Mixed Bag for ImmunoGen Inc.

By Markets Fool.com

ImmunoGen is trading down after reporting its third fiscal quarter earnings this morning. Of course, the reason it's down has little to do with the actual earnings numbers -- the biotech had $11.4 million in revenue and lost $21.6 million, or $0.25 per share, all of which was a year over year improvement, for the record.

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Along with the earnings numbers, ImmunoGen gave a mixed bag update for its clinical problem. It seems the bad news is washing out the good.

Bad news first
It came in two flavors.

ImmunoGen announced that Sanofi was handing back rights to coltuximab ravtansine, a CD19 antibody conjugated to maytansinoid, a cytotoxic drug that inhibits cell division. Like ImmunoGen's other antibody drug conjugates, or ADCs, the antibody targets the cytotoxic part of the drug to cancerous cells; in this case,B-cell lymphomas that tend to express CD19.

It's a bit of a surprise that Sanofi would hand back rights since the drug looked good in a phase 2 trial presented at ASCO last year. Patients with diffuse large B-cell lymphoma, or DLBCL, that had failed at least one standard treatment had an overall response rate of 43.9%, clearly beating the trial's goal of eliciting a response in at least 20% of patients.

ImmunoGen implied a portfolio assessment led Sanofi to hand back rights to the compound the two companies developed together. While it's probably not a problem with the drug itself, investors should be concerned that Sanofi cut and ran because it feels the drug won't be able to beat the new chimeric antigen receptor-expressing T cells, or CAR-T drugs, which have showed good results in blood cancers.

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ImmunoGen also announced that it had stopped a phase 1 trial testing its wholly owned EGFR-targeting ADC, IMGN289, because of unexpected safety concerns. The biotech declined to disclose what the issue was, but did say it plans to do more preclinical testing to see if the drug is salvageable.

Given that it was only a phase 1 program, losing the drug isn't the end of the world, but since ImmunoGen only has three other wholly owned drugs in the clinic -- including the one it just got back from Sanofi -- losing the drug can't be completely shrugged off either.

Pipeline progressing
ImmunoGen had some good news to report on its pipeline as well.

IMGN853 has a new name, mirvetuximab soravtansine; shedding the code name is a sign that the company thinks the drug is progressing smoothly. We'll get to see how smoothly when the company presents phase 1 data in platinum-resistant ovarian cancer at the American Society of Clinical Oncology meeting at the end of May. Abstracts for the presentations are released on May 13, so we'll get a taste of the data at that point.

ImmunoGen is hoping that a single phase 2 trial may be sufficient for accelerated approval based on the unmet need for patients with platinum-resistant ovarian cancer. The company plans to talk with the Food and Drug Administration about its plan and start the phase 2 trial by the end of the year. If it can use response rate as the primary endpoint, the trial could be completed much quicker than if the FDA requires the company to measure overall survival to gain approval.

In addition to platinum-resistant ovarian cancer, ImmunoGen is exploring using the drug at an earlier stage of ovarian cancer combined with other drugs in a trial that will begin later this year. There's also potential to use the drug in endometrial cancer and non-small cell lung cancer that also express the target of mirvetuximab soravtansine's antibody.

ImmunoGen's other wholly owned drug IMGN529 hasn't reached its maximum tolerable dose in its phase 1 trial yet. Once it does, the biotech plans to move it into phase 2 trial in DLBCL and chronic lymphocytic leukemia.

That would be the same DLBCL that coltuximab ravtansine, which it got back from Sanofi, was successful in. Management said it's weighing its options, including going with the best one or out licensing one of them, although that could put the company in the predicament of competing with itself.

Finally, on the good side, ImmunoGen is looking to submit an investigational new drug application for IMGN779, a CD33-targeting ADC, which would allow it to start clinical trials in acute myeloid leukemia and myelodysplastic syndrome.

Cash situation under control
Last month, ImmunoGen announced that it had sold some of its rights to the royalties it receives on Kadcylafor $200 million. With that added cash, ImmunoGen is forecasting to end next quarter -- the end of its fiscal year -- with between $265million and $275million. Given that it only expects to burn $55million and $60million on operations this fiscal year and spend between $7 million and $9million on capital expenditures, ImmunoGen looks like it has a nice runway even as pipeline progression increases expenses.

The article Mixed Bag for ImmunoGen Inc. originally appeared on Fool.com.

Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends ImmunoGen. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.