Infinity Pharmaceuticals Inc (INFI) 2015 Q1 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 financial results for the first quarter of 2015. I will be your operator for today's call.

(Operator instructions)

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, Miss Jaren Madden, Senior Director of Investor Relations and Corporate Communications at Infinity. Please go ahead.

Thank you and good morning, everyone.

Welcome to today's call to discuss our recent business progress and review our first quarter 2015 financial results. With me here today are Adelene Perkins, President and Chief Executive Officer; Julian Adams, President of R&D; and Larry Bloch, EVP, Chief Financial Officer and Chief Business Officer. Following our remarks we will open up the call for Q and A. The press released earlier this morning detailed our results and is available on our website at infi.com.

Please notice 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 projection. It is possible our actual results may differ materially from what we predict today due to the considerations described in the risk factor section of the quarterly report on Form 10-Q for the first quarter of 2015. 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

Good morning, everyone, and thank you for joining us on today's call.

We continue to focus on advancing duvelisib, our dual inhibitor of PI3-kinase-delta and PI3-kinase-gamma in multiple clinical studies as we work toward our goal of building a fully integrated sustainable biotechnology company. We're confident in the potential of duvelisib to become the first in class PI3-kinase-delta/gamma inhibitor that can make a meaningful difference for patients with hematologic malignancies. In March, we exercised our option to buy out future royalty obligations to Takeda. We believe that exercising his option, which eliminated the future obligation to pay Takeda tiered royalties ranging from 7% to 11% of worldwide net sales of duvelisib oncology indications as a potential to create significant value for shareholders.

Today, we provided an update on the anticipated the timing of the completion of patient enrollment in Dynamo, our Phase 2 study of duvelisib in patients with refractory indolent non-Hodgkin's lymphoma. While we are [now] pleased to report that enrollment is now expected to complete in the second half of 2015, the trial is over two-thirds enrolled and we are confident in our ability to complete enrollment in the second half of this year based on our current performance. We have also recently opened new sites to further ensure this is the case. Julian will discuss the study in more detail shortly.

We remain on track with DUO, our registration focused study in CLL and we expect to complete enrollment in this trial in the second half of 2015. We also continue to generate pre-clinical insights that can help guide the development of duvelisib. For example, last month we presented pre-clinical data at AACR, supporting duvelisib in combination with venetoclax, and we will present additional data on this combination at ASCO.

We have also augmented our Senior team as we continue to advance the duvelisib program and prepare for commercialization. We recently announced that Sujay Kango has joined as Chief Commercial Officer and K.C. Lam has joined as General Counsel. Sujay brings more than 20 years experience in the industry and most recently served as vice president, global marketing and sales operations at Onyx, where he led the global Onyx proteasome inhibitor franchise including Kyprolis. K.C. also brings more than 20 years of experience and most recently served as executive vice president, business development, and chief legal officer at Caris Life Sciences. Prior to Caris, he was chief legal counsel for the global pharmaceutical business unit at Schering-Plough. Sujay and K.C. have both played key roles in building successful companies and we're thrilled that they have joined the Infinity team.

In summary, as the only PI3-kinase-delta/gamma inhibitor in registration focused studies, duvelisib could become an important new treatment option for patients beginning with indolent non-Hodgkin lymphoma and chronic lymphocytic leukemia. Enrolling our registration focused studies remains our top priority and we are confident that we are on track to complete the accrual of DYNAMO and DUO studies this year while advancing our long-term objective of building a sustainable, fully integrated biotechnology company.

With that I will turn the call over to Julian to review the duvelisib program in more detail.

Thank you, Adelene. First, I will review the DYNAMO study and provide some context as to why we have updated our enrollment projection.

DYNAMO is our single arm Phase 2 mono-therapy study designed to evaluate the safety and activity of duvelisib in approximately 120 patients with refractory iNHL. The primary endpoint is overall response rate. To date, this study is over two-thirds enrolled. Our earlier expectation of completing enrollment in the first half of this year was based on a feasibility assessment. However, the most accurate way to predict enrollment completion is to track the actual accrual rate. Building off this experience, we are confident in our ability to complete enrollment in DYNAMO in the second half of 2015.

Our updated guidance for enrollment completion is based on our current steady-state performance from existing sites. The straight line projection positions us to complete enrollment in the second half of 2015. We have also recently opened additional sites to ensure we meet this goal. We now expect to report data in 2016 and we will provide more precise guidance on the timing of the data readout once enrollment is complete.

Taking a step back, it's important to stress that this is a rare patient population due to the stringent eligibility criteria. Specifically, we are enrolling indolent non-Hodgkin lymphoma patients who are refractory to both, Rituxan and to chemotherapy. To be double refractory, patients must have either not responded to treatment or have documented disease progression within six months of each treatment. The double refractory population represents a high unmet need for iNHL which allows us to explore an accelerated approval strategy.

We continue to be encouraged by the enthusiasm we see from our investigators about the DYNAMO study. Over the past few weeks, I have personally visited several study sites and investigators believe that the ability of duvelisib to inhibit both PI3-kinase-delta and PI3-kinase-gamma could be a differentiating benefit. The DYNAMO study in double refractory iNHL patients was inspired by our Phase 1 study in patients with advanced hematologic malignancies we most recently reported a 72% overall response rate including a 33% complete response rate among 18 patients with relapsed refractory iNHL. DYNAMO is a foundational study and represents the fast path to approval. Our development strategy is to evaluate duvelisib across multiple lines of therapy as a monotherapy and in combination with other agents.

In addition to DYNAMO, we are conducting DYNAMO+ R, our second registration-focused study in indolent non-Hodgkin lymphoma that could serve as a confirmatory study for DYNAMO to enable full approval. This is a Phase 3 randomized double-blind, placebo-controlled study in approximately 400 patients with previously treated follicular lymphoma and the primary endpoint is progression through survival. We are also enrolling patients in CONTEMPO a Phase 1b/2 study in treatment naive follicular lymphoma patients designed to evaluate the safety and activity of duvelisib plus Gazyva and duvelisib plus Rituxan. We are also planning to initiate two new studies in patients with iNHL this year and we look forward to providing more details as we move closer to the beginning of these studies.

Turning to CLL. DUO, our registration focused monotherapy study in patients with relapsed refractory CLL, remains on track to complete enrollment in the second half of 2015. DUO is a Phase 3 randomized open label study in approximately 300 relapsed refractory patients designed to evaluate the safety and efficacy of duvelisib compared to ofatumumab. The primary endpoint is also progression free survival. We have also initiated SYNCHRONY, our Phase 1b study of duvelisib in combination with Gazyva in patients with CLL whose disease has progressed following treatment with a BTK inhibitor.

While tremendous progress has been made in the treatment of CLL, patients are not yet being cured with any available therapies or therapy combinations. In particular, patients who relapse on ibrutinib therapy appear to have a more aggressive form of this disease. And we believe there will be a tremendous medical need for new, effective treatment options for patients following progression on a BTK inhibitor. Targeted combinations may have potential to provide patients with more effective durable treatment options and our translational research team continues to identify therapies that may be synergistic with duvelisib.

At AACR in April, we reported on research conducted in collaboration with Doctor Varsha Gandhi's laboratory at MD Anderson Cancer Center at Houston. Patients with CLL treated with duvelisib in our Phase 1 trial had their blood drawn and the leukemia cells demonstrated an increased sensitivity to venetoclax. This provides a strong rationale for evaluating duvelisib in combination with venetoclax and we are excited about the potential synergy between duvelisib and venetoclax. And we anticipate that AbbVie will initiate the first clinical study with duvelisib in the combination venetoclax this year.

At this year's ASCO we will present three posters with duvelisib data on Sunday, May 31, and these include a Phase 1 efficacy and safety data in clinical treatment -- sorry -- in treatment naive CLL patients to support the first line development and strategy in CLL. Additional preclinical data providing further rationale for evaluating duvelisib in combination with venetoclax and other therapeutic agents. And finally, translational data that further increases our understanding of the modifications to the tumor environment further supporting the role of PI3-kinase-delta and PI3-kinase-gamma in hematologic malignancies.

Also on Sunday, May 31, a poster describing SYNCHRONY study will be presented in the clinical trials progress section in the poster hall. Taken together, these presentations highlight the clinical activity observed in our Phase 1 study and underscore our efforts to continue to elucidate the role of PI3-kinase-delta and PI3-kinase-gamma in hematologic malignancies. The full abstracts will be made available by ASCO on May 13. Our discovery and translational teams also continue to provide important insights to our duvelisib clinical program while working to identify new development candidates to expand our pipeline.

In conclusion, we have a lot of important work to do over the coming months. In addition to ASCO, we have a translational poster presentation at the International Conference on Malignant Lymphoma and three encore presentations at the European Hematology Association meeting next month which will provide opportunities to meet with [and] current and potential future investigators. We are committed to completing enrollment of DYNAMO and DUO in the second half of 2015 while evaluating the broader potential for duvelisib through ongoing and planned clinical studies. We expect to make progress across all these fronts and look forward to sharing additional updates with you throughout the year.

Now I'd like to turn over the call to Larry who will review our financial results.

Thanks, Julian. Before I review our key financial metrics, I'd like to comment on our partnership with AbbVie, which provides an important contribution to our financials.

We continue to work very closely with the AbbVie and our partnership remains strong. As a reminder, its a part of our collaboration to develop and commercialize duvelisib and oncology. We received an up front payment of $275 million and are eligible to receive up to $530 million in additional payments for the achievement of development, regulatory and commercial milestones. Of this $530 million in milestone payments, up to $405 million are related to milestones to the first commercial sale duvelisib including a $130 million milestone payment associated with the completion of patient enrollment in either DYNAMO or DUO. We therefore expect our clinical trial progress will trigger the milestone payment in the second half of 2015.

Now I would like to provide an overview of our financial results for the first quarter of 2015. Revenue during the quarter was $4.4 million for R&D services associated with the collaboration with AbbVie. Revenue related to development services and community services are being recognized using proportionate method as service are provided over the estimated service period of approximately five years. We've recorded a remaining amount related to development and community services of $26.1 million and $79.6 million as short-term and long-term deferred revenue respectively. We did not record any revenue in the first quarter of 2014.

R&D expense for the quarter was $88.4 million compared to $34.5 million for the same period last year. Part of the expense for the first quarter of 2015 included a $52.5 million payment related to the Takeda buyout option and R&D expense for the first quarter of 2014 included a $10 million milestone payment to Takeda for the initiation of the first duvelisib Phase 3 study. Including these two payments to Takeda, the increased R&D expense was primarily due to higher clinical development expenses for duvelisib.

G&A expense for the quarter was proximally $8.6 million compared to $6.8 million the same period last year, primarily due to early commercial development activities for duvelisib and compensation expense. Net loss for the quarter was $93.3 million, or basic and diluted loss per common share of $1.91, compared to a net loss of $42.3 million, or basic and diluted loss per common share of $0.87 for the same period last year.

As of the March 31, 2015, we had total cash, cash equivalents and available-for-sale securities of $233.6 million compared to $333.2 million at the end of 2014. As a reminder, the decrease in our cash position from December 31, 2014, includes a payment of $22.5 million (sic- per press release, "$52.5 million") related to the Takeda buyout option, as well as the $6.7 million final release payment, also to Takeda, under our December 2012 amended and restated development and license agreement with Takeda through which we retained worldwide development rights and regained commercialization rights for all therapeutic indications for products arising from the agreement. Our financial guidance for 2015 remains unchanged.

In closing, we are continuing to advanced duvelisib, a first in class dual investigational inhibitor of PI3K-delta/gamma in late stage clinical development. We have a global strategic partner to help fund and expand the duvelisib development program and we have an experienced, dedicated team working on initiatives across all stages, from discovery and translational science, to clinical operations onto commercial readiness. We still have a lot of work to do but we have several key elements in place required to achieve our objective of building a fully integrated sustainable biotechnology company. We look forward to updating you on our progress over the coming months.

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

(Operator instructions)

And our first question comes from the line of Michael Yee with RBC Capital Markets. Your line is now open.

Hi, thanks. This is John Chung on behalf of Michael Yee.

On the DYNAMO enrollment, if the rare nature of the target population has been a hindrance for the enrollment, and the recently approved ZYDELIG has shown only very modest sales so far, then questions. Has the approval of ZYDELIG impacted enrollment at all? And second, how big is the commercial potential here for duvelisib? Thanks.

Sure. So, on your first question, there is a real need for patients who are double refractory. And so, on the strength of our Phase 1 data and our investigators belief in the potential of delta/gamma, we are confident that we will complete enrollment in the second half and that there are not competing therapies that are interfering. It's really that it is a small, a rare patient population.

To your second question of what does this mean for the commercial potential, our development strategy is to pursue the fastest path to approval in each indication by focusing on patients with the greatest medical need. And then we complement those registration focused trials with a broader range of [constant] development plans that include additional lines of therapy, additional combinations, additional indications. So, in iNHL we saw the greatest opportunity for accelerated approval in patients who have either, as Julian mentioned, not responded or progressed rapidly on RITUXAN and chemotherapy and for whom there is this need.

So the good news is that accelerated approval may be possible with data from DYNAMO. And the bad news is it's been challenging to enroll. But we are now confident in our ability to enroll it in the second half and that will provide the foundation for a broad program that will allow us to realize the full potential of duvelisib in many lines and indications.

Then as follow-up, with the delay in the DYNAMO study, how confident are you that the DUO study will actually complete enrollment in the second half? Because I would think this would be tougher here given the more compelling data in iNHL and the presence of a very strong option in CLL. Thank you.

Like our projection now on completion of DYNAMO in the second half of a the year, our projection for the completion of DUO in the second half of the year is also based on our current actual run rate. And so we are projecting that going forward. It gives us a lot of confidence. As we develop assumptions for projection in the early stages of trial it's based on interactions with the investigators on the site and in some cases reviewing charts. As these trials mature you have the added benefit of having your actual experience, and that's true now with both of these trials. And yet we aren't resting on that alone. In addition to projecting forward from our actual we have in both trials opened new sites.

And I would like to add to that, that based on our Phase 1 data, our response rate in CLL was 60%. So, very comparable to [Abrutinum]. For investigators that are trying to develop new therapies with different mechanisms of action, there's a high degree of interest in this trial.

Got it. Thank you.

And our next question comes from Mike King with JMP Securities. Your line is now open.

Hey, guys, thanks for taking the questions, one clinical and one financial. The first is, just in terms of combinations with venetoclax. There have been issues in the past with delta inhibitors and tumor lysis syndrome, its potential for 199 or venetoclax as well. Just wondering if the thought is -- how to think about dosing in these combination trials and whether you are going to start at low dose and go high? [Will you] look at sequential, all of the above?

And then I have a financial question but I will wait for that.

Mike you're very prescient. I would caution that the issue with tumor lysis syndrome is very much under control. The AbbVie folks have really understood their drug very carefully and the issues that you brought up are actually being looked at very carefully in the design of the protocol to combine the two drugs. So their considerations for sequencing, their considerations for dose escalation, just as you've presciently highlighted.

Okay and then just on the spend. I'm just wondering, is the run rate of $88 million, that you've reported for the quarter, something we should think about for the rest of the year? Or is that extraordinarily high just because of the additional sites and such?

Thanks, Mike. I appreciate the question.

I would not extrapolate based on our first quarter cash burn especially because it includes two one-time nonrecurring payments. One is $52.5 million exercise of the Takeda option to eliminate all future royalty to Takeda on duvelisib sales, oncology and those were tiered from 7% to 11%. And then there was also a final lease payment, also to Takeda of $6.7 million, which was to retain the development and regain commercial rights that Takeda owned through their acquisition of Intellikine. And so if you take out the $52.5 million and $6.7 million from the burn for the quarter it's reduced it by about $60 million.

Okay. All right, I thought the other payments were considered extraordinary. Okay, thanks for clarifying.

Sure.

Thank you, and our next question comes from Anupam Rama with JPMorgan. Your line is now open.

Hey guys, this is Eric in for Anupam this morning. I'm just wondering if you could comment on whether you see an increase in competition for patients with respect to the delay in DYNAMO recruitment? And to the extent that this is the case, just wondering if you could -- if this is going to change your expectations for starting two additional studies this year? Thanks.

Thanks, Eric. To your first question, it really is a focus of us being in a relatively rare patient population. And so that's the basis on which we have re-guided. It may help to explain how we do this.

So, when we start a trial, we look at the existing patients. We work really closely with sites, with investigators, with the nurse coordinators, with our CROs and in many case we review charts to identify eligible patients.

And as we start the study we've made projections using the best available information to inform our assumptions, but at the end of the day they're assumptions and as the study advanced we had the added benefit of being able to look at our actual enrollment performance. And it is really important that we not look at day to day or week to week because there is variability you have to look at a trend over time. And it's on the basis of that new information that we can project and, as I mentioned earlier, it's really not so much competing therapies, because there really is a significant unmet need for these patients.

And the second question was the new studies. No, we are very committed to the initiation of the two new studies this year and are actively underway in getting those ready to start. So, it is very fundamental to our development strategy. Both DYNAMO and DUO are what we believe are the fastest paths to registration and it is really critical that we compliment them with studies that move us into additional lines and additional combinations, so we remain very committed to that.

Okay great, thanks.

Thank you, and our next question comes from the line of Matthew Andrews with Wells Fargo Securities. Your line is now open.

Hey, good morning, thanks for the chance to ask a question. Julian, last fall you noted that the primary endpoint for DYNAMO was best overall response rate and that this was not based on a landmark analysis. Can you provide some clarity as to how you define that, is that after one scan at eight weeks? Is it after two scans at 16 weeks? (multiple speakers) How long are you going to allow patients to stay on drug before you determine the best response? Thank you.

It's a good question and let me clarify. So best overall response rate is the response rate which happens at any time through any series of scans that defines a patient's best overall response rate. So, a PR could be the best response rate but if it converts to a CR then the CR is deemed that response rate -- contributes to that response. And it's intended to treat analysis over the120 patients and there's no pre-specified landmark, as you pointed out.

So, it's the totality of the data. Obviously, the secondary endpoints are times of progression, progression pre-survival, duration of response, those are secondary endpoints in the trial.

Okay. Thank you.

Thank you and our next question comes from the line of Brian Klein with Stifel. Your line is now open.

Great, thank you. Given the slight delay in DYNAMO enrollment, as well as the fact that you are already two-thirds enrolled, what's the possibility of seeing mature PFS data at the time of reporting topline results?

So let me clarify. The reporting of topline results would be based on the primary endpoint, which is overall response rate. It will not be based on PFS, PFS is a secondary endpoint. So that's topline data, the totality of the data will be presented at a medical conference as is usual.

Yes, just wanted to get a sense of whether you would potentially have mature PFS data at that time that you report the topline response rate data.

We are not in the position to comment on the maturity of the data.

Okay, thank you.

I mean, obviously, the earlier patients will have been treated longer than the last patient, last visit and [that] first visit, so. It's a stochastic analysis.

Thank you.

(Operator instructions)

And our next question comes from the line of Katherine Xu with William Blair. Your line is now open.

Good morning. I'm just curious with regards to your strategy -- overall strategy in CLL. It looks like your focus is definitely in iNHL, which makes tremendous sense, but for CLL besides which you've been using to get out to the market and another study in [inverticus] or BTK inhibitor failures. What is the overall strategy in CLL? Are you going to be focused on later lines? Are you going to focused on combination with venetoclax and go into the more front line? Just given the competition there it would be great to hear your overall strategy in CLL. And also do you have any -- and AbbVie have any inclinations in doing combinations in immune-checkpoint inhibitors?

I think you've described the current trials exactly accurately. That we have the two ongoing trials, as we discussed, in areas where one trial is designed for an approval, a full approval. That's the DUO study. And the second study, CONTEMPO, is designed to help patients with progressed on a BTK inhibitor because that is a very high unmet need.

We are constantly developing other ideas and strategies, in collaboration with our partners AbbVie, but we haven't yet announced specifically what other trials we would do. But obviously there's a lot of high interest for frontline treatments and for other combinations, particularly novel combinations, and you've mentioned venetoclax, as have we, and there's a great deal of interest in understanding the potential for that combination as well as other combinations.

So then, Katherine, the one thing that I would add is our strategy for both DYNAMO and DUO is the fastest path to registration. Clearly our goal then, as Julian mentioned, is to move to earlier lines of therapy and there are two explicit objectives that we haven't met.

One is, where possible, to improve upon or replace chemotherapy. So, that's certainly a direction that the field would like to go. And then beyond, that it's to get to more curative outcomes, perhaps through minimal residuals disease negativity, and then along the way identifying places where we see a real need, as we do in following treatment with the BTK inhibitor. Because as those patients progress the growing body of data suggests that their disease is pretty aggressive when it comes back.

Beyond that we are not providing specifics on trial design. We will do that as we initiate those additional trials.

And your last point around a combination with checkpoint inhibitors, this is something we are exploring in the lab and exploring -- but we don't have any definitive plan to initiate such a trial at this time.

Thank you, and our next question comes from the line of Eun Yang with Jefferies. Your line is now open.

Hi, guys, this is John in for Eun, thanks for taking my question. Can you maybe give us some additional color on how you think about the impact of AbbVie's acquisition of PCYC affecting your collaboration, if any?

No, we can't. We continue to believe AbbVie is a great partner and we've had a strong working relationship. They are clearly committed to heme malignancies and developing better treatments for patients and so that continues to be the strong foundation on which we will continue to work with them. But we can't speak on other actions that they are taking.

Thank you.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Adelene Perkins for closing remarks.

Thank you for joining us on the call today.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.