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John Li
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I have a MBA in Healthcare Administration and Finance, a BS in Pharmacy, and a Doctorate degree in Pharmacy/Medicine. Investing in Biotechnology companies is my passion and I am also currently actively working in a teaching hospital. Also previously worked in the Pharmaceutical industry in... More
  • IMGN901 Trial Halted Bruised Immunogen's Ego More Than Its Pocketbook 2 comments
    Nov 7, 2013 4:10 PM | about stocks: AMGN, LLY, NVS, RHHBF, SNY

    On November 5th Immunogen (NASDAQ:IMGN)announced the halting of its Phase II trial that evaluated its compound IMGN901 for the treatment of small cell lung cancer. On the same day, Immunogen stock tumbled more than 20% as investors headed toward the exit. On that day, investors basically threw the Immunogen baby out with the bath water and over reacted.

    To put IMGN901 into perspective, IMGN901 represents only 1 of 14 compounds and 1 of 19 indications Immunogen currently have in its pipeline. Furthermore, IMGN901 was evaluated for the treatment of Small-cell lung cancer (SCLC). SCLC represents only 10% of all lung cancer cases. The vast majority of lung cancer cases are Non-small cell lung cancer.

    What makes IMGN901 special is that IMGN901 is a wholly Immunogen owned compound. If FDA approved IMGN901, Immunogen for the first time can keep all the revenue generated from its sale rather than relying on royalties collected from jointly developed compounds. If IMGN901 was successful, for once, Immunogen does not have to live in the shadow of its big partners.

    Despite IMGN901 failure to show superior efficacy to current gold standards for SCLC treatment, Immunogen may not have given up on IMGN901 just yet. According to the company's web site, "ImmunoGen is analyzing findings with IMGN901 - including those in the Phase I/II SCLC trial - as part of assessing potential next steps for this compound." Possible future indications to be evaluated can include the treatment of CD56-positive cancers such as Merkel cell carcinoma, many cases of multiple myeloma, and other cancers of neuroendocrine origin. Based on the current Immunogen price of $13, it seems analysts and investors have already written off IMGN901 which can be the wrong assumption. Furthermore, another Immunogen's wholly owned compound IMGN853 may serve as a near term catalyst to drive up Immunogen's stock price as it completes its Phase I trial for the treatment of ovarian cancer.

    IMGN901 trial discontinuation news have completely over-shadowed the value of Immunogen's strong partnership with numerous big pharma companies. Currently, Immunogen have partnerships with Roche (OTC:OTCQX:RHHBF), Sanofi (NYSE:SNY), Biotest, Bayer (BAYRX.PK), Lilly (NYSE:LLY), Novartis (NYSE:NVS), and Amgen (NASDAQ:AMGN). Literally every big pharma recognizes the value of Immunogen's TAP technology in chemotherapy. Through these partnerships, Immunogen's can potentially earn milestone payments exceeding $1 billion. This figure does not include royalty payments earned through sales.

    In addition to partnerships, Immunogen have already jumped through the most difficult hurdle by validating the clinical usefulness of its TAP technology with the FDA approval of Kadcyla. Kadcyla is a jointly developed product between Immunogen and Genentech (now acquired by Roche). Kadcyla sales have far exceeded most analyst predictions by earning $160 million in world-wide sales. If Kadcyla is a predictor of the success of Immunogen's joint ventures, it would be reasonable to say that Immunogen's potential is incredibly undervalued by investors at $13. This price is even lower than the price Immunogen was trading at when its TAP technology was unproven. If investors will pause, evaluate Immunogen in its entirety, somewhere in the muddied water there is baby to be found.

    Disclosure: I am long IMGN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: AMGN, LLY, NVS, RHHBF, SNY
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Comments (2)
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  • mershaw2001
    , contributor
    Comments (112) | Send Message
    I think you're missing why people are selling- they lack confidence in management. Management has consistently timed the release of bad news- news that sends the price down by 4-5 dollars- to right after a C-level sells stock. Furthermore, management never comes to defend the stock, and allows rumors to run wild.
    I completely agree with you that 901 is just one apple in a bin of many, but the reason the stock is selling off so hard is the fear that maybe this one apple's rot has spread to the others. What if others get pulled in short order? And where is management when they should be saying "this is an isolated event"?
    I'm not selling my shares, but I can see the fear out there.
    7 Nov 2013, 09:36 PM Reply Like
  • Ben Around
    , contributor
    Comments (125) | Send Message
    Don't forget the Morgan Stanley report that came out Yesterday that targeted the stock at $9.50 and a few days earlier Alan fuerst... called all the linkers dead.


    We must now wait for an update from today's annual meeting. Wish it was on the web.


    The stock is getting pounded, down .70 @ 14.36.


    Might be a buy at 13.
    12 Nov 2013, 12:10 PM Reply Like
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