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ImmunoGen - A Little Rock that Could be a Diamond

|Includes:ImmunoGen, Inc. (IMGN)

ImmunoGen - A Little Rock that Could be a Diamond

Courtesy of Pharmboy at PSW

ImmunoGen (NASDAQ:IMGN) shares were down on heavy volume Friday after a the FDA derailed a lead product, T-DM1, by issuing a decision to issue a "refuse to file" letter for proposed breast cancer treatment.  Whilst it creates a setback for the short term, it opens the door for PSW members to get in on a stock that has huge potential in the cancer arena for significant gains.

ImmunoGen (IMGN) develops targeted anticancer drugs using its proprietary tumor-activated prodrug (Taxane-Based Tumor-Activated Prodrug - aka TAP) technology. What’s so special about the techology? The mAb enables a TAP compound to bind specifically to cancer cells that express a particular target antigen and the cytotoxic agent serves to kill the cancer cell.  What are taxanes?  Taxanes are diterpenes produced by the plants of the genus Taxus  (yews).  Taxanes include paclitaxel (Taxol) and docetaxel (Taxotere).  The principal mechanism of the taxane class of drugs is the disruption of microtubule function. It does this by stabilizing GDP-bound tubulin in the microtubule. Microtubules are essential to cell division, and taxanes therefore stop this - a "frozen mitosis". Thus, taxanes are essentially mitotic inhibitors. In contrast to the taxanes, the vinca alkaloids (vincristine and vinblastine) destroy mitotic spindles. Both, taxanes and vinca alkaloids are therefore named spindle poisons or mitosis poisons, but they act in different ways.

Figure 1.  Depicts a cell going through mitosis (cell division).

IMGN out-licenses its TAP technology to other companies (Amgen, Biogen-Idec, Centicor, Genentech, Sanofi, and others) for use with their proprietary antibodies to specific targets.   The TAP technology addresses two critical components for companies pursuing monoclonal antibody (mAb) therapeutics: enhancing the yields from development programs by creating new products and/or providing product franchise life extension.  Go here to see the show.  ImmunoGen is currently studying several product candidates:

  • First, trastuzumab-DM1, or T-DM1 for short, is for women with advanced HER2-positive breast cancer who have previously received multiple HER2-targeted medicines and chemotherapies, including Genentech’s Herceptin.  A mid-stage study of the drug showed that it shrank tumors in women with HER2-positive breast cancer, a form of the malignancy in which the protein, human epidermal growth factor receptor 2, promotes the growth of cancer cells. Now, the FDA reviewed Roche’s application for the drug, and the company is beginning several mid-stage and late-stage trials to test how the drug stacks up to combination therapies that pair other drugs and courses of treatment, including one early access study in the United States for a small group of people. The fast track for the drug was rejected last week.
  • IMGN901 is an  under investigation for hematological malignancies and is designed to kill cancer cells that express CD56, a protein that has as been implicated as having a role in cell-cell adhesion. This TAP compound consists of a CD56-binding antibody with a potent cancer-cell killing agent, DM1, attached to it using an engineered linker.   A near term opportunity for this agent is in a niche indication: Merkel Cell Carcinoma (NYSE:MCC).  MCC is a rare and aggressive skin cancer, with an incidence of 1000 patients per year in the US. Similarly to other skin cancers, the disease has high cure rates if detected early, but about half of cases are diagnosed at more advanced stages which are associated with poorer prognosis. In particular, metastatic MCC patients have a median survival of less than a year and are bereft of approved treatments.  IMGN901’s promise in MCC is based on data from only six patients with advanced MCC. One of these patients achieved a complete response (disappearance of lesions) which is ongoing for more than four years. Another patient had a partial response which was still ongoing after 9 months at of the latest data presentation. Of note, both patients had relapsed shortly after chemotherapy prior to entering the study.  Investors should remain cautious about this opportunity due to the limited number of patients.  IMGN901 is wholly owned by the company.
  • IMGN242, for gastrointestinal cancers; and IMGN388, for multiple tumor types, in different stages of clinical development in its internal pipeline.

In addition, the IMGN works on developing antibody-based therapeutics, including target validation, antibody development and humanization, and process development and scale-up of the ‘drug’. ImmunoGen receives its revenues under collaborative and license agreements for licensing its proprietary technology in the form of upfront fees, milestone payments and royalties on any commercial product sales.

Figure 2.  IMGN Pipeline.

Institutional ownership accounts for a about 70% of the stock and one will have to watch if the institutions use this as another buying opportunity.

Figure 3.  IMGN share holders.

Cancer is only going to grow over the next 15-20 years (literally), and mAb companies are going to command premiums (if the risk is mitigated by understanding the target and/or technology).  I believe that these small companies will be swallowed up by a big pharma player that needs to enhance its pipeline (...all of them).  mAb companies have a  good chance of success, are hard to ‘patent bust’ because they are hard to replicate (aka biosimilars), and the utilities beyond cancer and inflammation may be coming to a new age.  Furthermore, the companies are improving the manufacturing processes which will impact margins and lead to profitability. 

IMGN is a stock that should be bought on weakness, and we, at PSW, will look at some options to pick up this potential gem.  Join me at PSW and get involved with the stock and option trades from Phil, David, Optrader and the many members that make up our diverse investment community!  I will outline my pick in the member chat.

Discloser:  I do not currently own IMGN stock or options but plan on initiating a buy in the coming week. 

Disclosure: none
Stocks: IMGN