Infinity Pharmaceuticals, a Cambridge, MA-based developer of cancer drugs, got a significant boost today. It signed a partnership worth $75 million upfront from Stamford, CT-based Purdue Pharma, the maker of the pain reliever oxycodone (OxyContin), and Mundipharma, an affiliated company with operations outside the U.S.
Under the deal, Purdue Pharma has agreed to pay $45 million to buy four million shares of Infinity (NASDAQ: INFI) at $11.25 a share, more than double what they were selling for before the deal was announced. If Infinity shareholders approve the partnership, the company could get another $30 million from Purdue and Mundipharma by selling another two million more shares, and six million warrants to buy shares until the middle of 2012. If shareholders approve the closing of the second financing, Infinity also will get access to a $50 million line of credit for any business purpose, Infinity said in a statement.
The deal allows the Purdue companies to co-develop IPI-926, a drug Infinity is developing to block signals from the “hedgehog” pathway, which is thought to be integral to survival of cancer cells. The collaboration will also include other drug candidates Infinity is working on, including one that affects fatty acid amide hydrolase (FAAH), a target researchers are studying for nerve pain. The deal calls for the Purdue companies to pay all the bills for these research programs through the end of 2013. The new partnership doesn’t include Infinity’s Hsp-90 drug program that is run in partnership with AstraZeneca, or another Bcl-2 program it has in collaboration with the drug giant Novartis.
The collaboration with Purdue comes at an important time for Infinity. The company has no marketed products to generate cash flow, and this is not an easy time for money-losing biotech companies to raise more capital from investors. It had a limited ability to weather the financial storm without help, with $80.7 million in cash and investments on its balance sheet at the end of September, and a net loss of $12.4 million in the quarter.
“This alliance with Purdue Pharma and Mundipharma provides Infinity with the financial resources and independence to continue our productive discovery efforts, to expand our clinical development capabilities, and to build our own organization to commercialize our products in the United States,” said Steve Holtzman, Infinity’s CEO, in a statement.
Shares of Infinity climbed 7 percent after the news, to close today at $5.65.