Infinity Pharmaceuticals, Inc.
Q4 2012 Earnings Call Transcript

Published: 6 Mar 2013

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the Infinity Pharmaceuticals conference call to discuss the company's full year 2012 financial results. My name is Kate, and I'll 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, Ms. Jaren Madden, Director of Investor Relations and Corporate Communications at Infinity. Please go ahead.

[Julian Adams:]

Thank you, Kate, and good afternoon, everyone. Welcome to today's call to discuss our recent business progress and review our full year 2012 financial results. With me here today are Adelene Perkins, President and Chief Executive Officer; Julian Adams, President of R&D; and Larry Bloch, CFO and CBO. Following our remarks, we will open up the call for Q&A. The press release issued earlier today details our results and is available on our website at infi.com. Please note that during this call, we may make forward-looking statements about our future expectations and plans, including clinical development milestones, the therapeutic potential of our 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 our annual report on Form 10-K for 2012 and our subsequent filings with the SEC. While these forward-looking statements represent our views as of today, they should not be relied upon in the future as representing our then current views. We may update these statements in the future but are not taking on an obligation to do so. And with that, I would like to turn the call over to Adelene.

[Adelene Q. Perkins:]

Thanks, Jaren. Welcome, everyone, and thank you for joining us on the call today. This is an exciting time in Infinity. We made important advances in 2012, which provide a strong foundation for the continued progress we expect to make this year. Our vision of building a sustainable, fully integrated biopharmaceutical company is based on 3 strategic pillars

[Julian Adams:]

Thank you, Adelene. We're very pleased with the progress we've made with our PI3-kinase heat shock protein 90 programs over the past few months, and we anticipate reporting data from both of these programs later this year. This afternoon, I will review our pipeline with a focus on IPI-145, our potent oral PI3-kinase delta/gamma inhibitor. At this stage of development, IPI-145 continues to be the most exciting program I have ever worked on in my career. Last year, we reported encouraging preliminary data at ASH, demonstrating that IPI-145 was well tolerated with a potentially broad therapeutic window. These data indicated the IPI-145 was clinically active at each dose evaluated, from 8 milligrams to 75 milligrams twice daily, or BID. Activity was observed in patients with both B-cell and T-cell malignancies, including chronic lymphocytic leukemia, indolent non-Hodgkin's lymphoma, mantle cell lymphoma, Hodgkin lymphoma and T-cell lymphoma. Currently, we are completing our dose exploration and optimizing -- and optimization efforts in planning for the initiation of at least 2 additional trials this year of IPI-145 in patients with hematologic malignancies. Today, we announced that the maximum tolerated dose of IPI-145 has been defined as 75 milligrams BID. The dose-limiting toxicities observed at 100 milligrams BID, which per protocol are defined in the first cycle of treatment, were an incidence of grade 3 rash and an incident of grade 3 ALT elevation. These were consistent with the adverse events previously reported at ASH. I'm pleased to add that both patients' DLTs resolved and, per protocol, were dose-reduced and remain on steady at 75 milligrams BID. With the MTD defined, we're now able to leverage the adaptive approach of our Phase I trial to initiate additional planned expansion cohorts. These cohorts allow us to increase our patient experience in a broad range of hematologic malignancies and further optimize the dose of IPI-145 as we advance the program towards registration studies. To that end, we have just opened 5 expansion cohorts of approximately 30 patients each to further evaluate the safety, pharmacokinetics, biomarkers and activity of IPI-145 at 75 milligrams BID. I will now take a moment to describe these 5 cohorts. The first 2 new expansion cohorts are designed to confirm the initial activity reported at ASH, and the other 3 are intended as signal-finding cohorts to explore malignancies in which there is strong mechanistic rationale for PI3-kinase delta and gamma inhibition. First, we are enrolling another cohort of patients with chronic lymphocytic leukemia, indolent non-Hodgkin's lymphoma and mantle cell lymphoma. As you know, in July of 2012, we initiated our first cohort expansion at a dose of 25 milligrams based on activity observed at our lowest doses of 8, 15 and 25 milligrams in our dose escalation. Based on the tolerability and activity reported at ASH, we believe that 25 milligram BID may be an appropriate dose for the chronic hematologic malignancies. At this dose, the PK profile of IPI-145 indicates full inhibition of PI3-kinase delta, as well as partial inhibition of PI3-kinase gamma. Importantly, the second cohort at 75 milligrams BID provides us with the opportunity to further evaluate IPI-145 at a higher dose in these same indications and thereby evaluate whether or not there's an enhanced benefit to treating patients at this higher dose. Second, we are enrolling a cohort of patients with T-cell lymphomas, which allows us to explore the initial activity reported at ASH. Finally, we are enrolling patients in 3 signal-finding cohorts in malignancies in which there is a compelling scientific rationale in the following indications

[Lawrence E. Bloch:]

Thank you, Julian. I will briefly review our financial results for the full year 2012. The total revenue for the full year 2012 was $47.1 million compared to $92.8 million for 2011. In 2012, revenue consisted of $45 million related to reimbursed R&D services and $2.1 million related to the amortization of deferred revenue with a grant of rights and licenses under our previous strategic alliance with Purdue and Mundipharma. This compares to $88.5 million and $4.3 million, respectively for 2011. R&D expense was $118.6 million compared to $108.6 million for 2011. The increase in R&D expense in 2012 compared to 2011 was primarily due to a restructuring agreement with Millennium last December, which recorded the full lease payment of $15 million payable in installments, as well as development milestones paid to Millennium for IPI-145 and IPI-443. Under restructuring, Infinity regained U.S. rights to all its PI3K kinase inhibitors. G&A expense was $27.9 million compared to $22.7 million for the same period in 2011. Increase in G&A expense year-over-year was primarily due to higher stock-based compensation expense, early commercial development activities and corporate development activities. In 2012, we recorded a non-recurring gain of $46.6 million, which was triggered by the restructuring of our previous strategic alliance with Purdue and Mundipharma. On this restructuring, we gained ex-U.S. development and commercialization rights to all our PI3K kinase inhibitors. Net loss for the full year 2012 was $54 million, or basic and diluted loss per common share of $1.70, compared to $40 million, or basic and diluted loss per common share of $1.50 for 2011. And as of December 31, 2012, we had total cash, cash equivalents and available-for-sale securities of $326.6 million compared to $115.9 million as of December 31, 2011. In the absence of additional funding or business development activities and based on our current operating plans, we expect our current cash and investments to provide us with a cash runway into 2015. Importantly, we have the financial resources necessary to see our ongoing trials through the next key inflection points. With that, I'll turn the call over to our operator for questions.

[Operator:]

[Operator Instructions] Our first question comes from the line of Michael Yee with RBC Capital Markets.

[Michael J. Yee:]

When you think about opening these cohorts, these 5 cohorts, are you looking at your competitors who are ahead of you, speeding along? One of them may be in accelerated filing later this year or next year. How do you think about your path to market? Do you think you could turn some of those 5 cohorts into an expanded cohort and file? Are 1 those 5 cohorts a great unmet medical need? And then my second question is on your 5 studies. You also previously alluded possibly opening 2 other cohorts as well, maybe in combination. Maybe you could talk about where we stand on that.

[Julian Adams:]

Thanks, Michael, for your question. I think the expansion of the 5 cohorts is really part of the Phase I investigation, and is not anticipated to provide the basis of a regulatory filing. I don't think the size of the cohort nor the composite safety data would be sufficient at this time. But it does allow us to very thoroughly investigate the activity of the drug of IPI-145 in the indolent malignancies, as well as the more aggressive malignancies and gives us a basis for which to plan aggressively the next trials to initiate conversations with ad boards of KOLs and investigators, as well as start engaging the agency, both FDA and EMA, to determine the threshold and the trial design and comparators and the necessary elements for registration studies.

[Adelene Q. Perkins:]

And that really speaks to your second question, Michael. There will be -- in addition to these 5 expansion cohorts, we do anticipate opening 2 additional trials, which will be follow-on trials from these expansion cohorts. And we're in the process of determining whether they might have a registration path associated with them.

[Julian Adams:]

And we haven't discussed it, but we're well aware that ultimately, there's a need also to look at combination studies. So all of these are part of our thinking. We just haven't -- voiced this over today. But rest assured, we're leaving no stone unturned with this program.

[Operator:]

Our next question comes from the line of Cory Kasimov with JPMorgan.

[Cory William Kasimov:]

Julian, I wonder if you could talk a little bit more about this adaptive approach you're using and how you may compare the low and high doses to inform your next steps, considering you're looking at 3 indications with both those doses, the other one is obviously all to high dose. And then a second question is if you can provide us an update on how you're thinking about your partnering strategy now that you've made this next step in determining the MTD.

[Julian Adams:]

Yes. So the adaptive approach was always foreseen when we wrote the trial, and we had accounted for enrolling up to 5 cohorts. What was different in this trial is, and was not anticipated at the very start, is we would see such activity as we saw at the lowest doses and, therefore, elected to expand the 25-milligram cohort in CLL, in lymph lymphoma and mantle cell lymphoma. For certain diseases, particularly the aggressive lymphomas, the T-cell malignancies, we fully anticipate that a further suppression of gamma, which we assert is important in these heme malignancies, should be investigated at the mem MTD or the biologically optimal dose to fully suppress delta and suppress gamma as much as possible. And by doing so, it behooves us also to reinvestigate CLL lymphoma just to see if we have deeper and faster responses -- enhanced responses as I alluded to, and will that make a difference? Because the field still needs a better understanding of what inhibition of delta and gamma. We are the only one -- we are the pioneers sort of forging the way here, and we'd like to very much understand the interplay of these 2 isoforms of PI3 kinase. With respect to partnering, Larry?

[Lawrence E. Bloch:]

Sure. Cory, thanks for your questions. In regard to partnering, we feel there's really -- this 2 motivations for partnering. One is to access capital necessary to prosecute the clinical campaign and eventually the commercial campaign, assuming we were able to get regulatory approval. And second one is to access capabilities in order to execute with the financial resources. And we do continue to have ongoing discussions with the potential partners. But as we sit today, we believe that we have all the financial and operational resources to really fully explore the breadth of activity for IPI-145, both in the heme malignancies and in inflammatory disorders through these next value inflection points. And that's our plan. Again, we're open to having discussions, we have those discussions ongoing. But we are in no way inhibited from fully prosecuting independently, which is our current plan.

[Operator:]

Our next question comes the line of Marshall Urist with Morgan Stanley.

[Marshall Urist:]

So a few for me. So first, Julian, just -- on the MTD determination, I mean, you mentioned rash and ALT, both things that we've seen before, certainly saw in the data at ASH. So just trying to understand a little bit better, was that because you saw them in the first cycle? And related to that, it seems like, from a gamma perspective, 75 milligrams probably does leave some efficacy on the table from the gamma perspective. So just trying to think about why -- why not try and either protocol modification or some other way, to kind of push -- to push on?

[Julian Adams:]

Yes. Your first point is exactly right. Per protocol, DLTs are defined in the first cycle. And you're right, we have seen sporadic events like rash and transaminase elevations. What we haven't yet shared with the world is sort of the PK profile of 75 milligrams and 100 milligrams, and those data will be probably provided by the ASCO time frame. But I can assure you that at 75 milligrams, we are getting quite a substantial suppression of gamma. So we don't feel like we're leaving a lot on the table, and it's very important that we really do follow the patients so that it's not just getting them through the first cycle but it's now -- the game is about duration of response as well, so we want to make sure that the drug is very well tolerated and we can manage patients for a long time on study. So duration of the -- I mean, we're very happy with the initial response. Number of responses, albeit in a small number of patients, we want to enhance that experience in terms of response and get a response rate, but make sure that, that is a durable response that patients can be maintained for long time on study.

[Marshall Urist:]

Okay, understood. And then I just wanted to get your updated thoughts on gamma. You've obviously seen more sort of longer follow-up from the patients of sort of the ASH vintage. And just your kind of updated thoughts on -- at 75 milligrams, can you give us a sense of how much gamma -- how much gamma inhibition are we seeing? It doesn't seem like that will get us to the IC, certainly not the IC90. So I just wanted to get a sense of -- how much gamma inhibition do you think you need or I guess want? I guess the other way to think about it -- when we think about T-cell lymphoma and I guess, the T -- ALL as well.

[Julian Adams:]

So I can't give you a precise answer on that. We'll be providing more guidance on that at ASCO. Suffice it to say that we think that gamma is very important because there's high expression above delta and gamma in these malignancies. And so the science that we're following in terms of looking at the database of -- databases in these malignancies in the expression of delta and gamma certainly looks like delta and gamma coamplify each other and cooperate in these malignancies. So delta's clearly been shown to be important and then we think we're at a very professional dose of gamma inhibition. And we'll provide more details at ASCO.

[Marshall Urist:]

Okay, perfect. And then just one last one, which was just -- Okay, I just wanted to understand a little bit better what your plan is in terms of interactions with the FDA and what you kind of feel like you need to initiate those discussions and thinking -- and think of next steps. Is a decent amount of duration from the 25 expansion cohort enough? Do you want to wait for -- wait for these cohorts right now maybe in some of the bigger unmet need populations to think about going to the FDA? Just wanted to get a better sense of what you think the critical path is to getting there from a data perspective.

[Julian Adams:]

Yes. In general, it's good to meet with them early and often, but it's also important to bring them data and not just have a theoretical conversation. So we are thoughtfully considering the timing and the data we will present to the FDA in a propitious timing that doesn't hold back our clinical development but is in alignment with what the agency's expectations are, as well as our clinical investigators. So again, stay tuned over the year. It will become very clear how we're prosecuting the program.

[Operator:]

Our next question comes from the line of Jason Kantor with Credit Suisse.

[Jason Kantor:]

I have a -- just 2 really. One, one of your competitors got this breakthrough therapy designation. Is this something that you could also likely get? Is there some criteria? Have you talked to FDA about this? Does this offer you an accelerated path forward potentially as well?

[Julian Adams:]

So first of all, I would like to congratulate Pharmacyclics. I think it's good for the field, and it shows a very attentive FDA looks at data, particularly their data in mantle cell, which unequivocally shows -- it is meritorious of a breakthrough designation. We will look at our own data and make the same kinds of judgments and present our data to the agency at the appropriate times. And if we've narrowed it, maybe we'll be next in line. It's impossible to -- I certainly don't want to speak for the agency or for data yet -- that we don't yet have in hand.

[Jason Kantor:]

So -- and with regard to the data, will we see the data on all patients for the full expansion of the 25 cohort at ASCO?

[Julian Adams:]

Yes, we should. At ASH, we had 55 patients enrolled. So imagine that all 55 patients, the maturity of those data will be included for an ASCO presentation, again if we're accepted. And then the ongoing enrollment of the 5 cohorts, to the extent that those data are mature, we'll present whatever we have as of the few weeks cutoff before ASCO.

[Jason Kantor:]

Is there any -- with regard to the ASCO abstract, you said that -- what you submitted to the ASCO abstract was the same data cutoff for the presentation that you had at ASH. Is there any risk that ASCO just doesn't accept it because you've sort of submitted no new data in the abstract? Or is that fairly standard?

[Julian Adams:]

I would say it's fairly standard, but I cannot speak for the adjudicators at ASCO.

[Jason Kantor:]

Okay. But you'll provide us with data that's updated as of -- as close to ASCO as possible when we get to that time?

[Julian Adams:]

Oh, at ASCO, we'll provide you with the data. That's the forum, the medical forum and peer-reviewed forum for which we will be able to present the most updated version of our data.

[Operator:]

Our next question comes from the line of Ian Somaiya with Piper Jaffray.

[M. Ian Somaiya:]

Just 2 questions for me. First, just on the combination, I know the question was asked previously, but it's early days but I think we're all looking forward to the sort of pursuit of novel combinations in the hematology field. And just from a mechanistic standpoint, just rationale, can you just maybe point to what combinations maybe make more sense than others?

[Julian Adams:]

It's a subject of great discussion and research in our laboratories. So we're trying to make that determination both from first principles, from experimental work and then eventually from clinical studies. Obviously, this is an era where new targeted therapies look very exciting. And I would hazard a guess that what we're trying to do is replace more toxic standard chemotherapies, DNA-damaging agents, alkylating agents and the like. And one can imagine all sorts of combinations that need -- require exploration. I still confess that none of these agents has presented themselves as a cure. So these -- so the goal is really to induce deep remissions, minimal residual disease and have patients live a long time with their cancer and not succumb to their cancer eventually.

[M. Ian Somaiya:]

Okay. And the other question I had was just on the recent publication which spoke more to a more prominent of the potential [indiscernible] of PI3-kinase in myeloma. Is that something you would agree with? Does it sort of directionally point you away from myeloma as a -- in a pursuit for your drug?

[Julian Adams:]

I would not make any assumptions. Delta and gamma are also highly expressed in myeloma. It is not clear to me which -- what is the driver in myeloma, if PI3-kinase at all is a driver there. I would just submit that this is a very different disease in a very different microenvironment, and I would -- probably not sufficiently explored to draw any final conclusions.

[Operator:]

[Operator Instructions] Our next question comes from the line of Joel Sendek with Stifel, Nicolaus.

[Joel D. Sendek:]

A couple of questions. Let's see, first, I'm wondering if you can answer this, maybe we have to wait for ASCO, but can you tell us if there's any new AEs and if there were any grade 4 or 5 AEs?

[Julian Adams:]

I think you're right with the assumption that you have to wait for ASCO [indiscernible] talk one-off -- comments about patients.

[Joel D. Sendek:]

Got it. Okay. Well, I figured I'd try anyway. A couple more. I noticed in the 5 Phase Is that you went through in the press release and on the call, the one disease that appears to be missing relative to where you got responses at ASH was Hodgkin's lymphoma, and I'm wondering why that might be.

[Julian Adams:]

You're right. If we should come upon Hodgkin's lymphoma, they would form part of the aggressive B-cell lymphomas. So we -- probably we'll see more of the diffuse large B-cell lymphoma, both the ABC and the germinal-centered lymphomas. Just because of prevalence, Hodgkin's patients and adults are very rare. But certainly, we would not have turned away Hodgkin's patients.

[Joel D. Sendek:]

Okay, got it. And then just a quick one on the finance outlook. You mentioned that $15 million R&D payment. So if I back that out of the fourth quarter number, that puts you on an R&D spend of about $25 million run rate. Is that what we should use and build off of our modeling for this year?

[Lawrence E. Bloch:]

Yes. So we gave our guidance early this year at JPMorgan, and the operating expense is about 115 to 125. That incorporates obviously some of the aggressive prosecution of the PI3K franchise that Julian went through with you. So that's not all of that obviously, that can be reflected in the Q4, which is kind of a baseline from which we're building on for 2013.

[Joel D. Sendek:]

Got it. Okay. And then my final question is when you're -- you're talking about these 2 additional trials, at least 2 additional trials. Should we -- and then you give a date of 2013 as the general day. I mean, is it fair to say we'd be back end of the year? Or might you be lucky enough to start those sooner rather than later, maybe possible in the first half?

[Julian Adams:]

We'll comment on those trials as we've announced them with patient enrollment. We don't forecast sort of month-to-month.

[Lawrence E. Bloch:]

We try -- in our guidance, we try to be -- provide a clarity that was feasible to provide. And so in the first half, for the IPI-145 heme malignancy focus, we committed to expand the 5 expansion cohorts and define the Phase II dose in the first half. But in the balance of the year, we committed to at least 2 additional trials. We're certainly moving expeditiously as possible, but it could be any time in the balance of the year.

[Julian Adams:]

And let me just point out, the most important is not the first patient in. It's the last patient out. So when we -- seriously, when we design the trial, we have to look at the landscape, what will look -- what will be 1 or 2 years down the road. And therefore, there's no imperative for us to rush into a trial in any particular quarter. It's really about designing the right trial, executing flawlessly and collecting the data and reporting on the data, getting database locked and being able to announce a successful trial down the road.

[Operator:]

I'm not showing any further questions at this time. I'd like to turn the call back over to Ms. Adelene Perkins for closing remarks.

[Adelene Q. Perkins:]

Thank you, everyone, for joining us today, and we look forward to providing you with further updates on our clinical trials throughout the year. Have a good night.

[Operator:]

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