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ImmunoGen (IMGN) Stock Down Despite Q2 Earnings & Sales Beat

Zacks Equity Research

ImmunoGen, Inc. IMGN reported loss of 29 cents per share for the second quarter of 2019, narrower than the Zacks Consensus Estimate of a loss of 32 cents and the year-ago loss of 31 cents. The loss includes a restructuring charge of $19.3 million.

Revenues came in at $15.5 million in the quarter, beating the Zacks Consensus Estimate of $10.3 million. Revenues also increased from the year-ago quarter figure of $9.3 million. The second quarter of 2019 included $10.4 million in non-cash royalty revenues. The company recorded $5.1 million in license and milestone payments, which included a milestone payment of $5 million from Roche RHHBY. Revenues from research and development (R&D) support were $0.05 million.

ImmunoGen’s shares were down 2.2% on Aug 2 despite the earnings and revenue outperformance. The company’s stock has declined 53.3% so far this year against the industry’s increase of 7.2%.


Operating Expenses & Cash Details

During the quarter, R&D expenses decreased almost 26.1% from the year-ago level to $28.6 million due to lower costs related to clinical development of mirvetuximab soravtansine and reduction in personnel expenses due to restructuring initiatives. General and administrative (G&A) expenses were up less than 1% to $8.7 million in the second quarter of 2019. However, total operating expenses increased 17.8% year over year as the company recorded $19.3 million as restructuring charge. The restructuring plan was announced in June.

ImmunoGen’s cash and cash equivalents decreased to $239.8 million at the end of June 2019 compared with $270.4 million at the end of March 2019.

Pipeline Update

Mirvetuximab soravtansine failed in the late-stage FORWARD I study in March. However, the candidate demonstrated encouraging activity in the pre-specified subset of ovarian cancer patients with high folate receptor alpha expression.

In May, ImmunoGen announced that the FDA has advised the company to conduct a new phase III study to evaluate the safety and efficacy of mirvetuximab soravtansine in patients with high folate receptor alpha (FRα)-positive, platinum-resistant ovarian cancer. The study will be conducted to support regulatory application. The company will meet the FDA and European Medicines Agency to discuss the design of the study in the second half of 2019 and expects to initiate the study by the end of this year.

In the same month, ImmunoGen announced data from the phase Ib/II FORWARD II expansion cohort evaluating mirvetuximab soravtansine in combination with Roche’s Avastin. The combination demonstrated significant anti-tumor activity and favorable safety and tolerability in platinum-resistant disease. The company is currently enrolling patients in a cohort of the study evaluating the combination for recurrent platinum-resistant ovarian cancer in patients eligible for non-platinum-based regimen. The company expects to complete the enrollment in the third quarter.

The company is also developing IMGN632 in phase II studies as monotherapy or in combination with Celgene’s CELG Vidaza or AbbVie ABBV/Roche’s Venclexta for treating acute myeloid leukemia.

Restructuring Initiatives

Following the failure of ImmunoGen’s lead candidate, mirvetuximab soravtansine, in a late-stage study evaluating it in ovarian cancer, the company initiated an operational review to extend its cash runway. In June, the company announced a few restructuring initiatives to reduce costs and to support a new phase III study on mirvetuximab soravtansine.

The company announced that it will continue development of mirvetuximab soravtansine and three other pipeline candidates — IMGN632 for hematologic malignancies and two pre-clinical candidates (IMGN936 and the company’s next generation anti-FRα antibody-drug conjugate). The company plans to discontinue all other research activities including clinical development of IMGN779. It has also planned to reduce its workforce by 220 employees, which is expected to be completed by the end of July. The company will also monetize its assets including discontinued pipeline candidates and platform technologies through sales or out-licensing deals.

The company expects these initiatives to reduce its quarterly operating expense by half.

2019 Guidance

ImmunoGen provided its guidance for 2019 along with the second-quarter earnings release. The company expects full-year revenues to be in the range of $40-$45 million, similar to what was guided earlier on the fourth-quarter earnings call. The company expects its operating expense to lie between $175 million and $180 million, much lower than the previously guided range of $265-$270 million. The company expects its cash and cash equivalents to lie between $165 million and $170 million at 2019 end.  It expects its cash resources to be enough to fund its operation through the release of top-line results from the upcoming phase III study on mirvetuximab soravtansine, expected in the first half of 2022.

ImmunoGen, Inc. Price, Consensus and EPS Surprise


ImmunoGen, Inc. Price, Consensus and EPS Surprise

ImmunoGen, Inc. price-consensus-eps-surprise-chart | ImmunoGen, Inc. Quote

Zacks Rank

ImmunoGen currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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