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Why Infinity Pharmaceuticals Shot Nearly 4% Higher Today

By Eric Volkman – Oct 18, 2021 at 5:22PM

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An analyst initiated coverage of the biotech stock with a unambiguous buy recommendation.

What happened

Infinity Pharmaceuticals (INFI -2.77%) got off to a market-beating start this week as its shares zoomed 3.8% higher Monday, on the back of new analyst coverage that made an extremely bullish case for investing in the biotech.

So what

H.C. Wainwright's Michael King Jr. is the prominent new Infinity bull. He unhesitatingly tagged the stock with a buy recommendation at a price target of $9 per share. That's more than triple the current share price, even after Monday's pop.

Gloved and masked medical researchers using microscopes in their work.

Image source: Getty Images.

King points out that the company's lead pipeline candidate, the cancer treatment eganelisib, "has shown compelling activity both as a single agent as well as in combination with commonly used immune checkpoint inhibitors." He was specifically referring to Bristol Myers Squibb's Opdivo and Roche's Tecentriq.

It should be stressed that since Infinity's proximate future depends heavily on the development of eganelisib, its stock carries an above-average degree of risk -- even in the context of the always-risky biotech sector.

Now what

King is clearly not bothered by this. In his research note initiating coverage of Infinity stock, he wrote that "we are comforted by two factors: first, the company has a long history of discovery and development of clinical candidates, albeit with its fair share of disappointments, and; second, eganelisib has shown provocative evidence of single agent activity in difficult to treat patient populations."

The analyst also pointed out that in phase 2 clinical trials, eganelisib has produced much better-than-expected results in terms of response and overall survival, among other endpoints.

King certainly makes valid points about eganelisib. As always, though, even when a drug candidate looks promising in the earlier phases of testing, there is no guarantee that it will continue to perform as well through the later stages and ultimately be approved by regulators for use.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.

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