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What: Shareholders of the clinical-stage biotech Infinity Pharmaceuticals (NASDAQ:INFI) are having a very rough day. The stock has collapsed, shedding more than 70% of its value as of 11:30 a.m. EDT today after management reported disappointing top-line results from an important clinical study.

So what: Infinity Pharmaceuticals released data from its phase 2 monotherapy study of duvelisib, the company's investigational compound being researched as a possible treatment for non-Hodgkin lymphoma. This 129-patient study was being run in conjunction with its collaboration partner, AbbVie (NYSE:ABBV).

The results showed that duvelisib was able to meet its primary endpoint, demonstrating an overall response rate of 46%. Unfortunately, that response rate was far lower than the two companies were looking for and is an inferior result when compared to currently available treatment options. That suggests that even if duvelisib does manage to find its way to market, it could have a very hard time competing against other therapies.

As a result, Infinity has announced that it is in "ongoing, collaborative discussions" with AbbVie to explore what's next regarding their collaboration. While those talks are ongoing, AbbVie and Infinity have agreed to put another AbbVie-sponsored phase 1b/2 study of duvelisib on hold.

To help preserve the company's financial position, Infinity Pharmaceutical's management team has announced that the will be closing down its discovery research organization, resulting in the loss of roughly 21% of its workforce.

This is how Infinity CEO Adeline Perkins explained the decision:

This restructuring is a necessary step to preserve financial resources as we explore options for duvelisib and the advancement of IPI-549, our second clinical program.

Now what: Given that the majority of this company's value was tied to the future success of duvelisib, it's hard to see how Infinity will be able to recover from this crushing blow. While it did report more than $192 million in cash on its books as of March 31, it's currently burning through about $40 million per quarter. Even with the cost savings from the workforce reduction, its cash pile is certain to dwindle at a rapid rate from here, and with its share price down so much, issuing new shares to raise capital isn't likely to be a viable option.

Infinity Pharmaceuticals was a risky investment before this announcement was made, and there are now serious questions about its long-term viability. I'd advise any investor who is thinking about bargain hunting on this beaten-down stock to look elsewhere for investment opportunities.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.