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Infinity (INFI) Q3 Loss Narrower than Expected, View Intact

Zacks

Infinity Pharmaceuticals, Inc. INFI reported a loss of 14 cents per share in third-quarter 2017, narrower than the Zacks Consensus Estimate of a loss of 21 cents. The company had reported a loss of 39 cents in the year-ago quarter.

Since Infinity does not have any approved product in its portfolio, the company earns revenues in the form of royalties, license and milestone payments as well as research and development (R&D) support fees paid by its partners.

Infinity recorded $6 million in revenues during third-quarter 2017. The amount was paid by Verastem, Inc. VSTM as milestone payment related to phase III DUO study evaluating duvelisib. However, it did not record any revenues in the year-ago quarter.

Infinity’s share price has increased 80.7% year to date compared with the industry’s gain of 1.2%.


Quarter in Detail

In the reported quarter, R&D expenses plummeted to $9.3 million from $12.8 million in the year-ago quarter. The decline was mainly due to the company's 2016 restructuring activities.

General and administrative (G&A) expenses were $4.5 million for the reported quarter, down from $7.1 million in the year-ago quarter. The decrease was mainly due to the company's 2016 restructuring activities, partially offset by issuance of convertible notes for eliminating Infinity's royalty obligation to Takeda.

2017 Outlook Reiterated

Infinity expects net loss to be in the range of $40–$50 million in 2017. The company anticipates year-end cash and cash equivalents and available-for-sale securities balance in the $40–$50 million band. Moreover, Infinity expects that its existing cash and cash equivalents as of Sep 30, 2017 should be adequate to fund the company's capital needs through first-quarter 2019.

Other Updates

Infinity is evaluating IPI-549 as a monotherapy and in combination with Bristol-Myers Squibb Company’s BMY Opdivo in a phase I study in patients with advanced solid tumors.

The company has expanded its collaboration with Bristol-Myers to include triple negative breast-cancer patients in the study. The earlier agreement allowed study in patients with non-small cell lung cancer, melanoma, and head and neck squamous cell carcinoma.

In the second quarter, the company had completed the evaluation of escalating monotherapy doses of IPI-549 ranging from 10 – 60 mg QD once daily and set the 60 mg dose for evaluation in the expansion component of the study.

Meanwhile, dose escalation evaluating IPI-549 (40 mg QD) in combination with Opdivo is currently ongoing. The company plans to initiate the combination expansion component of the study in 2017.

Our Take

The restructuring initiatives taken by the company have lowered operating expenses. We expect the initiatives to have a significant positive cumulative effect on the company’s margin, going forward.

Zacks Rank & Stock to Consider

Infinity has a Zacks Rank #3 (Hold).

A better-ranked stock in the health care sector is Exelixis, Inc. EXEL, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Exelixis’ earnings per share estimates increased from 26 cents to 43 cents for 2017 and from 63 cents to 70 cents for 2018 over the last 30 days. The company delivered positive earnings surprise in all the four trailing quarters with an average beat of 572.92%. The company’s shares are up 78.3% so far this year.

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