What happened

Shares of ImmunoGen, Inc. (NASDAQ:IMGN), an oncology-focused biotech, dipped 16.5% lower in July according to data from S&P Global Market Intelligence. A fairly benign earnings report near the end of the month wasn't enough to offset some profit taking after June's exciting run-up. 

So what 

In an industry famous for volatility, ImmunoGen has been bouncier than most in recent months. The company has no products to sell, and any hint of success -- or lack of success -- for the new drug candidates sends its stock roaring up or down.

Frustrated person with head on table in front of a downward sloping chart.

Image source: Getty Images.

In June, the stock surged in response to positive, but not terribly important, news concerning an early clinical-stage program and amendments to the company's equity incentive plan. With little to sustain biotech stock-trader attention spans, the slow slide last month wasn't surprising.

The stock perked up near the end of July in response to an earnings report that showed a much narrower loss of $8.9 million than the $45.9 million loss recorded during the previous-year period. Again, the news wasn't at all surprising. A previously disclosed payment from a big pharma partner was responsible for the revenue bump.

Now what

One figure from ImmunoGen's second-quarter earnings report that long-term investors will want to focus on is the $150.3 million cash balance on the books at the end of June. The company dosed the first of an expected 333 patients with its lead candidate, mirvetuximab soravtansine, this January. Treating and observing this many patients will get expensive, and there's a good chance the company will need to dilute shareholder value with another share offering to fund the study through completion.

The candidate is aimed at the large population of ovarian cancer patients that no longer respond to standard treatments. If results from the registrational trial fall in line with previous observations during smaller studies, the company has a solid shot at an approval that could lead to over $1 billion in annual sales at its peak.

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