Infinity Pharmaceuticals
Infinity Pharmaceuticals (INFI) is an innovative biopharmaceutical company dedicated to advancing novel medicines for people with cancer. Infinity Pharmaceuticals is focusing its efforts on advancing IPI-549, an orally administered, clinical-stage, immuno-oncology product candidate that selectively inhibits the enzyme phosphoinositide-3-kinase-gamma, or PI3K-gamma.1
Preclinical research has demonstrated that PI3K-gamma is highly expressed in tumor-associated macrophages and that blockade of PI3K-gamma signaling by treatment with IPI-549 results in a reprogramming of macrophages in the tumor microenvironment from the M2, or pro-tumor, phenotype to the M1, or anti-tumor, phenotype. This shift increased the number and activity of anti-tumor T cells that can attack the tumor and also increased the production of pro-inflammatory cytokines, which can further stimulate an anti-tumor immune response. Preclinical data from multiple solid tumor models demonstrated that IPI-549 was active as a monotherapy and that IPI-549 administered in combination with checkpoint inhibition led to enhanced activity compared to either treatment alone. Additionally, preclinical tumor model data demonstrated that M2 pro-tumor macrophages are associated with resistance to checkpoint inhibition and that treatment with IPI-549 in combination with checkpoint inhibitors is able to overcome this resistance. These preclinical data further elucidate the mechanism of action for IPI-549 by demonstrating that PI3K-gamma plays a key role in the immuno-suppressive tumor microenvironment.
Based on its preclinical data, Infinity Pharmaceuticals is conducting a Phase 1/1b clinical study designed to evaluate the safety, tolerability, pharmacokinetics, or PK, pharmacodynamics, or PD, and activity for IPI-549 both as a monotherapy and in combination with nivolumab, also known as Opdivo ® , in approximately 175 patients with advanced solid tumors. Nivolumab is an immune checkpoint inhibitor therapy commercialized by Bristol-Myers Squibb, or BMS, that targets a receptor in the human body called programmed death receptor 1, or PD-1. Infinity Pharmaceuticals has entered into a clinical supply agreement with BMS under which BMS agreed to provide nivolumab at no cost to it for use in its Phase 1/1b study of IPI-549. Under the agreement with BMS, Infinity Pharmaceuticals has agreed to provide BMS with clinical data from the study.
The company's Phase 1/1b study consists of a monotherapy dose-escalation phase, a monotherapy expansion phase, a combination therapy dose-escalation phase designed to evaluate IPI-549 in combination with the standard regimen of nivolumab, and a combination therapy expansion phase in patients with specific cancers. The combination therapy expansion phase is designed to evaluate IPI-549 in combination with nivolumab in patients with selected solid tumors, including non-small cell lung cancer, melanoma, and squamous cell carcinoma of the head and neck, whose tumors have shown initial resistance or subsequently have developed resistance to immune checkpoint therapy and is intended to directly test whether IPI-549 is able to overcome resistance to checkpoint inhibitors as demonstrated in preclinical models.
Patient enrollment is complete in all monotherapy dose escalation cohorts ranging from 10 mg once daily, or QD, to 60 mg QD, and Infinity Pharmaceuticals has initiated the monotherapy expansion phase evaluating IPI-549 dosed at 60 mg QD in approximately 25 patients with a variety of advanced solid tumors. The monotherapy expansion phase dose was selected based on safety and an analysis of PK and PD that showed that IPI-549 maintained full suppression of PI3K-gamma at this dose level. The company initiated the combination therapy dose escalation phase in December 2016 based on PK and PD data from monotherapy dose escalation phase that showed significant suppression of PI3K-gamma at 20 mg QD. Patient enrollment is complete in the cohorts evaluating IPI-549 dosed at 20 mg QD and 30 mg QD in combination with the standard regimen of nivolumab, and the company expect to initiate the combination therapy expansion phase in the second half of 2017.
In April 2017, the company reported updated clinical data from its Phase 1/1b study of IPI-549 in a poster session at the American Association for Cancer Research, or AACR, Annual Meeting. Of the 15 evaluable patients from the monotherapy dose escalation phase, preliminary data showed no dose-limiting toxicities or serious drug-related side effects and showed no side effects that led to treatment discontinuation or dose reduction. As of the March 20, 2017 data cutoff date, 6 of the 15 evaluable patients remained on treatment for at least 24 weeks, and three had remained on treatment for more than 32 weeks. Of the six evaluable patients from the combination therapy dose escalation phase, all of whom are in the cohort evaluating IPI-549 20 mg QD in combination with nivolumab, preliminary data showed no dose-limiting toxicities or serious drug-related side effects and no side effects that led to treatment discontinuation. Infinity Pharmaceuticals is continuing to evaluate patients from the combination therapy dose escalation cohort assessing IPI-549 30 mg QD in combination with nivolumab.
Infinity Pharmaceuticals has worldwide development and commercialization rights to IPI-549, subject to certain success-based milestone payment obligations to its licensor, Takeda, as described in more detail under the heading Strategic Alliances - Takeda. Additionally, Infinity Pharmaceuticals is obligated to pay its former strategic collaborators Mundipharma International Corporation Limited, or Mundipharma, and Purdue Pharmaceutical Products L.P., or Purdue, a 4% royalty in the aggregate on worldwide net sales of products that were previously subject to the strategic alliance, including IPI-549, until such time as Mundipharma and Purdue have recovered approximately $260 million in royalty payments from all products that were previously subject to the strategic alliance. After this cost recovery, which represents the funding paid to it for research and development services performed by it under its strategic alliance, its royalty obligations to Mundipharma and Purdue will be reduced to a 1% royalty on net sales in the United States of products that were previously subject to the strategic alliance, including IPI-549.
Lease Termination
On March 27, 2017, the company and BHX, LLC, as Trustee of 784 Realty Trust, which the company refer to as the Landlord, entered into an amendment to its lease agreement, or Lease, for the lease of approximately 61,000 feet of office space at 784 Memorial Drive, Cambridge, Massachusetts. Under the lease amendment, the company and the Landlord agreed to the early termination of the Lease subject to the satisfaction of specified contingencies, which the company refer to as Lease Termination Contingencies, and a termination payment of a $5.0 million, which the company refer to as the Termination Payment. The Lease amendment was extended by entry into a second lease amendment dated May 1, 2017, and a third lease amendment dated May 31, 2017. The company refer to the Lease amendment and its extensions as the Lease Amendments.
The Lease Termination Contingencies were satisfied on June 15, 2017 and the company paid the first installment of the Termination Payment to the Landlord of $4.5 million. The Lease, as amended, will terminate effective August 31, 2017 provided that the company pay the final installment of the Termination Payment of $0.5 million to the Landlord on or before August 31, 2017. The company intend to secure office space with a significantly smaller lease obligation.
Strategic Alliances
Since its inception, corporate alliances have been integral to its strategy. These alliances have provided access to breakthrough science, significant research and development resources, and innovative drug development programs, all intended to help it realize the full potential of its product pipeline. All of its revenues since September 2006 have been generated under research collaborative agreements including its corporate alliances.
Takeda
In July 2010, the company entered into a development and license agreement with Intellikine, Inc., or Intellikine, under which the company obtained rights to discover, develop and commercialize pharmaceutical products targeting the gamma and/or delta isoforms of PI3K, including IPI-549 and duvelisib, an oral, dual inhibitor of PI3K delta and gamma. In January 2012, Intellikine was acquired by Takeda Pharmaceuticals Company Limited acting through its Millennium business unit. The company refer to its PI3K inhibitor program licensor as Takeda. In December 2012, the company amended and restated its development and license agreement with Takeda and further amended the agreement in July 2014, September 2016, and July 2017. The company refer to the amended and restated development and license agreement, as amended, as the Takeda Agreement.
Under the terms of the Takeda Agreement, Infinity Pharmaceuticals is obligated to pay Takeda an aggregate of up to $5.0 million in remaining success-based milestone payments for the development of a product candidate other than duvelisib, which could include IPI-549. Infinity Pharmaceuticals is also obligated to pay Takeda up to an aggregate of $165 million in remaining success-based milestone payments related to the approval and commercialization of one product candidate other than duvelisib, which could include IPI-549.
The July 2017 amendment to the Takeda Agreement terminated its obligations to Takeda to pay royalties with respect to worldwide net sales of products containing or comprised of a selective inhibitor of PI3K gamma, including but not limited to IPI-549. In consideration for such termination, the company concurrently executed a convertible promissory note, which the company refer to as the Note, pursuant to which Infinity Pharmaceuticals is obligated to pay Takeda, or its designated affiliate, the principal amount of $6.0 million together with interest accruing at a rate of 8% per annum on or before July 26, 2018 in cash or in shares of its common stock, at the election of Takeda. The share payment price would be equal to the average closing price of its common stock for the 20 days prior to the payment date. Infinity Pharmaceuticals has the right to prepay the Note, in whole or in part, without penalty and any amounts owed under the Note would become immediately due and payable in the event of a change of control of Infinity, as defined in the Note. Additionally, any unpaid amounts may become immediately due and payable upon customary events of default, as defined in the Note.
Under the September 2016 amendment to the Takeda Agreement, and in connection with its entry into the Verastem Agreement, Infinity Pharmaceuticals is no longer obligated to pay Takeda any remaining milestone payments for the development, approval or commercialization of duvelisib. In return, Infinity Pharmaceuticals is obligated to pay Takeda 50% of all revenue arising from certain qualifying transactions for duvelisib, including those under the Verastem Agreement, subject to certain exceptions including revenue the company receive as reimbursement for duvelisib research and development expenses.
Except for duvelisib in oncology indications, IPI-549, and other products containing a selective inhibitor of PI3K-gamma, Infinity Pharmaceuticals is obligated to pay Takeda tiered royalties ranging from 7% to 11% on worldwide net sales of products described in the agreement. Such royalties are payable until the later to occur of the expiration of specified patent rights and the expiration of non-patent regulatory exclusivities in a country, subject to reduction of the royalties and, in certain circumstances, limits on the number of products subject to a royalty obligation.
The Takeda Agreement expires on the later of the expiration of certain patents and the expiration of the royalty payment terms for the products, unless earlier terminated in accordance with its terms. Either party may terminate the Takeda Agreement on 75 days ’ prior written notice if the other party materially breaches the agreement and fails to cure such breach within the applicable notice period, provided that the notice period is reduced to 30 days where the alleged breach is non-payment. Takeda may also terminate the Takeda Agreement if Infinity Pharmaceuticals is not diligent in developing or commercializing the licensed products and do not, within three months after notice from Takeda, demonstrate to Takeda’s reasonable satisfaction that Infinity Pharmaceuticals has not failed to be diligent. The foregoing periods are subject to extension in certain circumstances. Additionally, Takeda may terminate the Takeda Agreement upon 30 days’ prior written notice if the company or a related party bring an action challenging the validity of any of the licensed patents, provided that Infinity Pharmaceuticals has not withdrawn such action before the end of the 30 -day notice period. The company may terminate the agreement at any time upon 180 days ’ prior written notice. The Takeda Agreement also provides for customary reciprocal indemnification obligations of the parties.
Verastem
On October 29, 2016, the company and Verastem Inc., or Verastem, entered into a license agreement, which the company and Verastem amended and restated on November 1, 2016, effective as of October 29, 2016. The company refer to the amended and restated license agreement as the Verastem Agreement. Under the Verastem Agreement, the company granted to Verastem an exclusive worldwide license for the research, development, commercialization, and manufacture of duvelisib and products containing duvelisib, which the company refer to as the Licensed Products, in each case in oncology indications. Upon entry into the Verastem Agreement, Verastem assumed financial responsibility for activities that were part of its ongoing duvelisib program, including a randomized, Phase 3 monotherapy clinical study in patients with relapsed/refractory chronic lymphocytic leukemia, which the company refer to as the DUO Study. Verastem is obligated to use diligent efforts, as defined in the Verastem Agreement, to develop and commercialize one Licensed Product. During the term of the Verastem Agreement, Infinity Pharmaceuticals has agreed not to research, develop, manufacture or commercialize duvelisib in any indication in humans or animals.
Under the Verastem Agreement, Infinity Pharmaceuticals has financial responsibility for up to $4.5 million of costs related to the shutdown of certain specified clinical studies. Infinity Pharmaceuticals has incurred the $4.5 million maximum for clinical study shutdown costs through June 30, 2017 . Following a short transition period, which terminated December 31, 2016, Verastem has assumed all financial and operational responsibility for the duvelisib program except for the clinical shutdown costs and certain clinical close-out activities that the company agreed to retain. Verastem will reimburse it for costs incurred by it during the transition period, and certain prepaid expenses associated with the clinical studies assumed by Verastem.
Pursuant to the terms of the Verastem Agreement, Verastem is required to make the following payments to it in cash or, at Verastem’s election, in whole or in part, in shares of Verastem common stock: 
$6.0 million upon the completion of the DUO Study if the results of the DUO Study meet certain pre-specified criteria and (ii) $22.0 million upon the approval for a Licensed Product of a new drug application, or NDA, in the United States or an application for marketing authorization with a regulatory authority outside of the United States. For any portion of any of the foregoing payments which Verastem elects to issue in shares of common stock in lieu of cash, the number of shares of Verastem common stock to be issued would be determined by multiplying (1) 1.025 by (2) the number of shares of common stock equal to (a) the amount of the payment to be paid in shares of common stock divided by (b) the average closing price of a share of common stock as quoted on NASDAQ for a twenty day period following the public announcement of the applicable event. The shares of common stock would be issued as unregistered securities, and Verastem would have an obligation to promptly file a registration statement with the Securities and Exchange Commission, or SEC, to register such shares for resale. Any issuance of shares would be subject to the satisfaction of standard closing conditions, including that all material authorizations, consents, and similar approvals necessary for such issuance shall have been obtained.
Verastem is also obligated to pay it royalties on worldwide net sales of Licensed Products ranging from the mid-single digits to the high-single digits. The royalty obligation will continue on a product-by-product and country-by-country basis until the latest to occur of the last-to-expire patent right covering the applicable Licensed Product in the applicable country, (ii) the last-to-expire patent right covering the manufacture of the applicable Licensed Product in the country of manufacture of such Licensed Product, (iii) the expiration of non-patent regulatory exclusivity for such Licensed Product in the applicable country and (iv) ten years following the first commercial sale of a Licensed Product in the applicable country, provided that upon the expiration of the last-to-expire patent right covering the Licensed Product in the United States, the applicable royalty on net sales for such Licensed Product in the United States will be reduced by 50% . The royalties are also subject to reduction by 50% of certain third-party royalty payments or patent litigation damages or settlements which might be required to be paid by Verastem if litigation were to arise, with any such reductions capped at 50% of the amounts otherwise payable during the applicable royalty payment period.
In addition to the foregoing, Verastem is obligated to pay it a royalty of 4% on worldwide net sales of Licensed Products to cover the reimbursement of research and development costs owed by it to Mundipharma and Purdue. The company refer to this royalty obligation as the Trailing Mundipharma Royalties. Once Infinity Pharmaceuticals has fully reimbursed Mundipharma and Purdue, the Trailing Mundipharma Royalties will be reduced to 1% of net sales in the United States. The Trailing Mundipharma Royalties are payable on a product-by-product basis until the latest to occur of the last-to-expire patent right covering the applicable Licensed Product in the United States, (ii) the last-to-expire patent right covering the manufacture of the applicable Licensed Product in the country of manufacture of such Licensed Product, (iii) the expiration of non-patent regulatory exclusivity for such Licensed Product in the United States and (iv) ten years following the first commercial sale of such Licensed Product in the United States, provided that, upon the expiration of the last-to-expire patent right covering a Licensed Product in the United States, the applicable royalty on net sales for such Licensed Product in the United States will be reduced by 50% . In addition, the Trailing Mundipharma Royalties are subject to reduction by 50% of certain third-party royalty payments or patent litigation damages or settlements which might be required to be paid by Verastem if litigation were to arise, with any such reductions capped at 50% of the amounts otherwise payable during the applicable royalty payment period.
The Verastem Agreement expires when each party no longer has any obligations to the other party under the Verastem Agreement. Verastem has the right to terminate the Verastem Agreement upon at least 180 days’ prior written notice to it at any time following the earlier of Verastem’s decision to discontinue the DUO Study under certain circumstances as specified in the Verastem Agreement and (ii) the determination of whether the DUO Study has met its pre-specified primary endpoint. Either party may terminate the Verastem Agreement if the other party materially breaches or defaults in the performance of its obligations. If the company terminate the Verastem Agreement for Verastem’s material breach, patent challenge, or insolvency, or if Verastem terminates for convenience, then, at its request and subject to its execution of a waiver of certain types of damages, Verastem will transition the duvelisib program back to it at Verastem’s cost. If Verastem terminates for its breach or insolvency, Verastem will effect a more limited transition of the duvelisib program to it at its request and cost, subject to its execution of a waiver of certain types of damages, and the company will thereafter pay to Verastem a low single-digit royalty on net sales of Licensed Products.
The company and Verastem have made customary representations and warranties and have agreed to certain customary covenants, including confidentiality and indemnification.
AbbVie
On September 2, 2014, the company entered into a collaboration and license agreement with AbbVie Inc., or AbbVie, which the company refer to as the AbbVie Agreement. Under the AbbVie Agreement, the company and AbbVie agreed to develop and commercialize in oncology indications products containing duvelisib. The company refer to products containing duvelisib as Duvelisib Products. IPI-549 was excluded from the collaboration. On June 24, 2016, AbbVie delivered to it a written notice that AbbVie was exercising its right to terminate the AbbVie Agreement unilaterally upon 90 days’ written notice, which the company refer to as the AbbVie Opt-Out. The termination of the AbbVie Agreement was effective on September 23, 2016.
Under the AbbVie Agreement, AbbVie paid it a non-refundable $275 million upfront payment in 2014 and a $130 million milestone payment in November 2015 associated with the completion of enrollment of DYNAMO, its Phase 2 clinical study evaluating the efficacy and safety of duvelisib in patients with refractory indolent non-Hodgkin lymphoma, or iNHL.
On September 23, 2016, the effective date of the AbbVie Agreement termination, the company received all rights to the regulatory filings related to duvelisib, its license to AbbVie terminated, and AbbVie granted it an exclusive, perpetual, irrevocable, royalty-free license, under certain patent rights and know-how controlled by AbbVie, to develop, manufacture and commercialize products containing duvelisib, excluding any compound which is covered by patent rights controlled by AbbVie or its affiliates, in oncology indications worldwide.
Neither party has any ongoing financial obligation to the other party under the AbbVie Agreement.
