Image source: ImmunoGen.

What: Shares of ImmunoGen (NASDAQ:IMGN), a biotechnology company focused on developing drugs to fight cancer using its proprietary antibody-drug conjugate technology, went in reverse in May, dropping 18%, according to data from S&P Global Market Intelligence. The culprit appears to be the hangover from its third-quarter earnings report and corporate update, provided at the tail end of April.

So what: Aside from the fact that ImmunoGen reported a wider net loss of $31.9 million, or $0.37 per share in Q3, compared to its previous net loss of $21.6 million, or $0.25 per share, in Q3 2015, it was the company's updated plan for mirvetuximab soravtansine, its lead drug, that sent shareholders running for the exit.

Image source: Pixabay.

As described in much better detail by my Foolish colleague Brian Orelli, ImmunoGen completely shifted the focus of its FORWARD I trial, which is designed as a potential treatment for ovarian cancer -- specifically, folate receptor alpha-positive ovarian cancer. ImmunoGen had original planned its FORWARD I trial to be two phase 2 trials, with overall response rate as the primary endpoint. Now it will be a single phase 3 trial with progression-free survival as the primary endpoint. Patients who are folate receptor alpha-positive, and who've received up to three lines of therapy, are eligible for the trial.

This new design does have its benefits, such as enrolling patients earlier in ovarian cancer disease progression based on the assumption they'll be more likely to respond based on the response rates seen in the phase 1 trial. Additionally, the new trial design could actually give ImmunoGen a larger patient pool if it's successful relative to the old trial design. Unfortunately, the new trial design will push the end date out a bit further, and, as Brian notes, ImmunoGen is hinging its bet on data from a patient subset in phase 1 trials. Clearly, investors have viewed this new trial move as risky, as ImmunoGen shares remained in the doldrums throughout the month of May.

Now what: While clearly not a great month for ImmunoGen, there are still reasons to believe long-term shareholders might be vindicated. Working in ImmunoGen's favor is its deep pipeline. ImmunoGen currently has 16 ongoing clinical-stage studies, as well as two preclinical programs. Beyond that, its ADC technology is unique to just a handful of companies, which could give it an edge in treating cancer.

ImmunoGen has also forged collaboration or licensing agreements with nine other companies, most of which are much larger than it. These collaborations give ImmunoGen access to upfront cash payments, as well as milestone payments based on the development and/or sales of a drug. In other words, ImmunoGen has plenty of interest from some of the industry's biggest players, and it has many opportunities to hit a home run with 16 ongoing clinical studies and more than a dozen novel compounds in trials. 

We should hopefully know a lot more following the American Clinical Society of Oncology's annual meeting, but for the time being I'm adding ImmunoGen high up on my watchlist after its May swoon.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.