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EP Vantage interview – Infinity takes stock of Asco free fall

Date June 05, 2013

In normal times, a reassuring readout of phase I data for Infinity Pharmaceuticals' blood cancer candidate IPI-145 at the important Asco meeting should have been a bulwark against a steep drop in the company's share price. But amid a biotech bubble a decision to test a low dosage in phase II was taken as a negative sign about safety, causing a damaging sell-off that sent shares down 39% on Monday.

As investors voted with their feet, Infinity chief executive Adelene Perkins tried to remain calm and instead pointed to the company's efforts to execute clinical programmes for  IPI-145 and the phase II lung  cancer drug retaspimycin hydrochloride. “We would much prefer to have had [the shares] go up,” she tells EP Vantage, adding, “We try not to get too focused on the daily swings in our stock price.”

What is it worth?

True, the Massachusetts group was looking overvalued to begin with and was due for a re-rating. EvaluatePharma’s consensus forecast puts sales of retaspimycin (IPI-504) at $194m and  IPI-145 at $83m in 2018, giving the projects net present values of $314m and $85m respectively. Compared with  Infinity's $1.3bn market capitalisation on Friday, expectations were clearly much too high.

That did not stop Piper Jaffray from renewing coverage in March and setting a whopping $53 price target, which would have valued the company at an incredible $2.5bn; they were not alone in having price targets above $50 as RBC Capital and JP Morgan joined in. Such an environment is ripe for disappointment;  Purdue Pharma’s decision to sell its stake should perhaps have been taken as a sign to take profits (Purdue pulls back from biotech with sale of Infinity stake, April 15, 2013).

Of course, Infinity has gone along for the ride as – and Ms Perkins touts this fact – the share price has doubled since the beginning of 2012 even after accounting for Monday’s carnage. It tapped the market twice in 2012 for a total of $261m, leaving it in the enviable position of having $303m in cash at March 31. This healthy amount should enable the group to push its compounds far into the clinic.

In any case, the company appears to have soothed jittery investors after meeting with analysts at Asco, as shares bounced back 23% on Tuesday to $20.26. It should come as no surprise that Piper Jaffray was among those taking a bullish stance post-crash, saying the stock was too cheap to ignore and keeping a $50 price target.

The numbers game

Infinity presented data from two dose-escalation studies of  IPI-145, a phosphoinositide-3 kinase (PI3K) inhibitor, in leukaemia and lymphoma. In addition to safety data, the pill, which blocks the activity of the delta and gamma isoforms of PI3K, has shown early clinical activity, with 12 of 22 patients in an advanced chronic lymphocytic leukaemia (CLL) trial showing partial response.

A second study in multiple types of lymphoma indicated clinical activity in all of them, with a strong showing in indolent non-Hodgkin lymphoma – 10 of 19 patients showed a partial response.

The data established a maximum tolerated dose of 75mg twice daily, although the study’s authors said the project was highly active at a third of that. As a result, the company said it would pursuing the lower dose in a phase II trial in indolent non-Hodgkin lymphoma, a decision taken to be a negative sign about toxicity, even though the study had found no dose-related adverse events in pills containing from 8mg to 75mg of the active ingredient.

As IPI-145 is just entering phase II, it remains behind  Gilead Sciences’ idelalisib, which reported phase II data in CLL – 93% progression-free survival. Ms Perkins says Infinity hopes to differentiate itself from  idelalisib as the  Gilead pill only inhibits the delta  isoform of PI3K, one of the two that  Infinity’s inhibits.

She lauds Gilead for having pushed forward the understanding of PI3K activity. “A couple of years ago there was a lot of concern about this increase in  lymphocyte counts, where people said, ‘Oh my gosh, the drug is making the disease progress more rapidly’,” she says. “What we learned is that it’s not getting worse. It’s actually taking these cancer cells out of the lymph nodes and dumping them into circulation.”

Once in circulation, the cells can then be attacked by the immune system, or if used in combination with chemotherapy, become more exposed to systemic treatment.

The advantage of also inhibiting the gamma isoform is that this prevents abnormal  lymphocytes from returning to the lymph node, exposing them to further attack, she says: “We’re really encouraged by  Gilead revealing the relevance of the delta  isoform and emboldening us to go forward with something that we believe has the potential to be best in class by inhibiting delta and gamma.”

And the rest

Little news can be expected for a few months on the company’s lead product, the heat shock protein 90 (HSP90) inhibitor retaspimycin. The compound is in a blinded phase Ib/II trial in non-small-cell lung cancer, results of which are expected in the second half of the year. Decisions on whether to pursue a partnership or advance into phase III solo will be made after this readout – highly positive data could enable a smaller trial that Infinity could self-fund, she says.

The HSP90 space suffered an Asco-related shock of its own with falling share prices for Synta Pharmaceuticals on disappointing trial results. Ms Perkins says, however, that the two drugs have slightly different focuses, with  retaspimycin’s trial having pre-defined analyses in the squamous cell subgroup and a biomarker subgroup, while Synta’s Galaxy-1 trial was broader.

The volatility that accompanies Asco will subside in coming weeks, and Infinity should be able to relax. It is a slightly less valuable company, but there are catalysts coming soon that will better define what its assets are worth.

To contact the writer of this story email Jonathan Gardner in Chicago at jonathang@epvantage.com or follow  @JonEPVantage on Twitter

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