Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) Q2 2016 Results Earnings Conference Call August 9, 2016 4:30 PM ET
Jaren Madden - Senior Director of IR
Adelene Perkins - President and CEO
Julian Adams - President of R&D
Larry Bloch - EVP, CFO and Chief Business Officer
Andrew Tian - RBC Capital Markets
Eric Holder - JPMorgan
Welcome to the Infinity Pharmaceuticals Conference Call to discuss the Company's Financial Results for the Second Quarter of 2016. My name is Juliana, 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.
Thank you, Juliana, and good afternoon, everyone. Welcome to today's call to discuss our recent business progress and review our second quarter 2016 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 remark, 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 objectives, the therapeutic potential of our product candidates, our strategic plans and strategies and financial projections. Our actual results may differ materially from what we project today due to a number of important factors including considerations described in the Risk Factors section of our quarterly report on Form 10-Q for the second quarter of 2016 and in other filings we make with the SEC.
And these forward-looking statements represent our views as of today, and we caution you we may not update them in the future as a result of new information future events or otherwise.
Now, I'd like to turn the call over to Adelene.
Good afternoon, everyone, and thank you for joining us on today's call. I apologize and hope you can hear me all right sort of the laryngitis. Over the past few weeks, we have focused on shifting Infinity's strategic plan in response to the previously announced termination of our collaboration with AbbVie for duvelisib, our dual PI3-kinase-delta, gamma inhibitor.
In conjunction with regaining worldwide rights to duvelisib, we began to pursue a broad range of strategic options for the program with a focus on the sale of duvelisib as an attractive late stage oncology asset. This process is ongoing and we are encouraged by the interaction we've had with companies who had expressed interest in duvelisib based on our review of our clinical development program, clinical data, and the commercial opportunity.
We are unable to provide further details at this time but I can tell you that our goal is to optimize the path forward for duvelisib providing a new treatment option for patients and maximizing value for shareholders. In parallel we are continuing to advance key value drivers for the program which include select clinical studies and proceeding with activities designed to enable the potential future registration, approval and commercialization of duvelisib.
We also implemented a corporate restructuring designed to align our resources with our new strategy and operational plans. Earlier this summer, we announced topline data from DYNAMO, our first registration focused Phase 2 monotherapy study evaluating the efficacy and safety of duvelisib in patients with refractory Indolent Non-Hodgkin Lymphoma or iNHL. This study met its primary endpoint with an overall response rate of 46%.The majority of reported side effects in the study were reversible and clinically manageable. We are planning to seek feedback on this data from the FDA to help inform the next steps for duvelisib in iNHL.
Our second registration focus study is DUO, a Phase 3 randomized monotherapy study of duvelisib compared to ofatumumab in patients with relapsed or refractory chronic lymphocytic leukemia or CLL. We announced today that the DUO study will proceed to its final analysis. The primary endpoint of this study is progression free survival and the event that will trigger the final analysis is expected to occur in the fourth quarter of 2016. If the data are positive we continue to believe that the DUO study could provide the basis for regulatory approval in CLL.
Three other studies of duvelisib are also ongoing and Julian will review these momentarily. We will continue to provide updates on our strategy for duvelisib. However given that we're exploring the potential sell of the program we're suspending our prior guidance on the nature and timing of additional duvelisib update including guidance on data from registration focused trials and the timing of potential regulatory filing.
Turning now to IPI-549 our oral immune-oncology development candidate that selectively inhibit PI3-Kinase-gamma.We are continuing to advance this program and are pleased with the progress being made. Our enthusiasm for IPI-549 is based on the continued medical need for additional therapies in solid tumors coupled with our pre-clinical data suggesting that IPI-549 may provide a complementary mechanism of action to multiple checkpoint inhibitors. Julian will also review that IPI-549 program in more detail.
In summary, clinical studies with duvelisib demonstrates that it is clinically active and has the potential to add to the available treatment options of the patient with indolent non-Hodgkin lymphoma and chronic lymphocytic leukemia. We are now exploring potential buyers for the program who we believe would be well positioned to capitalize on potential of duvelisib based on the data we generated today, as well as to expand on the clinical development program.
We're continuing to develop IPI-549 and are advancing activities that we believe can generate the most benefit for patients and create value for our shareholders. We appreciate your interest and your patience and we will continue to keep you updated on our progress.
With that I will turn it over to Julian.
Thank you, Adelene.
I will review our two clinical programs duvelisib and IPI-549. In June we reported top line data for DYNAMO, our Phase 2 monotherapy study of duvelisib in 129 patients with advanced indolent non-Hodgkin lymphoma. All patients enrolled in this study were refractory to rituximab and to either chemotherapy or radioimmune therapy. The primary end point of the study was overall response rates as assessed by an independent review committee.
The DYNAMO study achieved its primary end point with an overall response rate of 46%. The majority of the reported side effects were reversible and clinically manageable. We have received positive feedback on these data for study investigators and other experts in the medical community who share our belief that duvelisib has the potential to address an important medical need in the treatment of advanced iNHL. We're planning to seek feedback on the DYNAMO data from the FDA to help guide the next steps for duvelisib in iNHL and data from this study have been submitted to ASH.
We’re also continuing to conduct the FRESCO study which is designed to evaluate the potential to eliminate chemotherapy for some patients. An analysis from several studies of patient with follicular lymphoma demonstrated that approximately 20% of patients 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 significantly short survival.
This study is designed to evaluate the safety and efficacy of duvelisib plus Rituxan versus R-CHOP in approximately 230 patients with follicular lymphoma who relapsed within two years. The primary endpoint is PFS.
We are evaluating duvelisib in frontline setting and recently presented preliminary data from CONTEMPO at the recent European Hematological Association annual meeting. CONTEMPO is an Phase 1b/2 combination study designed to evaluate the safety and activity of duvelisib in combination with Rituxan or Gazyva, two anti-CD20 antibodies in treatment naive follicular lymphoma patients.
We reported that duvelisib in combination with Gazyva demonstrated an overall response rate of 100% including 33% complete responses, among nine patient a valuable four response. Duvelisib in combination with Rituxan demonstrated an overall response rate of 80% including a 30% complete response rate among 10 patients available for response. The preliminary safety profile of duvelisib in combination with either Rituxan or Gazyva was in line with the safety profile duvelisib as monotherapy.
The CONTEMPO study is ongoing having enrolled 55 patients and it is now close to additional patient enrollment. Updated data from this study has also been submitted to ASH.
Turning to CLL we’re conducting two clinical studies in the relapse refractory population. The first is DUO, a Phase III 3 randomized monotherapy study of duvelisib in approximately 300 patients with relapsed refractory CLO. This study is designed to evaluate the safety and efficacy of duvelisib compared to ofatumumab an anti-CD20 antibody.
The primary end point is progression free survival of PFS. This study is continuing to final analysis and we hope the data from this study will show that duvelisib could offer patients with relapsed refractory CLL another important treatment option.
We’re also continuing with the SYNCHRONY study which is designed to evaluate duvelisib in combination with Gazyva in patients with CLL who were previously treated with a BTK inhibitor. In addition to our clinical study activities we're also continuing with NDA preparations that could enable regulatory filing for duvelisib.
I will now review our progress with IPI-549, our oral immuno-oncology development candidate. IPI-549 represents a potentially new approach in immuno-oncology by selectively inhibiting PI3 kinase gamma. Today we announced that a manuscript describing the discovery team’s medicinal chemistry research efforts that led the discovery of IPI-549 has been accepted for publication in ACS Medical Chemistry letters. A preliminary copy of the paper is currently available on the ACS publication website.
It was a considerable challenge to design a selective a PI3 kinase gamma inhibitor which was accomplished through the outstand efforts by our team resulting in what believe is the only select PI3 kinase gamma inhibitor in clinical development.
Since the discovery of IPI-549 we’ve conducted a significant amount of preclinical research to elucidate the mechanism, pharmacokinetics, pharmacodynamics, and the invitro and the invivo activity of IPI-549. Earlier this year we presented data demonstrating that IPI-549 targets immune cells and alters the immunosuppressant microenvironment promoting an antitumor immune response that leads to tumor growth and inhibition.
Data have also demonstrated that IPI-549 enhances the effect of multiple checkpoint inhibitors resulting in improved survival including cures in multiple murine models. The study immune memory we evaluated mice that achieved complete responses following IPI-549 plus an anti-PD1 antibody therapy which was then re-implanted with the same tumor type. These animals showed low or no tumor engraftment indicating that they were immunized against the recurrent tumor growth.
These preclinical data provide a strong rationale for our ongoing phase 1 study. The first portion of this study includes a dose escalation phase to evaluate a recommended dose for IPI549 as a monotherapy and in combination with anti-PD1 antibody.
Once monotherapy dose escalation is complete we’re planning an expansion phase in patients with select solid tumors including non-small cell lung cancer and melanoma where we will evaluate IPI-549 in combination with an anti-PD1 antibody. I am pleased with how the study is progressing and now expect to initiate the first cohort evaluating combination therapy this fall.
Together with Jedd Wolchok and other collaborators at Memorial Sloan Kettering we will present new preclinical data for IPI-549 at the second International Cancer Immuno Therapy Conference which will be held in New York City September 25 through 28. And at this conference we will also present early data on pharmacokinetics and pharmacodynamics from the ongoing Phase 1 study.
In conclusion we have very important strategic objectives that we’re working on to ensure the continued advancement of both duvelisib and IPI-549. We’re making progress with our goals for both these programs. We’ll continue to keep you updated on strategic developments with duvelisib and progress with IPI-549.
With that I’ll pass the call over to Larry.
Thank you, Julian.
I’ll now provide an overview of our financial results for the second quarter of 2016. Revenue during the second quarter of 2016 was $9.5 million for R&D services associated with the collaboration of AbbVie up to the AbbVie opt out in June compared to $4.9 million for the same period last year.
R&D expense for the quarter was $52.9 million compared to $34.1 million for the same period last year. The increased R&D expense for the quarter was primarily due to R&D related restructuring charges of $11.9 million as well as higher clinical development expenses for duvelisib.
G&A expense for the quarter was $15.9 compared to $9.4 million from the same period last year. This year-over-year increase is primarily due to restructuring activities as we incurred $4.7 million of restructuring charges within G&A expense during the quarter. We also recorded a non-recurring non-cash gain on the AbbVie opt out of $112.2 million in the second quarter of 2016.
The accounting for this is related to the $235 million upfront fee and $130 million milestone that we proceed most of which was deferred and being recognized using proportionate performance method. For the opt out we’re now recognizing the remainder of these two milestones earned that were not previously recognized as revenue. Not have any ongoing performance or financial obligation to AbbVie. Additionally there were no gains for the same period last year. Net income for the quarter was $53 million or a basic and diluted earnings per common share of $1.05 compared to a net loss of $38.4 million or a basic and diluted loss per common share of $0.78 for the same period last year.
As of June 30, 2016 we have total cash, cash equivalents and available-for-sale securities of $146.4 million compared to $193 million at March 31, 2016. As a result of AbbVie opt out subsequent restructuring activities and other reference preserved our financial resources they were updating or anticipated yearend 2016 cash investments balance and cash run. We expect in the year with a yearend cash and investment balance ranging from $45 million to $55 million compared to prior guidance of $45 million to $65 million.
We expect that our existing cash, cash equivalents and available-for-sale securities at June 30, 2016 will provide a cash runway into the third quarter of 2017 compared to our prior guidance of cash runway through the first quarter of 2017. Our exceeded cash runway guidance is based on our current operating plans which do not include DUO’s expenses beyond the fourth quarter of 2016.
Additionally our yearend cash balance and cash runway expectations do not include additional financing or proceeds from these development activities including the potential sale of duvelisib. In closing we're focused on managing our cash and resources, exploring our broad range of strategic options for duvelisib with a focus on the sale of the program while advancing IPI-549. We will keep you updated on our progress throughout the year.
With that we will open the call for questions. Operator?
[Operator Instructions] And our first question comes from the line of Michael Yee with RBC Capital Markets. Your line is now open.
Hi, guys. This is Andrew on for Mike Yee. Thanks for the questions. So it sounds like you haven't had a dialogue with FDA since reporting the DYNAMO data but just in case how did those conversations go and what's your confidence level like in the likelihood of filing an NDA, is there any reason to believe that the FDA would not allow a filing or not want a filing? And I have a second follow-up question. Thanks.
So thanks Andrew. We will be discussing the DYNAMO data with the FDA to determine whether that data continues to support our anticipation of being able to file for accelerated approval. And so that conversation still needs to happen. And as part of that we will also need to determine the filing strategy whether that we would file on the DYNAMO study alone or combined now with the DUO study. And we, as we announced today we will be taking the DUO study to the full analysis and we'll be reviewing that with the FDA after we have the full analysis.
Okay, great. Thanks. And my second question is could you remind me when I think you said you would present 549 data at September 23 conference, which conference is that?
Yes, its IO conference, it’s the Cancer Research Institute it's got also AACR cosponsors it. So the name of the conference is a little bit difficult to the CRI-CIMT-EATI-AACR International Cancer Immunotherapy Conference titled to science into survival taking place, September 25 to 28at the Sheraton Hotel in New York Midtown.
Okay, very good. That's very helpful. Thank you so much.
And our next question comes from the line of Anupam Rama with JPMorgan. Your line is now open.
Hi, guys. This is Eric in for Anupam this afternoon. Thanks for taking our questions. Just on potential interactions with FDA just wondering whether your – whether you would wait for the DUO readout to initiate discussions with FDA around DYNAMO to have both I think the recession hand or would you anticipate having a discussion on DYNAMO in advance that? And then I have a follow-up on 549.
So we’re constantly in dialogue with the FDA and the DYNAMO and DUO conversations are the separate conversations, they are separate indications. And so we continuously are engaged with the FDA. We’re not operating on an island.
Q – Eric Holder
Got it. Thanks that’s helpful. And maybe just 549 heading into I’m going to call it AACR Immunotherapy that title is way strong.
Q – Eric Holder
I’m just wondering if you kind of help us frame expectations around the clinical data that you’re reasoning there that you will be presenting there, the number of doses that you might have a chance to see? Thanks.
Yes, so it’s the early part of the dose escalation. We're still very pleased with the performance of the molecule that’s a once a day drug. But there we intend to present as I described in the prepared remarks detailed PK/PD data. We think we are now achieving our biological dose but it's too early to assess clinical responses since it's only a handful of patients with a limited time and treatment. But I encourage you to come to the poster and run it more.
Q – Eric Holder
Great. Thanks very much for taking the questions.
[Operator Instructions] And our next question comes from the line of Katherine Xu with William Blair. Your line is now open.
Hi, guys. This is Joe on for Katherine. So with the DYNAMO data, are you still planning to present that at a Medical Meeting? And then also on DUO with the final analysis triggered in fourth quarter is it safe to assume we’re not going to get the topline data into 2017? Thanks.
So the answer to your first question is we have submitted an abstract for ASH and hoped to present DYNAMO at ASH. And you're quite right about the time for analysis that the late final data in this year it would not make it to the ASH presentation.
And what we intend Joe is because we are pursuing at [indiscernible] we’re not providing guidance on when we will be having that topline data we’ll share publicly.
Thanks for taking my questions.
And I’m showing no further questions at this time. I would now like to turn the call back over to Ms. Adelene Perkins for any closing remarks.
Thank you Lily and thank you everyone for joining us today. We appreciate your time and interest.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.
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