Infinity Pharmaceuticals, a clinical-stage biotech, posted a fourth-quarter share loss Tuesday with revenue under $1 million, narrowly hitting an analyst’s earnings forecast. However, meeting Wall Street’s quarterly expectations may have taken a back seat to larger concerns about a pending merger.

The company reported fourth-quarter earnings of 11 cents, versus a consensus estimate of 12 cents, per Zacks Equity Research. Revenue, mainly from royalties, came in at $540,000, well short of Zacks’ own estimate. 

Given the company’s lack of revenue from product sales (and that it expects to continue to incur losses for the foreseeable future as it develops its pipeline), the bigger concern is Infinity’s own sustainability.

 In that regard, the company has been holding on until it finds a partner. 

A white knight emerged in February when Infinity struck an all-stock merger agreement with MEI Pharma. As per the deal, Infinity will continue as a wholly owned subsidiary of MEI and the combined entity will focus on a pipeline of three clinical-stage oncology drugs.

Those three drug candidates are all combination therapies: immuno-oncology pill eganelisib, to be used with checkpoint inhibitor Merck’s Keytruda; oral CDK9 inhibitor voruciclib, to be used with AbbVie’s Venclexta; and ME-344, a novel tumor selective mitochondrial inhibitor for use with Genentech’s Avastin.

Still, Infinity isn’t out of the woods yet. 

“Substantial doubt exists about our ability to continue as a going concern for at least twelve months,” Infinity warned this week.

At the time of their merger announcement, the two firms said their roughly $100 million combined balance of cash or cash equivalents could be expected to fund operations through mid-2025 and to power clinical programs, as well. 

“That number anticipates the synergies of leveraging two public companies’ infrastructures,” noted David Urso, MEI’s chief operating officer, general counsel and head of corporate development. 

Infinity reiterated its cash position in Tuesday’s filing. However, expenses related to the MEI merger and advancement of eganelisib have shortened Infinity’s own cash runway, the company said. On a stand-alone basis, it expects to have enough cash to sustain operations into late 2023, versus its most recent guidance of 2024. 

That leaves Infinity in a precarious spot. If it doesn’t successfully consummate the tie-up with MEI, Infinity would have to evaluate other alternatives. But if it’s unable to enter into another transaction soon, or secure necessary financing, the company’s board may decide to cease normal operations and wind down the firm through bankruptcy or dissolution proceedings, it said.

Both companies’ shareholders must still approve the merger. In addition, a required breakup fee of $2.9 million may dissuade others from submitting alternative takeover bids, and Infinity’s board from bringing them forward, execs cautioned. Then, there’s its substantial debt load of $856 million.

Infinity’s nearest-term prospect for product revenue is eganelisib. The Food and Drug Administration granted fast track designation for the drug in 2020, and several mid-stage trials are assessing the agent, along with other cancer therapeutics and chemotherapy, for treating patients with triple-negative breast cancer (TNBC) and other cancers.

Were the company to seek approval, its debt load would stand to increase significantly, assuming Infinity takes on sales and marketing costs, along with manufacturing and distribution expenses.