UPDATE: William Blair & Company Initiates Coverage on Infinity Pharmaceuticals with Market Perform Rating, $21 PT on Multiple Challenges Ahead

In a report published Tuesday, William Blair & Company analyst Y. Katherine Xu initiated coverage on Infinity Pharmaceuticals INFI with a Market Perform rating and $21.00 price target. In the report, William Blair & Company noted, “Infinity's IPI-145 is a follower to ibrutinib in a different class with much lower potential due to its profile, timing in development, and more intense competition, in our opinion. We rate Infinity Market Perform with a price target of $21 because 1) we believe that Infinity's lead asset, the PI3K delta and gamma dual inhibitor IPI-145, faces stiff competition in the B-cell malignancy market, being potentially the third entrant behind ibrutinib and Gilead's idelalisib; 2) although IPI-145 might emerge to be more efficacious than idelalisib and on par with ibrutinib, we believe our peak sales estimate of $2.1 billion based on the competitive landscape and its position in the race is fair at the moment; 3) we believe clinical, regulatory, and execution risks as well as onerous milestone and royalty obligations weigh on valuation; and 4) we have lower confidence in IPI-145's potential success in asthma and rheumatoid arthritis, or Retaspimycin in non–small-cell lung cancer. We estimate peak worldwide sales for IPI-145 at $2.1 billion with an 80% probability of success in CLL, 75% in NHL, and a 55% in T-cell lymphoma.” Infinity Pharmaceuticals closed on Monday at $19.76.