Infinity Pharmaceuticals' (INFI) CEO Adelene Perkins on Q2 2014 Results - Earnings Call Transcript

Infinity Pharmaceuticals (NASDAQ:INFI)

Q2 2014 Earnings Call

August 05, 2014 8:30 am ET

Executives

Jaren Madden -

Adelene Q. Perkins - Chairman of the Board, Chief Executive Officer and President

Julian Adams - President of Research & Development

Lawrence E. Bloch - Chief Financial Officer, Chief Business Officer, Principal Accounting Officer, Executive Vice President, Treasurer and Secretary

Analysts

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Whitney G. Ijem - JP Morgan Chase & Co, Research Division

Michael G. King - JMP Securities LLC, Research Division

Do Kim

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Matthew J. Andrews - Wells Fargo Securities, LLC, Research Division

Lisa Zhang - Goldman Sachs Group Inc., Research Division

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Eun K. Yang - Jefferies LLC, Research Division

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Infinity Pharmaceuticals conference call to discuss the company's second quarter financial results. My name is Kevin, and I'll be your operator for today's call. [Operator Instructions] Please be advised, this call is recorded at Infinity's request. At this time, I'd like to introduce your host for today's call, Ms. Jaren Madden, Director of Investor Relations and Corporation Communications at Infinity. Please go ahead.

Jaren Madden

Thank you, Kevin, and good morning, everyone. Welcome to today's call to discuss our recent business progress and review our second quarter 2014 financial results. With me here today are Adelene Perkins, President and Chief Executive Officer; Julian Adams, President of R&D; and Larry Bloch, EVP, CFO and CBO.

Following our remarks, we'll 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 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 the quarterly report on Form 10-Q for the first quarter of 2014.

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.

Now I'd like to turn the call over to Adelene.

Adelene Q. Perkins

Thanks, Jaren. Good morning, everyone, and thank you for joining us. Over the past quarter, we have continued to advance our clinical development program for IPI-145 to achieve our vision of having investment-class PI3 kinase medicine. Our first priority is to enable rapid path to approval as a monotherapy in indolent non-Hodgkin's lymphoma, or iNHL, and in chronic lymphocytic leukemia, or CLL, through our DYNAMO and DUO studies, respectively.

The second component of our clinical development plan is to develop chemo-free regimen for patients with hematologic malignancies. To this end, we are planning to initiate DYNAMO+R, a Phase III study of IPI-145 in combination with Rituxan in patients with relapsed follicular lymphoma. We expect DYNAMO+R to start by the end of the year.

While eliminating the need for chemotherapy would represent a significant advance, patients remain in need of a cure. Combining IPI-145 with new therapies in development has the potential to further transform the treatment landscape beyond liberating patients from chemotherapy. As such, the third component of our plan is directed toward achieving more curative outcomes by evaluating IPI-145 in combination with recently approved novel therapies and novel drugs in development. And we look forward to sharing the details of the trials with you in the coming months as we move forward with these studies.

Our belief in the potential of IPI-145 to become the best-in-class PI3 kinase inhibitor is reflected in the investments we are making, both with respect to our clinical development plan and in our strategic agreement.

Yesterday, we announced that we purchased an option to buy out all future royalty payments to Millennium for worldwide sales of IPI-145 in oncology. We are pleased with the flexibility and upside potential that this buyout option provides. Larry will review the amended agreement shortly.

With encouraging data and worldwide rights to IPI-145, we are continuing to assess value-creating strategic partnerships. We are pleased with the nature of the conversations that have taken place and continue to work toward finding the right partner who shares our vision and commitment to improving outcome for these patients and who brings the strategic, financial, operational and commercial resources necessary to accelerate our global development and optimize the potential of IPI-145.

In summary, we are pleased with the progress we are making across the company and look forward to providing additional updates over the coming months.

Now I'll turn it over to our President of R&D, Julian Adams, to briefly review our development program.

Julian Adams

Thanks, Adelene. Our vision is to establish IPI-145 as the best-in-class PI3 kinase inhibitor, delay or obviate the need for chemotherapy and further improve outcomes for patients. Our initial indications are follicular lymphoma and CLL, hematologic malignancies, in which we've generated very encouraging data.

DYNAMO is our first study designed to enable registration. This Phase II study is expected to enroll approximately 120 patients with refractory indolent non-Hodgkin lymphoma, which includes follicular lymphoma, small lymphocytic lymphoma and marginal zone lymphoma. We expect the majority of patients enrolled to have the follicular histology.

IPI-145 is being administered and dosed at 25 milligrams twice daily, and the primary endpoint is the overall response rate. If we are able to confirm the response rates that we have reported in our Phase I study, we believe we will have compelling rationale to seek an accelerated approval on the basis of the DYNAMO data. Later this year, we expect to initiate DYNAMO+R, a Phase III randomized double blind placebo controlled study comparing IPI-145 in combination with rituximab versus placebo plus rituximab in patients with relapsed follicular lymphoma. DYNAMO+R has the potential to serve as a confirmatory study for DYNAMO.

To further expand the potential of IPI-145 in iNHL, we plan to begin a Phase II combination study in treatment-naïve patients later this year. In addition to the DYNAMO+R and frontline study in iNHL, we expect to initiate a third study of IPI-145 in hematologic malignancies by the end of the year. We will provide additional details about these trials in the coming months.

Moving to CLL. IPI-145 has shown encouraging activity in the relapsed and refractory setting, as well as interesting early data in the treatment naïve setting. We are currently enrolled in DUO, a Phase III randomized open label study and approximately 300 patients with relapsed or refractory CLL. This registration supporting study is designed to evaluate the safety and efficacy of IPI-145 administered at 25 milligrams twice daily compared to ofatumumab with progression free survival as the primary endpoint.

Looking across our program and the field more broadly, I continue to be encouraged by the potential for a total paradigm shift in the treatment of hematologic malignancies. At Infinity, in addition to evaluating the potential clinical benefit of IPI-145, we are working to advance our understanding of the underlying biology of these diseases. Specifically, we are focused on more fully elucidating the role of PI3 kinase gamma inhibition, as well as identifying synergistic combinations of targeted therapies so that we can better leverage the unique profile of IPI-145 with the hope of providing deeper and more dural responses -- durable responses for patients.

In September, I will present some new and evolving data supporting the importance of PI3K-gamma inhibition at the AACR Special Conference, targeting the PI3 kinase mTOR network in cancer. We hope to present further mechanistic insights emerging from our preclinical and translational research at ASH in December.

We are also submitting clinical abstracts to ASH, which should provide incremental updates on our Phase I study in hematologic malignancies.

Turning to IPI-145 in inflammation. Our clinical studies in rheumatoid arthritis and asthma are ongoing. The ASPIRA trial is our Phase II double-blind placebo-controlled study of IPI-145, plus methotrexate, in approximately 300 patients with moderate-to-severe rheumatoid arthritis. We're also conducting an exploratory Phase IIa randomized double-blind placebo-controlled crossover study of patients -- of IPI-145 in patients with mild allergic asthma. We expect to report topline data on both of these trials in the second half of this year.

Beyond IPI-145, our scientists are dedicated to building a portfolio of additional PI3 kinase-delta and/or PI3 kinase-gamma inhibitors.

IPI-443, our second PI3K delta/gamma development candidate, gives us strategic optionality to position our PI3 kinase delta/gamma franchise in oncology and inflammation. After we analyze the data from our ongoing inflammation trial, we plan to determine our development strategy for IPI-443.

In summary, we're very excited by the promise of IPI-145 and believe in its potential to become the best-in-class PI3 kinase inhibitor in hematologic malignancies. We are emboldened by the regulatory precedent set by the recent FDA approval of the first PI3 kinase inhibitor, and we hope to confirm the benefit of combined PI3 kinase delta and gamma inhibition in our DYNAMO and DUO trials.

These 2 studies are just the beginning for us. We aspire to achieve chemo-free regimens for patients and enable deeper and more durable responses. We continue to augment our understanding of the biology of PI3 kinase delta and gamma and novel synergistic combinations, with the aim of providing even better treatment regimens for patients. Beyond hematology, we anticipate data readouts from both of our trials and information by year end.

And with that, I will turn over to Larry to discuss our financial quarter -- financials for the quarter.

Lawrence E. Bloch

Thanks, Julian. We continue to be in a strong financial position to execute on our strategic development plan and our investments reflect our belief in the broad potential of IPI-145.

Yesterday, we announced that in exchange for a onetime upfront payment of $5 million, we now have the option to terminate our obligations to pay Millennium future royalties, which range from 7% to 11% of net sales on IPI-145 in oncology, with the ability to exercise option on or before March 31, 2015 by paying a onetime exercise fee of $52.5 million. If we do not exercise the option, our royalty obligations on oncology will remain in effect. We are pleased to have the flexibility in this option, which has the potential to provide long-term value to our shareholders.

Now to provide an overview of financial results for the second quarter of 2014. As of June 30, 2014, we had total cash, cash equivalents and available-for-sale securities of $141.7 million compared to $172.1 million at March 31, 2014.

In addition, we have in place a $100 million debt facility with Deerfield that provides important financial flexibility by allowing us to access these funds through February 2015 but without any obligation to do so. And to date, we have not drawn down any funds on this facility.

R&D expense for the quarter was $28.2 million compared to $26.1 million for the same period last year. Increase in R&D expense reflects higher clinical investment in IPI-145.

G&A expense for the quarter was $7.1 million compared to $6.7 million for the same period last year. The increase in G&A expense was primarily due to increase in early commercial development costs.

Interest expense for the quarter was $2.9 million and is a noncash item related to the amortization of the loan commitment asset recognized under debt facility with Deerfield. There was no interest expense recorded for the same quarter last year.

Net loss for the quarter was $38 million, or a basic and diluted loss per common share of $0.78, compared to $32.6 million, or a basic and diluted loss per common share of $0.68, for the same period last year.

Our financial guidance for 2014 remains unchanged.

In closing, we're in a strong position with registration enabling clinical studies underway, a validated path regulatory approval, a vision to liberate patients from chemotherapy while further improving patient outcomes and strong IP protection into 2030. All these components together provide a solid foundation on which we are building a fully integrated biotech company.

With that, we'll open the call for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Mike Yee with RBC Capital Markets.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Just a few questions. On the Phase II iNHL study that's ongoing that could serve as a pivotal study, can you give us a little more details on how that enrollment's going, whether you think you could complete that first half '15. You think you'd get data by the end of '15, is that what you're thinking? Second question is, with the announcement yesterday and amending the Millennium deal, can you help us understand what events or what things will happen before March 31 that would trigger your decision to do that? And how would you pay for that? And then the third question is, obviously, Gilead's drug just got approved so we have a label. We've all seen that label. What do you think you'd have to show in your studies particularly at that Phase II iNHL study to -- that perhaps not have a black box?

Julian Adams

So Michael, let me handle the first and third, and Larry will talk to you about the Millennium question. So first of all, we haven't provided any specific guidance on enrollment. Enrollment is going well. We are in many different sites, including in the U.S. and in Europe. And your general assumptions are not beyond consideration, but we haven't provided a specific guidance on enrollment. With regard to the label from Gilead. Obviously, we've seen that label as well. I think it's way too early to speak about class effects in terms of categorizing adverse events. Patient safety is paramount to our drug development. First, do no harm, of course. And we continue to monitor the aggregate safety database. What I can say is from our Phase I where we've enrolled over 200 patients, we're generally very pleased with the safety profile and find that most of the adverse events are either asymptomatic or very manageable with those interruptions and interventions -- common interventions in medicine, and we can retreat those patients at full dose and maintain patients on study. So we feel very good so far about our safety, but obviously, the Phase II data will have to be looked at and scrutinized appropriately when we complete the study.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Before Larry answers that other question, just to follow up a little bit more on that, I mean, typically, the FDA can be conservative as it relates to class effects. I think experience shows that. But on the other hand, I think it suggested that the black box is really related to specific deaths related to some of those events. So -- do you feel that if you didn't show those types of deaths, which, obviously, didn't really appear to happen in Phase I, that would be something that makes kind of argument?

Julian Adams

Indeed. I mean, of course, nobody wants to have drug-related deaths. And obviously, we continue to basically manage the treatment of our patients, and that's what we've focused on even in the conduct of the study, both in terms of inclusion-exclusion criteria for patients, but also, the actual management of patients and their adverse events, which we now know from the Phase I -- the extensive Phase I body of data. We think that we -- I hope that we have a favorable safety profile. And if our efficacy profile continues to hold up the way we saw in Phase I, then I think we have, clearly, a very palpable approach to an accelerated file -- filing and accelerated approval.

Adelene Q. Perkins

And Mike, I'd just add more broadly that the approval of new drugs in these malignancies is obviously gotten the entire investigator and patient community excited. And there's a lot of enthusiasm for bringing new mechanisms to bear. And there are a lot of people who share our enthusiasm for what a delta/gamma inhibitor can bring, not only as a monotherapy, which we hope to show in the DYNAMO trials, but then as an agent that can be combined with some of the other novel therapies to really get to more curative outcomes. Our clinical team and med affair's team is out and continues to be enthused by the support of our investigators. And particularly, in our DYNAMO study, given, as Julian mentioned, we've had in the indolent non-Hodgkin's Phase I over a 70% response rate in CRs that because it's a single-arm trial, patients know that they will be getting 145, and that's a very -- and that helps a lot with enrollment.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Okay, then, Larry?

Lawrence E. Bloch

Mike, just to be clear that March 31 is an arbitrary timeline. There's no magic to it. It happens to be the end of most Japanese companies' fiscal years. But your question is, what could we officially accomplish in advance of that, and how might we finance that option, should we exercise that option? And so in terms of the -- what we could accomplish prior to that, in terms of clinical data readouts, the only thing we've guided to in 2014 is the RA and asthma readout, which we have reiterated we expect to happen by year end while obviously instituting some additional studies in that same timeframe as well. In terms of how we might finance it, we always look at evaluating the cost of capital at the point when a decision is being made. But I know, as you're intimately aware, we put in place a financing option with Deerfield to be able to call down up to $100 million by the end of February of 2015. And this Millennium restructuring that we announced yesterday is an additional real option. And so we're really able to consider using one option to effectuate another option, but it's not the only financial instrument we might consider at that point in time.

Julian Adams

And if I can just add, we're in -- obviously, spend dollars to re-acquire the royalty rates that reflects our emboldened position that we really believe 145 is a winner.

Lawrence E. Bloch

Yes. So we, obviously, wouldn't even be allocating the $5 million to purchase the option if, as Julian and Adelene said in their opening remarks, we didn't believe even more so now than in the past, based on the evolving data and the evolving competitive landscape that we think we have potential for IPI-145 to be the best-in-class PI3K inhibitor in hematological malignancies.

Operator

Our next question comes from Cory Kasimov with JPMorgan.

Whitney G. Ijem - JP Morgan Chase & Co, Research Division

This is Whitney on for Cory. Can you guys hear me okay? So with all of the other things -- most of my questions have been answered. So I guess I'll ask about the incremental update at ASH. Can you remind us as of the last update if there were any unevaluable patients? So should we be expecting some incremental updates on response rate or is it mostly a duration update?

Julian Adams

I would say on both counts, there'd be an incremental update on both response rate, obviously, depends on which disease because we have multiple disease subtypes. But there'll be incremental information on response rates for patients who've been longer on study, as well as durability. So on both counts, yes.

Operator

Our next question comes from Mike King with JMP Securities.

Michael G. King - JMP Securities LLC, Research Division

A couple of things. Just curious about the option on 145. I think it's a first on that I've seen payment to acquire an option, which makes me think, perhaps, that your agreement didn't previously allow an approach to Millennium to buy down the royalty. I'm just curious about why the sort of the 2-step process instead of just approaching them when you thought the time was right and asking them if you could buy down the royalty.

Lawrence E. Bloch

This is Larry. Nice to talk to you, Mike. So from our perspective, the value of optionality, it puts the decision-making explicitly in the hands of Infinity over a timeframe that we think is relevant. So as opposed to waiting until some later date, we're big believers in doing things that are strategically important ahead of time to get our ducks in a row. So in general, I think this meets our philosophy of management, which is take variables and turn them into constants.

Michael G. King - JMP Securities LLC, Research Division

Okay. And do you -- in your view, is this a way to facilitate or enable partnership discussions? And do you have any update on that front?

Adelene Q. Perkins

So as you know, Mike, partnerships have been an important part of building Infinity to date, and it's been -- provided a source of non dilutive capital. As we go forward, this is the first time that we've had the luxury of having a Phase III asset with good data in an exciting field. And so there has been a high level of interest. We're gratified that perspective partner share a belief in the potential for our DUO delta/gamma inhibitor and for doing combo studies. So independent of the Millennium buy-down, we're engaged in a number of discussions and it's a competitive process. There aren't many good Phase III assets, and this is the latest stage PI3 kinase that's available for partnering. So we do not believe that we needed to do the Millennium transaction in order to engage in a partnership. We're now evaluating who we think brings the most strategic, financial and operational assets to bear. And also, we're looking at for whom do we believe 145 is a -- can really be a strategic value driver for them so that we enter a partnership where developing 145 is really important to both parties. So -- well, of course, we can't -- it wouldn't be wise to provide guidance on when we'll enter that partnership or expectation. You can -- rest assure that our expedition is that we will be developing 145 in partnership. And as soon as we've finalized and executed on that decision, you all will be the first to hear.

Michael G. King - JMP Securities LLC, Research Division

Okay. And then just...

Julian Adams

Said you specifically, Mike. We'll make sure that you're -- that you hear it [indiscernible] everybody [indiscernible].

Michael G. King - JMP Securities LLC, Research Division

Yes, yes, please do, definitely before the market closes too. Just on autoimmune. It seems to be dragging on, and I know last quarterly call, you guys got asked about it, and I forget exactly what language you used, but it had to do with analysis of the data, and it just seems like the data is taking an awful long time to analyze. So what are the last remaining gating factors in opening the envelope on those 2 programs?

Julian Adams

The Phase I data, we've completed enrollment, and it's really continuing to curate the data because patients continue on study. We have patients out of -- over 2 years on -- and still on study. And so it's a continuous curation of the data. And so that will be reflected in abstracts submitted for ASH.

Adelene Q. Perkins

And in addition on our in-plan studies, the RA data is -- has -- there has been no regard on that. That has been our plan to share the data by the end of the year. On asthma, we did decide to add an additional cohort to that study, which is why we are also guiding that we'll provide the data at the end of the year.

Lawrence E. Bloch

And regarding the RA, obviously that's a large 316-patient study, and there's a 12-week period for valuation. So we are confident that we can reiterate our guidance that 2014 is when the day we'll be presented top line.

Operator

Our next question comes from Ian Somaiya with Nomura Securities.

Do Kim

This is actually Do Kim in for Ian. A couple of them. First, wondering if you could comment on how your prioritizing your cash utilization. And second is a little more hypothetical looking for past or current studies. If you have any thoughts on potential accelerated development strategies for frontline CLL, in particular, whether the FDA and EMA could accept MRD negativity as a surrogate endpoint for PFS in survival?

Lawrence E. Bloch

Great. This is Larry. I'll take the cash question. So it's very much our top priority to allocate it and husband our cash carefully to maximize the ability to develop IPI-145. So we said that we're investing between $170 million and $180 million this year. And to a first approximation that's focused on IPI-145, we're obviously continuing to bring IPI-443 along. There's additional work being done in Julian's team in terms of developing early stage programs, some within the PI3K family, some outside the PI3K great family. But the short answer to your question is the -- our top priority by a long stretch is optimizing the development and accelerating developments of IPI-145.

Julian Adams

With regard to your question on MRD negativity and CLL. No drug to date has been approved on that basis. However, the FDA's very interested in using new technology, flow cytometry assessment of MRD negativity is akin to a complete pathological response in breast cancer. So i think the FDA is very open to seeing those kinds of very deep responses, but they also need to be linked to durability. So obviously, following that, it is the case that no drug as a single agent can achieve that kind of endpoint towards any significant extent with durable responses. So this is about optimizing for CLL. What are the meritorious combinations? Hopefully, we can also get away from chemo regimens that are commonly associated with younger patients in CLL. So we're looking at all of these parameters and clearly have MRD negativity as a goal. And I think that, eventually, the FDA has been showing -- have shown itself to be very up to speed with the improvements in scientific assessments. And we hope to be part of that cadre of companies that can bring new therapies for patients on the new and better endpoints that reflect the long-term durability of the -- of eradicating the disease.

Operator

Our next question comes from Katherine Xu with William Blair.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

My first question is on the restructuring of the agreement with Millennium. Just curious, by just buying down royalties now versus by March of next year, what incremental information are you going to get to actually push you to do this buy-down during this period in terms of data or other areas? Is it not being pushed by a partnership decision? And also, maybe if you could comment on how -- a bit of rationale you have or Millennium has to actually reach this $52.5 million number?

Lawrence E. Bloch

I'll take the second one first. That's a negotiation, and there's -- everyone has their spreadsheets and just kind of cash flows. Ours is driven by our strong belief in the potential for IPI-145 to be the best-in-class PI3K program in hematological malignancies. And so you had your own model, so what that means and what some 11% of royalties could mean on a present value basis. So you probably could negotiate it just as well as we did. In terms of the actual, data stream between now and the end of the next 3 quarters, as I said from a -- based on public guidance perspective, the only clinical data readout that we've guided to are the RA and asthma studies. We'll be initiating additional hematologic malignancies studies. We'll be presenting additional data in terms of some of the underpinnings of the gamma hypothesis, as well as additional data. We hope those who are submitting abstracts for ASH do so, and then we'll provide additional guidance at the JPMorgan Conference in January in terms of what additional things could occur in 2015. But that's kind of a public data that we'll be looking towards.

Adelene Q. Perkins

As Larry mentioned earlier, Katherine. We just -- have always built the business on trying to build -- create as much optionality as possible. And we think that for a $5 million payment, which is roughly 1% of our market capital, we think that's a really smart investment for us to have the option to relieve 7% to 11% royalty obligation. So we just -- we like creating that optionality at this point in time.

Julian Adams

We've been able to put that into our capital expense structure without requiring reguidance for 2014. So we think it's completely consistent with our trajectory that we've guided since the beginning of this year.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Okay. Well, I didn't quite catch AACR. Julian you said there's going to be some data on the gamma mechanism. Did you also say that you're going to present some data on combinations?

Julian Adams

I did. I will be presenting on September 16 in Philadelphia at a special AACR conference on the PI3 kinase mTOR pathway. So this is -- it's an invited talk so -- but there's a lot of enthusiasm, obviously, in the field. And I will provide additional insights that we've developed from our own laboratories, and that is evolving, and we'll continue to build on that throughout the rest of the year. And we've submitted abstracts also for ASH to further amplify on our learnings.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Okay. And then lastly, are you still pursuing T-cell lymphoma?

Lawrence E. Bloch

So we -- I will remind everyone. As part of the Phase I, we had a very impressive response rate in T-cell lymphoma, 55% in PTCL, including CRs. And so we are learning and figuring out, with experts, KOLs and advisers, what will be the next steps for T-cell lymphoma. We're the only targeted therapy to have shown a small molecule -- small molecule to have shown significant activity in this disease. So we're very emboldened by the data we've seen so far.

Operator

Our next question comes from Matthew Andrews with Wells Fargo Securities.

Matthew J. Andrews - Wells Fargo Securities, LLC, Research Division

So we're starting to see MRD negativity as a primary and secondary endpoint in a number of CLL studies. So Julian, could you discuss how MRD negativity's being assessed in the Phase II investigator study that's being conducted at Dana-Farber where 145 is being combined with FCR in young, fit, first-line patients? And second of all, are we to assume that 443 an IND will not be filed until 2015 based on what the information studies show for 145 later this year?

Julian Adams

So I can only comment very -- at a very high level for this investigator-sponsored study. As you know, it's not our study. It is being conducted at Dana-Farber, with principal investigator being Dr. Matt Davis. He wrote us a proposal to explore the MRD-negativity as a primary endpoint in combination with FCR. And obviously, to improve on that, what is seen with FCR is very excited about exploring IPI-145. So we'll just observe and look at what data he eventually is able to garner. And we continue to support investigator-sponsored studies that are meritorious and have good hypotheses and really sort of push the edge of a scientific exploration, in addition to our own company-sponsored trials, which are more designed to achieve regulatory approvals and are conducted in a different way with a different level of rigor. The second part of your question, remind me.-- 443, yes. So I think, yes, it's a safe assumption that we are waiting for the readout of IPI-145 and information to make for the strategic discussion -- the decisions about how to develop 443.

Operator

[Operator Instructions] Our next question comes from Navdeep Singh with Goldman Sachs.

Lisa Zhang - Goldman Sachs Group Inc., Research Division

This is Lisa in for Navdeep. Maybe framing the earlier questions a little differently. Have you seen any of Zydelig's black box adverse events in your clinical studies? And then, separately, what are your thoughts on their pricing?

Julian Adams

So again, in the aggregate, the data we've analyzed most closely are the Phase I data, and we have not seen an intolerable adverse event profile. And as I'll repeat, as I've said before, we have learned how to manage patients on study. So it is -- because of the nature of the low rate of mitotic cell division in these studies, meaning, they are indolent diseases, we can comfortably institute drug holidays to manage adverse events and then have patients stay on study and retreat patients full dose. And we've learned how to do that in the course of our Phase I investigation, and we're applying that to our Phase II trials and our Phase III trials. So we feel comfortable with our approach.

Adelene Q. Perkins

And then Lisa, on your second question with respect to pricing. We don't, as a matter of course, speak directly about other companies' efforts in this field or how they're pricing their drugs, other than just to acknowledge that there's been a lot of progress that's been made with the introduction and launch of new drugs to treat patients with hematologic malignancies, which is great for the field. And as Julian mentioned in his remarks, we're doing a lot of translational medicine work to look at all of those new agents that are in development, which ones make no sense to combined with IPI-145. So we see an opportunity to build on the initial progress that's been made and to take it to a new level by working with some of those other drugs.

Lisa Zhang - Goldman Sachs Group Inc., Research Division

Okay. And then can you just remind us how long you've been looking for a partner? Maybe how many companies you're actively speaking to? And is it -- there are not enough inbound or are their term sheets not compelling enough? If you could just provide more color there.

Lawrence E. Bloch

Yes. we've had -- this is Larry. We've had inbound interest all the way back to when we got the ex-U.S. write-back or when we restructured our Purdue/Mundipharma relationship back in the summer of 2012. We've discussed this year that we proactively decided that the right time to initiate partners discussions was once we had 145 in registration studies and it had, had clear discussions with relevant regulatory authorities about registration pathways. And so that was at the beginning of this year. And as Adelene said, 'this is competitive process. 145 is the most advanced oral hem-onc drug that's unpartnered. And we need to make sure that we are picking the right partner who shares our vision for optimizing IPI-145, shares our perspective on how to optimize the corporate governance of working together because structuring a deal is the first part of the process. The most important part of the process is actually maintaining alignment so we can execute together in long term, in optimizing and realizing the value of IPI-145. So we're going through that process with multiple parties, and we're looking forward to making a final decision in terms of who is the best partner to go forward with the 145.

Lisa Zhang - Goldman Sachs Group Inc., Research Division

Okay. Got it. And then last question on IPI-145 and autoimmune. Can you just remind us and help us frame our expectations as to what we should be focused on when -- on the data topline? I guess, what would you find clinically meaningful or adequate to warrant further developments?

Lawrence E. Bloch

So clinically meaningful is defined by improvements in the primary endpoint in rheumatoid arthritis, ACR20 score. But we have secondary endpoints, ACR50 and ACR70. So it's not just a statistical assessment, but as you correctly pointed out, is this really clinically meaningful in the sense that we just didn't meet our endpoint, but we feel emboldened that further investment is warranted. And that's why we've developed IPI-443 to create that optionality. In asthma, it's a much more of a exploratory proof of concept because it's mild allergic asthma with an antigen provocation, so it's not chronic, moderate-to-severe asthma, I think in the more interesting target population. But it's basically there to understand mechanistically what is delta/gamma inhibitor able to do in -- under antigen provocation. And the primary endpoint there is, of course, is lung function.

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Larry, it's Navdeep. I just had a quick follow-up question to Lisa's question. And sorry for joining the call late. So just on the option of what -- with Millennium, is it because -- I've heard your commentary on you're really not getting any incremental data besides the asthma data and the RA data until March 31. But did you choose March 31 because you'll have a better sense of the Zydelig's launch by then? Was that the purpose of the March 31 date?

Lawrence E. Bloch

Just to clarify. I appreciate your joining, Navdeep, and I appreciate your question. Just to clarify that we expect to have the RA and asthma data this year, so it's certainly through the -- prior to March 31, but during this calendar year. And March 31 truly is just an arbitrary date that happens to be the end of most Japanese domicile companies' fiscal year. So please don't read anything into that number. There's no magic to it.

Operator

Our next question comes from Eun Yang with Jefferies.

Eun K. Yang - Jefferies LLC, Research Division

If you establish a partnership before you exercise your option for Millennium agreement, are you obligated to pay certain percentage of the upfront from partner to Millennium?

Lawrence E. Bloch

No.

Adelene Q. Perkins

No.

Eun K. Yang - Jefferies LLC, Research Division

Okay. And the second question is...

Adelene Q. Perkins

It's completely independent. Our discussions around our partnership 145 are strategic in nature. And the Millennium is strictly a financial transaction that allows us to reduce that downstream royalty obligation, but those are separate.

Eun K. Yang - Jefferies LLC, Research Division

And then your current discussions with the potential partnerships for 145. Is there exclusively oncology indication or has the inflammation indication come up as well?

Adelene Q. Perkins

So we have prioritized our discussions around oncology because that's where we have the data and that's where we're aggressively in Phase III development. So our priority on partnering is around 145 in oncology.

Eun K. Yang - Jefferies LLC, Research Division

And the last question. The $5 million option fee. Is it going to be booked in the R&D line in the third quarter?

Lawrence E. Bloch

So the -- we haven't committed to -- when or if we would do the exercise for the option fee of $5 million, it'll be booked under R&D.

Operator

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

Adelene Q. Perkins

Thank you, everyone for joining us today. And we expect to provide further updates on our business in the coming months.

Operator

Ladies and gentlemen, that concludes today's presentation. You may now disconnect, and have a wonderful day.

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