The REAL Reason Infinity Pharmaceuticals (INFI) Erupted Today

The internet stock rooms are going insane, babbling about why Infinity Pharmaceuticals (INFI) skyrocketed over 50% today on insanely high volume.  Naturally the big question is why did INFI open higher this morning? And more importantly, is Infinity Pharmaceuticals (INFI) going to stay higher?

First off, Infinity Pharmaceuticals (INFI) is currently trading at $15.95, up $5.03 on the day, on volume of almost 15 million shares.  This compares to the average daily volume in INFI of just 500,000 shares . It is well off its intraday high of $16.93 though it looks like it could regain momentum in the late afternoon, in the last hour of trading.  Usually the profit takers would have dropped the stock a fair bit, but it looks like that may not happen until tomorrow.  INFI has a 52 week high of $21.60, and its year low is just $8.40 on the year.  That’s quite a large trading range, so this stock is no stranger to volatility.

Like any early stage developmental pharmaceutical company Infinity Pharmaceuticals (INFI) can be very volatile and react in big ways to any kind of news on clinical trial updates, or new partnerships.

It looks like the biggest catalyst for today’s move was the announcement of a partnership with Roche, which was announced by Infinity Pharma at 6:30 am this morning.  The company said that Roche was to Supply Infinity Pharmaceuticals with their product, GazyvaTM for a combination clinical trial of Infinity’s Duvelisib (IPI-145).  At the same time, Infinity  will supply their Duvelisib to Roche for their use in scientific studies.

Infinity Pharmaceuticals, Inc INFI logoNaturally, investors were quite ecstatic about this news of a “David and Goliath” partnership.  It’s not every day a development stage company gets that kind of seal of approval from a major pharmaceutical firm like Roche.  But when you do, the stock price sky rockets, as did Infinity’s (INFI) today.

Just one month ago Infinity Pharmaceuticals (INFI) stock was trading in the mid $9 range.  Today, it trades around $16.00. The question now is will INFI stock continue it’s momentum into tomorrow, or will it tank back down, kind of like DGLY did yesterday?  That’s a tough one to answer.  But our guess is it will come down in the near term.  The options trading in Infinity Pharmaceuticals (INFI) doesn’t seem to indicate this is going much higher for now.

Of course, given this relationship with Roche, there is the possibility of a buyout offer from Roche.  And this is a real possibility, but necessarily in the short term.  Of course the buyout rumors are already circulating on stock chat forums such as stocktwits, about offers of $28 per share already being turned down by the company.

For now, we wait and see.