On January 9, 2020 Infinity Pharmaceuticals, Inc. (NASDAQ: INFI) ("Infinity") reported a $20 million non-dilutive asset-backed financing with BVF Partners L.P. ("BVF"), Infinity’s largest shareholder (Press release, Infinity Pharmaceuticals, JAN 9, 2020, View Source [SID1234552924]). This investment by BVF entails no equity to be issued by Infinity and has its sole recourse in potential royalty payments due on future sales of patidegib, a hedgehog pathway inhibitor discovered by Infinity and licensed to PellePharm in 2013. Infinity has the right to repay the $20 million plus interest to repurchase the right to future patidegib royalties during the next three years under certain conditions.

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"This non-dilutive financing is representative of our very collaborative relationship with BVF and their tremendous support as a value-added investor. Leveraging our financial interest in patidegib royalties enables us to preserve significant upside for all of Infinity’s shareholders," said Adelene Perkins, Chief Executive Officer and Chair of Infinity Pharmaceuticals. "Importantly, with this financing, we now have over $60 million cash on hand to fund all of our current IPI-549 trials to key data readouts throughout 2020 and into 2H 2021. These data readouts include studies of IPI-549 in a randomized, controlled Phase 2 study in bladder cancer and in front line settings with novel triple therapy combinations, including in indications for which we have seen clinical activity, as part of a thoughtful clinical development strategy designed to reveal the potentially transformative impact of reprogramming macrophages with IPI-549."

Mark Lampert, President of BVF, Inc., commented, "In light of our longstanding association with Infinity, the enormous potential of IPI-549 to help cancer patients, which is not currently reflected in the company’s stock price, and our admiration for management’s dilution sensitivity in advance of data, we wanted to help Infinity raise capital without equity dilution. BVF’s large existing ownership stake in the company was fundamental in aligning our interests with the company to preserve IPI-549 upside for all shareholders, and we believe this innovative financing structure accomplishes the objective in a win-win manner."

Within this extended cash runway into 2H 2021, Infinity expects to generate data on approximately 525 patients from the following trials:

MARIO-275, our global randomized Phase 2 study in collaboration with Bristol-Myers Squibb (BMS), evaluating IPI-549 in combination with Opdivo in patients with advanced urothelial cancer.
MARIO-3, our Phase 2 study in collaboration with Roche/Genentech evaluating IPI-549 in combination with Tecentriq and Abraxane as a front-line treatment in patients with triple negative breast cancer (TNBC) and in combination with Tecentriq and Avastin as a front-line treatment for patients with renal cell cancer (RCC).
MARIO-1, our Phase 1/1b study in collaboration with BMS evaluating IPI-549 in combination with Opdivo in patients with advanced solid tumors.
Arcus Biosciences’ Phase 1 collaboration study evaluating IPI-549 in a novel, checkpoint inhibitor free regimen that includes their dual adenosine receptor inhibitor, AB928, and Doxil in patients with relapsed/refractory TNBC.
In addition to the initial $20 million payment, Infinity is eligible to receive from BVF an additional $5 million payment upon positive data from PellePharm’s Phase 3 trial in patients with Gorlin Syndrome. PellePharm announced the completion of enrollment in a Phase 3 trial of a topical formulation of patidegib in patients with Gorlin Syndrome in December 2019. FDA granted Breakthrough Therapy Designation and Orphan Drug Designation to PellePharm for a topical formulation of patidegib in patients with Gorlin Syndrome in November 2017. Infinity retains rights to all patidegib milestone payments from PellePharm of up to $9 million in regulatory and first commercial sale milestones and $37.5 million in sales threshold milestones.

Infinity has the option to repurchase the rights to future patidegib royalties by paying BVF an amount equal to the principal amount received by Infinity plus interest at any time when the 20-day volume weighted average price per share of Infinity’s common stock exceeds $5.00 during the next three years.

Furthermore, Infinity retains its approximately 1% equity interest in PellePharm. PellePharm has previously announced that LEO Pharmaceuticals has the right to acquire PellePharm following Phase 3 data for total potential consideration of $690 million.

If, during the period ending three years from the date of the agreement or earlier in the event Infinity has exercised its repurchase option for future patidegib royalties from BVF, Infinity completes future equity financings above a specified share quantity threshold and below a specified price threshold, then Infinity has agreed to provide BVF with 50% warrant coverage at a 50% premium to the price at which such shares in excess of the share quantity threshold were sold.

The terms and conditions of the transaction are described in more detail in a Form 8-K filed by Infinity with the Securities and Exchange Commission on January 9, 2020.