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Edited Transcript of INFI earnings conference call or presentation 7-Nov-17 1:30pm GMT

Thomson Reuters StreetEvents

Q3 2017 Infinity Pharmaceuticals Inc Earnings Call

Cambridge Nov 18, 2017 (Thomson StreetEvents) -- Edited Transcript of Infinity Pharmaceuticals Inc earnings conference call or presentation Tuesday, November 7, 2017 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Adelene Q. Perkins

Infinity Pharmaceuticals, Inc. - Chairman and CEO

* Claudio Dansky Ullmann

Infinity Pharmaceuticals, Inc. - SVP of Clinical Development

* Jaren Irene Madden

Infinity Pharmaceuticals, Inc. - Senior Director of IR & Corporate Communications

* Jeffery L. Kutok

Infinity Pharmaceuticals, Inc. - Chief Scientific Officer and SVP

* Lawrence E. Bloch

Infinity Pharmaceuticals, Inc. - President, Principal Accounting Officer and Treasurer

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Conference Call Participants

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* Eric William Joseph

JP Morgan Chase & Co, Research Division - Analyst

* Yanan Zhu

Wells Fargo Securities, LLC, Research Division - Associate Analyst

* Yu Xu

William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research, Partner & Biotechnology Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. Welcome to the Infinity Pharmaceuticals Conference Call to discuss the Company's Financial Results for the Third Quarter of 2017. My name is Brenda and I'll be your operator for today's call. (Operator Instructions) Please be advised that the call is being recorded at Infinity's request. Now, 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.

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Jaren Irene Madden, Infinity Pharmaceuticals, Inc. - Senior Director of IR & Corporate Communications [2]

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Thank you, Brenda, and good morning, everyone. Welcome to today's call to discuss our recent business progress and review our third quarter financial results.

With me here today are Adelene Perkins, Chief Executive Officer; Dr. Claudio Dansky Ullmann, Senior Vice President of Clinical Development and Larry Bloch, President; Dr. Jeff Kutok, our Chief Scientific Officer is also here to take questions, and now we'll open up the call for Q&A following our remarks.

The press release issued 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 objective, the therapeutic potential of our product candidate, our strategic plans of strategies and financial projection. Our results may differ materially from what we project today, due to a number of important factors, including the considerations described in the risk factors section of our quarterly report, on Form 10-Q for the third quarter of 2017. And in other filings, we may make with the SEC. These forward-looking statements represent our views only as of today. And we caution you that we may not update them in the future, whether as a result of new information, future events or otherwise.

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

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [3]

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Thanks, Jaren. Good morning, everyone, and thank you for joining us. Today, we are pleased to report on our recent progress at Infinity, including advancements we've made with IPI-549, our first-in-class oral selective PI3-kinase-gamma inhibitor. The Infinity team is entirely focused on IPI-549, which represents a novel approach within immuno-oncology and it's the only selective PI3-kinase-gamma inhibitor in clinical development.

As described in Two Nature publication in late 2016, IPI-549 targets and placed a unique role in the reprogramming macrophages to reduce immunosuppression, promoting an antitumor immune response and overcoming resistance to checkpoint blockade. We are evaluating IPI-549, both as a monotherapy and in combination with Opdivo, a PD-1 immune checkpoint inhibitor and in multifaceted Phase IIb clinical study and approximately 200 patients with advanced solid tumors.

The first two components of the study are monotherapy and combination dose escalation that determine the recommended dose for the second two components of the study in monotherapy and combination expansion.

We've made significant progress advancing the clinical trial this year, which sets us up for our steady cadence of data readouts that starts this Friday and continues through 2018. As a first-in-class medicine, the initial and the potential goal of our study was to demonstrate that IPI-549 is well tolerated as a monotherapy at an active dose that can be taken forward in development.

To this end, we're very pleased to have completed the monotherapy dose escalation portion of the trial with no dose-limiting toxicity and no drug-related serious adverse events. Because a maximum tolerated dose with IPI-549 was not reached, we declared 60 milligrams one stay rate as our go forward monotherapy dose, based on both the favorable tolerability profile as well as PK/PD demonstrating complete and sustained suppression of PI3-kinase-gamma.

Another important goal for this first portion of the study is to show that IPI-549 induces activation as an immune response, particularly, meaningful effect given the heavily pretreated and heterogeneous nature of the all-comer solid tumor patient population being treated. We look forward to the presentation of our late breaking abstract reviewing clinical and translational data from the monotherapy dose escalation this Friday, November 10, during an oral presentation in the new agent session of the Society for Immunotherapy of Cancer or SITC annual meeting.

We will also host a reception for analysts and investors Friday morning from 6 a.m. to 8 a.m. Eastern time. We know it's an early start to the day and appreciate you're rising early to hear directly from one of our investigators from one of our scientific collaborators.

We're encouraged by the data we've generated to-date, and we look forward to sharing why we, our collaborators and steady investigators are enthusiastic about building on a foundation that's been established.

The execution of the dose escalation portions of the study in 2017, which will enable us to shift our focus to the expansion cohort in 2018, have been may caused by the tremendous effort and support of our investigators, patients and the Infinity team.

We initiated the monotherapy expansion in August and this cohort is already nearly 50% enrolled. We are on track to complete the combination dose escalation this year. And upon declaring the go-forward dose for the combination, we will initiate multiple disease-specific expansion cohorts at the end of 2017.

A progress with the IPI-549 clinical study in 2017 positions us to have a steady flow of data from this trial starting later this week and continuing throughout 2018.

First, this begins with a presentation of data from the IPI-549 monotherapy dose escalation at SITC this Friday November 10.

Second, in the first half of 2018, we expect to report data in the monotherapy expansion portion of the study, which importantly will include clinical and translational data from paired tumor biopsies.

Third, and also in the first half of 2018, we anticipate data from the completed combination dose escalation evaluating IPI-549 to Opdivo.

Fourth, and also in the first half of '18, we expect to present preliminary data from multiple disease-specific expansion cohorts evaluating IPI-549 plus Opdivo.

And fifth and in the second half of 2018, we expect to update data on the combination expansion cohort with more mature, clinical and translational data, including insights compared tumor biopsies, across the multiple types of cancer testing several distinct hypotheses.

An important feature of our clinical study is the flexibility to add additional cohorts in response to evidence of activity, so there may also be additional combination cohorts with additional data readouts in 2018. The program has great momentum. We're very pleased with the progress to-date and we continue to be driven by the magnitude of the meaningful better treatment options for patients. Including for patients who do not respond to existing immunotherapy, could develop resistance to available immunotherapy, or who have forms of cancer that typically do not respond well to current immunotherapies.

Our experience with IPI-549 suggest that it may have an important role to play in addressing these needs and warrants the company to continue to focus on IPI-549, as we seek to bring better treatment to patients.

And now, I'll turn the call over to Claudio.

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Claudio Dansky Ullmann, Infinity Pharmaceuticals, Inc. - SVP of Clinical Development [4]

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Thanks, Adelene, This morning, I will bring forward the importance of the progress we have made in our clinical study and outline what we will present at SITC this Friday.

IPI-549 is the only selective PI3-kinase-gamma (inaudible) the clinic, 100% a novel approach within the field of immuno-oncology. Within this field, targeted macrophages in the new suppressive tumor-like environment is emerging as a (inaudible) approach to reduce immunosuppression. Our preclinical data demonstrate that targeting PI3-kinase-gamma with IPI-549, reprograms tumor-associated macrophages from an M2 or protumor to an M1 or antitumor phenotype.

We also demonstrated that IPI-549 overcomes resistance to check for any inhibition as well as enhances the activity of checkpoint inhibitors. This preclinical findings provided a rationale for our 4-part Phase IIb clinical study.

As we've mentioned, our study's designed to elevate the safety, pharmacokinetics and pharmacodynamics of IPI-549, given orally once daily as a monotherapy and in combination with Opdivo in approximately 200 patients with advanced solid tumors.

The monotherapy dose escalation portions of the trial serves as the underpinning for the entire study. And we are encouraged that IPI-549 has a strong foundation on which to continue to develop.

Our late breaking abstract is being presented by Dr. David Ho from MD Anderson Cancer Center during the oral session on new agents at SITC on Friday at 2:15 p.m. Eastern time.

I would include safety, activity, pharmacokinetic and pharmacodynamic data from 19 patients, treated with monotherapy doses of IPI-549, ranging from 10 milligrams to 60 milligrams once daily. Additionally, for the first time, we will be reporting early translational data from (inaudible) samples of patients in the monotherapy's dose escalation. These studies will serve as an important initial step, which will be followed by analysis of tumor biopsy samples obtained in the expansion cohorts. In addition to the oral presentation, there will be a correspondent clinical and translational poster as well as a clinical (inaudible) and progress poster presented that same day.

Moving on to the progress we're making in the execution of our study, the monotherapy expansion cohort of the trial is performing very well. Our near in-completion also combination dose escalation. Within the combination dose escalation, we're currently evaluating IPI-549 dose at 40 milligrams once daily combined with Opdivo. We anticipate that the last patient currently enrolled in the [IPI-549] plus Opdivo cohort, will complete the dose limit and toxicity assessment period later this month.

We're looking forward to declaring our recommended combination dose and initiate the expansion cohorts because it will enable us to evaluate activity of IPI-549 plus Opdivo in more homogeneous cohorts of patients with specific types of cancer.

All our combination expansion cohorts also include mandatory pre-treatment and on-treatment biopsies. We have selected these specific cohorts to test distinct hypotheses. For the initial expansion cohorts, non-small cell lung cancer, melanoma and squamous cell carcinoma of the head and neck, patients must have demonstrated de novo or a prior resistance to the immediate prior anti-PD-1 or anti-PD-L1 therapy. This cohorts represents a direct test of our preclinical data, which demonstrated that IPI-549 can overcome resistance to checkpoint inhibitors. Additionally, in September, we expanded our clinical collaboration with Bristol-Myers Squibb to test another hypothesis in a group of patients with triple-negative breast cancer who have not previously received anti-PD-1 or anti-PD-L1 therapy.

This cohort enables us to explore the potential of IPI-549 plus Opdivo to improve outcomes for patients with few treatment options that to-date have shown immediate response to checkpoint inhibitor therapy. The addition for macrophage target approach such as IPI-549 for a tumor that is often infiltrated with large numbers of macrophages could promote a more effective anti-tumor response.

This is a very exciting time for the product. Completion of the dose escalation portions of the study is critical to our expansion of the trial to evaluate IPI-549 in more homogeneous patient populations with tumor biopsies designed to characterize the effect of IPI-549 on the tumor microenvironment and co-relate the patient's benefit with biomarkers of immune activation at the tumor level.

We look forward to sharing data from the immunotherapy dose escalation to first complete the portion of this study with you at SITC on Friday. And hope to see many of you at our Investor reception that morning.

Now, Larry will review our financial results for the quarter.

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Lawrence E. Bloch, Infinity Pharmaceuticals, Inc. - President, Principal Accounting Officer and Treasurer [5]

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Thank you, Claudio. The Infinity team is very enthusiastic about IPI-549, which is one of the few oral immuno-oncology therapies in the clinic targeting macrophages. Additionally, IPI-549 is the first-in-class selective PI3-kinase-gamma inhibitor. And we believe that the only one in clinical development. This has been a foundational year for Infinity and IPI-549. We've made important progress while maintaining strong physical discipline. We expect to deliver meaningful safety and activity data from all 4 parts of our clinical study within our current cash runway, which extends into the first quarter of 2019. While this cash flow expectation includes the $6 million payment from Verastem that we received in October, following the positive readout from duvelisib DUO study, it does not include the potential $22 million payment from Verastem upon the first regulatory approval of duvelisib.

I'll now summarize our financial results for the third quarter of 2017. At September 30, 2017, the total cash, cash equivalents and available for sale securities of $55.6 million compared to $66.2 million at June 30, 2017. This cash balance as of September 30 does not reflect the $6 million payment from Verastem, which we received at the end of the third quarter.

Moving on to our income statement, revenue from the quarter was $6 million, all of which related to the payment from Verastem for the DUO study meeting the pre-specified criteria. Not record any revenue during the third quarter of 2016.

R&D expense for the quarter was $9.3 million compared to $12.8 million for the same period in 2016. We do retire the expenses related to 2016 restructuring activities offset by the $6 million note issued to Takeda in exchange for eliminating our royalty obligation to Takeda for IPI-549.

General and administrative expense was $4.5 million compared to $7.1 million for the same period last year. The decrease in G&A expense was primarily due to 2016 restructuring activities.

The net loss for the third quarter of 2017 was $7.1 million or a basic and diluted loss per common share of $0.14 compared to net loss of $19.5 million where basic and diluted loss per common share of $0.39 for third quarter of 2016.

Operational guidance that provided in January remains unchanged. We expect 2017 net loss to range from $40 million to $50 million. And we expect to end 2017 with the cash and investment balance ranging from $40 million to $50 million. Based on our current operating plans, which exclude additional funding or business development activities, we anticipate that our existing cash, cash equivalents and available-for-sale securities provide cash runway into the first quarter of 2019. Importantly, we expect that our cash runway will enable us to generate safety and activity data from all 4 products of our ongoing study of IPI-549.

The Infinity team is focused on advancing IPI-549 as we seek to address unmet medical needs in cancer. And we're very pleased with the progress we've made so far in this year, which includes our upcoming SITC presentation of clinical antral inflammation data with the monotherapy dose escalation component of our study.

You'll see many of your investor and analyst reception on Friday morning, already joined us by webcast to your Dr. David Hong review the data and share his experience and treating patients with IPI-549. Additionally, [Dr. Hong] a senior author of one of our Nature papers and it serves as the lead laboratory researcher complementing (inaudible) clinical work at Memorial Sloan Kettering will address the rationale for targeting PI3 gamma signaling in macrophages with IPI-549.

Beyond SITC, our progress this year positions us for data readout throughout 2018 from all components of our study of IPI-549. We look forward to reporting data over the coming year as we seek a meaningfully improved treatment options for patients.

And now we're happy to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Katherine Xu from William Blair.

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Yu Xu, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research, Partner & Biotechnology Analyst [2]

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So I'm just curious what kind of data indication that supported the TMBC cohort initiation? And also besides PD-1, so what are the sort of the other IO agents that could be synergistic to the current mechanism for 549, whether you can comment on IO or in other kind of pathway and that will be very helpful?

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [3]

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Sure thanks, Katherine. So right now, we're focused on those study evaluating IPI-549 with an anti-PD-1. But we are definitely interested in combining with other immunotherapies. We believe mechanistically and have some preclinical data to show that by virtue of the mechanism on the macrophages that it can be complementary and synergistic with the number of the other checkpoint and co-stimulatory factors. So we see 549 as a cornerstone that could be included in a broad range of combination therapies. To your question on the triple negative breast cancer, our rationale was that unlike the first cohorts, which are showing the ability to overcome resistance to checkpoint blockade, there are tumor-types like triple negative that are myeloid-rich for which the responses are not as strong as with other tumor types so that the combination of 549 and a checkpoint inhibitor might increase the response rates in those patient population.

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Operator [4]

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And our next question comes from the line of James Birchenough, Wells Fargo Securities .

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [5]

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This is Yanan, in for Jim. So first question, could you please give a little more color on what is the -- would be the incremental data at the SITC meeting compared with what's reported last time at AACR?

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [6]

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Sure. So at AACR, we also provided an update on the monotherapy dose escalation. At that time, we had 15 patients who were valuable. We now have completed the dose escalation so we have the data on the patients up through the 60 milligram once a day. So as Claudio mentioned, we have a total of 19 patients, 18 who are valuable for efficacy and so for all those 18 patients, we'll provide an update on the tolerability, the PK/PD, the activity and what we'll be sharing for the very first time is the translational data on all of those patients. And so this is from peripheral blood samples, we're looking for evidence of immune activation that's induced by treatment with IPI-549. So that'll be the first time we're sharing that data.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [7]

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Got it. That's very helpful. And another question is I think in the prepared remarks, you mentioned for the combination cohorts, it will be required that the patient had immediately -- immediate prior therapy is the PD-1 of which they are resistant to. So just curious for the current dose escalation cohort, what would be the proportion of patients who actually sit in that criteria?

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [8]

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Yes, so the requirement, the enrollment criteria that patients had immediately progressed on a checkpoint inhibitor applies to the extension cohorts, it is not going to be an inclusion criteria for the dose escalation, so we have a mix of patients with respect to their prior PD-1 exposure. And we'll be presenting that on Friday.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [9]

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Got it. And the last question.

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [10]

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Claudio, (inaudible).

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [11]

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Sorry?

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [12]

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Something you want to add, Claudio? No, okay.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [13]

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Great. Sorry, last question is for the does -- for the combination escalation cohort to start, I think before your end, is there any data items, for example, do you have to see any data from the dose expansion monotherapy cohort to initiate its combination escalation study?

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [14]

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No, so the key gating factor to initiating that combination expansion cohort is determining the appropriate dose to take forward. And that will come from the combination dose escalation and much like we did with the monotherapy, we'll be looking for that sweet spot where we have a combination dose in which it will tolerated, we have full suppression of PI3-kinase-gamma. And we believe that we have activation of 549 induced activation of immune response and that will allow us to declare the right dose to go forward.

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Operator [15]

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(Operator Instructions) And our next question comes from the line of Anupam Rama from JPMorgan.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - Analyst [16]

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It's Eric in for Anupam this morning, I guess at SITC, we're also going to get some updates from some PD-1 combination approaches that also focus on macrophage modulation, particularly, some CSF-1Rs. I'm just wondering how you're thinking about potential read-through there to the approach being taken with 549? Given that taking the similar tacts in modulating macrophage involvement, but with slightly different mechanistic approaches. And then secondly, as we think about combination -- data from the combination parts of the trial in 2018. I'm just wondering how we should be thinking about -- whether we should be thinking about separate presentations from the dose escalation portion versus the expansion cohorts and whether there are any kind of particular tumor histologies that you're focused on accruing or enrolling as we think about initial data from the expansion cohort?

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [17]

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Sure. So I'll begin and then if Jeff, you have anything to add. IPI-549 is unique in that, Jeff worked with our collaborators shown that we reprogram the M2 pro-tumor macrophages to the M1 antitumor. And it's unique relative to other macrophage-targeted approaches where we see a depletion of macrophages from the tumor microenvironment. And we believe that the conversion from the M2 to the M1 while maintaining a constant number of macrophages is preferable to some of the other macrophage targeting approaches. Jeff, is there anything that you would add to that?

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Jeffery L. Kutok, Infinity Pharmaceuticals, Inc. - Chief Scientific Officer and SVP [18]

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No, I think that's right, Adelene.

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [19]

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Okay, and then on your second question about the data in the first half of 2018. We will have -- the difference between the dose escalation and the expansion is that the dose escalation will be completed so it will be a completed dataset that will be revealing the dose that we're taking forward based on the tolerability, the suppression of PI3-kinase-gamma and its reflection through the PK/PD. The data on the expansion will be in a more homogeneous patient population, because the dose escalation is all-comer solid tumors and one of the real values of going into the expansion cohorts is that we will be evaluating patients with the disease that Claudio highlighted for patients who have become resistant to checkpoint inhibitors that will be non-small cell lung cancer melanoma and head/neck. And then patient to a checkpoint-naive will be triple negative breast cancer and those expansion cohorts will have the paired tumor biopsies. So we haven't determined which meetings those will be presented at or will be a function of the maturity of the data but the data sets will be different.

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Claudio Dansky Ullmann, Infinity Pharmaceuticals, Inc. - SVP of Clinical Development [20]

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Yes, and just to clarify further to your question, so all the cohorts will be open simultaneously, so we're not going to focus in the particular tumor type up for the involvement on all the sites and now our investigators, who are already working with them very closely to make sure that we have a good flow of patients for all the indications. And that's what we're trying to achieve together and enroll as many patients in each indication as possible. And then we'll see what the data shows and we will then further as Adelene was referring to, you know what amount of data we would be able to present in the first half of next year.

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Operator [21]

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At this time I'm showing no further questions. I would like to turn the call back over to Adelene for closing remarks.

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Adelene Q. Perkins, Infinity Pharmaceuticals, Inc. - Chairman and CEO [22]

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Thank you. We're very excited about the opportunity we have with IPI-549 and our team is working with a great sense of urgency and focus. We look forward to providing new clinical and translational data from our Phase I study later this week. And hope you'll join us in person or via the webcast for our review of the data on Friday morning. Have a good day, everyone, and thanks for joining the call today.