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Infinity pharmaceuticals (NASDAQ:INFI) is a development stage biopharmaceutical company based in Cambridge, Mass. The company's most advanced drugs are IPI-145, an inhibitor of the delta and gamma isoforms of phosphoinositide-3-kinase (PI3K), and retaspimycin HCl (IPI-504), a heat shock protein 90 (Hsp90) inhibitor.

On Aug. 14, the company completed a public offering of 6.1 million common stock shares at $14.50 per share. Gross proceeds were $88.4 million and net proceeds were $83.4 million. The company's stock price is 22.90 as of Nov. 19 with a market cap of $904.10 million and an enterprise value (EV) of $747.50. At a cash burn rate of $30-$35 million per quarter and approximately $175 million cash by November, Infinity can fund operations until the first quarter of 2014.

There are several catalysts that may influence INFI's share price over the next few weeks and months:

IPI-145

  • On Nov. 12, the company presented additional data from a Phase I trial in inflammation at the ACR/ARHP meeting.
  • Initiation in the fourth quarter of 2012 of a randomized, placebo-controlled, global, signal-finding Phase IIa trial to evaluate the safety and activity of multiple doses of IPI-145 in 150 patients with rheumatoid arthritis.
  • Data from expanded cohorts of a Phase I clinical trial in hematological malignancies in the second half of 2012, at the American Society of Hematology meeting on Dec. 8-11. The abstract will be presented on Dec. 10.

Retaspimicyn

  • Top-line data from the dose-escalation portion of a Phase Ib/II study of retaspimycin in combination with everolimus in KRAS mutant NSCLC in the first half of 2013.
  • Data in the first half of 2013 from a Phase II trial in NSCLC patients of retaspimycin in combination with docetaxel compared with docetaxel alone. After an interim analysis, the trial would be expanded in patient populations that respond to retaspimycin in combination with docetaxel.

Lead Programs: Clinical Data and Deals

IPI-145

PI3K is a validated target and its inhibition has been demonstrated to suppress tumor growth. There are a large number of drugs in clinical and preclinical development that target this enzyme. For instance, we have found almost 62 programs focused on the inhibition of PI3K in active development.

The delta and gamma PI3K isoforms are predominantly expressed in the hematopoietic system1 and are associated with leukemic cells growth. IPI-145 has a high affinity for PI3K delta and gamma.

Inflammatory diseases: In October 2011, a double-blind, randomized, placebo-controlled, phase I trial (NCT01549106) was initiated in healthy volunteers to assess safety, tolerability, pharmacokinetics and pharmacodynamics of single and multiple escalating doses of IPI-145. In March 2012, the trial was completed in 106 subjects. In June 2012, it was reported that the drug was safe and well tolerated with rapid, dose dependent, and durable inhibition of basophil activation at all dose levels. The company presented the abstract at the American College of Rheumatology Annual Scientific Meeting on Nov. 12. Infinity is planning to conduct Phase II studies in RA (see the PR here).

Asthma: The company is running a double-blind, randomized, placebo-controlled, crossover study clinical trial in patients with asthma (NCT01653756). The trial has as endpoints FEV1, markers of inflammation and airway hyper-responsiveness and will evaluate the safety and efficacy of multiple doses of IPI-145 in mild asthmatic patients (estimated n=30) undergoing allergen challenge. This study will be completed in September 2013. The drug has demonstrated to inhibit leukocyte migration in a preclinical allergic asthma model.

Hematological malignancies: In October 2011, an open-label, dose-escalation, Phase I trial was initiated in patients with advanced hematologic malignancies to assess the safety, efficacy and pharmacokinetics of 15 mg of IPI-145 given twice a day. After the determination of the maximum tolerated dose in the dose-escalation phase, an expansion phase was expected to follow in patients with selected hematologic malignancies. By July 2012, the drug had been reported to be safe and well tolerated, with dose-escalation ongoing and the maximum tolerated dose (MTD) not yet determined. In the same month, the expansion phase had begun. 30 patients with chronic lymphocytic leukemia (CLL), indolent non-Hodgkin's lymphoma (iNHL) or mantle cell lymphoma (MCL) will receive a higher dose of 25 mg twice a day. Infinity is also planning for additional cohort expansions other blood cancers once the MTD is determined. The diseases that may be evaluated in these cohort expansions include diffuse large B-cell lymphoma, T-cell lymphomas, acute lymphocytic leukemia and myeloproliferative malignancies.

Retaspimycin

Retaspimycin is an Hsp90 inhibitor. Heat shock protein 90 is part of the heat shock protein family and as a molecular chaperone; it's involved in the correct folding of several proteins in the human body. It also stabilizes proteins involved in cancer which is why it's been a subject of research and development efforts over the last few years.

MedImmune was previously collaborating with Infinity Pharmaceuticals on the development of IPI-493 an oral Hsp90 inhibitor and metabolite of retaspimycin, for the treatment of cancer, however in December 2008 Infinity re-acquired all development and commercialization rights to the drug from MedImmune. In May 2011, preliminary review of data from the two phase I trials was completed and the company intended to focus exclusively on the development of retaspimycin, as drug exposure of retaspimycin was superior to IPI-493.

Lung Cancer

Single agent: In 2007, Infinity started a Phase I/II trial (NCT00431015) of retaspimycin in patients with stage IIIb or IV NSCLC given as a single agent. Data from the Phase I portion were reported at the 19th AACR-NCI-EORTC International Conference in San Francisco. Out of nine evaluable patients, seven reported stable disease. The Phase II portion evaluated the drug in 20 patients divided into two equal groups, one with known epidermal growth factor receptor (EGFR) mutations and one group with wild-type EGFR. At the beginning patients received an intravenous (iv) dose of 400 mg/m2 twice weekly for 2 weeks followed by one week off treatment, but this dose was amended to 225 mg/m2 following mortality in a Phase III trial in gastrointestinal stromal tumors. An additional enrolment of 19 patients was made in October 2008 based on one patient in each group experiencing stable disease. Final data were reported in June 2010 at the 46th ASCO meeting in Chicago. Objective response rate was 7% in the overall patient population (n=78), 10% in EGFR wild-type patients, 4% in patients with EGFR mutations and 12% in patients with wild-type KRAS. There was a 67% response rate in patients with ALK gene rearrangements (n=3).

Combination with everolimus: This is a Phase Ib/II clinical trial testing the combination in KRAS positive patients with stage IIIb or IV NSCLC (NCT01427946). The Ib portion of the study tests the safety and tolerability of the combination and determines the highest dose of both drugs that can safely be given in combination. The Phase II portion evaluates the safety the combination with everolimus and compares the effect of the drugs on tumor response and life expectancy. Data from the Phase Ib portion will be reported in 2H 2012 as we mentioned before.

Combination with docetaxel: The drug has been tested in two clinical trials so far. Data from a Phase Ib in patients with advanced NSCLC were reported in May 2011. Six confirmed objective responses were observed for an overall response rate of 26%. Overall response rates of 43% and 33% were observed in patients with squamous cell carcinoma or with a history of heavy smoking respectively. The combination was well tolerated and pharmacokinetics of docetaxel were unaltered by retaspimycin. In June 2011, further data were presented at the 47th ASCO meeting in Chicago. Patients received 300 mg/m2 retaspimycin intravenously once weekly and 75 mg/m2 intravenous docetaxel every three weeks. The overall median progression-free survival was 2.8 months, and overall survival was 7.9 months.

The second study is a double-blind, placebo-controlled, Phase II trial that was initiated in May 2011 in patients (n=210) with stage IIIb or IV NSCLC (NCT01362400). The trial is evaluating intravenous retaspimycin 450 mg/m2 at day 1, 8 and 15 during each 21 day cicle, in combination with intravenous docetaxel (75 mg/m2 in US and EU, 60 mg/m2 in South Korea and Taiwan, every three weeks) compared with docetaxel alone. The trial was expanded in patient populations that respond to retaspimycin in combination with docetaxel. In July 2012, it was reported that enrollment was ahead of schedule and completion of enrollment was expected in autumn and data in the first half of 2013.

Other Drugs

INFI is also developing IPI-940, an oral fatty acid amide hydrolase (FAAH) inhibitor, for the potential treatment of neuropathic and inflammatory pain conditions, which completed a Phase 1 clinical trial in 2010. Although the company stated in September that the drug was "Phase II ready", there're not planned clinical trials that we know of.

An agreement with Mundipharma and Purdue was reached in November 2008 for saridegib and IPI-940 which was expanded in 2010 to include IPI-145. In June 2012, Infinity Pharmaceuticals announced that the strategic alliance was restructured by mutual agreement, whereby Infinity would regain worldwide rights for PI3K program (IPI-145), the FAAH program and its early discovery programs. Under the terms of the restructuring, Mundipharma and Purdue are still entitled to receive royalties on sales of these products. Additionally, Infinity will issue up to 5.4 million shares at a price of $14.50 per share obtaining proceeds of $78.5 million. Upon completion of this transaction, Purdue will hold 28% of Infinity's common stock outstanding. The company anticipates receiving $27 million during this quarter.

Investor Focus

Investors will mostly be focused on the additional data that will be presented on IPI-145 in hematological cancer at two scientific meetings respectively during the last quarter of the year.

With regards to hematological malignancies, the data presented so far look good for a small trial in a limited and heterogeneous population. In the expansion cohort study that will present data at the American Society of Hematology meeting in December 2012, investors will want to have more data on efficacy and safety of the higher dose of 25mg. The study began dosing patients at 15mg twice a day, and according to the company, some investigator assessments of clinical response at 15mg and less were observed, although the actual data haven't been published. Investors will therefore focus on the information the company will present at the ASH meeting.

On the inflammatory disease front, the data in hand so far are in too early stage to draw much of investors' attention to the presentation at the ACR meeting this fall. Previous data showed the drug being a potent delta/gamma PI3K inhibitor in lab assays and anti-inflammatory activity in preclinical models of disease such as rheumatoid arthritis and asthma. These results were presented at the New York Academy of Sciences event, "Inositol Phospholipid Signaling in Physiology and Disease" held on June 26-27, 2012, in NYC in a presentation titled "Targeting PI3Kgamma & PI3Kdelta in inflammation," by INFI's CSO Vito J Palombella2.

With respect to INFI's second main compound, retaspimycin, investors will focus on the dose-escalation portion of the Phase Ib KRAS NSCLC study to get a sense of how the combination with everolimus may turn out. Given the small set data presented as a single agent in a small clinical trial, it'll be interesting to see more data in combination with other drugs in order to assess the potential value more precisely.

Comparison Vs. Competitors

In Palombella's presentation, data comparing it with Gilead's GS-1101 (NASDAQ:GILD), also dubbed idelalisib or CAL-101, a PI3K delta inhibitor, are shown. This drug was the lead candidate of Calistoga Pharmaceuticals, which was acquired by Gilead in February 2011 in a deal worth $600 million overall. The drug is being tested in a Phase III in CLL and two Phase II trials in Hodgkin's lymphoma and indolent non-Hodgkin's lymphoma respectively. As one can see on the presentation, INFI's compound is a more potent inhibitor of the delta isoform, up to 10 times more and a specific inhibitor of the gamma isoform.

Other potential competitor in this class is Amgen's AMG-319 (NASDAQ:AMGN), currently in a Phase I in about 50 patients with lymphoid malignancies as a dose exploration trial of 25, 50, 100, 200, 300 and 400mg doses given orally once daily. There're no published data on the affinity it binds to PI3K delta.

Another important drug often touted as GS-1101's competitor is Pharmacyclics' Ibrutinib (NASDAQ:PCYC), a BTK inhibitor that has shown good results in trials performed in CLL patients to date. Pharmacyclics's stock valuation speaks for itself about how a kinase inhibitor for hematological malignancies in advanced stages could impact on the company's market cap.

In the field of PI3K gamma inhibitors, IPI-145 stands alone as the only candidate in human clinical trials, the rest of drugs are well behind in pre-clinical and R&D stages.

With regard to Heat shock protein 90 inhibitors in NSCLC, there are at present two other drugs in the same class intended to treat NSCLC: Synta's ganetespib (NASDAQ:SNTA) and Novartis' NVP-AUY-922 (NYSE:NVS). Ganetespib initial interim results published in June weren't well received by Wall St. until mid-stage data published at ESMO congress in Vienna, showed that the drug in combination with docetaxel had meaningful improvement in overall survival and good safety profile in the Phase IIb portion of the GALAXY trial3. The second drug completed a Phase II trial that presented results at ASCO 2012. 121 patients received 70 mg/m2 as a 1-h infusion, qw. Of the evaluable patients, partial response (PR) was observed in 17 patients, stable disease was observed in 41 patients and progressive disease was observed in 56 patients.

Market Opportunity

The hematological cancer market represents a multibillion-dollar commercial opportunity. According to Medtrack, the market's size would be around $20 billion and it's in consequence, a highly competitive field. Particularly, Roche's Rituximab for NHL has estimated sales of ~ $7.5 billion over the next few years incluiding its indications in inflammation and Novartis' Gleevec, the gold-standard for CML, has projected annual revenues of more than $4 billion until 2015 when its patent expires. Newer treatments are Celgene's Revlimid that made north of $3 billion in 2011; J&J/Takeda's Velcade generated revenues of $2 billion in 2011 or Onyx's carfilzomib, which has already been launched in the U.S. as third-line therapy in MM and is expected to reach blockbuster status by 2016 according to Thomson Pharma.

The standard first-line treatment strategy for previously untreated CLL patients is fludarabine, cyclophosphamide, and rituxan (RFC, $40,000/6 cycle treatment). On the failure of RFC therapy, the standard therapy is usually Campath (alemtuzumab, $60,000/year) or high dose steroids. Sanofi withdrew the drug in the U.S. and Europe in September, ostensibly to optimize the launch of the drug in multiple sclerosis.

NHL's gold standard is combination immunochemotherapy with rituximab, cyclophosphamide, doxorubicin, vincristine and prednisone (R-CHOP, $240,000/6 cycle treatment). Mantle Cell Lymphoma accounts for approximately 7% of all NHL and it's mainly treated with a similar chemotherapy regimen that comprises CHOP, bortezomib or R-Hyper CVAD (cyclophosphamide, vincristine, doxorubicin, and dexamethasone for the course A and methotrexate and cytarabine in the course B).

Some deals involving PI3K inhibitors:

  • July 2010: Infinity licenses Intellikine's INK-1197 (IPI-145) for initial license payments of $13.5 million, R&D payments to identify additional inhibitors for the first two years, milestones of up to $25 million to develop two distinct product candidates and milestones of up to $450 million for their approval and commercialization, plus royalties.
  • February 2011: Gilead's acquisition of Calistoga for $375 million upfront plus up to $225 million in milestone payments. Calistoga was developing CAL-101, a PI3K delta inhibitor in Phase I trials.
  • December 2011: Takeda acquires Intellikine for $190 million upfront plus $120 million in future milestone payments. At that time, Intellikine was developing PI3K inhibitors in early clinical stages.

With respect to retaspimycin, the lung cancer indication poses a good commercial opportunity. The standard first-line chemotherapy in NSCLC in the US is carboplatin/paclitaxel (both generics), but in Europe oncologists favor cisplatin/gemcitabine (generics). There are three agents approved for treating patients who progress after first-line treatment: docetaxel, erlotinib and pemetrexed.

Patient population

% of Overall NSCLC population

Number of patients

Number of stage III/IV patients

Heavy smokers

70%

~291,000

~180,000

Squamous cell

35%

~145,000

~90,000

KRAS mutant

30%

~125,000

~80,000

Source: October 2012 company presentation.

Intellectual Property

Retaspimycin is protected by several patents, shown on the table below:

Company

Title

Publication details

Type

Infinity Pharmaceuticals Inc (Patent Assignee/Owner)

Compositions, kits, and methods for identification, assessment, prevention, and therapy of cancer

WO-2011060328

Publ. date: 19-may-11

Priority: 13-NOV-2009

Component of Combination

Infinity Pharmaceuticals Inc (Patent Assignee/Owner)

Methods of treating liposarcoma

WO-2010135426

Publ. date: 25-nov-10

Priority: 19-MAY-2009

New use

Discovery Partners International Inc [Infinity Pharmaceuticals Inc]

Ansamycin hydroquinone compositions

WO-2010045442

Publ. date: 22-APR-2010

Priority: 15-OCT-2008

Formulation

Discovery Partners International Inc [Infinity Pharmaceuticals Inc]

Ansamycin formulations and methods of use thereof

WO-2008073424

Publ. date: 19-jun-08

Priority: 12-DEC-2006

Formulation

Infinity Pharmaceuticals Inc

Ansamycin formulations and methods of use thereof

WO-2007002093

Publ. date: 04-JAN-2007

Priority: 21-JUN-2006

Formulation

Infinity Pharmaceuticals Inc

Methods of treatment using hydroquinone ansamycins

WO-2007009007

Publ. date: 18-JAN-2007

Priority: 13-JUL-2005

New use

Infinity Pharmaceuticals Inc

Analogs of benzoquinone-containing ansamycins for the treatment of cancer

WO-2005063714

Publ. date: 14-jul-05

Priority: 23-DEC-2004

Product

Source: LifeSci Advisors.

IPI-145 is protected by these patents:

Infinity Pharmaceuticals Inc

Heterocyclic compounds and uses thereof

WO-2012064973.

Publ. date: 18-may-2012. Priority: 10-NOV-2010

Product and new use

Moreover, Intellikine has over 30 patent applications covering PI3K inhibitors, compositions, and methods of use.

Stock Valuation

Infinity Pharmaceuticals sports a market cap of $914.8 million at the closing bell on Nov. 23, with a share price of $26.01 and 35.17 million shares outstanding. The stock price has moved higher over the last few weeks probably as a result of the attention that other companies developing immunokinases such as Pharmacyclics have received. In fact, the stock is up over 50% since the offering in August.

The company has cash runway into 2014. Infinity ended the first half of 2012 with $104.6 millions in its coffers plus $111 million of cash infusions expected during Q3 2012 as a result of the August financing ($83.4 million net proceeds) and $27.5 million equity investment from Purdue after their partnership ended. Infinity has high expenses of more than $30 million per quarter mainly derived from their R&D activities in connection with the collaboration agreement they had with Purdue and Mundipharma. They received annual payments over the life of the agreement that offset these expenditures. The payments amounted to $55 million in 2012 and were made during the first half of the year. However, it will be necessary to see the next quarterly reports in order to have a sense of how the R&D expenses are restructured and their impact on the expected burn rate.

Conclusions

The indications of inflammation, hematological cancer and lung cancer represent a large commercial opportunity, with blockbuster drugs already marketed. There remains however, a medical need for safer and more effective drugs. Infinity's PI3K gamma/delta has the potential to become a best-in-class drug in hematological malignancies and also a first-in-class in inflammatory diseases. The drug has demonstrated to be safe and active in Phase I studies. The pico-molar affinity for its targets makes it a good candidate to become a high-profile treatment that will exploit the potential of inhibiting not only the delta isoform of PI3K, but also the gamma isoform. We think that there's published evidence that supports the use of this kind of dual inhibitors for the indications Infinity is pursuing.

We believe that Infinity's current valuation accurately reflects the potential of its pipeline given the stage of development of its drug candidates. Recent deals in this field and the valuations of similar companies suggest that investors are putting a big multiple on these stocks. With a market cap of $904.10 million and an enterprise value of $747.50 million, we still see room for more upside ahead of some additional data readouts that will take place during 2013: Phase IIa data in asthma and RA of IPI-145 and Phase II data from the NSCLC heavy smokers of retaspimycin. Although at an early stage, we think that the inflammatory and blood cancer lines of development bear the potential of becoming an important asset in the treatment of these indications.

Endnotes:

  1. (NYSE:A) Fruman DA, Cantley LC (2002) Phosphoinositide 3-kinase in immunological systems. Semin Immunol 14: 7-18. (NYSE:B) Beer-Hammer S, Zebedin E, von Holleben M, Alferink J, Reis B, et al. (2010) The catalytic PI3K isoforms p110gamma and p110delta contribute to B cell development and maintenance, transformation, and proliferation. Journal of leukocyte biology 87: 1083-1095. Accessed 2011 July 27.
  2. "Targeting PI3Kgamma & PI3Kdelta in inflammation," by INFI's CSO Vito J Palombella (PDF file).
  3. Phase IIb portion of the GALAXY trial (PDF file).
Source: Infinity Pharmaceuticals: Completion Of Phase I/II Trials May Drive Stock