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Greg Perry - EVP & CFO

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Jason Kantor- Credit Suisse

ImmunoGen, Inc. (IMGN) Credit Suisse Antibody Day Conference Call May 10, 2013 1:30 PM ET

Jason Kantor- Credit Suisse

Okay. Our final talk today is ImmunoGen and I would like to invite Greg Perry, CFO, to the podium. Yeah go ahead, thank you.

Greg Perry

Alright, great, thank you it’s Greg Perry, CFO of ImmunoGen and again I would like to start by thanking Jason and Credit Suisse for giving us the opportunity to come here today and talk to you a little bit about ImmunoGen and the mission that we are on here.

I would like to caution you that I will be making forward-looking statements often times. Actual results do differ from these forward-looking statements, so I would point you to the risk factors on our Form 10-K when we talk about the risks associated with investing in ImmunoGen more fully.

So let's talk about ImmunoGen; it’s a very exciting time for ImmunoGen right now. Kadcyla was approved and was launched in the first quarter and to I think a very good success. We are certainly looking forward to the continued development of Kadcyla globally across a number of indications and we just recently had a little celebration of the company where we brought all of our employees together and we listened to a survivor tell her story about what Kadcyla had done for her and we also listened to some clinicians talk about the power of this technology and this drug in their clinical practice. So it’s really a very exciting opportunity for our employees to really see first hand what it is that we are all focused on so diligently.

Of course along with this exciting development for patients as well as clinicians is an exciting development for ourselves and our shareholders as it will bring forward a potential significant royalty revenue. And while we've been very focused on Kadcyla, the leadership team has been very focused on developing our proprietary pipeline. We have three wholly owned compounds in the clinic today; I will talk about those in a moment and we expect you to have a forth into the clinic in this year.

We are also on a very sound financial footing. We have $206 million in cash as reported on our last quarterly call and we have no debt. We are also partnering with a number of the leaders in oncology which we think provides significant opportunity for value creation as well as a meaningful source of cash going forward.

So certainly, Kadcyla has really changed the paradigm for treating cancer and we think it really is a start of a new era in the treatment of HER2 positive cancers where you see both improved efficacy versus the former standard of care as well as improved tolerability. It really embodies the promise of ImmunoGen’s TAP technology. It’s not only the first compound that's been approved utilizing ImmunoGen’s TAP technology. It’s also the first compound or ADC rather that's been approved for a solid tumor and the first ADC that's been approved based on a randomized controlled trial with a full approval and we think this is obviously very exciting for ImmunoGen because it’s an ultimate validation of our approach to ADC.

Looking at Kadcyla which as I said is now launched and being sold in the US, the label was pretty much as expected, so approved to treat HER2 positive metastatic breast cancer and patients who had previously received Herceptin and a taxane; adjuvant setting disease progression on within six months and also in the metastatic setting. The graph to the right basically are some patient numbers from Roche, highlighted there is basically the label and we see about 10% to 12% of that first line patient population being available to the current label. And as I mentioned the approval was really based on efficacy as well as tolerability advantages; significantly improved progression free survival as well as overall survival but yet with a much more favorable tolerability profile and the standard of care at the time take plus the load truly the promise of ImmunoGen’s TAP technology.

Looking at Roche’s development plans, they’ve historically and continue to be very aggressive, a very broad registration program globally and we're expecting to see additional approvals to expand rapidly in different geographies as well as additional indications as they are pursuing this in gastric cancer, HER2 positive, gastric cancer as well.

Certainly, more indications, more opportunity in different metastatic settings in Herceptin and I think the value of Kadcyla in ImmunoGen’s TAP technology is really proven out by the price that Roche has achieved in terms of [$9800] per month, a significant premium to that of Herceptin at $4,500 per month.

So what is it that’s really powering Kadcyla and what exactly is ImmunoGen’s TAP technology? Well, it's really a portfolio of proprietary highly potent cell killing agent and this is actually quite difficult to achieve, an agent that is so potent that it can be attached and delivered into the cell to kill enough of the cancer cell without increasing the adverse event and profile of the molecule. So we have two cell killing agents DM-1 and DM-4 and then that portfolio is enhanced by a series of engineered linkers.

The linkers engineered to achieve specific capabilities both obviously stability while traveling to the plasma, but then to release the precise metabolites that are required to kill the cancer cell. Also ImmunoGen has acquired through it's experience a really unique opportunity in terms of learnings about what makes an appropriate target, what makes an appropriate antibody to access that target and what is the format as a best use to optimize the ADC against a given cancer.

If you look at ImmunoGen as well as our partners, we are really attacking a very broader ray of cancers, so not only are we attacking solid tumors for instance with Kadcyla, but also blood tumors in indication such as breast, lung cancer, B-cell malignancies, gastric cancer, ovarian, multi-myeloma, brain cancers, (inaudible) head and neck cancers, so a very broader array of cancers are being targeted by ourselves as well as our partners.

Now as exciting as Kadcyla has been for patients and for ImmunoGen our employees as well as our shareholders, as I said the time and attention for ImmunoGen’s leadership team has really been very much focused on proprietary pipeline and developing that proprietary pipeline effectively trying to find our one drug in terms of our proprietary pipeline.

So let’s talk about IMGN901, it's our most advanced proprietary program, it's a product candidate, it's targeting CD56 positive cancers, it's currently in Phase II testing for small cell lung cancer; we saw activity in some of our earlier assessment certainly in pre-clinical arena we saw some very interesting combination data that indicates given our mechanism of action it could be a potent compound to be used in combination.

CD56 is expressed on number of cancer types including small-cell lung cancer and Merkel cell which is a cell cancer of the skin and they are some what universally expressed on roughly 100% of those cancer cells, and it also is expressed the multiple myeloma about 70% of multiple myeloma cancers expressed CD56 as well as some other cancers including pediatric neuroblastoma. The design of the compound is DM1 payload linked to CD56 binding antibody.

Why small cell lung cancer? Well it’s a significant unmet medical need. So there are about just under 60,000 metastatic cases of small cell lung cancer in the U.S. and Europe per year and as I said about a 100% of those express CD56 and not much new has been developed for this patient population in some 25 years. Our CDO recently said he treated the patient in 1995 for small-cell lung cancer and he treated by giving them Etoposide which is the exact combination which we are using in our study call the NORTH trial. Medium survival is thus one year with treatment and the current frontline therapies lack any type of durable benefits, Etoposide Carboplatin have a median PFS of some 5.5 months with an overall survival of nine to 11 months. Later lines have been showed a very little affect, so there really is a need for frontline regiment with much more durable affect, so the goal of IMGN901 is to show some activity with the durable response that brings the benefit to this patient population.

We certainly signed development some single agent activity with the compound; we saw some interesting durable remissions in Merkel cell carcinoma and also we saw some interesting signals activity in some of the early trials that we had looking at IMGN901 in small cell lung caner in second line or later patient population and also more recently in the dose finding phase with a Etoposide Carboplatin we also saw some activity in that as well especially in the platinum resistant refractory population where we saw 2PRs with a (inaudible). The waterfall chart there is from the dose finding Phase 1 and I think here what's interesting is you know cancers that are expressed in CD56 to the right are responding and those to the left who we wouldn’t expect so much the red bars are not responding so again a signal of activity here.

We also studied 901 in multiple myeloma as I mentioned, multiple myeloma has CD56 expressed in about 70% of the cancers and here too as a single agent we saw some very intriguing activity and good tolerability and then on the combination study with (inaudible) again we show some interesting activity especially in some of these poor prognostic mutations where we saw four VGPRs, four PRs and MR and four stable disease from the (inaudible).

And again there's an interesting perspective from our new CEO who is actually looking at the state and impressed relative to the approvals that have been achieved in multiple myeloma recently, but for our purposes at ImmunoGen we don't see multiple myeloma as necessarily our path to registration for the compound; our path to registration is through small cell lung cancer, but we certainly thought that this was a good investment to enhance the value of 901 in the event that we determine that to partner the compound down the road, we think this could be very appealing in terms of asset value to potential partner. So the path to registration is through the NORTH trial. It’s not a registration trial itself, it’s a phase 2 trial and randomized two for one and here we are looking at IMGN901 in combination with etoposide and carbo compared to etoposide and carbo alone.

The control arm is for reference purposes only to historical norms, and as I said there we are expecting on the historical side to [CMTFS] or about 5.5 months and an overall survival of nine to 11 months. The trial when fully accrued would have 90 patients roughly and the 901 plus EC Arm in about 45 patients in the standard care arm which is etoposide carbo. Primary end point is progression free survival and our other new points include overall survival. We are anticipating having the trial accrued at the end of this calendar year with a data read out mid 2014.

The next compound I would like to talk about is IMGN853. And this is a compound that's designed to target folate receptor alpha over expressing cancers. Folate receptor alpha is over expressed in a number of carcinomas. It’s an attractive target for binding in oncology. The design of this program is to use the antibody as a targeting vehicle and that is linked to using one of our engineered linkers to counter multi drug resistance to our DM4 payload or cytotoxic. It’s in phase 1 testing currently and we are focused on cancers that over express the target folate receptor alpha. So the two primary cancers that we are focused on are ovarian and lung cancer. In ovarian again a very severe unmet medical need. So there's some 22,000 diagnoses per year and just under 16,000 deaths in the US. So very significant difficult cancer without many treatment offer options.

Unfortunately, when diagnosed at this stage, it's often advanced and what we do see with this indication is a strong folate expression. We're also looking at adenocarcinoma, non small cell lung cancer, much more prevalent disease, we're seeing some 90,000 diagnoses per year in the US and here it's what's interesting to you is also, it's one of the most lung cancers in women as well as for people under 45. So again I think a very significant unmet medical need and once again the majority of these cases are very strongly expressed folate. The goal of the 853 Phase I trial is basically to do an expansion after we achieve a dose in basically in to three signal generating expansion cohorts. The first of expansion cohort is focused on ovarian platinum resistant. The second is ovarian relapse refractory. It also have some other elements involved in that cohort and then there is adenocarcinoma, non small cell lung cancer.

The goal would be to achieve a signal in those expansion cohorts, if necessary, we can expand those further. But really the trigger, a more quick path to registration. So potentially moving to an investment in pivotal CMC activity in the associated expense as well as some potential move to directly in to a pivotal trial at the conclusion of the expansion cohorts should the signal be strong enough and convincing enough to warrant that investment. The next compound is IMGN 529. This is a product candidate that is targeting CD-37 expressing [decell] malignancies. CD-37 is primarily found on NHL and also it's generally found in the same place of CD20 as which is a supposed target for rituximab. Significant disease, one of the interesting aspects of the design of CD37 or IMGN529 is the fact that we have very active antibody. In fact as the graph on the right shows it actually has self killing capability that exceeds rituximab. In this case here the antibody is doing double duty, not only is it targeting, and shepherding the cytotoxic into the cell but it's cells having a cell killing ability on the cell.

Here we are linking in an FMCC format to our DM1 cytotoxic agent and what we see on the graph to the right is that in the conjugate format, we have a very synergistic cell killing effect. So very exciting pre-clinical data this is in dose escalation phase I we are anticipating tab data at the end of this calendar year. Our soon to be fourth program in the (inaudible) was an anticipated IND file mid this year and hopefully first patient dosing second half is the expectation is IMGN289. This is a compound that’s targeting EGFR over expressing cancers, our initial focus here is going to be in head and neck cancer in non-small cell lung cancer. Currently EGFR targeting therapies of working via EGFR inhibition only. So looking at the mechanism of action of an ADC, we have designed a compound that has an antibody that is active in terms of inhibiting EGFR expression, but also we have got the payload to provide in one, two punch in terms of cell killing capability for these EGFR over expressing cancers.

Preclinically, we just reported some data at AECR, and we have shown that net data that we have greater potency that naked EGFR antibodies in the conjugate format as well as we show activity against tumors that have been shown to be resistant to EGFR antibodies again because we are working to this mechanism of action of delivering a potent cytotoxic agent to these cancer cells. We are seeing a tolerability profile similar to Kadcyla and we have a noble ImmunoGen develop discovered make it antibody that we believe provide for prophecy of erbitux with less skin toxicity which is important in this arena because some of these EGFR inhibiting antibodies have been demonstrated to you have a side effect profiles skin tox. Also in terms of financial positions as I mentioned we are in sound financial position with $206 million of cash as we reported on our most recent financial call about our most recent quarter.

Looking at our guidance we are looking at net loss guidance of $76 million to $80 million and cash used in operations of between $65 million and $69 million for the year and that’s is our fiscal year ‘13 which ends at the end of June ‘13, and we are anticipating having a cash and marketable securities balance of between a $186 million and $190 million at the end of that fiscal year. We think that is good capital position and providing enough cash for us to get through proof of concept on this portfolio as we look forward. In addition to our proprietary pipeline we can't certainly ignore the value that Kadcyla has brought to ImmunoGen and ImmunoGen shareholders, so it is important for us to remind everyone about the portfolio partnered programs that we have today. Certainly ImmunoGen has two programs in the clinic, Bayer has an exciting program focused on mesothelioma; they just presented data at AACR on that.

Biotest has a program BT062 which is focused on multiple myeloma and Santa Fe has several programs in the clinic. Their most advanced is SAR3419. So 3419 is targeting CD19 that's also found on NHL, so that's also going after the Rituxamab market. They have a three phase 2 currently and remain excited about that program. Our most recent partners Novartis and Lilly; Novartis as we just announced in the first quarter is taking their first license to a compound using our technology and so they are progressing well and in that partnership and that relationship. In Lilly which is a little bit behind Novartis in terms of the timing when we closed that deal relative to Novartis is also progressing on their activity. So fairly extensive roster of really valuable named clients here who basically are working through and attacking a number of cancers with ImmunoGen’s TAP technology.

So as we look at news event that are going to drive ImmunoGen during the balance of this calendar year, certainly in terms of partner programs I've learned to never under estimate the power of Kadcyla so we will continue to monitor that launch and sales ramp. We are looking forward to the expected EU approval in the second half of 2013 and the launch in the EU as well as additional growth globally for that compound. In addition to Kadcyla there are seven other programs in the clinic. So each of these having the opportunity to advance in their clinical development path and generate milestones for ImmunoGen shareholders, and also we are anticipating from the portfolio of programs that we have partner that are in the clinic to see one additional compound advance into pivotal testing this year.

On the proprietary side A53 is in its dose finding where we are going to be with ASCO with data associated with the dose finding study, 289 we will be looking forward to an IND submission mid this year and first patient dosing in the back half of 2013 and then 529 that's also in the dose ranging study we are anticipating data at the end of this year and 901 we are looking forward to the completion of enrolment in the NORTH trial at the end of this calendar year with data mid-2014

So a number of important news driving milestones both for ImmunoGen’s proprietary pipeline but also coming from ImmunoGen’s partners. So thank you.

Question-and-Answer Session

Jason Kantor- Credit Suisse

Thank you. Do we have any questions in the audience. I definitely have some questions. So you have the advantage, two things, one being clean up here and two, I think being the only finance guy and so sort of strategically thinking in this space you kind of graduated to a new level of valuation, new level of validation, new level of future revenues and I am just wondering what your thoughts are in building the company from here weather there's opportunities to bring in other products besides what's coming out of your pipeline or whether it makes sense to consolidate some of the smaller antibody players to become to have a broader technology offering or if you think that the path you are on now is efficient to kind of get to that next level.

Greg Perry

No, Jason, I think it's a very relevant question. I think the way we think about it is that you know, ImmunoGen is in a very interesting unique and somewhat enviable position because we're comfortable with our capital position today with some 200 million to cash on the balance sheet in to our last quarter. We have soon to be four programs in the clinic that we're very excited about. We have a big validating event in the approval of Kadcyla which is going to generate cash royalties going forward and we really think that there is tremendous value creation opportunity by keeping our head down and executing on that proprietary pipeline and then you have this whole portfolio partnered products that have the potential for generating cash and potentially popping and generating significant value in their own right. So you know, as I told bankers, you know, keeping in mind, send me the proposals, call me up, I love to be in the flow, I love to know what's happening but I think our value creation opportunities are right in front of us and so we're very focused on trying to make clever decisions and trying to execute and drive those programs through these key inflection points.

Jason Kantor- Credit Suisse

And then just in terms of that revenue stream, I mean, I am sure you are getting approach by offers of different parties in terms of being able to pull some of the cash flow from that forward, all sort of various structures. Is that something that’s attractive to you? You say you are comfortable with your cash position? So you do just wait for those royalties to build or you know, are you considering opportunities to pull the revenue forward?

Greg Perry

Yeah. I really until now didn’t know that a royalty stream was a problem that need to be solve, so but I would say that from our capital position I look at the Kadcyla and I think we generally look at the Kadcyla royalty stream as a valuable asset and as I said I have learned to never under estimate Kadcyla I mean we go back to I think I was sitting across from you a year or two ago, when he ask me how big could it be and my answer was big, I think it could be big.

And it's proving to kind of follow along in that and so it's an asset that I think as a potential we still appreciate and yet it’s an asset that I understand can be monetized and we look at understanding if there is any synergy associated with monetizing it, but it doesn’t feel like it's a real priority at the moment. We feel good about the capital position of the company and we think we have a number of options depending on news flown and events as they unfold to fund increased further development of the company and we look at as one of those options. But it's not something I feel that’s our real pressing near term priority.

Jason Kantor- Credit Suisse

No I don't know anyone who sold a royalty, who hasn’t thought jeez wouldn’t it to be nice if I had held on, so or any other last questions? Alright thank you very much. I really appreciated on that that wraps things up here. Thank you.

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