ImmunoGen Narrows Loss

Zacks

ImmunoGen Inc. (IMGN) reported third quarter fiscal 2013 (ending Mar 31) loss of 2 cents per share, narrower than the Zacks Consensus Estimate of a loss of 14 cents and the year-ago loss of 24 cents per share. The narrower loss was primarily due to higher revenues.

ImmunoGen’s revenues in the reported quarter came in at $25 million, compared with $3.3 million in the third quarter of fiscal 2012. The massive jump in revenues was primarily due to the presence of a $10.5 million milestone payment from Roche Holding (RHHBY) during the quarter along with an $11 million amortization of upfront license fees from Novartis (NVS). Revenues in the third quarter were ahead of the Zacks Consensus Estimate of $13 million.

Quarter in Details

ImmunoGen’s revenues comprise of research and development support fees, license and milestone fees and clinical material reimbursement. The company recorded $2.3 million of research and development support fees in the third quarter of fiscal 2013 compared with $1.3 million in the year-ago period.

ImmunoGen received $22 million of license and milestone fees during the quarter compared with $1 million received in the year-ago quarter. The company received $10.5 million as milestone payment from Roche for the approval of Kadcyla in the US. In Feb 2013, the US Food and Drug Administration (:FDA) approved Kadcyla (ado-trastuzumab emtansine or T-DM1) for the treatment of patients suffering from HER2-positive metastatic breast cancer (mBC). ImmunoGen has partnered with Roche for Kadcyla.

The drug is also under review in the EU and Japan. Kadcyla is also being studied for a number of additional indications.

ImmunoGen recorded $0.7 million of clinical material reimbursement during the quarter in comparison to $0.9 million in the same period last year.

The company’s total operating expenses during the quarter increased 19.9% to $26.3 million. ImmunoGen reported research and development (R&D) expenses of $21.3 million during the quarter, up 25.9% year over year. The increase in R&D expenses was primarily due to higher expenses related to pipeline development.

General and administrative expenses in the third quarter of fiscal 2013 remained flat at $5 million.

Pipeline Update

The company’s three wholly owned clinical-stage compounds include IMGN901, IMGN853 and IMGN529.

IMGN901 is currently in phase II development for the first-line treatment of small-cell lung cancer (:SCLC). The company expects data from the study in mid-2014. IMGN901 is also being developed for the treatment of multiple myeloma.

Moreover, ImmunoGen is developing IMGN853 in a phase I study for the treatment of ovarian cancer, with initial data expected in mid-2013. Another candidate, IMGN529 is also being developed in a phase I study for the treatment of non-Hodgkin’s lymphoma. The company expects data from the study by year end.

Outlook for Fiscal 2013

Apart from releasing its financial results, ImmunoGen revised its guidance for fiscal 2013. The company now expects net loss for fiscal year 2013 in the range of $76–$80 million, up from the previous range of $70–$74 million.

We are positive on the FDA approval of Kadcyla since the breast cancer market represents significant commercial potential. We are also impressed by the company’s efforts to develop its pipeline.

ImmunoGen, a biotech stock, presently carries a Zacks Rank #2 (Buy). Comparatively, other biotech stocks such as WuXi PharmaTech (WX) look better positioned. WuXi Pharma currently carries a Zacks Rank #1 (Strong Buy).

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