Out of options: Infinity facing bankruptcy if MEI merger falls through

With 2023 shaping up to be defined by biotech-on-biotech mergers, Infinity Pharmaceuticals’ announcement in February that it was planning to merge with MEI Pharma didn’t raise too many eyebrows. But Infinity has now revealed that the proposed combination could be the company’s last hope of staying afloat.

“If Infinity does not successfully consummate the merger, Infinity expects to evaluate strategic alternatives and if Infinity is unable to enter into another strategic transaction, the company’s board of directors may conclude that it is in the best interest of stockholders to cease normal operations and wind down the company through bankruptcy or dissolution proceedings,” the biotech explained in its full-year 2022 earnings report issued Tuesday afternoon.

Infinity ended 2022 with $38.3 million in cash and equivalents, a sizable drop on the $80.7 million with which it entered the year. Failing to get the MEI deal over the line means this cash runway would run out in the second half of this year, as opposed to its previous timeline of 2024. “This shorter cash runway is a result of expenditures related to merger activities and the advancement of eganelisib,” the company explained.

That’s the worse-case scenario. Should Infinity and MEI's shareholders sign off on the merger, the combined company is projected to have a respectable cash balance of around $100 million—enough to fund operations into mid-2025. That should be enough to tick off some major readouts, including for immuno-oncology macrophage reprogramming candidate eganelisib, which is due to produce initial safety and survival data from a phase 2 trial of a combo with Keytruda in the second half of 2024.

Then there’s CDK9 inhibitor voruciclib, for which initial results are expected from a phase 1b trial of a combo treatment with Venclexta in patients with hematologic malignancies toward the end of this year. Finally, there’s ME-344, a tumor-selective mitochondrial inhibitor targeting the OXPHOS pathway, that is being evaluated in combination with Avastin in a phase 1b trial of patients with relapsed colorectal cancer that is also expected to read out toward the end of the year.

Under the terms of the merger agreement, Cambridge, Massachusetts-based Infinity will become a wholly owned subsidiary of MEI, whose shareholders will own approximately 58% of the company. The remainder will be owned by Infinity’s shareholders. The combined company, the new name of which has yet to be confirmed, will be headquartered in MEI’s hometown of San Diego and trade on the Nasdaq.

With so much at stake, Infinity will be keeping everything crossed that the merger goes ahead. Still, the looming threat of bankruptcy is a sobering reminder of the financial tightrope many biotechs are currently walking. After all, Infinity’s announcement comes the same week Codiak Biosciences filed for bankruptcy and Applied Molecular Transport began seeking out “strategic alternatives.”