Infinity (INFI) Reports Narrower-than-Expected Loss In Q3

Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) reported a loss of 39 cents per share in third-quarter 2016, much narrower than the Zacks Consensus Estimate of a loss of 84 cents. In the year-ago quarter, the company had reported earnings of 84 cents.

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

Infinity did not record any revenue during third-quarter 2016. The Zacks Consensus Estimate was $8.8 million. The company had recorded collaboration revenue of $90.7 million in the year-ago quarter.

Quarter in Detail

In the reported quarter, R&D expenses plummeted 66% to $12.8 million. The decrease in R&D expense was primarily due to a fall in activities for duvelisib and a decrease in compensation as a result of the restructuring announced earlier this year.

General and administrative (G&A) expense was $7.1 million for the reported quarter, down 27% year over year. The decrease in G&A expense was mainly due to a fall in commercial-readiness activities for duvelisib.

In Nov 2016, Infinity and Verastem, Inc. (NASDAQ:VSTM) announced that the companies have entered into a license agreement for exclusive worldwide rights to develop and commercialize duvelisib. Under the agreement, Infinity is eligible to receive up to $28 million across two milestone payments – $6 million upon positive data from the phase III DUO study in patients with relapsed/refractory chronic lymphocytic leukemia, and $22 million upon the first regulatory approval of duvelisib inside or outside of the U.S.

Verastem is also obligated to pay Infinity tiered mid-to-high single-digit royalties on net sales of duvelisib.

Following the license agreement with Verastem and further restructuring activities, Infinity provided an update on its projections for year-end cash and investments balance.

The company expects to end the year with a year-end cash and investments balance, in the range of $70–$80 million, which was previously expected to be within $45–$55 million.

Infinity expects its existing cash, cash equivalents and available-for-sale securities at Sep 30, 2016, to be adequate to meet capital needs into the first quarter of 2018, based on its current operational plans, compared to the previous guidance of cash runway through third-quarter 2017.

The company's updated financial guidance is in the absence of additional funding or business development activities and has expenses related to duvelisib beyond November 1, 2016, capped at $4.5 million. Additionally, Infinity's updated cash runway expectation excludes any potential milestone payments from Verastem related to duvelisib.

Infinity also announced clinical trial collaboration with Bristol-Myers Squibb Co. (NYSE:BMY) for the evaluation of the former’s IPI-549 in combination with the latter’s Opdivo in patients with advanced solid tumors.

Zacks Rank & Stocks to Consider

Infinity is a Zacks Rank #2 (Buy) stock. Other favorably placed stock in the healthcare sector include Anika Therapeutics Inc. (NASDAQ:ANIK) which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anika’s earnings estimates increased from $1.96 to $2.06 for 2016 and from $2.03 to $2.09 for 2017 over the last 60 days. The company has posted positive surprises in all of the four trailing quarters, with an average beat of 33.14%.

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