ASH -- to do so. And then we will provide additional guidance at the JP Morgan conference in January in terms of what additional things could occur in 2015.

But that is the public data that people can be looking towards.

As Larry mentioned earlier, Katherine, we just have always built the business on trying to build, create as much optionality as possible. And we think this, for a $5 million payment, which is roughly 1% of our market cap, we think that is a really smart investment for us to have the option to relieve a 7% to 11% royalty obligation. So we just like creating that optionality at this point in time.

We have been able to fit that into our capital expense structure without requiring reguidance for 2014. So we think it is completely consistent with our trajectory that we have guided since the beginning of this year.

Okay. Well, I didn't quite catch AACR. Julian, you said there is going to be some data on the gamma mechanism. Did you also say that you are going to present some data on combination?

I did. I will be presenting on September 16 in Philadelphia at a special AACR conference on the PI3-kinase mTOR pathway. This is an invited talk, but there is a lot of enthusiasm, obviously, in the field.

I will provide additional insights that we have developed from our own laboratories, and that is evolving, and we'll continue to build on that throughout the rest of the year. And we have submitted abstracts also for ASH to further amplify on our learnings.

Okay. Then lastly, are you still pursuing T-cell lymphoma?

I will remind everyone, as part of the Phase 1, we had a very impressive response rate in T-cell lymphoma; 55% in PTCL, including CRs. So we are learning and figuring out with expert KOLs and advisors what will be the next steps for T-cell lymphoma.

We are the only targeted therapy to have shown a small molecule -- small molecule to have shown significant activity in this disease. So we are very emboldened by the data we have seen so far.

Thank you.

Matthew Andrews, Wells Fargo Securities.

Good morning. Thank you for taking the questions. We are starting to see MRD-negativity as a primary and secondary endpoint in a number of CLL studies. So, Julian, could you discuss how MRD-negativity is being discussed in the Phase 2 investigator study that is being conducted at Dana-Farber, where 145 is being combined with FCR in young, fit, first-line patients?

Second of all, are we to assume that for 443 an IND will not be filed till 2015, based on what the inflammation studies show for 145 later this year? Thank you.

I can only comment at a very high level for the investigator-sponsored study. As you know, it is not our study; it is being conducted at Dana-Farber with the principal investigator being Dr. Matt Davids. He wrote us a proposal to explore MRD-negativity as a primary endpoint in combination with FCR and, obviously to improve on that, what is seen with FCR, and very excited about exploring IPI-145.

So we will just observe and look at what data he eventually is able to garner. And we continue to support investigator-sponsored studies that are meritorious and have good hypotheses and really push the edge of the scientific exploration, in addition to our own Company-sponsored trials which are more designed to achieve regulatory approvals and are conducted in a different way with a different level of rigor.

The second part of your question, remind me? Ah, 443, yes. I think, yes, it is a safe assumption that we are waiting for the readout of IPI-145 in inflammation to make further strategic decisions about how to develop 443.

Okay, thank you.

(Operator Instructions) Navdeep Singh, Goldman Sachs.

Hi, this is Lisa in for Navdeep. Thanks for taking our questions. Maybe framing the earlier questions a little differently, have you seen any of Zydelig's black box adverse events in your clinical studies? And then separately, what are your thoughts on their pricing?

Again, in the aggregate, the data we have analyzed most closely are the Phase 1 data, and we have not seen an intolerable adverse event profile. As I will repeat, as I have said before, we have learned how to manage patients on study. So it is -- because of the nature of the low rate of mitotic cell division in these studies, meaning they are indolent diseases, we can comfortably institute drug holidays to manage adverse events, and then have patients stay on study, and re-treat patients full dose.

We have learned how to do that in the course of our Phase 1 investigation, and we are applying that to our Phase 2 trials and our Phase 3 trials. So we feel comfortable with our approach.

Then Lisa, on your second question, with respect to pricing, we don't as a matter of course speak directly about other companies' efforts in this field or how they are pricing their drugs. Other than just to acknowledge that there has been a lot of progress that has been made with the introduction and launch of new drugs to treat patients with hematologic malignancies, which is great for the field.

And as Julian mentioned in his remarks, we are doing a lot of translational medicine work to look at, of all of those new agents that are in development, which ones make most sense to combine with IPI-145. So we see an opportunity to build on the initial progress that has been made and to take it to a new level by working with some of those other drugs.

Can you just remind us how long you have been looking for a partner, maybe how many companies you are actively speaking to? Is it there are not enough inbounds, or are their term sheets not compelling enough? If you can just provide more color there.

Yes. This is Larry. We have had inbound interest all the way back to when we got the ex-US rights back, when we restructured our Purdue/Mundipharma relationship back in the summer of 2012. We have discussed this year that we proactively decided that the right time to initiate partner discussions was once we had 145 in registration studies and had had clear discussions with the relevant regulatory authorities about registration pathways. So that was at the beginning of this year.

As Adelene said, this is a competitive process. 145 is the most advanced oral hem/onc drug that is unpartnered. And we need to make sure that we are picking the right partner who shares our vision for optimizing IPI-145, shares our perspective on how to optimize the corporate governance of working together. Because structuring a deal is the first part of the process; the most important process is actually maintaining the alignments so we can execute together long-term in optimizing and realizing the value of IPI-145.

So we are going through that process with multiple parties, and we are looking forward to making a final decision in terms of who would be the best partner to go forward with on 145.

Okay, got it. Then last question on IPI-145 in autoimmune. Can you just remind us and help us frame our expectations as to what we should be focused on when the data top line -- I guess what would you find clinically meaningful or adequate to warrant further development? Thanks so much.

Clinically meaningful is defined by improvements in the primary endpoint. In rheumatoid arthritis it is the ACR20 score; but we have secondary endpoints, ACR 50 and ACR 70.

So it is not just a statistical assessment, but as you correctly point out: is this really clinically meaningful? In the sense that we didn't just meet our endpoint, but we feel emboldened that further investment is warranted. And that is why we developed IPI-443, to create that optionality.

In asthma it is much more of an exploratory proof of concept, because it is mild allergic asthma with an antigen provocation, so it is not chronic moderate to severe asthma, I think (technical difficulty) more interesting target population. But it is basically there to understand mechanistically what is a delta/gamma inhibitor able to do under antigen provocation? And the primary endpoint there, of course, is lung function.

Hey, Larry. It's Navdeep. I just had a quick follow-up question to Lisa's question. Sorry for joining the call late. Just on the option with Millennium, is it because -- I have heard your commentary on you're really not getting any incremental data besides the asthma data and the RA data until March 31.

But did you choose March 31 because you will have a better sense of the Zydelig launch by then? Was that the purpose of the March 31 date? Thanks a lot.

No, just to clarify. First of all, I appreciate your joining, Navdeep, and I appreciate your question. Just to clarify that we expect to have the RA and asthma data this year, so it is certainly true that it would be prior to March 31, but it would be during this calendar year.

And March 31 truly is just an arbitrary date that happens to be the end of most Japanese-domiciled companies' fiscal year. So please don't read anything into that number. There is no magic to it.

Okay. All right. Thanks a lot.

Eun Yang, Jefferies.

Thank you. If you establish a partnership before you exercise your option for Millennium agreement, are you obligated to pay certain percentage of the upfront from partner to Millennium?

No.

No.

Okay. The second question is --

It is completely independent. Our discussions around a partnership with 145 are strategic in nature; and the Millennium is strictly a financial transaction that allows us to reduce that downstream royalty obligation. But those are separate.

Thanks. Then your current discussions with potential partnerships for 145, is that exclusively an oncology indication, or has the inflammation indication come up as well?

We have prioritized our discussions around oncology, because that is where we have the data and that is where we are aggressively in Phase 3 development. So our priority on partnering is around 145 in oncology.

Thank you. The last question, the $5 million option fee, is it going to be booked in the R&D line in the third quarter? Thank you.

We haven't committed to when or if we would do the exercise for the option fee of $5 million. It will be booked into R&D.

Thank you.

I am not showing any further questions at this time. I would like to turn the call back over to Adelene for closing remarks.

Thank you, everyone, for joining us today, and we expect to provide further updates on our business in the coming months.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.