What happened

Shares of ImmunoGen (NASDAQ:IMGN), a biotech company focused on the development of antibody-drug conjugates (ADC) for the treatment of various cancer types, skyrocketed 54% in June, according to data from S&P Global Market Intelligence. There appears to be one clear, and one possible, catalyst behind ImmunoGen's big move.

So what

The clear-cut catalyst that appears to have excited investors last month was the presentation of phase 1 data for IMGN779 in patients with relapsed or refractory adult acute myeloid leukemia whose tumors express CD33. The results of the phase 1 study, which were presented at the Congress of the European Hematology Association on June 24, showed no dose-limiting toxicities across seven observed doses, as well as evidence of dose-dependent biological and anti-leukemia activity.

A biotech lab worker using a pipette.

Image source: Getty Images.

Said Richard Gregory, Ph.D., executive VP, and chief scientific officer, "These data suggest favorable tolerability and encouraging activity in patients with AML, and we look forward to determining the recommended dose for IMGN779 and moving quickly into later-stage development." With IMGN779 being a 100% internally owned program, the fact that a move into phase 2 studies once proper dosing is found is likely promising for the company.

Another possible catalyst, though far less direct, was an 8-K filing with the Securities and Exchange Commission in mid-June related to the company's recently completed shareholder meeting. The 8-K allows for amendments to the employee, director, and consultant equity incentive plan by increasing the amount of stock that can be awarded. Normally, increasing the number of shares outstanding would be frowned upon, but in this instance, it might be a positive that a rise in shares awarded would more intricately tie the interests (and pockets) of management to that of ImmunoGen's shareholders.

Now what

Early-stage data from IMGN779 and 8-K aside, the biggest catalyst for ImmunoGen remains experimental ADC mirvetuximab soravtansine, a potential treatment for patients with folate receptor alpha-positive cancer. In May 2016, ImmunoGen completely altered its study involving mirvetuximab soravtansine to a single phase 3 study in ovarian cancer patients as opposed to two phase 2 studies. It's a risky bet given that ImmunoGen is focusing on the positive results of a subset of patients from its phase 1 study of the drug. But if it pays off, ImmunoGen's ADC development platform would be validated, and perhaps new funding from Big Pharma may flood in.

This is also the beauty of ImmunoGen: It has a bounty of licensing and development partners, which means the possibility of up-front cash and milestone revenue. Its partners also have seasoned marketing teams if experimental therapies make it to pharmacy shelves.

ImmunoGen has significant upside potential if its lead ADC drug demonstrates success. However, with so much riding on a phase 1 subset of patients, I'd probably suggest investors wait for this concrete phase 3 data on the sidelines and make their move after we have this data in hand.

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.