The Time Has Come For Valuing ImmunoGen Technology And Pipeline Products

| About: ImmunoGen, Inc. (IMGN)
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ImmunoGen (NASDAQ:IMGN) seems to have passed the test of quarterly financial results that many traders and investors still consider the most important criteria for evaluation. The value of the technologies and pipeline products can be easily disregarded if a firm fails the quarterly test. ImmunoGen did well in the Q3 test. It cut almost half of its fiscal Q1 loss and, importantly, raised its expectations for the year. Investors considered good news cashing $7.8 million in licensing fees from Eli Lilly (NYSE:LLY) and getting a little over $7 million payment from Roche's (OTCQX:RHHBY) $5 million in royalty payment and a little more than $2 million in milestone payment on the good news that Japan approved the HER2 positive breast cancer drug Kadcyla.

It is also possible that investors were impressed by the firm's continued licensing of its breakthrough TAP technology to large biotech and pharmaceutical companies. They were probably impressed by the fact that royalty payment came sooner than they had expected, as Kadcyla's market penetration has been impressive.

ImmunoGen's losses decreased from $25.2 million in Q3 last year to $11.2 million this year. Revenue jumped to $17.2 million from $4.1 million. Adding to the enthusiasm is the firm's projection that its net loss for the year would be $67 million to $71 million on revenue of $71 million to $75 million, rather than $72 million to $76 million on $66 million to $70 million in revenue as previously projected.

The time has come, though, for investors to have a look at ImmunoGen's validated breakthrough TAP technology and its pipeline products, and appreciate what they are providing in terms of cancer treatment safety and efficacy. It is time to begin appreciating, thus valuing the firm's technology and products. Kadcyla's encouraging early sales revenues of $168 million hint that oncologists had been waiting for this product to improve the odds of survival of their advanced HER2 breast cancer patients. Long before the drug hit the market, oncologists had learned much about it and about the TAP technology that enabled the production of antibody drug conjugate. These specialists had been following Kadcyla's clinical trials and were aware of the results, which were presented at ASCO, ESMO, ASH and many other oncology meetings-- at the time the drug was called TDM-1.

If the technology were not precious enough and the product not safe and effective enough to validate the TAP technology, Roche wouldn't have conducted so many clinical trials following Kadcyla's approval. A trial is being conducted to compared Kadcyla to physicians-choice drug combinations (TH3RESA). Another trial for using the drug's as first line treatment (MARIANNE). A third trial for the neoadjuvant use of the drug in early-stage HER2-positive breast cancer and a forth trial with Kadcyla for advanced gastric cancer.

Indeed, ImmunoGen's partner Roche has fallen in love with the conjugate drug. The firm conducted whatever trials needed to expand Kadcyla's market.

TH3RESA trial is In Phase 3. Trial results demonstrate Kadcyla has significantly extended duration of progression-free survival (PFS) compared to treatment with physician's choice (median 6.2 months vs. 3.3 months, respectively). Kadcyla reduced the risk of disease progression or death by 47 percent. In the planned interim analysis, overall survival (OS) favored Kadcyla, but the data are not yet mature. PFS and OS are co-primary endpoints of the trial. No new safety signals were observed with Kadcyla.

The trial intended for the neoadjuvant use of the drug on patients in early stage HER2-positive breast cancer is expected to start this trial in 2Q 2014 and for the pCR (pathological complete response) data to be available in late 2015.

Results from its first-line MARIANNE trial is expected in 2014 and Roche expects to file for approval in 2015 for first-line treatment of HER2-positive metastatic breast cancer.

ImmunoGen Wholly Owned Product Candidates

Most analysts and investors are looking for and asking about ImmunoGen's wholly owned products. Here is the list:

IMGN901: In Phase 2 trial for the first-line treatment of extensive small-cell lung cancer. The drug is an antibody drug conjugate (ADC) targeting CD56. Data is expected by mid-2014.

IMGN853: Folate receptor-alpha (FRα) ADC drug in Phase 1 trial for the treatment of FRα-positive solid tumors, which include ovarian and endometrial cancers as well as certain non-small cell lung cancers. Data expected in mid-2014.

IMGN289: EGFR-targeting ADC. The drug is a potential new treatment for squamous cell lung, head and neck, and other EGFR-positive cancers, including those resistant to EGFR inhibition. Its Investigational New Drug (IND) application is active and the firm expects patient dosing in Phase 1 testing to begin this quarter.

IMGN529: Compound targeting CD37. The drug is in Phase 1 trial for non-Hodgkin's lymphoma (NHL) and chronic lymphocytic leukemia. The first clinical data is expected in 2014.

ImmunoGen Partnered Programs

SAR3419: Novel anti-CD19 ADC developed by Sanofi (NYSE:SNY). The drug is in clinical trials in patients with relapsed/refractory CD19+ non-Hodgkin's lymphoma (NHL), diffuse large B cell lymphoma (DLBCL) alone and in combination with rituximab. Studies are accepted for presentation at a medical meeting in December 2013.

BT-062: Anti-CD138 ADC produced by Biotest through ImmunoGen's TAP technology for multiple myeloma. The drug binds to CD138 expressed on the cancer cells. The drug has demonstrated activity in heavily pretreated multiple myeloma cells. Studies are accepted for presentation at a medical meeting in December 2013.

SAR650984: Anti-CD38 monoclonal antibody in combination with lenalidomide and dexamethasone in Phase 1 trials for multiple myeloma.

SAR566658: In development for the treatment of CA6-positive cancers, which include certain breast and ovarian cancers. In Phase 1 trial the drug demonstrated objective responses and stable disease.

AMG 595: TAP compound in development by Amgen (NASDAQ:AMGN); in Phase 1 clinical testing for recurrent malignant glioma

AMG 172: TAP compound, in development by Amgen; in Phase 1 clinical testing for clear cell renal cell carcinoma (ccRCC)

ImmunoGen's TAP technology is a step forward in the efforts to provide more effective and more potent cancer products with improved adverse effect profile than the unconjugated monoclonal antibodies. Each and every one of ImmunoGen's TAP-derived products has a story to tell, and all stories point to ImmunoGen's scientists' continued improvement of the ADC linker and the ADC itself -- both the toxins and the monoclonal antibodies that are employed. The firm developed multiple engineered linkers, which have been introduced into new ADCs. They developed a new class of payload agents, its IGN platform of DNA-acting agents (IGN-ADCs) to extend the opportunity for ADCs to include cancers not responsive to tubulin-acting agents, those with low levels of antigen expression, and those with multidrug resistance.

ImmunoGen's partners and licensees are also making improvements by devising companion tests and procedures to increase the accuracy in recruiting patients whose cancers will respond to the drugs.

Indeed, the time has come for investors to recognize the reasons the small firm is attracting a large number of collaborators and licensees; most if not all are top biotech drug developers and large pharmaceutical firms. IMGN is no longer speculative. Its lead product has proven very valuable and it is marketed. Additionally, the firm has a rich pipeline filled with promising, effective products.

At this stage, considering that the risk might outweigh the rewards would be unreasonable.

Disclosure: No positions