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Infinity (INFI) Down 22.5% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Infinity Pharmaceuticals (INFI). Shares have lost about 22.5% 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 Q2 Loss Wider Than Expected, Sales Miss

Infinity reported a loss of 18 cents in the second quarter of 2019, wider than a loss of 12 cents in the year-ago quarter. The loss was also wider than the Zacks Consensus Estimate of a loss of 15 cents.

The company recognized $0.26 million as royalty revenues, lagging the Zacks Consensus Estimate of $2 million. The company did not record any revenues in the year-ago quarter.

Infinity recognized the $30-million gross proceeds from the Copiktra royalty monetization as a liability on the balance sheet in accordance with accounting guidance for royalty monetization. The company is amortizing the liability to non-cash interest expenses every quarter.

2019 Outlook

The company expects a net loss for 2019 to be $40-$50 million.

Infinity expects its existing cash, cash equivalents and available-for-sale securities to be adequate to satisfy its capital needs in the second half of 2020.

Pipeline Updates

The company will initiate MARIO-3, a phase II study of novel triple combination front-line therapy, in clinical collaboration with Roche/Genentech. Roche will supply Tecentriq (atezolizumab) to Infinity for use in MARIO-3. The study will evaluate the company’s lead immuno-oncology candidate, IPI-549, in combination with Tecentriq and Abraxane (nab-paclitaxel) in front-line, triple-negative breast cancer (TNBC), and IPI-549 in combination with Tecentriq and Avastin (bevacizumab) in front-line renal cell cancer (RCC). The study is anticipated to initiate in the third quarter of 2019.

Infinity initiated a global, randomized phase II study in collaboration with Bristol-Myers Squibb, which will evaluate IPI-549 in combination with Opdivoin second-line,immuno-oncology (I/O) naïve patients with advanced urothelial cancer.

The company expects to complete enrollment in the second half of 2019 in the expanded combination cohorts in MARIO-1, an ongoing phase I/Ib study of IPI-549 as a monotherapy and in combination with Opdivo in approximately 225 patients with advanced solid tumors.

In the third quarter of 2019, the company will also initiate a study in collaboration with Arcus BioSceinecs Inc. to evaluate IPI-549 combined with the latter’s adenosine inhibitor, AB928, and Doxil in patients with advanced TNBC.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -5.97% due to these changes.

VGM Scores

At this time, Infinity has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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

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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