Infinity Development on Track

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By Lisa Bradley on May 20, 2014 BioPharma

On Tuesday, after markets closed, Infinity reported first quarter 2014 financial results and provided business updates. The company ended the quarter with $172.1 million in cash, which according to our model should sustain operation through first quarter 2015. If including the $100 million debt facility from Deerfield, the cash runway is extended to year-end 2015. Infinity said that no funds have been drawn down from the Deerfield debt facility to date. Net loss for the quarter was $42.3 million with a per share loss of $0.87 versus our estimates of net loss of $34.1 million and a per share loss of $0.71, respectively. Infinity commented that partnership discussions for IPI-145 are going well, and we estimate a potential global development partnership to be consummated by yearend.

We note that the clinical development programs for ibrutinib (Pharmacyclics and Johnson & Johnson [JNJ $99.51]) and idelalisib (Gilead) are in full swing covering many histologies, settings, and combinations, while Infinity is resource-constrained and has not put together as a full-fledged development program. As the potential third entrant in the market three years after the launch of ibrutinib and idelalisib, IPI-145 has to compete with well-entrenched agents marketed with powerful muscles. On the other hand, IPI- 145 is also a potentially attractive asset as the only delta and gamma dual PI3K inhibitor in the clinic and the most advanced unpartnered PI3K inhibitor in development. We believe a global development partnership will bring much-needed resources to execute a much larger clinical development program, as well as to bring financial resources to extend the cash runway for the company.

As IPI-145 is an in-licensed compound, Infinity is obligated to pay Millennium, a division of Takeda Pharmaceuticals, $15 million in pre- NDA milestones, $450 million in approval and commercial milestones, as well as 11%- 15% in royalties; such onerous obligations will weigh on valuation. The company reiterated the strategic focus for IPI-145 on iNHL, with a strong clinical program ongoing and planned; we continue to believe that compared to CLL, iNHL is more of an open field, and IPI-145 may demonstrate a sizable advantage over the front runner idelalisib from Gilead. The highly competitive landscape in chronic lymphocytic leukemia (CLL), including the recent approval of Pharmacyclics’ (PCYC $93.84; Outperform) Imbruvica (ibrutinib) and the anticipated approval of Gilead’s (GILD $78.32; Outperform) PI3K delta inhibitor, idelalisib, in August 2014, has led Infinity to strategically steer IPI-145’s future development toward indolent non-Hodgkin’s lymphoma (iNHL), where data to date suggest that IPI-145 may have a competitive advantage over idelalisib, which is expected to be approved in August.

We note that overall response rate (ORR) in relapsed/refractory (r/r) iNHL for IPI-145 was 73% (including 20% compete response) as compared to the 57% (including 6% complete response) reported for idelalisib from the Phase II DELTA study. Further, 53% of IPI-145 patients remain progression-free at one year, seemingly better than the median PFS of about 11 months in DELTA for idelalisib.