Please ensure Javascript is enabled for purposes of website accessibility

Why ImmunoGen Inc. Pulled Back Today

By Brian Orelli, PhD - Feb 5, 2018 at 4:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

For the biotech's non-fundamental moves, what goes up, must come down.

What happened

Last week's boost from an analyst at H.C. Wainwright was short-lived, with ImmunoGen (IMGN -2.28%) closing down 12.6% today on no obvious news.

So what

It shouldn't come as much surprise that the valuation would retreat after it was boosted by an analyst initiating coverage. Just because someone says the biotech is worth $18 per share doesn't actually make it worth that much -- or even more than it was the day before.

These price targets are typically determined by probability of success. For example, if there's a 50% chance of the stock being worth $36 after a positive clinical trial result, it's worth about $18 now. That probability, however, is just an educated guess and investors still have to be willing to wait for the binary event.

In ImmunoGen's case, the major share-moving event -- results from the Forward I trial testing mirvetuximab in patients with ovarian cancer -- isn't due out until the first half of 2019. That's a long time to wait for the plethora of traders who jump in and out of ImmunoGen at the drop of a hat.

Doctor talking to patient

Image source: Getty Images.

Now what

ImmunoGen is scheduled to release earnings on Friday, but after selling off royalties it receives from Roche for breast cancer drug Kadcyla, there shouldn't be much in the numbers to watch other than the biotech's remaining cash and its burn rate -- although there shouldn't be any surprises there. At its third-quarter earnings report, management said the company had a two-year runway, giving it enough time to get through the Forward I readout.

While Forward I is the easiest way for ImunoGen to get mirvetuximab approved, the company is also testing the drug in combination with other drugs in a mid-stage trial called Forward II. Positive data from that trial, which is scheduled to be released in March (for the mirvetuximab and Keytruda combination), and June (for the mirvetuximab and Avastin combination), could help boost ImmunoGen's stock price if the data convinces investors to increase their probability-of-success calculations.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ImmunoGen, Inc. Stock Quote
ImmunoGen, Inc.
$4.29 (-2.28%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.