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INFINITY PHARMACEUTICALS, INC. Reports Operating Results (10-Q)

August 07, 2012 | About:
10qk

10qk

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INFINITY PHARMACEUTICALS, INC. (INFI) filed Quarterly Report for the period ended 2012-06-30.

Infinity Pharmaceuticals Inc. has a market cap of $450.9 million; its shares were traded at around $16.68 with and P/S ratio of 4.9.

Highlight of Business Operations:

obligated to fund any activities in excess of the annual funding cap ourselves, which we did in 2011 primarily due to expanded clinical trial activities for saridegib and the commencement of clinical development of IPI-145, our lead PI3K inhibitor program candidate. We recognized revenue for reimbursed research and development services we performed for Mundipharma and Purdue, including $20.9 million and $45.0 million in such revenue in the three and six months ended June 30, 2012, respectively. We recognized $18.4 million and $42.1 million in such revenue in the three and six months ended June 30, 2011, respectively. During the three months ended June 30, 2012, we discontinued company-sponsored development of saridegib (see Note 10 Restructuring Activities, in our condensed consolidated financial statements). Based on this event, we adjusted the total forecasted expenses for the programs in the strategic alliance with Mundipharma and Purdue. Additionally, as a result of the discontinuation of company-sponsored development of saridegib, we received indication in June 2012 that we may not receive the $55 million in budgeted research and development funding for the second half of 2012 from Mundipharma. Due to this uncertainty, we revised the budgeted research funding amount we expected to receive during 2012 from $110 million to $55 million, which we already had received. We recognized the impact of the changes in forecasted expenses and research and development funding as a change in accounting estimate prospectively during the three months ended June 30, 2012. This resulted in a decrease to revenue and an increase to loss from operations and net loss recognized for the three and six months ended June 30, 2012 by approximately $3.1 million. This change in accounting estimate increased loss per share by $0.12 for the three and six months ended June 30, 2012.

In October 2010, following completion of the first Phase 1 clinical trial of IPI-940, Mundipharma and Purdue exercised their rights to assume all worldwide development and commercialization activities and to fund all subsequent research, development and commercialization expenses for products arising out of our FAAH program. All expenses associated with activities we conduct related to the transition of the FAAH program to Purdue and Mundipharma were reimbursed by Purdue and Mundipharma, with such amounts not counting towards the annual funding cap. We recognized $0.6 million and $2.9 million in revenue related to reimbursed research and development services for the transition of the FAAH program for the three and six months ended June 30, 2011, respectively. The amount of revenue related to reimbursed research and development services for the transition of the FAAH program for the three and six months ended June 30, 2012 was immaterial.

repay the $59.3 million, and we have been recognizing the deferred revenue ratably over 14 years, which is our estimated period of performance under the arrangement. The estimated period of performance will change during the three months ended September 30, 2012 as a result of the termination of the strategic alliance agreements. We periodically review this estimate and may make adjustments as facts and circumstances dictate. We recognized $1.0 million in such revenue in each of the three months ended June 30, 2012 and 2011 and $2.1 million in such revenue in the six months ended June 30, 2012 and 2011.

Our revenue during the three and six months ended June 30, 2012 consisted of approximately $20.9 million and $45.0 million, respectively, for reimbursed research and development services we performed under our strategic alliance with Mundipharma and Purdue, and $1.0 million and $2.1 million, respectively, from the amortization of the deferred revenue associated with the grant of rights and licenses under this alliance. Our revenue during the three and six months ended June 30, 2011 consisted of approximately $19.0 million and $45.0 million, respectively, for reimbursed research and development services, including $0.6 million and $2.9 million, respectively, in revenue related to reimbursed research and development services for the transition of the FAAH program, and $1.0 million and 2.1 million, respectively, from the amortization of the deferred revenue associated with the grant of rights and licenses under our alliance with Mundipharma and Purdue. The increase in reimbursed research and development services revenue for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011 is primarily due to increased internal effort and greater external expenses on our Hedgehog pathway inhibitor and PI3K inhibitor programs. The decrease in reimbursed research and development services revenue for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011 is primarily due to reimbursement during the six months ended June 30, 2011 of an $8.5 million license fee that was accrued as of December 31, 2010. This decrease was offset by increased internal effort and greater external expenses on our Hedgehog pathway inhibitor and PI3K inhibitor programs during the six months ended June 30, 2012.

in operating activities for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 decreased primarily due to an increase in deferred revenue from Purdue entities partially offset by the higher net loss for the six months ended June 30, 2012. Our cash flow used in operating activities for the six months ended June 30, 2011 included a license payment of $8.5 million paid in January 2011 for our PI3K program. Cash flows from operations in future periods can vary significantly due to the level of research and development reimbursement or future collaboration arrangements. We expect to be obligated to make a $5 million milestone payment to Millennium in connection with the commencement of the phase 2 clinical trial of IPI-145 in patients with asthma. We expect to record this milestone payment as research and development expense in the three months ending September 30, 2012.

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