Citing “no upside driver beyond Kadcyla,” Morgan Stanley initiated coverage on ImmunoGen (NASDAQ: IMGN) with an Underweight rating and $10 price target (22.2 percent downside).
In the best case scenario, Morgan Stanley analyst Matthew Harrison sees Kadcyla capturing 50 percent of the market. Further, “We model Kadcyla with $6B in peak sales and $8/share in value (NOLs offset Kadcyla taxes until 2023). We believe our valuation represents a best case scenario for Kadcyla given competition from Perjeta and Herceptin biosimilars. We also highlight that Kadcyla has no terminal value as its royalties have a 12 year term from first sale.”
Harrison is more bearish on ImmunoGen’s pipeline. He puts a $0 value on the proprietary pipeline and $2 per share value on the partnered pipeline. The most promising drug could only add $1.5 of annual revenue per share, according to the research note.
Shares of ImmunoGen are selling off on the rating, last down 2.1 percent to $12.85.
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