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Greg Perry - Chief Financial Officer

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Ryan Martins - Lazard

ImmunoGen, Inc. (IMGN) Lazard Capital Markets 9th Annual Healthcare Conference Transcript November 14, 2012 3:00 PM ET

Ryan Martins - Lazard

Hi. I'm Ryan Martins, biotech analysts here at Lazard. Our next presenting company is ImmunoGen. ImmunoGen is leading approval of TDM-1 and now they’ll give us an update on the company and their plans. We have with us here, Greg Perry, who is the CFO of ImmunoGen. Greg?

Greg Perry

Thank you, Ryan. It’s a real pleasure to be here and I want to thank you and Lazard for giving me the opportunity to come today and tell you about ImmunoGen. Just as a reminder, I will be making forward-looking statements. And often time, future results do differ from those forward-looking expectations and I’d direct you to Form 10-K where we more fully discuss risk associated with investment in ImmunoGen.

So the first thing really is to try convey just what an exciting time it is to be at ImmunoGen today. When we think about ImmunoGen, ImmunoGen is ultimately a personalized medicine company. When you think about how we go about killing cancer, it’s a very personal way of killing cancer.

Our TAP compound binds specifically to antigens that are expressed on the cancer cell, and then delivers the cytotoxic agent specifically to the cancer cell to effect the killing. When I think about ImmunoGen, it’s really two stories, a big story that hearing now today and a big story that’s coming very quickly. And that big story that’s hearing now today is really the ultimate proof-of-concept and that is TDM-1.

TDM-1 is a compound that’s underdevelopment by Roche that incorporates our technology, our TAP technology. And by all indications, they’re developing it to effectively replace Herceptin, which is a $6 billion drug and in some cases, even more so.

The second thing that’s really the game changer for ImmunoGen shareholders is the advancement of our proprietary pipeline and that’s really the second story and that’s a story that’s been emerging underneath the umbrella of all of the excitement and progress around TDM-1.

In addition, the ImmunoGen shareholder gets a benefit from the advancement of compounds that are in the hands of our partners who are also employing ImmunoGen’s TAP technology. And significantly for biotech company of course, we’re in very solid financial footing. We have some $234 million of cash at our September quarter close, which puts us in a very good capital position.

So let’s look little bit more closely at TDM-1. We often can ask the question, just what exactly did you bring that ImmunoGen bring to TDM-1. And frankly the short answer is a great deal. But it began with number one, the idea. And the idea for conjugating trastuzumab or the Herceptin antibody came from our scientist in the late 1990s when the Genentech scientist were basically just coming to grips with trastuzumab itself.

Secondly, we brought to this molecule, our cytotoxic agent, DM1 and people often underestimate the importance of the cytotoxic agent and an antibody drug conjugate. You need to have a highly toxic agents, some 100 to 1,000 fold more toxic than standard chemotherapy, yet not too toxic so that you can secure an appropriate therapeutic window.

Third, we brought to the party, linker technology. We have a portfolio of engineered linkers, each designed to achieve a certain effect depending upon the cancer that we’re targeting. And fourth we brought together expertise and insight around the manufacture, the cytotoxic agent and the formulation and processes needed to commercialize -- to manufacture on a commercial scale the antibody drug conjugate, TDM-1.

On the right hand side of this chart, I’d like to just kind of revisit exactly what an ADC is dealing. So the antibody is specifically targeting antigen that’s expressed on the cancer cell through normal mechanisms. It’s internalized into the cell and then generally trafficking through the lights that somewhere it’s being metabolized and certain metabolites are going to release including the cytotoxic agent to then interfere with the microtubules in affecting the ability of the cell to replicate inducing cell death.

So very elegant the complicated mechanism of actions. And as powerful and important is TDM-1 has been to cancer patients, TDM-1’s been very important to ImmunoGen and to our TAP technology. First off, HER2+ Breast Cancers are solid tumor. The first two antibody drug conjugates that were approved were targeting blood tumors.

And so TDM-1 really is proof-of-concept that you can use in ADC to reach a solid tumor and have a very meaningful effect on the course of the disease. Secondly, looking at the data, the promise of our technology has always been, we can achieve greater efficacy with a reduced side effect. It’s really the wholly grill of oncology. In what we saw on the recent data is exactly that, very strong efficacy data and a very much-reduced side effect profile.

And lastly, the visibility, so the EMILIA presentation at ASCO this summer was a preliminary session, oral presentation at ESMO and then recently published in the New England Journal of Medicine has really resulted in a tremendous amount of buzz around TDM-1 and an umbrella effect for ADCs in general in ImmunoGen’s TAP technology specifically.

So let’s look at what’s driving lot of the excitement around TDM-1 and most certainly looking at the EMILIA data with Phase 3 and large randomized trial of almost 1,000 patients. This was repose to Herceptin patients and was TDM-1 versus standard of care which was Tykerb plus Xeloda.

And what we saw was significant efficacy signal, in fact, significantly improved progression-free survival in the overall survival. And you can see some of the data there that oncologist really responded to given the fact that this is progress in this disease. Most recently, it has been relatively slow.

And then on the last line there, you can see that to a significantly favorable safety profile with our fewer grade 3 adverse events. And the adverse events, when you look at TDM-1 versus standard of care were significant. So you saw the level p shift, you saw much reduced diarrhea, very, very significant quality of life issues for this patient population.

So we often get out how big could TDM-1 be and we hold this kind of respond jokingly to some extent big. And the reason we say big is because we start with Herceptin which is a $6 billion drug. And at TDM-1 if you look at potential pricing, we think that there is an opportunity for Roche to price TDM-1 at a premium to Herceptin.

They recently have achieved that with Prejeta. So you could see higher price per dose for TDM-1. In addition based on the clinical experience, we could anticipate that you would dose TDM-1 longer than Herceptin given the progression-free survival. So therefore you may be seeing more doses per patient.

And then as these, bar graphs imply, there were actually some new indications, if you will, including neoadjuvant and residual cancer, which could actually present more patients. And so I think when you look at multiplier effect of that, it could be a very significant economic answer in terms of how big could be TDM-1 become.

In terms of what’s going to drive TDM-1’s commercial success in the upcoming months. In green, you can see the very important regulatory milestones U.S. approval early 2013 perhaps even able to come a little bit earlier that, EU approval early in the second half of 2013 and then other approvals down the road.

And also on the clinical side still very, very active with three registration trials starting dataset for the MARIANNE trial which is looking at TDM-1 in a first line setting expected to see datas late 2013 early 2014 and then data in 2015 for neoadjuvant as well as HER2+ gastric cancer. So, tremendous amount of news driving events as we look towards 2013.

But as I said the real game changer for ImmunoGen shareholders really is the advancement of the proprietary pipeline and here kind of a list of some of the programs that I’m going to be talking about starting with our IMGN901, which is in a Phase II focused on small cell lung cancer. I will be talking to you about IMGN853, which is in a Phase I focused on ovarian cancer and then also IMGN529 targeting CD37 expressing cancers, which is largely seen on B-cell malignancies.

So, let’s look at IMGN901, so as I said this is targeting CD56 expressing cancers. And its kind of interesting because I think this demonstrates the potential reach of ADC technology, CD56 expressing cancer would not be a particularly exciting target for antibody, drug or for even a small molecule. There is no real function attribute to CD56 that it exist on these cancers and it internalizes and that’s what we need as an essential element of our TAP technology.

So, we’ve fashioned attempt compound to target CD56 expressing cancers. We find CD56 on a range of cancers that you can see on the right here. Our focus for development and registration of 901 is first line small-cell lung cancer. So why small-cell lung cancer?

Well, first of all its -- the incident is quite high. It almost 30,000 in the U.S. alone, it’s a significant unmet medical need. So looking at the natural history of these disease progression free survivals about 5.5 months, once it goes metastatic, overall survival is actually less than a year.

So, a very, very difficult intractable disease to really hasn’t been much new for patients in this area for some 20 years or so. Also when we looked at 901’s development we looked at 901 in monotherapy trials against small-cell lung cancer and we saw about 25% benefit rate and these were largely in patients clinical benefit rate. And these were largely in patients that were later stage. These patients deteriorate quite quickly and their disease progresses quite rapidly.

So that was significant. In addition and in ultra-orphan indication called Merkel cell carcinoma or which is a small-cell cancer of the skin. We actually experienced three durable complete responses in 21-patient study.

However, the effect was somewhat binary. So patient seem to have this dramatic complete response effectively cured or there wasn’t very much of response at all but this also gave us some indication that there was some activity with this molecule.

And lastly, when we look at our preclinical models, we saw that there was some synergistic affect with standard of care. So we had reason to believe that we might be able to add to the benefit of standard of care etoposide and carboplatin.

So, we prepared a study to answer the question is 901 going to be a drug. We moved into the Phase II portion, the Phase I portion of the study was simply to arrive at MTD’s quickly and rapidly as we can. We selected the dose of 112 mix per meter square that patient population, the Phase I was not representative of the patient population in the Phase II. And Phase I, we basically took any patient who would be taking etoposide and carbo. So we perhaps one small-cell lung cancer patients in fact they didn’t even have to be CD56 expressing cancers.

Now, that we are into the Phase II arm, the Phase II arm design is basically 120 patient randomize 241 and here we are going to look for progression free survival and overall survival. Our expectation is that the first stage look at this trial and will be 60 patient, the 60 patient plus above six months, which would put us in a position to perhaps see some data read out on this in the back half of 2013.

Basically, we did publish the results from the Phase I portion of this trial and again it wasn’t the same patient population that you will find in Phase II. And I think the most interesting aspect of this is line right here that clinicians found this very interesting that in two of seven patients would platinum refractory resistant disease, we had a PR and so that was very intriguing to them giving how intractable these disease is.

Let me turn now to IMGN853, this is our wholly-owned compound that’s targeting folate receptor alpha and again this is found on a number of cancers but specifically ovarian and non-small cell lung cancer. This is an interesting conjugate in the sense that the antibody itself doesn’t have any function other than delivering the cytotoxic agent. But we’ve employed engineered charge linkers to try to combat multi drug resistance and then its link to our cytotoxic agent DM4.

Patient enrollments underway in our expectation is perhaps is early as mid next year would be able to share some data. The way we structured the Phase I is really a Phase I plus trial where we rapidly escalate through dose ranging portion and then we will have expansion cohorts to better inform in terms of development pathway regulatory pathway, but also the pace of investment on CMC not in significant decision.

Our last compound it’s in the clinic IMGN529 is targeting CD37 expressing cancers the unique aspect of this compound is unlike 853, the antibody itself has significant cell-killing capability.

So we have now marry that to the same linker cytotoxic design that’s found in TDM-1, which is our SMC, CDM-1 format. This is also in Phase I. Dose escalation is underway and then may have expansion cohorts as well.

So if we look across all of our TAP compounds that are in development that use our technology partner and our proprietary, you can see a real range of indications from blood tumor to solid tumor and across number of different areas. So there is a tremendous amount of activity that’s happening with our TAP technology.

Brief look at financials, we’ve previously guided to our net loss 70 to 74 range and this is for our fiscal year ending June 2013 net cash provided by operations $70 -- $82 million and then a cash balance at the end of this fiscal year of a $172 million to $176 million. And the significance of that is that we believe that that cash balance at the end of June plus anticipated royalties and the opportunity for future milestones should be able to support the company to achieve proof-of-concept in its proprietary pipeline, which again we think is going to be a very significant inflection point for ImmunoGen and for ImmunoGen shareholders.

As we look at events that are driving news flow across the company. Certainly, TDM-1 is going to be a continued big driver there. Certainly other partner compounds and when you think about their partners, we have more recently, Lilly, Novartis, partners that have been in the fold a bit longer like Amgen and Bayer, and Biotest and Sanofi. Six compounds in the clinic and expectations around data flow in milestones for those partners.

And then certainly in the proprietary pipeline, as 901 moves through its Phase II towards the data, we know back half of ’13, 853 data perhaps as early as mid-’13 and then 529 data, back half of 2013. And then I should also point out that our next compound move into the clinics. So they’ll be four compounds in the clinic.

The next ImmunoGen compound is expected to enter the clinic in 2013. So, as I said, a very, very exciting time to be at ImmunoGen. The first story in terms of TDM-1 continues to unfold. It continues to seemingly unfold always to the upside with positive data and surprising on the upside. So we look forward to the continued development success of that for patients in for all of us.

And also on the proprietary side, I think the second story that’s really emerging at ImmunoGen and sometimes overshadowed by the success of TDM-1, but the tremendous progress that’s being made in the proprietary side where at the end of 2013, potentially we’d read out of data on three programs and basically having four programs overall in the clinic.

Also, continued progress by partners and then lastly a very strong balance sheet, good capital position to sustain the company through proof-of-concepts on our proprietary programs.

With that I thank you and open it up to any questions.

Question-and-Answer Session

Ryan Martins - Lazard

Greg, maybe you can talk about what the plans -- the plans that Roche’s put in place in terms of thinking about the launch for TDM-1, the commercialization of TDM-1?

Greg Perry

Well, unfortunately since it is ferocious compound, we are not really ready to exactly where they are at. Our sense is that, based on just general activity that they are certainly working and preparing for that event. So there is a lot of excitement about this.

I think, when we read their public comments as you do as well, you begin to see the excitement you see begin to see just important it is to Roche and Roche’s story going forward. So, unfortunately, we don’t have any other insights.

Ryan Martins - Lazard

Okay. In terms of your ADC platform, it seems like a lot of other companies are now trying to advance ADC’s, how do you see those as positioned relative to what else is out there in terms of linkers or just the ADC platform in general?

Greg Perry

So, if I think about the ImmunoGen business model, we are really transitioning from a platform play in a company that’s dependent upon licensing our technology to being a developer of drugs. So our real focus -- my real focus, what I worry about when I wake up in the morning is how we are doing with accrual.

Are we making good choices about regulatory pathways, about clinical develop plans, about configuration of the next two products that people are working on, that will come into the clinic. So we invest a modest amount of money to stay current in the areas like linker and cytotoxic agent. But more and more, it’s really with the high towards our own potential pipeline.

So we continue to work on a second class of cytotoxic agents and we’ve had some exciting breakthroughs internally there. This is a DNA alkylating class. That’s an example how we will spend a modest amount of money to maintain that. But we feel less threatened or concerned about some of what else is going on competitively, because we are focused on our proprietary product development.

The only other thing I would say there is that, we are a company with tremendous amount of experience in TAP technology or an ADC technology, and there have been a tremendous amount of lessons learned about the challenges of identifying a cytotoxic agent that is, which has put enough, but yet still delivers the therapeutic window.

There is a tremendous amount of experience and lessons learned about linker technology and what’s required to maintain stability in plasma, but yet achieved the desired affect inside a cancer cell. And not just any cancer cell, but the specific cancer cell that you are working on.

And there is a lot of learning cycles that have been taken place about what makes a great antibody for a conjugate, so not necessarily just a great antibody, any old antibody but an antibody in the conjugate format that will deliver the optimum results. So, I’m excited. It tells me that we are mining in the right area if you will that so many people are rushing in. But I’ve got a – I would say a quiet confidence about our experience and knowledge in this area.

Ryan Martins - Lazard

Any questions in the audience? So, maybe one final one on the manufacturing side. Whose obligation is the manufacturing? Are you involved on the manufacturing for commercial product in anyway with, providing to linker or how does that work in terms of the set-up with you and Roche?

Greg Perry

Yeah. So most all of our technology license -- since we provide a technology package if you will and then what we do is we offer our services, generally more so in the early stage of development. So we’ll offer research services in terms of identifying the lead candidate.

We’ll then offer our process development services in terms of developing formulation and requisite assays. And then we’ll actually offer conjugation services for pre-pivotal conjugation. And our value proposition to partners is we know an awful lot about this. And if you purchase these services, we think you will get to where you want to go faster with a greater probability of success. And we’ve been very successful in selling that value proposition.

But after that basically, customers are pretty much going to be on their own if you will. In some cases, they will engage us and in the case of TDM-1 and Sanofi’s SAR3419, we actually developed their commercial scale process as well. So that’s often something we will sell, but they own all of the relationships after that with their CMOs.

Ryan Martins - Lazard

So it is just responsible for manufacturing.

Greg Perry

Yeah.

Ryan Martins - Lazard

Okay. Thank you.

Greg Perry

Great. Thanks, Ryan.

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