Infinity Pharmaceuticals, Inc.
Q2 2017 Earnings Call Transcript

Published: 4 Aug 2017

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Infinity Pharmaceuticals conference call to discuss the Company’s financial results for the second quarter of 2017. My name is Brian 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. Now 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.

[Jaren Irene Madden:]

Thank you Brian and good afternoon everyone. Welcome to today’s call to discuss our recent business progress and review our second quarter financial results. With me here today are Adelene Perkins, Chief Executive Officer; Dr. Claudio Dansky Ullmann, Senior Vice President, Clinical Development and Larry Bloch, President; Dr. Jeffery Kutok, our Chief Scientific Officer is also here to take questions and we’ll open up the call for Q&A following our remarks. 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 objective, the therapeutic potential of our product candidate, our strategic plans and strategies and financial projection. Our actual results may differ materially from what we project today, due to a number of important factors, including the considerations described in the risk factors section of our quarterly report, on Form 10-Q for the second quarter of 2017. And in other filings, we may make with the SEC. These forward-looking statements represent our views only as of today. We caution you that we may not update them in the future, whether as a result of new information, future events or otherwise. Now I’d like to turn the call over to Adelene.

[Adelene Perkins:]

Thanks, Jaren. Good afternoon everyone and thank you for joining us. Today, we are pleased to report on our recent progress at Infinity, including advancements we’ve made with IPI-549, our oral selective PI3-kinase gamma inhibitor in a Phase 1 study in patients with advanced solid tumors. We will also review the recent amendment to our license agreement with Takeda, our anticipated milestones for the second half of the year and our second quarter financial results. I’d like to start by putting the significance of the company’s progress over the last quarter, in the context of recent development within the immuno-oncology field. Results with checkpoint inhibitors reported over the past few weeks, highlight that while tremendous advances have been made in the fields of immuno-oncology, the benefits for patients are inconsistent, and today’s therapeutic regimens remain insufficient for many patients. In particular, patients need well tolerated and effective medicine that can address three major treatment gaps. First, for patients with tumor types that have shown to be responsive to checkpoint inhibitors, there is a need for therapies that are effective in a higher percentage of patients with these tumor types. Second, more options are made for patients who respond, but subsequently develop resistance to their immunotherapy. And third, well tolerated in effective therapies are needed to treat patients with many cancer types that today have not responded to checkpoint inhibitors. Addressing these significant patient needs requires novel approaches. Ideally medicines that are effective and well tolerated when combined with other immunotherapy. We are pleased to report that emerging data from our Phase 1 study of IPI-549 suggests that it is well tolerated both as a monotherapy and in combination with Opdivo, a PD-1 immune checkpoint inhibitor. Our Phase 1 study is supported by preclinical data, demonstrating that IPI-549 is synergistic with and can help overcome resistance to checkpoint blockade by reprogramming macrophages from a pro-tumor to an anti-tumor phenotype. Taken together, we believe that IPI-549 could play an important role in addressing the significant medical need that have not been addressed by checkpoint inhibition alone. Our ongoing Phase 1 study of IPI-549 includes four parts. Monotherapy dose escalation, monotherapy expansion, combination dose escalation and combination expansion. The study is advancing very well and today we announced that we had achieved an important milestone. We have initiated the monotherapy expansion component of the study to evaluate IPI-549 dose at 60 mg once daily. This decision is based on the completion of analysis from our monotherapy dose escalation, which show that IPI-549 was well tolerated and maintained full suppression of PI3-kinase gamma at this dose. This is an important milestone because our expansion enables us to enroll approximately 25 patients with paired pretreatment and on- treatment biopsies, allowing us to generate additional clinical and translational data on IPI-549 monotherapy treatment. Dose escalation evaluating IPI-549 in combination with Opdivo is ongoing and we are in track to initiate the combination expansion component of this study in the second half of this year. Claudio will review the study progress in more detail. We also undertook an important strategic initiative and recently amended our license agreement with Takeda Oncology, which further underscores our belief in IPI-549 and enhances our potential return on investment in the program. Under the amended agreement, we will no longer have an obligation to pay Takeda royalties, which have ranged from 7% to 11% on any future sales of IPI-549. In exchange, we have issued Takeda an unsecured $6 million convertible note that matures in July 2018 with an annual 8% interest rate. The principal and interest are repayable in cash for an Infinity common stock at Takeda’s election. Importantly, the amendment reduces the total royalty burden on any future net sales of IPI-549 to 4%, payable to Mundipharma and Purdue from a previous agreement. As we look to the second half of 2017, we expect to make progress in the following 3 key areas. First, we will be enrolling patients in the recently opened monotherapy expansion component of our Phase 1 study. Second, we will complete enrollment in the combination dose escalation component of our study and determine our recommended combination dose. Third, we will initiate the combination expansion, which will include disease-specific cohorts, evaluating activity of IPI-549 plus Opdivo in non-small cell lung cancer, melanoma, and head and neck cancer. And fourth, we will report additional data in the second half of this year. We’re very pleased with the progress we’ve made to-date and are continuing to make with IPI-549, while maintaining strong fiscal discipline. Our experienced team is executing with a great sense of urgency to deliver meaningful data within our current cash runway. We look forward to updating you on the potential of IPI-549 to address the significant medical need that remain under served by existing therapy, as we continue to advance this exciting program. Before Larry reviews our financial results, Claudio will provide an update on our clinical study.

[Claudio Dansky Ullmann:]

Thanks, Adelene. This afternoon, I will update you on the progress we have made with IPI-549 in the clinic. The objective of the Phase 1, 175 patients, is to determine the safety, recommended Phase 2 dose and activity of IPI-549 given orally is to determine the safety recommended Phase 2 dose, an activity of IPI-549 given orally once daily as a monotherapy and in combination with Opdivo in patients with advanced solid tumors. As Adelene mentioned, the study includes four parts. The first two parts are dose-escalations which are followed by monotherapy and combination expansions. The first part is a monotherapy dose-escalation evaluating the safety, tolerability, pharmacokinetic and pharmacodynamic profile of IPI-549. We have completed patient enrollment in six cohorts evaluating doses ranging from 10 milligrams to 60 milligrams once daily. And we have selective IPI-549 60 milligram once daily for evaluation in the monotherapy expansion. We chose these doses based on pharmacokinetic and pharmacodynamic analysis, which show that IPI-549 maintained full suppression of PI3-kinase gamma at this dose. Data also show that IPI-549 dose at 60 milligrams once daily was well tolerated with no dose limiting toxicities observed. As Adelene mentioned, the monotherapy expansion is now open to enrollment, which enables us to generate clinical and translational data on IPI-549 as a monotherapy in a greater number of patients with a variety of advanced solid tumors. Very importantly our translational analysis within this part of the study will include mandatory pre-treatment and on-treatment biopsies. The translational analysis, we will conduct using these biopsies are significant because any markers of immune response can be attributed to IPI-549 and may allow us to better understand the effect of IPI-549 on tumors, the tumor characteristics of patients who may benefit from monotherapy and the biomarkers of activity and resistance. Based on our monotherapy PK and PD data, which showed substantial suppression of PI3-kinase gamma at 20 milligrams. We initiated combination dose-escalation to evaluate IPI-549 plus approved regimen of Opdivo. This component of the study is designed to show that IPI-549 and Opdivo can be safely combined and to establish the recommended dose to be used in the combination expansion. Currently, we have enrolled cohort of 6 patients evaluating IPI-549 at 20 milligrams in combination with Opdivo, as well as a cohort of 12 patients evaluating IPI-549 at 30 milligrams combined with Opdivo. Among the first six patients that enrolled in the 30 milligrams plus Opdivo cohort, there were two reports of patients with Grade 3 uncomplicated rash that figured enrollment of 6 more patients at this dose regimen. Upon further evaluation and discussion, our investigators felt that this type of rash which resolved completely within one week following treatment with topical steroids should not be considered a dose limiting toxicity, and we have since amended our protocol to incorporate this recommendation. We anticipate that the last patient enrolled in the in the 30 milligrams plus Opdivo cohort will complete the DLT assessment period later this month. At that point, we will determine whether we will continue dose escalation or whether we will initiate combination expansion. The bottom line is that we’re very pleased with the safety and to the relative profile observed to-date and we expect to complete combination dose- escalation and initiate the combination expansion in the second half of this year. The combination expansion is a key component of the study because it allows us to evaluate the activity of IPI-549 in combination with Opdivo in patients with specific types of cancer, including non-small cell lung cancer, melanoma and squamous cell carcinoma of the head and neck. Notably, enrollment into disease-specific cohorts is reserved for patients who have demonstrated de novo or acquired resistance to checkpoint therapy. This component of the study is a direct test of whether IPI-549 can overcome checkpoint resistance as demonstrated in our preclinical research published in Nature, last year. The combination expansion also includes mandatory pre-treatment and on-treatment biopsies to provide additional translational insights for the combination. Overall, we’re very pleased with the progress we have made in this study. Demonstrating a favorable tolerability profile and selecting the recommended monotherapy expansion dose, represent significant milestones for the program and will enable us to further test the activity of IPI-549 in a greater number of patients. We expect to report updated data from this study in the second half of this year and we look forward to continue to share our maturing data as we progress IPI-549 in the clinic. Now Larry will review our financial results for the quarter.

[Larry Bloch:]

Thank you Claudio. The Infinity team is very enthusiastic about IPI-549, which is one of the few oral immuno-oncology therapies in the clinic targeting macrophages. Additionally, we believe IPI-549 is the only selective titer K-gamma inhibitor in clinical development, providing us with an important first-in-class opportunity. As we drove our fiscal discipline, we are in a strong position to generate safety and activity data on all four parts of our clinical study within our current cash runway, which extends into the first quarter of 2019. At June 30, 2017 we had total cash, cash equivalents of $66.2 million compared to $75.4 million at March 31, 2017. Cash used for operating activities during the second quarter of 2017, including payments of $800,000 related to company’s 2016 restructuring activities and $4.5 million related to exiting of the company’s lease for 784 Memorial Drive. Since the original lease agreement was to expire in March 2025, exiting lease decreases our future payment obligations excluding operating costs and taxes from $16.9 million to $200,000 as of June 30, 2017. We are making plans to move into facility with significantly reduced lease obligation. Moving on to our income statement, Infinity did not record any revenue during the second quarter 2017. Revenue for the second quarter 2016 was $9.5 million, all of which related to the previous AbbVie collaboration for duvelisib. R&D expense recorded was $3.9 million compared to $52.9 million for the same period last year. The decrease in R&D expense was primarily due to the decrease in clinical development expense following the out-license of duvelisib in addition to the company’s 2016 restructuring activities. General and administrative expense was $6.2 million for the quarter compared to $15.7 million for the same period last year. The decrease in G&A expense was primarily due to 2016 restructuring activities. Other expense of $6.9 million for the second quarter 2017 was related to expenses recognized to exit the company’s facility lease agreement. Net loss for the second quarter of 2017 was $17 million or basic and diluted loss per common share of $0.34 compared to net income of $53 million or basic and diluted earnings per common share of $1.05 for the second quarter of 2016. Net income during the second quarter 2016 was driven by a nonrecurring gain on the previous AbbVie collaboration of $112.2 million. Our 2017 financial guidance that we provided in January remains unchanged. We expect 2017 net loss to range from $40 million to $50 million and we also expect to end 2017 with a cash and investment balance ranging from $40 million to $50 million. Based on current operating plans, which exclude additional funding or business development activities, we anticipate our existing cash and cash equivalents at June 30, 2017 to provide cash runway into the first quarter of 2019. Importantly, we expect that our cash runway will enable us to generate safety and activity data from all four parts of our ongoing Phase 1 study of IPI-549. We are pleased with our achievements so far this year. We have completed patient enrollment in our monotherapy dose-escalation and initiate monotherapy expansion. We remain on track to complete enrollment in the combination dose-escalation component study and initiate combination expansion before the end of this year. And we significantly reduced our royalty obligations for IPI-549 to a total of 4% of net sales, which enhances the potential return on our investment in the program. The Infinity team has continued operate with a great deal of focus and urgency as we seek to address unmet needs in cancer. We look forward to updating you our progress throughout the year. And now, we’re happy to take your questions.

[Operator:]

Thank you. [Operator Instructions] Our first question will come from the line of Mike King with JMP Securities. Please proceed.

[Mike King:]

Can you hear me okay.

[Jaren Irene Madden:]

Yes, we can Mike.

[Mike King:]

Okay, hi. Thanks for taking the question and I apologize if I’ve missed some of this, but I just if I missed some of this, but I just want to maybe dig a little deeper on these patients that had rash. Can you talk about a few things one was there a dose relationship with respect to the insurance. #2, I think you said it was [driven] inflammatory rash, clarify that for me, rather than sort of like the EGF receptor blocker rash that is typically seen. And thirdly, did you try to figure out if the rash might have had any pharmacodynamic predictive power as far as response rates or outcome is concerned, or was it too transient in order to play a role without the marker? Thank you.

[Adelene Perkins:]

Sure, I’ll turn that over to Claudio, I just will, before doing that, put it in the context that the rashes that were seen ultimately are not a concern because the investigators on review felt that they should not have been considered a dose limiting toxicity, and so we are just, in that context of study this enrolling rapidly and we overall have a favorable tolerability profile, but we felt it was important to describe the overall kinetics and the reason that we enrolled four patients at the 30 mg. So that’s the reason that we’re highlighting, it’s not because of particular safety concern and it is not part of a full safety [indiscernible].

[Mike King:]

I am just trying to see it can help you understand the mechanism of action at all.

[Claudio Dansky Ullmann:]

Yes, so the two cases that actually occurred during the [indiscernible] the first month were really grade 3 uncomplicated rash. And as you know, if you go by the standard CTCAE criteria, there is a flow there that basically is based on the extension or the body surface area that is compromised that gives a qualifier for the grade 3 usually is by standard measures more than 30% of body surface. So that’s the grade 3 rash that we have seen in these two patients. The important thing is that, we induces a first in human initially any grade 3 rash would put a prestipulated into protocol that qualify for a DLT, but actually these type of rash that was observed what if you look at the patients was really very benign in terms of the compromise and there were clearly no systemic affectation or implications for the patient, that would otherwise make you think that is a different type of rash and evolve into a worsening of some different sort. So that’s to give thea context, I think you were asking is, is this dose-dependent both occurred in the 30 mg cohort, so we can’t speak to that in that in that relation, there I think, keep in mind that here – this is in the combination, so we have [indiscernible] one in the mix and [indiscernible] as you – like any other checkpoint inhibitors rash, is a very common event that happens. So that’s one thing that also to keep in consideration in terms of being able to say what’s the contribution of IPI-549 for that rash. The other thing you were asking is about what this may represent in terms of a potential activity or been rash as a toxicity, kind of an indirect [indiscernible] of what we may expect on efficacy or activity, and I’ll have to say that obviously everybody has their own thinking on this, but clearly there is not a very conclusive if you want indication. That’s always the case, so it is very difficult to elaborate on that regard. I think you also mentioned how this compare for example to rash related to GFR, drugs on target therapies and actually we believe that this more from what we thought with investigators and actually the pictures that we saw from the clinical cases, were really kind of very undefined or not very typical of any other rash. So it’s very difficult to attribute how similar or dissimilar is toward, you got [indiscernible] with other target antigens. We do have – sorry remember I think a biopsy of one of the patients that really showed kind of inconclusive, if you want [indiscernible] if you are asking because you’re asking more in terms of what this could limit us of mechanism question.

[Mike King:]

Yes. I am trying to find out what say that an M2, you can convert an M2 macrophage in M1 [indiscernible] something I could be detected in the...

[Claudio Dansky Ullmann:]

So, the short answer to that is not – we don’t have sufficient elements to say anything regarding that.

[Operator:]

Our next question will come from Anupam Rama with JP Morgan.

[Tessa Romero:]

This is Tessa filling in for Anupam this evening. My first question and first thing for the color on the choice of the 60 mg dose in the monotherapy expansion study, but I just wondered with respect to the combination study, how are you all assessing for the maximally biologically effective dose in combination with PD1 therapy and there any particular biomarkers that are particularly out-focused. And then I have one more follow-up thing.

[Adelene Perkins:]

Thanks for the question. I think Claudio can address that. I just would remind you that for the combination, we are still in the dose escalation. So we have not yet reached an MPD or determined the combination dose going forward. So, as Claudio mentioned earlier, once we complete the DLC assessment period at 30mg later this month, we’ll decide whether we continue the dose escalation or whether we expand at 30 mg and that’s and all host of factors that may be Claudio can describe.

[Claudio Dansky Ullmann:]

And actually, we’re not doing, it seems very differently to what we’ve done for the monotherapy. In the sense that where we will be looking the PK profile in the combination and PD – if the PD activity the same way that we look for the monotherapy. If you remember, at ACR, we reported preliminary data only for pharmacokinetics of the 20mg plus Opdivo cohort and we found that there was really no changes in what we have seen in terms of PK for IPI-549, a small therapy in combination with Opdivo. As we continue evaluating the 30 mg combination cohort, we will gather all the information related to that and obviously related to safety and then we will make an assessment of where we are in terms of the doses to proceed.

[Tessa Romero:]

Okay, great, thank you very much. Very helpful. And then I guess I had one more follow-up, just with respect to the tumor biopsy has been optional for patients in the mono and combo dose escalation cohort, but you’ve outlined that the plan to dose expansion cohort with Opdivo for mandate pre and post-treatment biopsies. And we just wonder can we expect to see tumor biopsy data at some point ahead of this data – that data from the expansion cohort. Thanks.

[Adelene Perkins:]

So, Jeff Kutok, Chief Scientific Officer can address what we expect to get out of the biopsies. Those are included as part of both expansion cohort, so both in the monotherapy expansion cohort that we’ve just initiated as well as in the combination cohort.

[Jeff Kutok:]

Right, so we are mandating biopsies both pre and on treatment in both as Adelene said the monotherapy and combination expansion cohorts. And we have two major goals in mind. The first is to generate translational data that support the biological activity of IPI-549 and our proposed preclinical mechanism of action, which includes changes in the macrophages and T-cell populations within tumor. And the second goal is really to identify potential biomarkers that may correlate with clinical observations. So that data will be coming in both of those expansion cohorts, within the first several months of patients entering those cohorts.

[Adelene Perkins:]

So to your question, we will most certainly present that data in terms of when we will present it, what you should be expecting next is our first update on data will be from the monotherapy dose escalation which we just completed enrollment and completed the 28-day DLT assessment period and we’re continuing to monitor patients on study. So that will be the next update that we give. Following the update from the monotherapy dose escalation, you would expect our next two updates will be two other phases of the trial that are open right now, which is a combo dose escalation and the monotherapy expansion and it would be reasonable to think those would be in 2018.

[Operator:]

Thank you. [Operator Instructions] I’m showing no further questions at this time. I’d like to turn the call back over to Adelene for closing remarks.

[Adelene Perkins:]

Thank you, Brian. We are excited about the opportunity we have before us with IPI-549 and our team is working hard to rapidly advance our Phase 1 study. We very much look forward to providing additional updates on Infinity in the second half of this year. And we thank you all for dialing in, have a good evening.

[Operator:]

Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude the program and you may all disconnect. Everybody have a wonderful day.