Infinity Pharmaceuticals, Inc.
Q2 2015 Earnings Call Transcript

Published: 6 Aug 2015

[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 2015. My name is Crystal and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. [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, Senior Director of Investor Relations and Corporate Communications at Infinity. Please go ahead.

[Jaren Madden:]

Thank you, Crystal and good morning everyone. Welcome to today’s call to discuss our recent business progress and review our second 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&A. The press release issued earlier this morning details 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 projections. It is possible that our actual results may differ materially from what we project today due to the considerations described in the Risk Factors section of the Quarterly Report on Form 10-Q for the second 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. And with that, I would like to turn the call over to Adelene.

[Adelene Perkins:]

Thanks, Jaren. Good morning, everyone and thank you for joining us on the call today. During the quarter, we continue to focus on advancing duvelisib, our dual inhibitor of PI3 kinase-delta and PI3 kinase-gamma, in registration focused studies. Our first priority remains enabling a rapid path to approval as a monotherapy in indolent non-Hodgkin lymphoma, or iNHL and in chronic lymphocytic leukemia, or CLL. Our enrollment in both DYNAMO and DUO is on track and we are focused on executing the completion of these trials and initiating additional trials by the end of the year. We now have more than 100 patients enrolled of the 120 patients expected to be enrolled in DYNAMO, our Phase 2 monotherapy study in patients with refractory iNHL. Based on current performance, we remain confident in our ability to complete enrollment in the second half of the year. DUO, our Phase 3 monotherapy study in patients with relapsed refractory CLL is also enrolling well and we also remain confident in our ability to complete dual enrollment in the second half of 2015. Completing enrollment in the first of either DYNAMO or DUO triggers a $130 million milestone payment from AbbVie, our global strategic partner for duvelisib in oncology. The potential to file for regulatory approval based on these studies would represent a significant achievement for the company. We also announced this morning that the FDA granted Fast Track designation for the investigation of duvelisib for the treatment of patients with CLL who have received at least one prior therapy. The Fast Track designation underscores our belief and the potential of duvelisib to still an unmet need and provides us with additional opportunities to rapidly advance our development program. Duvelisib is core to our foundation and our vision of building a great company that brings meaningful medicines to patients. As our registration focused studies near enrollment completion, we are continuing to build out our medical and commercial functions as we begin to prepare for registration and launch. We are also very focused on ensuring that we have opportunities beyond duvelisib. So, we are carefully evaluating both internal and potential in-licenses to expand the pipeline. We look forward to sharing further updates at our R&D Day in New York City on October 6. With that, I will turn the call over to Julian to review the duvelisib program in more detail.

[Julian Adams:]

Thank you, Adelene. We were very pleased that the Fast Track designation has been granted for the investigation of duvelisib for the treatment of CLL in patients who have received one prior therapy. The Fast Track program enables us to file sections of the NDA on a rolling basis as data become available. This allows the FDA to review portions of the NDA as they are received rather than waiting for the entire NDA filing to commence the review process. We look forward to continuing to work with the FDA as our program advances. We are also very pleased that our plan for executing on enrollment in our DYNAMO study is achieving the intended results. With over 100 patients enrolled, we are confident in our projection of completing enrollments in the second half of 2015. As a remainder DYNAMO was a single arm Phase 2 monotherapy study designed to evaluate the safety and activity of duvelisib in approximately 120 patients with double refractory iNHL. The primary end point is overall response rate. This study was inspired by our Phase 1 study in patients with advanced hematologic malignancies. At the ASH meeting in 2014, we reported a 72% overall response rate including a 33% complete response rate among 18 patients with relapsed/refractory iNHL. The population we are evaluating in DYNAMO includes patients with follicular lymphoma that are refracted to both Rituxan and chemotherapy. These patients are in need of effective treatment options. These patients are in need of effective treatment options, which allow us to explore an accelerated approval strategy. In addition to DYNAMO, we are conducting a DYNAMO+R, a Phase 3 study in patients with previously treated follicular lymphoma. The strong Phase 1 data we previously reported in iNHL involves us to explore the clinical potential for duvelisib in the frontline setting. We are currently enrolling patients in CONTEMPO, a Phase 1b/2 study in treatment naïve follicular lymphoma patients designed to evaluate the safety and activity of duvelisib plus Rituxan and duvelisib plus GAZYVA and next generation Rituxan. We are also planning to initiate two new studies in patients with iNHL later this year. Turning to CLL the DUO trial a registration focused monotherapy study in patients with relapsed/refractory CLL remains on track to complete patient enrollment in the second half of 2015. DUO is a Phase 3 randomized open label study in approximately 300 patients designed to evaluate the safety and efficacy of duvelisib compared to ofatumumab, an anti-CD20 antibody in improved setting. The primary endpoint of this study is progression free survival. While extensive progress has been made in the treatment of CLL, patients have not yet been cured. In particular patients who relapse on ibrutinib therapy appear to have the more aggressive form of disease. We believe there is an emerging medical need for new set of treatment options for patients following progression on a BTK inhibitor. We are currently enrolling SYNCHRONY, our Phase 1b study of duvelisib in combination with GAZYVA in patients with CLL whose disease has progressed following the treatment with the BTK inhibitor. We believe duvelisib could play an important role in the treatment of this patient population. We are also looking forward to the presentation of early data from the Phase 1b investigator-sponsored study evaluating duvelisib plus FCR in younger first line CLL patients at the 16th International Workshop on Chronic Lymphocytic Leukemia next month in Sydney, Australia. This IST is being conducted by Dr. Matthew Davids at the Dana-Farber Cancer Institute. Looking ahead at the future of care for patients with hematologic malignancies, we are very excited about the trend towards developing combinations of targeted therapies with the potential to offer patients regimens that could lead to deeper and more prolonged responses. Together with AbbVie, we have an opportunity to be at the forefront of changing how these malignancies are treated. At this year’s ASCO we presented preclinical data providing further rationale for the evaluation – for evaluating duvelisib in combination with venetoclax, a selective first-in-class BCL2 inhibitor as well as other therapeutic agents. We are particularly impressed by the potential synergy observed between duvelisib and venetoclax and we anticipate that AbbVie will initiate the first clinical study of this combination in patients with hematologic malignancies later this year. As Adelene mentioned earlier on October 6, we will host our R&D Day in New York City. We are planning a morning that includes both Infinity speakers and external experts on lymphoma and leukemia. Infinity is committed to developing first-in-class and best-in-class medicines for patients and we are very much looking forward to the opportunity to share updates on both our research and development efforts as well as perspectives on the future of cancer treatment. We hope to see many of you there in person. Now, I would like to turn the call over to Larry who will present our financial results.

[Larry Bloch:]

Thank you, Julian. I will provide an overview of financial results for the second quarter of 2015 and then quickly review our collaboration details with AbbVie and our current financial guidance, which remains unchanged. Revenue during the second quarter 2015 was $4.9 million for R&D services associated with the collaboration with AbbVie. Revenue related to development services and community services are being recognized using proportionate performance method as services are provided over the estimated service period of approximately 5 years. We have recorded remaining amount with latest development and community services of $30.6 million and $70.1 million, a short-term and long-term deferred revenue, respectively. We would not record any revenue in the second quarter of 2014. R&D expense in the second quarter 2015 was $34.1 million compared to $28.2 million the same period last year. The increase in R&D expense was primarily due to contingent cash compensation expenses related to early discovery programs. G&A expense for the second quarter 2015 was $9.4 million compared to $7.1 million for the same period last year primarily due to higher G&A cash compensation. Net loss for the second quarter 2015 was $38.4 million or a basic and diluted loss per common share of $0.78. The same period last year we reported a net loss of $38 million and also a basic and diluted loss per common share of $0.78. As of June 30, 2015, we had total cash, cash equivalents and available-for-sale securities of $199.5 million compared to $233.6 million at March 31, 2015. As Adelene mentioned, we expect to receive a $130 million milestone payment from AbbVie from the second half of this year, which will be triggered by the completion of patient enrollment in the first of either DYNAMO or DUO. As a reminder, we received an upfront 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 of milestone payments, $4 million and $5 million are related to milestones through the first commercial sale of duvelisib and designed to fund this continuing investment in the duvelisib development program. Our financial guidance for 2015 remains unchanged. In conclusion, we are very confident with the potential of duvelisib to make a meaningful difference in the lives of people with hematologic malignancies. And we have the fundamental elements in place, a global strategic partner, registration studies underway, a validated path to regulatory approval for duvelisib, and a commitment to developing a pipeline of first-in-class and best-in-class medicines. That will open the call for Q&A. Operator?

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Mike King from JMP Securities. Your line is now open.

[Mike King:]

Good morning, guys. Thanks for taking the questions. Couple of quick ones. First of all, just with regard to if I got the name right, SYNCHRONY in the BTK failures, would that study exclude Richter’s, most BTK failures tend to progress at a very rapid rate. I am just wondering if you are going to try to exclude Richter’s out of that or would Richter’s not be in exclusion criteria?

[Julian Adams:]

Yes, Richter’s patients are indeed excluded. The majority of patients are not developing Richter’s they are transforming and see we have much more aggressive disease and shortened survival.

[Mike King:]

Right, okay. And would that be a potential registration trial, Julian?

[Julian Adams:]

Right now, we have just announced the Phase Ib portion of the trial and that’s all we are commenting on today. The rest is a data-driven process of course.

[Mike King:]

And then primary there would be wide response rate?

[Julian Adams:]

The response rate is of course the first initial clinical signal that we have.

[Mike King:]

Okay. And then the other question I had was with regard to the combo, venetoclax and duvelisib, I don’t know if you can walk us through your thoughts on dose escalation with regard to sort of what proportion or what fraction of MTD of both molecules you will be starting out with to reach your optimal combination doses?

[Julian Adams:]

Yes, I can’t comment on the actual design of the study. What I can say is that venetoclax and duvelisib appeared to have non-overlapping toxicities in terms of what’s been reported clinically and what we have been seen pre-clinically we are able to give full doses at least in animal studies of both drugs. So, we are encouraged by the tremendous potential for venetoclax and duvelisib.

[Mike King:]

Okay. And then one final question, just coming out of both EHA and ICML getting a lot of investor questions about the definition of colitis and the incidence of colitis with duvelisib versus other PI3 kinase deltas and I am just wondering if you could perhaps put your incidence of colitis/GI grade 3/4 adverse events into context with the other available delta inhibitors? Thanks.

[Julian Adams:]

Yes, thank you for your questions, Mike. We have a very low incidence of colitis. We have sporadic cases. And there are different grades as well. Colitis may develop in some patients where initially they are experiencing an immunological diarrhea. And the way we are managing these patients is to institute dose interruptions, treat diarrhea, immune-based diarrhea with oral steroids. And if the diarrhea resolves, then patients can go back on study. So, we are working very hard to limit this low incidence even this low incidence rate of colitis. And we hope that our treatment synergies will pan out in our clinical trials.

[Mike King:]

I know the data are imperfect, but I mean, do you believe duvelisib is comparable to other deltas better than other deltas, maybe slightly worse than other deltas how would you….

[Julian Adams:]

It’s really impossible for me to comment on the treatment management of how other delta inhibitors have been used. I don’t have access to details of other company’s investigational drugs or approved drugs, but we are aware that this is probably an on-target effect and it’s a function of the new modulation that occurs in the GI immune barrier and it’s something that doesn’t occur. Again, it’s a very low incidence, but it’s something that’s at least quite a bit manageable.

[Mike King:]

Okay, thanks for taking my questions.

[Julian Adams:]

Thank you.

[Operator:]

Thank you. Our next question comes from Robyn Karnauskas from Deutsche Bank. Your line is now open.

[Mohit Bansal:]

Hey, good morning. This is Mohit filling in for Robyn and thank you for taking my questions. I had a question regarding the timelines of DYNAMO data, when do you think you will be in that position to talk about timeline of the data readout? And in terms of filing on that data, do you think – so given that we see responses very quickly with PI3K, do you think you will be able to file right away or do you think you will need some level of PFS data before you file for that? Thank you.

[Julian Adams:]

Thank you for your question. We have announced that we will complete enrollment this year and the data readout will be in 2016. We will give a further updated guidance probably in the JPMorgan timeframe as when we expect those data to readout. And you are quite right, while the primary endpoint is overall response rate, secondary endpoint is PFS. So we do need to have some time element that we think appropriate for reporting on these data.

[Mohit Bansal:]

Great, thanks.

[Operator:]

Thank you. Our next question comes from Anupam Rama from JPMorgan. Your line is open.

[Eric Joseph:]

Hi guys this is Eric in for Anupam this morning. Just a quick question regarding Fast Track designation, congratulations on that, your press release kind of specifies CLL, but just wondering whether or not this kind of applies – to be applied more broadly also to indolent NHL? Thanks.

[Adelene Perkins:]

Right. So we don’t talk about ongoing discussions with the FDA obviously that would be of interest what we have received as the Fast Track designation for patients who have received at least one prior therapy on CLL and we can’t speak any further than that. But of course it would be of interest.

[Eric Joseph:]

Okay, great. Thanks.

[Operator:]

Thank you. And our next question comes from Michael Yee from RBC Capital Markets. Your line is now open.

[Michael Yee:]

Thanks. Good morning. A couple of questions for the team, on the upcoming DYNAMO data I guess in 2016 two questions, one is I guess how confident are you that the data – the efficacy data would be clinically meaningfully different than Zydelig, is there anything to think about in terms of the design of the study whether it’s helped your patients, whatnot to that versus the Phase 1 where you would have some sort of thought process as to why you feel confident versus the Phase 1b clinically meaningfully different. And then I guess second question is how do you think your thoughts would changes if it’s not clinically meaningful difference either on CRs and whatnot and then CR is kind of where you are thinking about differentiation?

[Adelene Perkins:]

Yes. So Michael, say of course we are very hopeful that we will show differentiation based on the Phase 1 data that we saw with both the high response rate and high CR rate. But we kind of run the experiment, so we don’t know, so we have to wait and see the DYNAMO data. And then there are really two sources of differentiation. One is as a monotherapy and we are hopeful that will replicate the data we saw on Phase 1. And the second is on the development strategy and that’s where novel combinations we believe are really the future of the treatment in hem malignancies that it will be combination therapy. And it was really one of the primary reasons that we chose to partner with AbbVie because we saw some of the most compelling synergy data between venetoclax and duvelisib. And so that’s a very important second source of potential differentiation for us. Julian do you want add something?

[Julian Adams:]

Yes. I would add that we have theoretical basis for believing differentiation in laboratory data to support where duvelisib is differentiated and that it has both delta and gama. And we have shown in many different cellular experiments why that has a more profound effect on the microenvironment compared with delta inhibitor alone. We have also demonstrated this in animal studies. So we have a strong scientific basis for differentiation, but as Adelene points out the proof of the pulling is in the data.

[Michael Yee:]

Okay, sure. Then with the combination approach I guess when do you think we would first start getting some data, you feel pretty confident and start having data by either ASCO or ASH combination and when would we start getting data on SYNCHRONY I guess you need by ASCO or ASH. And then just lastly to wrap up if all of this we are talking about your confidence with AbbVie maybe just talk a little bit broadly about how your discussions have been with AbbVie and how aggressive we are with getting all this that you started and underway in getting data out? Thanks.

[Adelene Perkins:]

Yes, sure. So we can’t yet comment on when we will have data from the combo study with venetoclax or with SYNCHRONY. As you know as Phase 1 study is primary purpose of both is evaluating the safety and then on top of that we have precise of efficacy with both response rate and durability through both PSF and longer term OS as will PK. So we will be collecting all of that data. We can’t yet speak to when we will have the ability to publish it. What I say is our relationship with AbbVie is going very well. And so as you know they will be conducting the combo study. They are working and moving that forward aggressively and all of our different interactions at all levels within the AbbVie organization. There is great alignment about what we are trying to accomplish and great working relationship. So, we are very pleased with the relationship.

[Michael Yee:]

Okay, thanks.

[Operator:]

Thank you. Our next question comes from Matthew Harrison from Morgan Stanley. Your line is now open.

[Unidentified Analyst:]

Hi, this is [indiscernible] filling in for Matthew. Just a quick question and you touched on this just a little bit right now, but would you be able to provide any more specificity around when the combination trial with venetoclax maybe start this year? And in the press release you mentioned for later this year, but we were interested in finding out there is any more specific timelines available? Thanks.

[Adelene Perkins:]

No more specificity then by the end of the year.

[Unidentified Analyst:]

Okay, got it. Thank you.

[Adelene Perkins:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from Katherine Xu from William Blair. Your line is now open.

[Unidentified Analyst:]

Yes, hi, this is Joe on for Katherine. I was wondering if there is a specific rationale for why they started to test the combination of duvelisib with venetoclax before doing duvelisib with Imbruvica?

[Julian Adams:]

The data that we collected in the laboratory was systematic survey of [indiscernible] combinations with duvelisib. And what came to the top of the list was venetoclax. Number two close behind it is Imbruvica. So, we have every intention of enabling both of those studies. We want to have the seal the relationship with them last September. And obviously at that time, Imbruvica was not part of their portfolio. So, our intentions went to venetoclax almost logically that was what was on the table. And now that they have acquired Pharmacyclics, obviously there is understanding of conversations we can have about enabling the combination with Imbruvica. So, we are not – we would like to enable any combination that would show that we have been predicted from our scientific studies to be efficacious.

[Adelene Perkins:]

And the other thing I would add is that we saw a strategic value to beginning the venetoclax combination before venetoclax is approved, because we have through the relationship with AbbVie unique access to doing the groundwork to begin the trial for that combination and we felt that was strategically advantageous.

[Unidentified Analyst:]

Thanks for taking my questions.

[Operator:]

Thank you. And I am showing no further questions from our phone lines. I would now like to turn the conference back over to Adelene Perkins for any closing remarks.

[Adelene Perkins:]

Thank you, Crystal. In summary, we are pleased with the progress made during the quarter and are on track to complete enrollment in DYNAMO and DUO in the second half this year. We hope you will join us for R&D Day on October 6 in New York City. We can’t wait to share results from a lot of great work that’s going on at Infinity. We will cover topics and data that span from discovery research and duvelisib development through our perspective on involving treatment paradigms and changing patient needs together with Infinity’s plan for how to address those needs. You will also have the opportunity here from Sujay Kango, Infinity’s Chief Commercial Officer in addition to key opinion leaders in lymphoma and leukemia. We will see you throughout the fall and thank you for joining us today. We appreciate your continued support.

[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 wonderful day.