Infinity Pharmaceuticals Inc. (INFI), a development stage pharmaceutical company, develops treatment for unmet medical conditions. The company has promising candidates in its pipeline, with its lead candidate IPI-145 for blood cancer advancing into phase III.
Infinity Pharmaceuticals is a development stage pharmaceutical company with a focus on the discovery, development and delivery of medicines for difficult to treat diseases. It has four product candidates in its pipeline and has the worldwide development and commercialization rights to them. The primary area of focus includes oncology and inflammation. The company licensed one of its candidates IPI-145 from Intellikine Inc., which was later acquired by Takeda Pharmaceutical's Millennium business unit.
The company has a market capitalization of $718.89 million (6/12), with 154 employees, and 66.90% institutional holdings and 15.83% of insider holdings. It currently doesn't generate any revenue and has been posting loss since its inception.
The competitors of the company include Gilead Sciences (GILD), Roche (OTCQX:RHHBY), AbbVie Inc. (ABBV), Pharmacyclics Inc. (PCYC), Onconova Therapeutics (ONTX), and Synta Pharmaceuticals (SNTA), Incyte Corporation (INCY), Amgen Inc. (AMGN), TG Therapeutics (TGTX), GlaxoSmithKline (GSK), and Rigel Pharmaceuticals Inc. (RIGL).
The company has a development and license agreement with Millennium, a business unit of Takeda Pharmaceuticals. The agreement was originally inked between Infinity and Intellikine in July 2010; however the latter was acquired by Millennium in January 2012. Infinity acquired the rights to the discovery, development and commercialization of products that target the delta and/or gamma isoforms of PI3K. The company paid Intellikine an upfront license fee of $13.5 million, however the terms of the agreement were restated in December 2012. The company is obligated to make milestone payments of up to $450 million and royalties from 7% to 11% on worldwide sales, to Millennium.
The company also had a strategic alliance with Mundipharma and Purdue, which was terminated in July 2012. After the termination the company holds the worldwide rights to the product candidates covered under the agreement. Furthermore, Infinity is obligated to pay royalties from worldwide sales of the products previously covered under the agreement, until Mundipharma & Purdue recover the $260 million they paid for R&D.
The company currently has four candidates in its pipeline for oncology and inflammation, with the most advanced candidate in phase III. It has one candidate in preclinical stage, a PI3K inhibitor referred to as IPI-443, with an expected completion by the end of this year.
IPI-145 is an oral inhibitor of PI3K delta and gamma, which presents multiple opportunities for developing differentiated therapies for inflammation diseases and blood cancer. The PI3Ks (phosphoinositide-3-kinase) are family of enzymes which are involved in multiple cellular functions, such as cell differentiation, cell proliferation and survival, cell migration and immunity. The PI3K delta and gamma isoforms are found in white blood cells, having a distinct and non-overlapping role in immune cell development and function. IPI-145 targets these PI3Ks for treating inflammatory diseases and hematologic malignancies. Infinity launched DUETTS, worldwide investigation of IPI-145 in blood cancer program, which includes DYNAMO and DUO. The DYNAMO is a phase II safety and efficacy study of IPI-145 in patients with refractory indolent non-Hodgkin lymphoma (GM:INHL); while DUO is a phase III monotherapy study for safety and efficacy of IPI-145 for refractory/relapsed chronic lymphocytic leukemia (CLL).
IPI-145 is also being studied for inflammatory diseases, including asthma and rheumatoid arthritis, in phase II/a and phase II respectively. Asthma trial is a randomized, double-blind, placebo controlled study of approximately 30 people. Whereas, the rheumatoid arthritis trial ASPIRA is designed evaluate the safety and efficacy in the patients and is expected to enroll approximately 316 adults. The primary efficacy endpoint is the ACR (American College of Rheumatology) 20 response rate, i.e. the proportion of people achieving at least 20% of improvement.
The company's pipeline also consists of retaspimycin hydrochloride (HCI), an inhibitor of heat shock protein 90 (Hsp90). It will not be further studied, since the phase II study evaluating retaspimycin HCI in combination with chemotherapy (docetaxel) in patients with non-small cell lung cancer failed to meet the efficacy endpoints of improving overall survival. However, the final study of retaspimycin HCl combined with everolimus in NSCLC is in the phase I and is expected to complete by the end of this year, concluding the development of retaspimycin HCI.
The company recently announced clinical data for phase I IPI-145 monotherapy in iNHL, showing a 73% overall response rate and 20% complete response rate, in patients receiving ≤ 25 mg of dose twice daily. Additionally, 53% of the patients for over one year remained progression free. The dosage was generally well-tolerated with the most common side effects being diarrhea (13%), neutropenia (31%), and increase in ALT or AST (38%).
Additionally, the company also announced the data for IPI-145 phase I study for CLL. The studies were found to be positive with 86% of nodal response and 48% of overall response. Furthermore, the study showed activity of IPI-145 in other blood cancers including advanced T-cell lymphomas, with an overall response rate of 38%. And in the peripheral T-cell lymphomas (PTCL) patients, there was a 50% overall response rate with the dosage of IPI-145.
The company also announced IPI-145 pre-clinical data for diffuse large B-cell lymphoma (DLBCL) and T-cell acute lymphoblastic leukemia (T-ALL); and phase 1 data for aggressive non-Hodgkin lymphoma (aNHL). The aNHL data showed reduction in adenopathy in three of eight DLBCL patients and two of three Richter transformation patients. IPI-145 was generally well-tolerated, with side effects including febrile neutropenia, diarrhea, pneumonia, fatigue, increased ALT or AST, and dyspnea (9% each), and neutropenia (32%). Whereas, the T-ALL data showed that IPI-145 inhibited T-ALL cell growth substantially as compared to molecules only for PI3K delta or gamma.
The company's year to date performance is a negative 57.29%, and fell from $50.51 in April this year, to the current price of $14.95 (6/12). The fall is attributed to the share offering in April, IPI-145 phase I positive data rated disappointing by analyst in June, phase II trials of saridegib ended owing to disappointing results in June, and the phase II trial of retaspimycin HCl ended owing to failure. These events have taken the toll on the share prices and they are yet to recover.
The company currently has nine analysts rating it a Buy and five rating it a hold, with a consensus price target of $31.75, a high of $50 (Piper Jaffray) and a low of $12 (Think Equity). However, other analysts rate it a Buy with a mean target of $23.57, a high of $36 and a low of $13. Currently the price is just above the low target, at $14.95, and has almost 63% of upside.
Infinity will be presenting at the Oppenheimer Healthcare Conference on December 11. The company is also expected to participate in a T-cell meeting on January 23rd or 24th next year, details of which are yet to be announced. These events are expected to hold catalytic importance.
The company expects to complete nonclinical study for IPI-433 by the end of this year, to initiate phase I of clinical development. It also expects to give an update of IPI-145 for allergic asthma by year-end. Furthermore, the company is also expected to announce additional studies for IPI-145 next year. These events are expected to positively impact the share prices if positive.
Fundamentals and Potential Risks
The company reported loss of $33.9 million in the third quarter, bringing the accumulated deficit to $416.9 million. The company doesn't have any sources of revenue currently, and its candidates are still a long way from approval and subsequent commercialization. The company must look for partnerships to fund its R&D which have been increased quarter over quarter.
The company as of September 30 has cash and equivalents of $250.9 million, down from the $277.2 million in the previous quarter. This amount is expected to be sufficient to fund operations till 2015. The company is also obligated to make a $6.65 payment to Millennium in January 2014, as per the restated terms.
There are other companies working on leukemia drugs with major potential, which include Pharmacyclics poised for a drug approval for Ibrutinib; and Gilead's Idelalisib. The estimated annual sales for Ibrutinib in 2020 are $4.8 billion and $951.8 million for Idelalisib in 2017, whereas IPI-145 is expected to generate $308 million in 2019. These drugs are expected to make about $9 billion per year in revenue by the year 2020. However, Infinity is faced with major competition and will have to gain market share among these drugs, which are touted for approval next year, whereas IPI-145 only recently entered phase III.
The company has a history of disappointing trials and the subsequent discontinuation, this poses as a major concern while investing. The company is primarily focused on IPI-145 and any failure in the related trials may push the share prices further down and put the company in jeopardy.
There has been continued insider selling of Infinity's shares, and no purchases in the current year. This does have a major negative impact on the company and a major risk.
The company's recent announcement of positive data has caused a major rally in the shares, and the analysts see major potential in IPI-145. However, after gaining almost 17% the shares have slid back to their old price levels.
The primary reason behind this decline was Gilead's positive trial data for Idelalisib which caused the shares of the company to fall almost 24% during trading hours on December 9. The shares opened at $17.50, 17% increase from its previous close, and reached $18.35 during the day; however as fast as the shares went up, they fell to $13.93.
There is some positive sentiment surrounding these results and analyst believe that the data of IPI-145 shows that Infinity has the potential to stand up to the competition.
Financially, the company is stable with a strong cash position, which is expected to see it through 2014 and into 2015. Furthermore, the company currently has no long term debt obligations. However, the insider selling is a major concern. During the last six months insiders have sold almost 11 million shares of the Infinity and institutional investors have also reduced holdings by almost 15%.
Overall, the company is a good investment with upcoming catalysts, but the competition is a major concern. And the shares have remained volatile over an extended period, holding their downward trend despite some strong clinical data and announcements. While it might be difficult to predict when this volatility will end, IPI-145 does hold potential and the recent low could be good entry point for long term investors. Overall, I believe there is a higher probability of Infinity rallying at these low price levels and combined with a solid pipeline, that makes it a good long term investment.