Immunomedics, Inc. Shares Rallied 14% in July as Shareholders Picked Up the Pieces

Image source: Getty Images.

What: Shares of Immunomedics (NASDAQ: IMMU), a clinical-stage biotech company focused on the development of monoclonal antibodies and antibody-drug conjugates for the treatment of cancer, pushed higher by 14% during July based on data from S&P Global Market Intelligence

So what: First, biotech in general had a pretty good month in July. The broad-market S&P 500 rallied close to 4% during the month of July, while the SPDR S&P Biotech ETF surged nearly 15%. Improved investor sentiment pushed riskier assets like biotech stocks higher, and it appears that Immunomedics was simply a fortunate beneficiary after a previously rough June that saw its valuation get cut in half.

The second catalyst in June could very well be bottom-fishing or the aptly named "dead cat bounce." Shares of Immunomedics dove 52% in June because of two press releases. Most of the damage was done after its presentation at the American Society of Clinical Oncology's annual meeting was pulled. The reasoning is that ASCO data needs to be new, and Immunomedics had apparently presented its data at a previous meeting.

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Secondly, Immunomedics' chief financial officer announced his resignation to pursue other career opportunities. Though the CFO's departure and the ASCO presentation had nothing to do with one another, it was just another nail in the coffin for shareholders in a dismal June. Thus, the 14% rebound in July could be nothing more than cooler heads prevailing and buyers picking up the pieces, so to speak.

Image source: National Cancer Institute.

Now what: For a company its size, Immunomedics actually has a lot going for it. The company has two experimental therapies pushing into phase 3 trials: one for epratuzumab, a humanized monoclonal antibody targeted CD22 for pediatric acute lymphoblastic leukemia; and sacituzumab govitecan, an antibody-drug conjugate designed to treat metastatic triple-negative breast cancer. Immunomedics has received the breakthrough therapy designation from the Food and Drug Administration for the latter study, where its ADC delivered a 28% RECIST confirmed response in TNBC patients.

Beyond these phase 3 studies, sacituzumab govitecan is being studied in a number of solid tumors, including lung, esophageal, and urothelial cancers, while labetuzumab govitecan, another antibody-drug conjugate, is being examined in a midstage trial for advanced colorectal cancer. A handful of earlier-stage and preclinical products also reside in Immunomedics' pipeline.

What Immunomedics needs that's currently lacking is a late-stage pipeline success, and a much-needed licensing or development partner. Immunomedics isn't going to get the latter without the former, so all eyes remain on Immunomedics' most advanced compounds. The one to watch closest is sacituzumab govitecan, where enrollment is slated to begin this December, with an accelerated approval application with the FDA coming by mid-2017.

For investors the best thing to do at the moment is probably watch and wait. Though I admit to being intrigued by Immunomedics' pipeline for its size, I'd also like to see the company mature and take a step forward with positive clinical data. Immunomedics has just $61.6 million in cash left on its balance sheet, and it burned through $44.5 million in operating losses over the trailing 12-month period. Until we see discernable clinical success, the sideline is probably your friend here.

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Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.

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