Back to top

Analyst Blog

Shares of Infinity Pharmaceuticals (INFI - Snapshot Report) reached a new 52-week high of $35.32 on December 28, 2012, shortly after amending its development and license agreement with Millennium Pharmaceuticals, a subsidiary of Takeda Pharmaceutical Company Limited’s (TKPYY).

Infinity Pharma’s closing price as on December 28 was $34.72, which represented a solid year-to-date return of 303.7%. Average volume of shares traded over the last 3 months stands at approximately 1.1 million.

Amended Agreement in Focus

As per the initial agreement, which was signed in July 2010, the companies were not allowed to research, develop or commercialize product candidates that target PI3K-delta and/or PI3K-gamma except those covered by the agreement.

The amended agreement between the companies allows Infinity Pharma to retain full worldwide rights to IPI-145 along with worldwide rights to any future candidate that targets PI3K-delta and/or PI3K-gamma.

The inclusion of additional candidates under the agreement should bring in additional revenues to Infinity Pharma on successful development and commercialization.

Moreover, Infinity Pharma made a one-time payment of $15 million to Millennium Pharma, in exchange of which the latter surrendered its option for an equal profit and loss sharing arrangement in the US for any of Infinity's PI3K inhibitors, including IPI-145. Millennium Pharma also gave up its right to participate in up to 30% of the detailing effort in the US for any of Infinity Pharma’s PI3K inhibitors.

Steep Valuation

Based on 2012 sales estimates, Infinity Pharma is trading at a price-to-sales ratio (P/S) of 16.0x, a huge premium compared to its peer group average of 1.3x.

About the Company

Infinity Pharma is an innovative drug discovery and development company. The company is currently focusing on the advancement of IPI-145 and other PI3K candidates. Infinity Pharma has a market capitalization of roughly $1.58 billion.

We currently have a Neutral recommendation on Infinity Pharma. The stock carries a Zacks #2 Rank (Buy). However other pharma stocks like Astellas Pharma (ALPMY) and Valeant Pharma (VRX - Analyst Report) carry a Zacks #1 Rank (Strong Buy).

Please login to Zacks.com or register to post a comment.