Infinity Pharmaceuticals Inc (INFI) 2016 Q2 法說會逐字稿

Welcome to the Infinity Pharmaceuticals conference call to discuss the Company's financial results for the second quarter of 2016. My name is Lilianna, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. There will be a question and answer session to follow. Please be advised that this call is being recorded at Infinity's request.

At this time, I would like to introduce your host for today's call, Ms. Jaren Madden, Senior Director of Investor Relations and Corporate Communications at Infinity. Please go ahead.

Thank you, Lilianna, and good afternoon, everyone. Welcome to today's call to discuss our recent business progress and review our second-quarter 2016 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&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 objectives, the therapeutic potential of our product candidates, our strategic plans and strategies, and financial projections. Our actual results may differ materially from what we project today due to a number of important factors, including considerations described in the Risk Factors section of our quarterly report on Form 10-Q for the second quarter of 2016 and in other filings we make with the SEC. These forward-looking statements represent our views as of today, and we caution you that we may not update them in the future, but as a result of new information, future events or otherwise.

Now I would like to turn the call over to Adelene.

Thanks, Jaren. Good afternoon, everyone, and thank you for joining us on today's call. I apologize and hope you can hear me all right through laryngitis.

Over the past few weeks, we have focused on shifting Infinity's strategic plan in response to the previously announced termination of our collaboration with AbbVie for duvelisib, our dual PI3 kinase delta/gamma inhibitor. In conjunction with regaining worldwide rights to duvelisib, we began to pursue a broad range of strategic options for the program with a focus on the sale of duvelisib as an attractive late-stage oncology asset. This process is ongoing, and we are encouraged by the interactions we have had with companies who have expressed interest in duvelisib based on a review of our clinical development program, clinical data and the commercial opportunity. We are unable to provide further details at this time, but can tell you that our goal is to optimize the past forward path for duvelisib providing a new treatment option for patients and maximizing value for shareholders.

In parallel, we are continuing to advance key value drivers for the program, which include (inaudible) clinical studies and proceeding with activities designed to enable the potential future registration, approval, and commercialization of duvelisib.

We also implemented a corporate restructuring designed to align our resources with our new strategy and operational plan.

Earlier this summer, we announced top-line data from DYNAMO, our first registration focused Phase 2 monotherapy study evaluating the efficacy and safety of duvelisib in patients with refractory indolent non-Hodgkin's lymphoma or iNHL. The study met its primary endpoint with an overall response rate of 46%.

The majority of reported side effects from the study were reversible and clinically manageable. We're planning to seek feedback on these data from the FDA to help inform the next steps for duvelisib in iNHL.

Our second registration focus study is DUO, a Phase 3 randomized monotherapy study of duvelisib compared to ofatumumab in patients with relapsed or refractory chronic lymphocytic leukemia or CLL. We announced today that the DUO study will proceed to its final analysis.

The primary endpoint of this study is progression free survival, and the event that will trigger the final analysis is expected to occur in the fourth quarter of 2016.

If the data are positive, we continue to believe that the DUO study could provide the basis for regulatory approval in CLL.

Three other studies of duvelisib are also ongoing, and Julian will review these momentarily. We will continue to provide updates on our strategy for duvelisib. However, given that we are exploring a potential sale of the program, we are suspending our prior guidance on the nature and timing of additional duvelisib updates, including guidance on data from registration-focused trials and the timing of potential regulatory filing.

Turning now to IPI-549, our oral immuno-oncology development candidate that selectively inhibits PI3 kinase gamma, we are continuing to advance this program and are pleased with the progress being made. Our enthusiasm for IPI-549 is based on continued medical need for additional therapies in solid tumors, coupled with our preclinical data suggesting that IPI-549 may provide a complementary mechanism of action to multiple checkpoint inhibitors.

Julian will also review the IPI-549 program in more detail.

In summary, clinical studies with duvelisib demonstrate that it is clinically active and has the potential to add to the available treatment options for patients with indolent non-Hodgkin's lymphoma and chronic lymphocytic leukemia. We are now exploring potential buyers for the program who we believe would be well-positioned to capitalize on the potential of duvelisib based on the data we generated to date, as well as to expand on the current clinical development program.

We are continuing to develop IPI-549 and are advancing activities that we believe can generate the most benefit for patients and create value for our shareholders. We appreciate your interest and your patience, and we will continue to keep you updated on our progress.

With that, I will turn it over to Julian.

Thank you, Adelene. I will review our two clinical programs, duvelisib and IPI-549.

In June, we reported top-ine data for DYNAMO, our Phase 2 monotherapy study of duvelisib in 129 patients with advanced indolent non-Hodgkin's lymphoma. All patients enrolled in this study were refractory to rituximab and to either chemotherapy or radio immunotherapy. The primary endpoint of this study was overall response rate as assessed by an independent review committee.

The DYNAMO study achieved its primary endpoint with an overall response rate of 46%. The majority of reported side effects were reversible and clinically manageable. We have received positive feedback on these data from study investigators and other experts in the medical community who share our belief that duvelisib has the potential to address an important medical need in the treatment of advanced iNHL.

We are planning to seek feedback on the DYNAMO data from the FDA to help guide the next steps for duvelisib in iNHL, and data from this study have been submitted to ASH.

We are also continuing to conduct the FRESCO study, which is designed to evaluate the potential to eliminate chemotherapy for some patients. An analysis from several studies of patients with follicular lymphoma demonstrated that approximately 20% of patients progressed within two years upon initial diagnosis and treatment with R-CHOP, a chemotherapy cocktail commonly used for the treatment of follicular lymphoma, and that early progression is associated with significantly shortened survival. This study is designed to evaluate the safety and efficacy of duvelisib plus Rituxan versus R-CHOP in approximately 230 patients with follicular lymphoma who relapse within two years. The primary endpoint is PFS.

We're also evaluating duvelisib in the front-line setting and recently presented preliminary data from CONTEMPO at the recent European Hematological Association annual meeting. CONTEMPO is a Phase 1b/2 combination study designed to evaluate the safety and activity of duvelisib in combination with Rituxan or Gazyva, two anti-CD20 antibodies in treatment-naive follicular lymphoma patients. We reported that duvelisib in combination with Gazyva demonstrated an overall response rate of 100%, including 33% complete responses, among the nine patients evaluable for response.

Duvelisib in combination with Rituxan demonstrated an overall response rate of 80%, including a 30% complete response rate among 10 patients evaluable for response. The preliminary safety profile of duvelisib in combination with either Gazyva or Rituxan was in line with the safety profile of duvelisib as monotherapy. The CONTEMPO study is ongoing, having enrolled 55 patients, and is now close to additional patient enrollment. Updated data from this study will have also been submitted to ASH.

Turning to CLL, we are conducting two clinical studies in the relapse refractory population. The first is DUO, a Phase 3 randomized monotherapy study of duvelisib in approximately 300 patients with relapsed refractory CLL. This study is designed to evaluate the safety and efficacy of duvelisib compared to ofatumumab, an anti-CD20 antibodies. The primary endpoint is progression free survival or PFS. This study is continuing its final analysis, and we hope that data from this study will show that duvelisib could offer patients with relapsed refractory CLL another important treatment option.

We are also continuing with the SYNCHRONY study, which is designed to evaluate duvelisib in combination with Gazyva in patients with CLL who were previously treated with a BTK inhibitor.

In addition to our clinical study activities, we are also continuing NDA preparations that could enable regulatory filing for duvelisib.

I will now review our progress with IPI-549, our oral immuno-oncology development candidate. IPI-549 represents a potentially new approach in immuno-oncology by selectively inhibiting PI3 kinase gamma. Today, we announced that a manuscript describing the discovery team's medicinal chemistry research efforts that led to the discovery of IPI-549 has been accepted for publication in ACS Medicinal Chemistry Letters. A preliminary copy of the paper is currently available on the ACS publications website.

It was a considerable challenge to design a selective PI3 kinase gamma inhibitor, which was accomplished through the outstanding efforts by our team, resulting in what we believe is the only selected PI3 kinase gamma inhibitor in clinical development.

Since the discovery of IPI-549, we have conducted a significant amount of preclinical research to elucidate the mechanism, pharmacokinetics, pharmacodynamics, and the in vitro and in vivo activity of IPI-549. Earlier this year, we presented data demonstrating that IPI-549 targets immune cells and alters the immunosuppressive microenvironment promoting an antitumor immune response that leads to tumor growth inhibition. Data have also demonstrated that IPI-549 enhances the effects of multiple checkpoint inhibitors, resulting in improved survival, including cures in multiple (inaudible).

To study immune memory, we evaluated mice that achieved complete responses following IPI-549 plus an anti-PD1 antibody therapy, which were then re-implanted with the same tumor type. These animals showed low or no tumor engraftment, indicating that they were immunized against the recurrent tumor growth. These preclinical data provide a strong rationale for our ongoing Phase 1 study. The first portion of this study includes a dose escalation phase to evaluate a recommended dose for IPI-549 as a monotherapy and in combination with anti-PD-1 antibody.

Once monotherapy dose escalation is complete, we are planning an expansion phase in patients with select solid tumors, including non-small cell lung cancer and melanoma where we will evaluate IPI-549 in combination with an anti-PD-1 antibody. I am pleased with how the study is progressing, and we now expect to initiate the first cohort evaluating combination therapy this fall.

Together with Jed Wolchok and other collaborators at Memorial Sloan-Kettering, we will present new preclinical data for IPI-549 at the Second International Cancer Immunotherapy Conference, which will be held in New York City September 25 through 28. And at this conference, we will also present early data on pharmacokinetics, pharmacodynamics from the ongoing Phase 1 study.

In conclusion, we have very important strategic objectives that we are working on to ensure the continued advancement of both duvelisib and IPI-549. We're making progress with our goals for both these programs. We will continue to keep you updated on strategic developments with duvelisib and progress with IPI-549.

With that, I will pass the call over to Larry.

Thank you, Julian. I will now provide an overview of our financial results for the second quarter of 2016. Revenue during the second quarter 2016 was $9.5 million for R&D services associated with the collaboration with AbbVie, up through the AbbVie opt out at the end of June, compared to $4.9 million in the same period last year. R&D expense for the quarter was $52.9 million compared to $34.1 million in the same period last year. The increased R&D expense for the quarter was primarily due to R&D-related restructuring charges of $11.9 million, as well as higher corporate development expenses for duvelisib.

G&A expense for the quarter was $15.9 million compared to $9.4 million from the same period last year. This year-over-year increase is primarily due to restructuring activities as we incurred $4.7 million of restructuring charges within G&A expense during the quarter.

We also recorded a nonrecurring, non-cash gain on the AbbVie opt out of $112.2 million the second quarter of 2016. The accounting for this is related to the $235 million upfront fee and the $130 million milestone that we received, most of which was preferred and being recognized using a proportionate performance method. With the opt out, we are now recognizing the remainder of these two milestones earned that were not previously recognized as revenue.

We do not have any ongoing performance or financial obligations to AbbVie.

Additionally, there were no gains in the same period last year.

Net income for the quarter was $53 million or a basic and diluted earnings per common share of $1.05 compared to a net loss of $38.4 million or a basic and diluted loss per common share of $0.78 for the same period last year.

As of June 30, 2016, we had total cash, cash equivalents, and available for sale securities of $146.4 million compared to $193 million at March 31, 2016. As a result of the AbbVie opt out, subsequent restructuring activities and other efforts to preserve our financial resources, today we are updating our anticipated year-end 2016 cash investments balance and cash flow. We expect to end the year with a year-end cash and investment balance ranging from $45 million to $55 million compared to prior guidance of $45 million to [$65] million. We expect that our existing cash, cash equivalents, and available-for-sale securities at June 30, 2016, will provide a cash runway into the third quarter of 2017 compared to our prior guidance of cash runway through the first quarter of 2017.

Our cash runway guidance is based on our current operating plans, which do not include duvelisib expenses beyond the fourth-quarter 2016.

Additionally, our year-end cash balance and cash runway expectations do not include additional financing or proceeds from duvelisib activities, including the potential sale of duvelisib.

In closing, we are focused on managing our financial resources, exploring a broad range of strategic options for duvelisib, with a focus on the sale of the program, while advancing IPI-549. We will keep you updated on our progress throughout the year.

With that, we will open the call for questions. Operator?

(Operator Instructions) Michael Yee, RBC Capital Markets.

This is Andrew on for Mike. Thanks for the questions. So it sounds like you haven't had a dialogue with the FDA since reporting the DYNAMO data, but just in case, how did those conversations go, and what is your confidence level like and the likelihood of filing an NDA? Is there any reason to believe that the FDA would not allow a filing or not want a filing?

And I have a second follow-up question. Thanks.

Thanks, Andrew. We will be discussing the DYNAMO deal with the FDA to determine whether that data continues to support our anticipation of being able to file for accelerated approval. And so that conversation still needs to happen. And as part of that, we will also need to determine the filing strategy whether we would file on a DYNAMO study alone or combine that with the DUO study.

And, as we announced today, we will be taking the DUO study to the full analysis and be reviewing that with the FDA after we have a full analysis.

Okay. Great. Thanks. And my second question is, could you remind me of when I think you said you would present 549 data at a September 25 conference. Which conference is that (inaudible)?

Yes. It is the I/O conference. It is the Cancer Research Institute. It has got -- also ACR cosponsors it. So the name of the conference is a little bit difficult to -- it is CRI-CIMT-EATI-AACR International Cancer Immunotherapy Conference. (multiple speakers) science into survival taking place September 25 through at the Sheraton hotel in New York Midtown.

Okay. Very good. That's very helpful.

Anupam Rama, JPMorgan.

This is [Eric] in for Anupam. Just on potential interactions with the FDA, was just wondering whether you had waited for the DUO readout to initiate discussions with FDA around DYNAMO to have (inaudible) data sets in hand, or would you anticipate having a discussion on DYNAMO in advance of that? And then I have a follow-up on 549.

We are constantly in dialogue with the FDA, and the DYNAMO and DUO conversations are, indeed, separate conversations. They are separate indications. And so we continuously are engaged with the FDA. We are not operating on an island.

Great. That's helpful. And then, maybe just on 549 heading into -- I am going to call it ACR immunotherapy. That title is way too long. I am just wondering if you kind of help us confirm frame expectations around the clinical data that you will be presenting there. The number of doses that you might have a chance to see. Thanks.

Yes. It is the early part of the dose escalation. We are still very pleased with the performance of the molecule. That is a once a day drug. But we intend to present, as I described in the prepared remarks, detailed PK/PD data. We think we are now achieving our biological dose, but it is too early to assess clinical responses. It is only a handful of patients with a limited time on treatment. But I encourage you to come to the poster and learn more.

Great.

(Operator Instructions) Katherine Xu, William Blair.

This is [Joe] on for Katherine. With the DYNAMO data, are you still planning to present that at a medical meeting? And then also on DUO, with the final analysis trickling in the fourth quarter, is it safe to assume we are not going to get the top line data until early 2017? Thanks.

So the answer to your first question is we have submitted an abstract for ASH and hope to present DYNAMO at ASH. And you are quite right about the time for analysis that it is late final data, and this year it would not make it to the ASH presentation.

And what we have said, Joe, is because we are pursuing a sales program, we are not providing guidance on when we will be having that top-line data for share publicly.

I am showing no further questions at this time. I would now like to turn the call back over to Ms. Adelene Perkins for any closing remarks.

Thank you, Lilianna, and thank you, everyone, for joining us today. We appreciate your time and interest.

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