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Why ImmunoGen Jumped Higher Today

By Brian Orelli, PhD - Feb 12, 2018 at 2:50PM

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Investors are jumping back into the biotech for no apparent reason.

What happened

ImmunoGen (IMGN -2.28%) is up 15.5% at 3:09 p.m. EST Monday after releasing earnings on Friday. Without any revenue-generating drugs on the markets, the report was mostly just an update of what the company did over the last few months and what investors can expect in the year ahead. Like we've seen so many times before, Monday's move is more likely just day traders having their fun with the very volatile biotech than an actual change in the intrinsic value of the company.

So what

ImmunoGen lost $96 million in 2017, but, more importantly, the biotech ended the year with $267 million in cash and equivalents. That's substantially higher than the $160 million it had at the end of 2016 thanks to some shrewd moves like its deal with Jazz Pharmaceuticals (JAZZ -0.93%), gaining upfront cash to license rights to IMGN779, a CD33-targeted antibody drug conjugate (ADC), and IMGN632, a CD123-targeted ADC.

A doctor talking to a patient.

Image source: Getty Images.

ImmnoGen expects to burn through a little over half of its nest egg this year, with guidance for cash and equivalents of $115 million to $120 million at the end of 2018. Fortunately, ImmunoGen has a few events this year that could help it raise additional cash at higher valuations, including data from the Forward II trial testing mirvetuximab in combination with other cancer drugs. There will also be data for the two drugs partnered with Jazz Pharmaceuticals available in the fourth quarter, although both are only in phase 1 trials, so they may not provide much of a valuation bump unless the data is quite compelling.

Now what

Long-term investors should ignore the daily gyrations and focus on the Forward I trial, which is testing mirvetuximab as a monotherapy in patients with ovarian cancer, and could lead to an FDA approval. The trial will have a futility test this quarter, which would stop the trial if it's clear the drug isn't working. Assuming the data monitoring committee says the trial should continue, it's scheduled to be fully enrolled in the middle of this year, putting a potential readout in the first half of 2019.

Don't be surprised if the stock has plenty more double-digit moves on no particular news between now and then.

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Stocks Mentioned

ImmunoGen, Inc. Stock Quote
ImmunoGen, Inc.
$4.29 (-2.28%) $0.10
Jazz Pharmaceuticals plc Stock Quote
Jazz Pharmaceuticals plc
$155.24 (-0.93%) $-1.45

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