ImmunoGen (IMGN) soared on Thursday, after investors saw Forbes senior editor Robert Langreth's article about pharmaceutical company Roche’s status and plans. In the article, Severin Schwan, Roche’s chief executive, discussed his firm’s dominant position in the cancer drug market, stressing the fact that Roche’s cancer drug Avastin is hard to beat, regardless of what other pharmaceutical companies claim about their upcoming competing drugs. “In cancer, we are at the beginning,” Schwan told Forbes. “The barrier to beat our established drugs is very high. It is extremely difficult to find something better than Avastin whose sales approached $6 billion last year.”
The part related to ImmunoGen, though, came when the article described Roche’s plans. “Roche is testing drugs called armed antibodies that combined targeted therapy with traditional toxic cell-killing drugs. The idea is that the antibody will deliver the toxic chemotherapy directly to the tumor, maximizing effectiveness and limiting side effects.” Is this not ImmunoGen’s drug? Indeed it is, as investors who read the article confirmed their notion when it mentioned the armed antibody by name “T-DM1,” described it as much as possible, and confirmed that ImmunoGen is the developer of the drug.
Motivating IMGN’s rally yesterday was this passage: “Roche is in late stage testing of T-DM1 that chemically links Herceptin to a potent chemotherapy toxin. If the drug works, patients will take one drug for breast cancer instead of two or three. Roche, presumably, could charge a higher price for the two-in-one combo, especially if it has fewer side effects.”
Further exciting ImmunoGen’s fans was the part of the text that said, “Schwan swears there are no big more mergers in Roche’s future because we think it destroys a lot of value. We are going for targeted midsize acquisitions.”
Well, well, well. Reading the article’s description of ImmunoGen’s T-DM1 drug was enough for informed investors to connect the dots. ImmunoGen typically fits the description of what Roche is interested in. If taken over, the firm, which is fairly small sized, would turn into a midsized firm on the premium to be paid in case of acquisition. In addition, investors know that ImmunoGen is not a single cancer drug firm, but has a pipeline of several conjugated monoclonal antibodies developed for several cancers. More important, it owns the TAP technology that made possible what defied other firms’ previous attempts, i.e., designing and developing monoclonal antibodies that carry highly toxic payloads, yet leave the normal cells intact because they released their toxic ammunition only inside the cancer cells.
Disclosure: No Positions