ImmunoGen in Licensing Deals

ImmunoGen, Inc. (IMGN), a biotechnology company, has entered into several agreements with bigger companies like Novartis (NVS) and Eli Lilly and Company (LLY). ImmunoGen focuses on the development of novel anticancer therapeutics using its antibody-drug conjugate (ADC) technology.

Earlier in the month, ImmunoGen entered into a second licensing deal with Novartis under a 2010 agreement. As per the terms of the deal, Novartis will gain the exclusive right to use ImmunoGen’s ADC technology to develop anticancer candidates to an undisclosed target.

As per the 2010 agreement, Novartis is responsible for the development, manufacturing and marketing of any products successful from the license agreement. For each licensing deal under the agreement, ImmunoGen receives an upfront payment along with milestone payments of up to $200 million plus royalties on the sales of any resulting products. ImmunoGen has already received $45 million as upfront payment under the agreement.

We note that Novartis has the right to terminate any development and commercialization license with prior notice. Moreover, both the companies may terminate each license for a material breach by the other company.

ImmunoGen’s revenues primarily consist of research and development support fees, license and milestone fees. For fiscal year 2013 (ending Mar 31), ImmunoGen received an $11 million amortization of upfront license fees from Novartis. ImmunoGen expects revenues for fiscal year 2014 in the range of $66–$70 million.

We are encouraged by ImmunoGen’s association with companies of the likes of Novartis and Eli Lilly. The company is expected to ink more deals in the future.

ImmunoGen presently carries a Zacks Rank #3 (Hold). Stocks such as Actelion Ltd. (ALIOF) look better positioned with a Zacks Rank #1 (Strong Buy).

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