Infinity Pharmaceuticals, Inc. (NASDAQ:INFI)

CAPS Rating: 2 out of 5

The Company's mission is to discover, develop, and deliver to patients medicines for the treatment of cancer and related conditions.

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Player Avatar zzlangerhans (99.69) Submitted: 11/14/2011 11:58:50 AM : Underperform Start Price: $8.07 INFI Score: +30.92

I haven't become score leader on Infinity through any particular strength in my predictions, at least on a short-term basis. Instead, I've plugged away at the stock over years eking out small victories which sometimes required many months to come through. Meanwhile, the rest of the community found little of interest to garner a rating.

Once again, I won't be scoring more than 20 points on the play, and I could go that far into the red at first. The stock has crept up through my red thumb threshold of 8 despite an ongoing ho hum fulfillment of their midstage pipeline obligations. The next catalyst is likely to be data from the phase II trial of oral Hedgehog inhibitor IPI-926 and gemcitabine in metastatic pancreatic cancer. But the trial just finished enrolling and the endpoint is overall survival, so I don't think we'll be seeing topline data any time soon. Of course, pancreatic cancer has buried many a drug candidate and Infinity has already established a track record of failure with their Hsp inhibitor retaspimycin.

Infinity is far from worthless, and 215M isn't a huge cap for an oncology biotech with multiple phase II trials and 75M in cash. However, I'm seeing a major broad decline in the near future which means the valuation of speculative biotechs will move in the direction of cash for the short term.

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Member Avatar pugnaciously (28.06) Submitted: 11/15/2011 1:05:05 PM
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Could you explain what how you've determined "a major broad decline in the near future which means the valuation of speculative biotechs will move in the direction of cash for the short term." Specifically, I'm asking what data you mined or how you mined it - so I can learn to do it for myself. Secondly, I'm assuming these companies moving to a cash basis means share price will be at a major decline as a result? What level do you go for market cap wise to say a company is a speculative biotech? Less than 200 million? Thanks for your time and answers. I saw no way to contact you directly, but I'm sure your answers will help others like myself who are trying to learn more about biotech.

Member Avatar zzlangerhans (99.69) Submitted: 11/15/2011 3:36:57 PM
Recs: 1

I haven't determined anything. I'm guessing there will be a major broad decline in the broad markets in the near future. If you trade in speculative sectors like small cap biotech/pharma you need to know that on average these stocks will mimic broad market swings at higher amplitudes. If Greece and then Italy default and the S&P plunges, even the best of these companies will be discarded as speculators flee to safer harbors. The safest harbors in biotech will be relatively larger companies with enough cash reserves to weather the storm.

If you were trading in 2008/2009 you had the chance to see this up close. When the world economy looks unstable I'll take my chances on missing some profits to avoid losing 50-70% of my basis even in "good" biotechs. If you want more info on why the S&P might drop 20-40% in the near future, you'll find many others here who can explain that better than I can. Personally, I'm liquidating anything that seems to have hit a relative high and given me a profit until the situation in Europe and the national debt/credit rating issue in the US have clearly stabilized. Others might disavow attempts at market timing and continue to invest based on fundamentals/technicals within the sector.

If you haven't put money into small cap biotechs yet, I wouldn't start now. Stick with blue chips, dividend payers, and lots of cash reserves. I'd avoid biotech unless the market gets crushed and you have the chance to spread your money around many companies that are trading below cash, once you've weeded out the scammers and moonshots. Then enjoy the eventual rebound and try to remember that doesn't make you a genius, or you'll lose it all again.

When is a company speculative? The cap is only a small part of it. Historical volatility is the biggest indicator - check out the five year chart. If looking at the climbs and plunges makes you feel a little nauseated, it's speculative.

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