Infinity Pharmaceuticals, Inc.
Q4 2015 Earnings Call Transcript

Published: 24 Feb 2016

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Infinity Pharmaceuticals conference call to discuss the company's yearend 2015 financial results. My name is Andrea and I'll 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.

[Jaren Madden:]

Thank you, Andrea, and good afternoon, everyone. Welcome to today's call to discuss our recent business progress and review our full year 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'll 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's 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 Annual Report on Form 10-K for 2015. While these forward-looking statements represent our views as of today, they should not be relied upon in the future as representing our event’s current views. We may update the statements in the future but are not taking on an obligation to do so. Now, I'd like to turn the call over to Adelene.

[Adelene Perkins:]

Thanks, Jaren. Good afternoon, everyone, and thank you for joining us on today’s call. 2016 is the year of results for Infinity, as we continue to develop duvelisib, a dual inhibitor of PI3 kinase-delta and gamma with first in class potential. The day that we have developed with duvelisib to date suggest it may play an important role in the future treatment of patients with hematologic malignancies. To advance our role of bringing duvelisib to patients, we are focused on three strategic objectives with duvelisib this year. Our first strategic objective is to submit regulatory filings for duvelisib based on two registration focus studies, our Phase 2 DYNAMO study and patients with relapsed/refractory in duvelisib indolent non-Hodgkin lymphoma or iNHL and our Phase 3 DUO study in patients with relapsed/refractory chronic lymphocytic leukemia or CLL. We are on track to report topline data from DYNAMO early in the third quarter of this year. We expect to report topline data from DUO predicated on a progression-free survival interim analysis in the second half of the year and our estimate suggests that the timing of this analysis could occur in whole proximity to our DYNAMO data read out. We anticipate that marketing applications is supported by these data will be submitted to the FDA and EMEA in the fourth quarter of 2016, which is accepted would triggered a $200 million milestone payments from AbbVie, our global strategic partner for duvelisib. These filings are very important because their foundation to our primary objective of seeking approval for duvelisib. Our second objective is to prepare for 2017 duvelisib launch with AbbVie. AbbVie is building a very promising portfolio of novel therapies directly to cancers and brings established global commercial expertise and infrastructure to our collaboration which remains strong. Our teams are working in parallel to build the foundation required for successful launch, from raising awareness of the potential importance of dual inhibition of PI3 kinase-delta and gamma to developing distribution in asset plan. We will be co-promoting duvelisib in the United States and AbbVie will be responsible for the commercialization of duvelisib outside the United States. We are pleased to be working alongside AbbVie, as we prepare to bring duvelisib to patients world-wide. Our third strategic objective this year is to differentiate duvelisib. We have several opportunities to differentiate duvelisib through our registration focus studies and through other trials. In addition to our duvelisib objective, we have an important strategic objective which is focused on advancing IPI-549, our oral immuno-oncology development candidate that selectively inhibit PI3 kinase-gamma. IPI-549 represents an important extension of our oncology portfolio into solid tumors and we began patient enrollment in our first Phase 1 study of IPI-549 last month. Julian will discuss both our differentiating strategic for duvelisib and our development strategy for IPI-549 in more detail. In summary, we have the strategy in place designed to develop seven significant milestones in 2016. First, to report top line DYNAMO data early in the third quarter. Second, to report topline DUO data early in the second half predicated on the results for the planned interim analysis. Third, to submit our NDA for duvelisib in the fourth quarter. Fourth, submit the MAA for duvelisib by AbbVie also in the fourth quarter. Fifth, report initial data from CONTEMPO our Phase 1b/2 study in treatment naïve patients with follicular lymphoma in the second half of the year. Sixth, advanced Phase 1b/2 study of duvelisib in combination with venetoclax, AbbVie’s BCL-2 inhibitor, and seventh, advance the Phase 1 study of IPI-549 in solid tumors. With that, I’ll turn the floor over to Julian to review our clinical programs in more detail.

[Julian Adams:]

Thank you, Adelene. I too am excited about the year ahead as we work toward our goal of bringing duvelisib which is issues in patients. Our vision is to establish duvelisib as the best-in-class PI3 kinase inhibitor with the ultimate goal of curing the patients with hematologic malignancies in combination with other novel therapies while eliminating the need for chemotherapy. In our Phase 1 duvelisib study we reported broad activity across a range of hematologic malignancies and observed profound activity in patients with iNHL and CLL. These Phase 1 data let us to initiate two registrations focused studies and provide us with parallel paths to potential approval. DYNAMO is our Phase 2 monotherapy study designed to evaluate the safety and activity of duvelisib in approximately 120 patients with double refractory iNHL, and we are on track to report topline data from this study early in the third quarter. The primary endpoint is overall response rate. Our second potential path to approval is through DUO, our Phase 3 randomized monotherapy study of duvelisib in approximately 300 patients with relapsed/refractory CLL. This study is designed to evaluate the safety and activity in duvelisib compared to ofatumumab, an anti-CD2O antibody approved in this setting. The primary endpoint is progression-free survival or PFS. We completed patient enrollment in DUO last November. As Adelene mentioned, this study has an event driven PFS interim analysis and we expect to – which we expect to occur early in the second half of 2016. Together the DYNAMO and DUO studies represent important opportunities for duvelisib. In relapsed/refractory iNHL, double refractory patients are difficult to treat and have very limited treatment options. In relapsed/refractory CLL we believe duvelisib may offer patients, but first PI3 kinase monotherapy treatment option without acquiring combination with Rituxan. In addition to our registration focus studies, we are advancing clinical trials designed to further differentiate duvelisib. In iNHL, our strategic includes improving upon and replacing chemotherapy. The BRAVURA study is evaluating potential of duvelisib to improve upon chemotherapy and began enrolling patients in December. BRAVURA is a Phase 3 double-blind, placebo-controlled study in approximately 600 patients with relapsed iNHL designed to evaluate the safety and efficacy of duvelisib plus Rituxan and bendamustine compared to placebo plus Rituxan and bendamustine and the primary endpoint is PFS. Turning to our FRESCO study, this trial addresses an opportunity to eliminate chemotherapy for some patients. A med analysis from several studies reported by Carla Casulo and her colleagues at the University of Rochester was published in the journal of Clinical Oncology last year. The datas demonstrate at approximately 20% of patients with follicular lymphoma progress 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 short-term survival. The lymphoma community agrees that this is an unreserved population. Given the unique and targeted biological mechanism of action for duvelisib, we are evaluating whether we can address an important medical need for these patients. We do not have durable responses to chemotherapy. This Phase 2 study recently began enrolling and is designed to evaluate the safety and efficacy of duvelisib plus Rituxan versus R-CHOP in approximately 230 patients which is relapsed follicular lymphoma. The primary endpoint is PFS. Another opportunity for differentiation in iNHL includes devaluting duvelisib and early alliance of therapy. CONTEMPO was an ongoing Phase 1b/2 study in treatment-naïve follicular lymphoma patients. This study is designed to evaluate the safety and equity of duvelisib plus Rituxan and duvelisib plus Gazyva, a next generation Rituxan. The primary endpoint includes safety measures and complete response rate. We expect to report topline data from this trial by the end of this year. With respect to differentiation in CLL, we are continuing to enroll patients in our SYNCHRONY study designed to evaluate duvelisib in combination with Gazyva and CLL patients previous treated with a BTK inhibitor. The post BTK setting represents a significant unmet need as there are limited treatment options for these patients. We progress on or intolerant to do a BTK inhibitor therapy. Our ultimate goal is to offer more patients the potential for achieving a curative outcome, and we believe the best chance of seeing cure rates increase in hematologic malignancies is through combination therapy. AbbVie’s initiating a Phase 1b/2 clinical study of duvelisib in combination with venetoclax, their investigational BCL-2 inhibitor. This is a comprehensive study designed to evaluate the safety and efficacy of the combination in approximately a 174 patients with relapse and refractory iNHL, aggressive iNHL, small lymphocytic lymphoma and or CLL. The rationale of this study is based on the extensive preclinical research which we observed strong synergy between duvelisib and venetoclax which we reported last year. Our commitment to innovation and improvement patient care has led us to broaden our oncology portfolio at the solid tumors with a new approach in immuno-oncology. In 2015, the amounts of the addition of IPI-549, a small molecular development candidate that may play an important role in anti-tumor immunity by selectively inhibiting PI3 kinase-gamma. Last fall we presented research supporting a mechanism of action by which IPI-549 inhibits the function of the tumor associated immune suppressive macrophages within the microenvironment, potentially enabling an enhanced anti-tumor immune response. We also reported preclinical data showing those dependent, single agent anti-tumor activity with IPI-549 multiple solid tumor models, including murine models of lung, colon and breast cancer. Additionally, mice treated with IPI-549 in combination with checkpoint inhibitors showed greater tumor growth inhibition than either treatment as a monotherapy. We began enrolling patients in our Phase 1 trial of IPI-549 last month. This is a robust study design to explore the dose safety and activity of 549. The first part of the study includes a dose escalation phase testing IPI-549 as monotherapy and in combination with an anti-PD1 antibody therapy. Once dose escalation is complete, we are planning an expansion phase in patients with selective solid tumors including non-small cell lung cancer and melanoma. Our hope is that combining IPI-549 and a checkpoint inhibitor to distinct in complementary mechanisms of actions will enhance activity in solid tumors. In summary, 2015 was an important year for our R&D programs. We are pleased with our progress and we are focused on delivering results in 2016 with the potential opportunity to bring duvelisib to patients with hematologic malignancies. And with that, I will pass the call over to Larry.

[Larry Bloch:]

Thank you, Julian. I'll now provide an overview of our financial results for yearend 2015. At December 31, Infinity had total cash investments of $245.2 million compared to $303.2 million at December 31, 2014. As Adelene mentioned, we anticipate earning $200 million of regulatory milestones from AbbVie in the fourth quarter of 2016. This includes a $125 million milestone associated with the acceptance of our planned NDA filing, and a $75 million milestone of acceptance of AbbVie’s planned M&A filings. While the acceptance of these permissions are expected to occur in the fourth quarter of 2016, the payments of these milestones will likely not occur into the first quarter of 2017. Excluding the $200 million in anticipated milestones we expect to end 2016 with a cash investment balance range between $45 million and $65 million. Total revenue during 2015 was $109.1 million. This included $75.2 million in licensing fees associated with $130 million milestone payment from AbbVie for the completion of patient enrollment in DYNAMO and $33.9 million in R&D services associated with our AbbVie collaboration. By comparison, total revenues during 2014 was $165 million which is composed of $159.1 million license fee and $5.9 million in R&D services both of which are related to the $275 million upfront milestone payment from AbbVie. Turning to our expenses, R&D expense for full year 2015 was $199.1 million compared to $143.6 million for 2014. R&D expense for 2015 include a $52.5 million payment related to the exercise of an option to buy out the company’s royalty obligation to Takeda Pharmaceutical Company for duvelisib world-wide oncology sales. In 2014 R&D expenses include a $10 million milestone payment to Takeda for the initiation of the first duvelisib Phase 3 study and $5 million payment to Takeda related to the royalty option. Excluding these payments increased R&D expense in 2015 was primarily due to higher clinical development expenses for duvelisib. G&A expense was $37.1 million for 2015 compared to $29.3 million for 2014. The increase was primarily due to additional personal as well commercial expenses as we prepare for a potential 2017 launch. Net loss for the full year 2015 was $120.4 million or basic and diluted loss per common share of $2.62 compared to $17.4 million net loss of basic and diluted loss per common share of $0.36 for 2014. The 2016 financial guidance we provided January remains unchanged. In closing, 2016 is a year of results for Infinity. We expect important data in the second half of this year which is positive will allow us to file with regulatory authorities in the U.S. or part of AbbVie to file globally outside the U.S. We have a strong partner in AbbVie with whom we planned to launch duvelisib globally in 2017. Immuno-oncology candidate IPI-549 continues to progress and we are confident that we have the elements in place to make a meaningful difference in the lives of people with cancer. Now we’ll open the call for Q&A. Operator?

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Mike King with JMP Securities. Your line is open.

[Mike King:]

Hi guys, thanks for taking my questions. I had a couple quick ones here. Maybe one to kick off with for Larry, how should we think about the – you guys received a partial milestone payment last year for full enrollment and we’re looking for another approximately $55 million from that, how do we think about that playing out over the course of this year?

[Larry Bloch:]

I think I understand your question. So we received a full milestone payment of a $130 million which we are – could be recognizing based on the portion of performance method over the term of the collaboration. So the cash that we would be expecting our next milestones would be $200 million, the next milestones will not be reflected under portion for a method that will be all recognized upon the earning in payment of those milestones, but this one because of the portion format that will be recognized over period of time. So a portion of it was reflected upfront in our 2015 financials and you’ll see additional reflected in 2016 and the timing suing years.

[Mike King:]

Okay, will you break that down in the K or the Q when you report that?

[Larry Bloch:]

Yes.

[Mike King:]

Okay. And then Julian you didn’t update – you did a great job updating us on a lot of the different trials but the one that I thought was conspicuous by its absence was DYNAMO plus R, can you just give us an update on that?

[Julian Adams:]

Yes. In the past I think we have updated that we have terminated DYNAMO plus R, it turns out that this trial was extremely difficult to enroll…

[Mike King:]

All right.

[Julian Adams:]

This Rituxan as the control arm and we found that very few patients were able to – were available to enroll in that study. So we have instead replacing it with BRAVURA which is the combination I alluded to combination with bendamustine and Rituxan.

[Mike King:]

Okay, my bad. Thanks very much.

[Julian Adams:]

Sure.

[Adelene Perkins:]

Thanks Mike.

[Operator:]

Thank you. Our next question comes from the line of Jim Birchenough with Wells Fargo. Your line is open.

[Unidentified Analyst:]

Hi, good afternoon. It’s Nick in for Jim this afternoon, he is traveling. Just there is a whole program with duvelisib and so now did Mike rise conspicuous by its absence combinations with lenalidomide or with ibrutinib. So can you talk a little bit about how you view duvelisib getting in and perhaps where those molecules are going to get used, I know you have a trial that’s coming in particularly failures, what about trying to move duvelisib further up?

[Adelene Perkins:]

Yes, what might be helpful is just to contextualize your question in our development strategy for duvelisib. And so our first approach is to advance it as a monotherapy and that’s the basis of approval from what we hope will be from DYNAMO and DUO, so that is to combine with today’s standard of care which as Julian highlighted is that trial plus Rituxan and plus BRAVURA then the next issue multiple and advance today’s treatment paradigm by eliminating chemotherapy and that’s FRESCO. And then ultimately we believe our growth standard is novel combinations where we can get more curative outcome as reflected in our trial of duvelisib plus venetoclax. That outlines a very broad and robust development strategy today and as Julian mentioned, we believe that the future will continue to be combination therapy. And so we hope to evaluate duvelisib much more broadly with other novel combination and Julian can speak about some of those as well.

[Julian Adams:]

Yeah, so you mentioned lenalidomide and we are aware that another delta inhibitor was combined with lenalidomide and we stopped early for profound toxicities in pneumonitis in particular. So not all drugs can be combined and this is something we’re very mindful of both in the preclinical setting and of course in patients as well. So we’re very judiciously picking our combination therapies with strong mechanism with rational and preclinical laboratory data and we carefully translate those combinations for powerful agents in combination to seek cures for patients.

[Adelene Perkins:]

And you also asked about duvelisib plus ibrutinib that’s a combination that we’re very interested in. We have some very compelling preclinical data that for which we’ve seen synergy so that’s certainly one that’s we’re interested in exploring it from the future.

[Unidentified Analyst:]

Okay, thanks and thanks Julian for that. So where I was heading really a little bit on that toxicity, have you been able to reproduce that in preclinical studies?

[Julian Adams:]

Reproduce what?

[Unidentified Analyst:]

The toxicity that’s associated with the PI3 delta with…

[Julian Adams:]

No we haven’t found the need to reproduce toxicity in our labs given the clinical results.

[Unidentified Analyst:]

I guess I’m just pointing, I’m trying to find out that there is a point of differentiation between the two compounds that’s really what I’m getting at.

[Julian Adams:]

Yes, but we have not attempted to combine with lenalidomide and have no intension of doing so.

[Unidentified Analyst:]

Okay, and then maybe a follow-up, I know there were some early data for PI3 K detail and its potential role on immuno-oncology. Have you sort of teased out the components between the gamma innovation and delta innovation for solid tumors and obviously you’ve selected gamma but what was it about gamma as oppose to gamma and delta sort of it?

[Julian Adams:]

Indeed we have – we’ve done a lot of work with delta selected and gamma selected compound, notably IPI-549 and we selected IPI-549 and gamma collected inhibitor based on its effects on the mile expressive cells and the macro – the immuno suppressive macrophages found in the tumor micro environment. And we found that inhibiting gamma selectively spares the delta activity required in T cells to initiate a CDA cytolytic immune response.

[Unidentified Analyst:]

Sounds like a really good plan to me. Thank you.

[Julian Adams:]

You’re welcome. We’re trying hard.

[Operator:]

Thank you. Our next question comes from the line of Michael Yee with RBC Capital. Your line is open.

[Andrew Tian:]

Hi guys, thanks for the questions. This is Andrew Tian for Michael Yee. Just apologies if these questions have been asked already, when can we expect to get data from the combo trial to ABT-199? And when do you think we can get Phase 1 data for 549 by year end or do you foresee that more in the NASCO 2017 event? Thanks.

[Julian Adams:]

So we’re first of all very pleased that AbbVie has undertaken the combination with ABT-199 and the phases will be enrolled eminently. There are portions are of this trial, the first is too sure that the clinical pharmacology is appropriate and there is a drug interaction portion of this trial. And then there will be the determined expansion phase or the recommended Phase 2 dose for both drugs. So this will be ongoing throughout this year, and as I said the file was being conducted by AbbVie so we look for them to announce and make disclosures about when we’ll be able to see data.

[Andrew Tian:]

Okay.

[Julian Adams:]

And for IPI-549, we’ve just begun the dose escalation and moving our first patients. So it depends on the dose escalation, the PKPD results which we are monitoring very carefully and we hope we will have a recommended Phase 2 dose. It’s a little too early to project when we will be reporting data, but we will find an appropriate medical meeting to let you know how we’re doing with IPI-549.

[Andrew Tian:]

Okay, and that’s very good. Thank you.

[Operator:]

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

[Eric Holder:]

Hey guys, this is Eric in for Anupam this afternoon. Thanks for taking the question. Just a couple of quick ones from us, first around the falling timelines. In the events in the interim analysis and DUO is a two premature, just wondering if you could walk us through the following strategy in the U.S. and Europe which you move ahead in the iNHL alone or would you wait for DUO to read out?

[Adelene Perkins:]

Absolutely, what we like about having the two path is they are distinct and independent, so either trial that is positive we would move forward with filing.

[Eric Holder:]

Okay, great, thanks. And just wondering if you could give us some color around recruitment in the SYNCHRONY trial and we might expect to see data there? Thanks.

[Julian Adams:]

Well it’s been challenging to enroll patients to progress on BTK inhibitor treatment because there are many investigational agents. However we are also very interested in the patients that are intolerant to BTK inhibitors and so has been amended the protocol to include those patients as well.

[Eric Holder:]

Okay, great. Thanks for taking the questions.

[Operator:]

[Operator Instructions] We have another question from the line of Mike King with JMP Securities. Your line is open.

[Mike King:]

Yeah, actually my question was answered. I was also curious about first time we might be able to see the data from the combination with venetoclax.

[Julian Adams:]

It’s always good to hear from you again Michael.

[Mike King:]

Well, thank you.

[Operator:]

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

[Katherine Xu:]

Hi, good afternoon.

[Operator:]

Katherine, please check your mute button. And I’m not showing any further questions at this time. I would now like to turn the call back over to Adelene Perkins for further remarks.

[Adelene Perkins:]

Thank you, Andrea. And thank you everyone for joining us today. We appreciate your interest and time and we look forward to updating you throughout a very important 2016 the year of results for Infinity. Have a nice night.

[Operator:]

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