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|Stock to Avoid:||Infinity Pharmaceuticals (Nasdaq: INFI )|
|Stock Price at Underperform Recommendation:||$9.00|
Infinity Pharmaceuticals Profile
|Star Rating (out of 5):||*|
|Market Cap:||$265 million|
|Industry Peers:||Biosante Pharmaceuticals (Nasdaq: BPAX )
Dendreon (Nasdaq: DNDN )
Adventrx Pharmaceuticals (NYSE: ANX )
Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.
Sometimes I like to play a mental exercise with biotech stocks. I call it Then and Now. I look at the stock now and a few months ago and try and figure out what justified a massive change in the share price. Let's play Then and Now with Infinity.
Then (March 16, 2011): Share price $5.33. Cash $101M. Controlled phase II trials of oral Hedgehog inhibitor IPI-926 in advanced chondrosarcoma and in metastatic pancreatic cancer have recently been initiated. IPI-926 is partnered with Purdue/Mundipharma with a funding commitment of 85M in 2011 and 110M in 2012. Phase II studies of oral FAAH inhibitor IPI-940 for pain as well as initial clinical trials of oral p3kinase inhibitor IPI-145 are planned for later this year. Phase I data for Hsp90 inhibitor retaspimycin with docetaxel in solid tumors will also be released later this year.
Now (July 18, 2011): Share price $9.00. Cash $91M. Enrollment in phase II trial of IPI-926 and gemcitabine in pancreatic cancer is expected to be complete by the end of 2011. A phase I trial of IPI-926 and Erbitux in advanced head and neck cancer has been initiated at the University of Colorado as part of an investigator-sponsored trial program. The phase II trial of IPI-926 in advanced chondrosarcoma continues to enroll, and a phase II trial of IPI-926 in myelofibrosis will be initiated later this quarter. In 5/11 company initiated a phase II trial of retaspimycin with docetaxel in lung cancer.
As far as I can tell there isn't much in the way of elapsed or upcoming catalysts to explain a 70% increase in share price from recent lows over the last four months. There hasn't even been a coordinated pumping effort on Seeking Alpha. So what accounts for it? Stochastic price movement? Irrational speculation? Low float manipulation? Or a combination of the above? In the spirit of Taco Bell, I'll call it stochirrapulation. Infinity hasn't won my confidence with a series of failures in their Hsp90 inhibitor program and I don't have any strong reason to have faith in their Hedgehog inhibitor program. I'm betting this move is pure stochirrapulation.