Why ImmunoGen Inc. is Soaring Higher Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.


What's happening: Shares in ImmunoGen sky-rocketed by more than 15% today after the company reported that Takeda Pharmaceutical has licensed its antibody-drug conjugate technology.

Why it's happening: Antibody-drug conjugates, or ADCs, have gotten a lot of attention among researchers for their ability to more precisely deliver cancer-killing medication to cancer cells. ADCs' improved targeting could not only enhance the effectiveness of cancer drugs in targeting the disease, but it could also reduce nasty side effects associated with current cancer therapies, which indiscriminately kill both healthy and unhealthy cells.

ImmunoGen is receiving $40 million up front for the use of its ADC technology in two undisclosed cancer drugs. ImmunoGen could also receive up to $210 million in milestones, plus eventual royalties, on each of these drugs -- if they pan out. Additionally, Takeda can exercise an option to add a third drug to this deal at a later date, for an additional fee.

The deal adds another deep-pocketed collaborator to ImmunoGen's list of partners that already includes Amgen, Bayer, Eli Lilly, Roche, and others. Roche won FDA approval for its breast cancer drug Kadcyla, which uses ImmunoGen's ADC technology, in 2013.

During ImmunoGen's fiscal second-quarter 2015, the company received $4.6 million in royalty payments tied to the prior quarter's sales of Kadcyla, which is double the amount it received in the comparable period the year before.

Overall, the Takeda agreement bolsters ImmunoGen's already solid financials. Exiting December, the company has $106.6 million in cash on the books and no debt. As a result, the company has additional financial flexibility that it can use to advance its research program, which includes 17 drugs that are in human clinical trials.

The article Why ImmunoGen Inc. is Soaring Higher Today originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies 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.

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