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ImmunoGen, Inc. (NASDAQ:IMGN)

Oppenheimer 24th Annual Healthcare Conference Call

December 11, 2013 1:00 PM ET

Executives

Daniel Junius – President and CEO

Analysts

Boris Peaker – Oppenheimer & Co.

Boris Peaker – Oppenheimer & Co.

We continue with our presentation. The next company to present is going to be ImmunoGen and it’s my pleasure to introduce the President and CEO of ImmunoGen, Mr. Daniel Junius.

Daniel Junius

Thank you, Boris and thank you to Oppenheimer for inviting ImmunoGen to present the conference. Before we start, let me note that I will make forward-looking statements both during the presentation and during any Q&A that would follow. And I would point you to the Securities and Exchange filings that ImmunoGen has for risks associated with investments in the company. So in terms of the company today, I’m going to walk through a couple of things. I want to talk about where the company is from a stage standpoint, clearly a number of things have changed over the course of the year, the biggest being the approval of Kadcyla so we’ll talk about that a little bit. I think it does a number of things in terms of validating our technology. I want to walk through pipeline. We have a pipeline that continues to grow. We have three clinical compounds of our own, seven in the clinic, two partners and I’ll talk a bit about both our cash position as well as forthcoming in 2014. So starting with Kadcyla, so Kadcyla was approved earlier this year, just as a reminder this is a compound that utilizes the antibody from Genentech, trastuzumab to which we then applied our technology, which includes both our linker and our payload to come up with the molecule. I should also note that ImmunoGen has supplied the clinical material to support early stage studies as well as put together a process that was utilized by the selected CMO of Roche, to do a commercial scale process and get large scale manufacturing.

It’s important to note it’s the first ADC or a prevalent indication and the only ADC at this point with full regulatory approval. As I noted earlier, it provides important validation around our technology from a number of dimensions as well as the first commercial related revenue that the company has been able to generate. So commercialization has started. The compound was approved and launched in the U.S. in February of this year. Since then, it’s progressed nicely in international markets. Most recently was approved in Europe last month, in September it had approval in Japan and other international markets are coming along at the same time. I would note that while approval is taking place in many instances, reimbursement is the secondary issue that needs to be addressed. Sometimes there can be a gap between approval and commercial sales in some jurisdictions. What we’ve seen thus far, is a pretty healthy launch. U.S. sales grew for the seven or eight months that Kadcyla has been approved have been 152 million CHF, add in the international sales and it’s been about almost $170 million from approval through the end of September. And the label is for later stage metastatic HER2 positive breast cancer. So it’s for patients who have failed in earlier line of therapy that included Herceptin. With approval, what was seen with the registration study was not only improved survival quotations, but a significant increase rather in the quality of life before patients. So the tolerability benefits versus the standard of care for second line in later metastatic were pretty dramatic.

Where Roche is going with this is, is looking to commercialize on a pretty broad basis. The chart here shows that the three areas of approval today for Herceptin that being for first line metastatic breast cancer for adjuvant breast cancer as well for first line gastric cancer. Over time, there are studies in place that will take Kadcyla well beyond where Herceptin is today. So we have it approved now for late stage cancer, there is a study first line study in place that we would expect to lead to Kadcyla replacing Herceptin in first line metastatic disease. A number of studies underway in early breast cancer, it should be reading out from 2015 and beyond, the earliest reading out in 2015 as well as a study underway looking at Kadcyla in HER2 positive second line gastric cancer. And we think this could prove to be quite an interesting indication, given the prevalence of gastric cancer to some extent in the U.S. but even more predominantly outside the U.S. So as we see the geographies and the indications expand, that clearly represents an increase in commercial opportunity for Kadcyla and in turn, for ImmunoGen for the royalties that we generate. I think it’s also important to note that from the studies that we’ve seen thus far, patients stay on Kadcyla longer than they stay on Herceptin based therapy. So, again as you think in commercial terms, that expands the opportunity for revenue generation from Kadcyla and at least in the U.S. the pricing for Kadcyla is 2x what it’s been for Herceptin. So if you think about Herceptin today across whole indications, it’s been roughly $6 billion plus therapy, if you think about additional indications longer treatment, higher pricing, to the extent Kadcyla can move forward and replace Herceptin that represents a rather substantial commercial opportunity.

Now going beyond Kadcyla so that’s very important since it’s first approved therapy with our technology, and as I noted I think it validates our technology in a solid tumor -- a difficult solid tumor being doses [ph] therapy. There are a couple of oral presentations that just took place at ASH over the weekend that I think they provide further interesting validation of the technology. The first is a compound B2062. This is in development by a partner Biotest for multiple myeloma. It’s important to note, it’s a targeting antibody. So the antibody is not providing any therapeutic benefit, contrast that with Kadcyla where there is some therapeutic benefit being delivered by trastuzumab. So it’s our ADC technology that’s providing whatever therapeutic benefit exists. This particular study was in combination with Revlimid and dexamethasone for multiple myeloma as I noted. So a liquid tumor. The results were quite encouraging, while it’s early in development in this combination therapy, all of the patients showed some benefits. So at least stable disease and then all the way through higher level responses. The response rate itself was 73% now as I noted, a relatively low number of patients available to be evaluated 15, but many of these patients who were Revlimid and dexamethasone refractory there was very good response there. And in the patients who were receiving this triple combination had the maximum tolerated dose, 89% of them had a response. So this looks to be quite interesting. We’re excited about it based on what it’s demonstrating about our technology using a different linker, a different cytotoxin what we have with Kadcyla. There are opportunities for this compound beyond multiple myeloma. There is preclinical data looking at it at a range difficult to treat solid tumors that has been quite interesting. And lastly from an economic standpoint, ImmunoGen has the right to opt into this compound at a later date, to co-develop and co-commercialize in the U.S. where we would retain 50% of the U.S. rights. So we think that this makes a number of interesting statements about the technology and the opportunity for ImmunoGen.

The other compound that was featured in an oral presentation is one from Sanofi, 650984. This is a compound that targets CD38. It is a naked antibody. So it doesn’t necessarily make a statement about our ADC technology, but given that within ADCs that we’re developing, we have several that have active antibodies in and of themselves, the fact that we have demonstrated with the data and I’ll review the data in a second, I think it does make a statement about our ability not just an ADC company, but the A portion of the ADC is important. We can develop antibodies that can be very effective as therapies. The data here again it was for multiple myeloma. This was as a single agent, what you had was of the evaluable [ph] patients 77% of them had stable disease or better. And again this is simply what the naked antibody and among the 11 patients receiving higher doses there were a number of CRs a number of PRs and a minimal response, so north of 30% it turns that the overall response rate for these patients had the higher dose levels. So quite interesting, CD38 is a target that’s attracted quite a bit of attention. It’s a -- there are other antibodies that’s been licensed in by big players J&J did a deal with Genmed, Celgene did a deal with MorphoSys, both around naked CD38 compound. So we think this looks to be quite interesting, we’ll see how Sanofi choose it to take it forward.

What you’ve seen over the course of 2013 and I think it’s noted by the activity at ASH with the two oral presentations I just referenced is, an expanding opportunity for presentation of clinical data with our technology. You see here the partner compounds ranging from Bayer back at AACR around their compound charting as a feeling [ph] to the some updated Kadcyla data at the European Cancer Conference. At EORTC, there was data around an ovarian targeting compound from Sanofi and then the most recent data at ASH. Beyond the two oral presentations I noted, Sanofi also had data on their first phase II with what’s noted here as SAR3419 and that data again showed very good activity in difficult to treat patients, who had to diffuse large B-cell lymphoma. So this is the first phase two data we’ve seen for that compound, there is two other phase II studies underway. But the activity level in terms of clinical data has picked up in 2013, I’ll talk further -- later about 2014 but I think it harbors an increased level of data coming forward as time passes around our technology. Beyond the partner compounds, we also had data on our own IMGN853 at ASCO and I’ll come back and talk about that, but that’s one of the three wholly compounds that ImmunoGen has in the clinic.

So let me now talk about the proprietary pipeline, I can start with IMG852 which I just referenced. This is a compound that targets something that called the folate receptor alpha. It’s found on a variety of solid tumors, that one include ovarian cancer where it’s a very difficult to treat disease, endometrial cancer as well as a subtype adenocarcinoma of non-small cell lung cancer. We’ve seen very good preclinical activity. Our scientists would say it’s probably the best preclinical activity we’ve seen of any compound that we’ve worked with including partners. So the preclinical data was very exciting. It’s a design that has an antibody that we selected strictly based on its ability to deliver a payload. So it’s not an active antibody, there is not therapeutic benefit from it. But as opposed to finding something that has the most attractive inherent properties, we want one that doesn’t necessarily have the best inherent properties of affinity avidity, but one that when you conjugate it, it’s most effective.

Beyond that, we have linker, that’s the first time that we put into clinic. So linker that’s engineered to specifically compensate for a survival mechanism that sells developed when a foreign agent is taken into the cell. Where we are in this is that we are currently in the phase I evaluation so we’ve gone through dose escalation or the tail-end of dose escalation. We’re dosing every three weeks for patients who have disease that would most likely have a high level of expression of the target. When they complete this dose escalation, we’ll go into specific disease cohorts and we’ve noted those at the right of the slide. So surely we expect to begin dosing patients in plague resistant ovarian cancer as well as relapsed refractory endometrial cancer. And in both instances, we’ll be looking at further tightening the definition of patients in the patient selection, to give us the greatest likelihood of success in dealing with the disease on behalf of those patients.

At the same time, we’re looking at alternative dosing schedule that may allow us to get more compound into the patients and therefore lead to better activity. So, as we go through it we’ll be looking at both of those dosing regiments to see how we optimize the treating patients. We did have data at ASCO back at June of this year and it was a relatively heterogeneous set of patients. So we had different cancer types, so we had different levels of expression. We were dosing at different levels as we try and determine that the optimal dosing prospectively. And what we saw was well when you go through that what you’re doing is increasing to determine what the maximum you can give to a patient without manifesting unacceptable toxicities, so looking to get to the maximum tolerated dose. We dosed all the way up to 7.0 mg/kg as a reference point with Kadcyla or T-DM1 went through the same process, its intolerable dose is 4.8 mg/kg. So we think we got to a relatively high dose. What we saw as the manifestation of intolerability on behalf of patients was a blurred vision, an ocular toxicity. It’s one that’s reversible and it’s been seen in other compounds that have this mechanism, it’s addressable by adjusting your dosing and we’ve gone through that and I think we have that at the right level.

As we went through this, because this phase I is principally be determined the dose but secondarily you’re looking to see if you can generate any activity as you’re going through this process. What we saw is, with patients who were at the higher expression levels and at somewhat higher doses we saw three patients who did exhibit some level of activity. In one patient, we had a number of prior regiments, they showed stable disease after six cycles. Another endometrial patient who had been through two prior taxane and platinum therapies had a partial response after four cycles and then a patient with ovarian cancer also had a partial response both of those partial responses unconfirmed at the time we cut out data for the presentation. So given that the profile of the patients we found this activity to be quite encouraging. The second compound that we have in development is IMGNQ89. This is another solid tumor targeting conjugate. It targets actually the epidermal growth factor receptor, EGFR. That’s strongly expressed on both lung and head and neck cancers. Here, we feel again we’re dealing with a significant unmet medical need. There are very few options for patients who had squamous cell lung cancer as well as those squamous cell carcinoma in the head and neck. What happens with these patients is they may respond to an existing therapy that will disrupt signaling from the EGFR receptor, but they will develop resistance over time. And what we’re able to do by the mechanism that we have is we’re able to potentially disrupt the signaling that I referenced earlier, but we also are delivering a very powerful agent that isn’t necessarily dependent on whether that signaling mechanism whether it’s becoming sensitive to that signal mechanism disruption.

You can see at the bottom we show some preclinical charts that are from models that we develop when we looked at different cell lines that in some cases were dependent on EGFR signaling. We saw their efficacy both with our naked antibody as well as the conjugate, because again here the antibody itself has an impact. And cell lines that were sensitive to EGFR disruption, we saw no impact from the antibody but significant effect of killing capability from the ADC and then also from those cell lines tyrosine kinase inhibitors can be effective in some of these diseases. The cell line that’s resistant to that, we’re also able to show very good activity with the ADC. When we put this together, these diseases and the therapy that exists today are somewhat notorious because the compounds that are delivered will tend to -- it looks like a skin toxicity, a rash that can be very severe that becomes limiting in terms of how much you administer. What we did in looking for the antibody to look at our payload, we were actually looking for an antibody that had no therapeutic activity at all, because we thought if we stayed away from therapeutic activity with the antibody, we’d be able to bypass the skin toxicity and just deliver the agent that’s the self-killing agent that comprises the ADC.

What we ended up with and going through our studies is actually finding an antibody that had characteristics that didn’t manifest the skin toxicity, but nonetheless was active as an agent. Sort of activity comparable to Herbatox, Herbatox being an antibody based therapy for these disease today. So at that point we add an antibody as we went through our testing, the configuration end up with a linker and a payload that actually are the same as Kadcyla. That’s interesting because the target for Kadcyla HER2 is part of the same family as EGFR. So the fact that we have some similarities between the two compounds going at the same -- within the same family of targets have encouraged as we take this forward. Where we are today we’ve just begun dosing patients, so when the dose finding phase we’re dosing patients weekly and attracting patients or recruiting patients who are likely to have EGFR positive tumors. Once we get past that, we’ll go into an expansion phase and that patient population will be more limited to screen them for certain levels of EGFR expression and that will cover the range of diseases that you see on the right. So, EGFR resistant non-small cell lung cancer, non-small cell lung cancer of the squamous cell nature and squamous cell carcinoma for the head and neck. So we’re moving forward and once we reach an appropriate level, we’ll begin to get into those specific cohorts.

The last proprietary compound that we have in the clinic design is IMGN529 and this was developed for B-cell malignancies. The target is CD37 which is found on B-cells. This is the same -- so you’re going after the same non-Hodgkin's Lymphoma sub types as you would with CD20 with CD20 Rituxan would mean that the prevalent therapy that would be administered. Again from a design standpoint, same linker, same cytotoxin as Kadcyla and we’re underway here in phase I testing for a variety for variety of non-Hodgkin’s lymphoma subtypes. We have noted that we’re seeing unexpected activity both in terms of therapeutic benefit to patients as well as unusual characteristics that we need to monitor in patients at these levels, but because we’re seeing this activity it encourages us that there is a path that we can develop that would provide for an effective therapy for patients. We paused in our patient recruitment as we saw some of these effects. We now are back recruiting and administering the patients and look forward to generating some results to take us forward. Beyond the proprietary compounds, there are a number of other compounds being developed by our partners and I note, that we think that we have just an extremely high quality of partners who have large ontology franchises. Two compounds are in development today by Amgen with two additional licenses they’ve taken Bayer I noted early has a compound in development. I talked about the Biotest data, Sanofi has three compounds in development with licenses to additional compounds and then our newest partners Lilly and Novartis have begun to process of taking licenses that we think over the next certainly coming quarters and years will lead to them taking compounds into the clinic. So I think that there is a deep pipeline beyond our own proprietary compound, both to demonstrate the viability of the technology as well as lead to further commercial success.

Lastly, in terms of the financial position before I get to the coming events, we think that we’re in a pretty strong position. We came out of our September quarter which is our first fiscal quarter we’re at June 30 fiscal year-end with about $175 million in cash and cash equivalents. We provided guidance for the year on most recent guidance said that we would end the year again end of June of ‘14 with about $120 million in cash and marketable securities, that should give us sufficient liquidity to take our existing clinical compounds all the way through to proof of concept, without needing to raise money. So we think that we’ve gotten ourselves into a reasonable financial position to advance our proprietary pipeline. What we see coming forward and now pointing to 2014, since I think the last major medical conference for us for 2013 is over. For our proprietary compounds, the expansion cohorts that I referenced earlier should begin dosing in the early part of 2014. We also would expect out of that to be able to generate disease specific data that we could present sometime around midyear at our medical conference. For IMGN529 that’s the B-cell targeting compound, we look to be starting the expansion cohorts there in some time over the course of 2014, now that we’re back in dosing and dose escalating. And then we would have our first clinical data again sometime around the middle of 2014.

IMGN289 is a little bit tougher to predict give that we’ve just begun to dose patients, but there is the potential for us to have the first clinical data over the course of next year. IMGN901 which I didn’t mention earlier, this is a compound that we had in the clinic for small cell lung cancer we stopped that study announced it over just over a month ago. We are looking at the data to understand the dynamics that led to stopping that particular study, seeing if we can interpret whether there were certain patient characteristics that resulted in manifestation of the toxicity that we saw that led to this study conclusion. But as we go through that process, we look to collect that data and present it again at a medical conference again most likely around the middle of next year. And we continue to do earlier stage innovation, we have a compound that’s currently in early stage development. We expect we’ll be in a position to talk about that more expansively sometime in the second half of 2014. If you take that over and then look at our partner compounds, we just came through ASH and had a significant amount of data across partner compounds at that conference. Kadcyla data will continue to develop we’ll hear about sales on a quarterly basis. The next major clinical event will be results from their first line metastatic breast cancer study, the MARIANNE study. Roche has indicated that, that data would be available sometime in the second half of 2014 leading to registration in 2015.

As we think about the major oncology conferences or scientific conferences coming up over the first half of 2014, both at AACR and at ASCO, we would expect clinical data on one or more compounds at each of those conferences. And then as we think beyond that other events, we think that across the partner pipeline and again I noted, seven partner compounds, we will gain insight into partner’s plans for those compounds over the course of 2014. We’ve now heard about early clinical data or early or later clinical data on all but two of those compounds. So the opportunity for us to get further insights on development plans for that entire portfolio. We expect to see some compounds coming to the clinic from partners as I noted there are licenses that partners have to a variety of targets. We think those will lead to clinical studies over the course of 2014. And then also with partners who are doing earlier stage work, we would expect to hear about the first preclinical data sometime over the course of the year. So with that I’ll conclude. I think the company has made a significant amount of progress. 2013 was an extremely successful year. I would have to say that the approval of Kadcyla alone made it a banner year for ImmunoGen, but the activity level is increasing and I look for that to continue as we go into 2014. So with the few minutes that are remaining be happy to take any questions that anyone might have.

Boris Peaker – Oppenheimer & Co.

Any questions from the audience? I’ll get the mike for you.

Question-and-Answer Session

Unidentified Analyst

Can you describe the market potential for Kadcyla in general not specific?

Daniel Junius

Well let me drive the question because didn’t hear about the market potential for Kadcyla. The -- I’d approach that a couple of ways, one is since it’s going after this same target as Herceptin, I think a good starting point is to look at the current sales levels for Herceptin, which is something between I guess $6 billion and $6.5 billion worldwide. Now I think what you have to do is understand how that splits out and why I don’t have the exact data, I think that 30% to 40% of those sales for Kadcyla are for metastatic breast cancer. The rest would be for gastric or adjuvant breast cancer HER2 positive breast cancer. So as you think about the progression -- if Kadcyla follows the progression of Herceptin, I think you have that type of base. The big incremental element would be what does adjuvant look like and you’re not really going to get any full insight into adjuvant till some time probably past 2017, those patients tend to stay on for a very long time. Our study is going to take a while to execute and understand. But I think as I noted earlier, the fact that even if you start with Herceptin as a base, when you take into consideration the pricing for Kadcyla and in the U.S. Kadcyla is two times the level of Herceptin, actually above two times the level. All the studies that we’ve seen thus far would suggest patients stay on Kadcyla, longer than they stay on Herceptin so now you got a multiplier as opposed to additive factor. And you’re seeing gross for a broader range of indications than they have for Herceptin. So all of those things together project that the potential is larger, it will take sometime to realize that execute the study needed to be able to justify the label to be able to service those indications.

Boris Peaker – Oppenheimer & Co.

Any other questions? So maybe I’ll ask just one question. In terms of antibody drug conjugate or just in general payload, the technology where do you think the company is putting payloads may be not so much on the antibodies but either short peptides or some other targeted molecules? I’m just curious is that something that your technology is amenable to or is it something that you would consider to expanding beyond antibodies?

Daniel Junius

There are variety of innovations coming around ADC. People are looking at alternative cytotoxins, alternative means alternative means of delivery. And we try to stay abreast of all of those. We have data at AACR not long ago about a new family of cytotoxins that we’ve delivered, so it knows that they are internally developed. When you think about delivery, we are open to that. We look at the different approaches that are there. All of them have a number of dimensions that have to be evaluated, but it’s not one that is necessarily limited by our technology. We think that this technology is sufficiently flexible and adaptable that it can work with those. What you end up with is however different characteristics because the delivery mechanism whether or not there is a fragment whether it’s a peptide can then have a different half-life, it can half means you can lead to different characteristics in terms of pharmacokinetics. And so you’re making a substantial change to a system that has to interrelate to another system, the system being the whatever is the new name for an ADC that is not an antibody based ADC, it’s now changed and have to interact with the -- this is the biologic system of the cancer cell. So we do look at it, I think there is some opportunity there. We just have to see how all of these different elements evolve.

Boris Peaker – Oppenheimer & Co.

Great. There is no more questions then we’ll close this presentation.

Daniel Junius

Thank you.

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