REFILE-UPDATE 2-AstraZeneca drops two Infinity cancer drugs

* Hands back rights as part of research prioritisation

* Infinity remains fully committed to drugs

* Shares in Infinity fall 19 percent in early trade

(Corrects typographical error in fourth paragraph)

(Updates with Infinity share price drop, adds CEO comment)

By Ben Hirschler

LONDON, Dec 11 (Reuters) - AstraZeneca (AZN.L) has handed back rights to two experimental drugs discovered by Infinity Pharmaceuticals (INFI.O), one of which has already reached final-stage Phase III clinical testing.

The news sent shares in Cambridge, Massachusetts-based Infinity 19 percent lower to $5.80 in early Nasdaq trade on Thursday.

AstraZeneca inherited the products -- IPI-504 and IPI-493 -- through its acquisition last year of U.S. biotech group MedImmune, which had clinched a deal with Infinity in 2006.

A spokesman for the Anglo-Swedish company said the decision to drop the two compounds reflected "prioritisation" within the company's research pipeline.

IPI-504, the more advanced of the two drugs, had initially been in development for prostate cancer -- a large market -- but clinical results in this indication proved disappointing.

Further enrolment into a clinical trial testing the drug in prostate cancer was discontinued in July.

It is now in Phase III clinical testing for refractory gastrointestinal stromal tumours, or GIST, a relatively small indication.

IPI-493, meanwhile, is in early-stage Phase I tests.

Infinity said it remained fully committed to developing the two products, despite AstraZeneca's decision to pull out. Chief Executive Steven Holtzman said it had the financial strength to bring the drugs to market and sufficient cash to fund itself through to the end of 2012.

Both drugs belong to a class of medicines targeting heat shock protein 90 (Hsp90), which plays a central role in cellular systems that support numerous cancer-causing proteins.

By blocking Hsp90, researchers hope to knock out a critical source of support for cancer cells, leading to tumour growth inhibition and cancer cell death.

Under the terms of the break-up AstraZeneca will fund an amount equivalent to its share of Hsp90 programme costs for the next six month and Infinity will have a single-digit royalty obligation to AstraZeneca on any IPI-504 and IPI-493 sales. (Editing by Jon Loades-Carter, Greg Mahlich)