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Infinity (INFI) Down 48.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Infinity Pharmaceuticals (INFI - Free Report) . Shares have lost about 48.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Infinity due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Infinity Q3 Earnings Beat Estimates, Revenues Up Y/Y

Infinity reported earnings of 23 cents per share in third-quarter 2018, against the Zacks Consensus Estimate of a loss of 14 cents. The company reported a loss of 14 cents in the year-ago quarter.

Since Infinity does not have any approved product in its portfolio yet, 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. The company reported collaboration revenues of $22 million in the quarter compared with $6 million in the year-ago quarter.

The revenues are related to the amount due from Verastem for the FDA approval of duvelisib on Sep 24, 2018 for the treatment of adult patients with relapsed or refractory chronic lymphocytic leukemia or small lymphocytic lymphoma after at least two prior therapies, as well as adult patients with relapsed or refractory follicular lymphoma after at least two prior systemic therapies. 

Quarter in Detail

In the quarter, R&D expenses decreased 42.4% to $5.4 million due to the convertible note issued to Takeda in July 2017.

General and administrative (G&A) expenses were $3.4 million in the quarter, down 23.6% from the year-ago quarter. The decrease was mainly due to a reduction in stock compensation.



 

2018 Outlook

Infinity revised its outlook for 2018. The company expects net loss for 2018 to be $10-$20 million, down from its previous expectation of $35-$45 million. The company anticipates year-end cash, cash equivalents and available-for-sale securities balance to be $50-$60 million compared with its previous expectation of $15-$25 million. Moreover, Infinity expects existing cash, cash equivalents and available-for-sale securities to be adequate to fund the company's capital needs in 2020.

Other Updates

Infinity is evaluating IPI-549 as a monotherapy as well as in combination with Bristol-Myers’ Opdivo in a MARIO-1 phase I/Ib study in approximately 200 patients with advanced solid tumors.

The company is also planning to initiate the MARIO-275 phase II study to evaluate the effect of adding IPI-549 to Opdivo in checkpoint inhibitor-naïve advanced urothelial cancer patients who have progressed or recurred, following treatment with platinum-based chemotherapy.

Further, Infinity’s partner Arcus Biosciences will initiate two triple combinations investigating IPI-549 with their dual adenosine receptor antagonist, AB928; anti-PD-1 antibody, AB122; and chemotherapy in triple negative breast cancer and ovarian cancer. One triple combination therapy will evaluate IPI-549 in combination with AB928 and AB122, and the second will evaluate IPI-549 in combination with AB928 and chemotherapy. with topline data expected in 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -27.5% due to these changes.

VGM Scores

At this time, Infinity has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Infinity has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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