Shares of biotech ImmunoGen (NASDAQ:IMGN) soared by 27% after the company beat financial expectations for its fiscal first quarter and reassured investors about the prospects for its lead drug candidate as a treatment for ovarian cancer. Its revenues, which currently come from licensing, milestone, and non-cash royalty fees from partnerships, were $44.9 million, compared with analysts' average expectation of $29.3 million. The company also had a profit of $4.8 million, or $0.03 per share, when the market was expecting a loss of $0.05.
ImmunoGen suffered a major setback in early 2019 when it announced a failed trial of its lead drug, mirvetuximab soravtansine. That prompted management to restructure the company to reduce costs, which contributed to Friday's surprising profit news. Operating expenses for the year fell 19% to $174 million, and the company expects operating expenses to decline further in 2020 to between $165 million and $170 million.
But the jump in the stock price was probably in response to the vision for a path to commercialization of mirvetuximab that the company laid out on the conference call. ImmunoGen is focusing trials of the drug on patients with tumors that express high levels of folate receptor alpha and are resistant to platinum-based chemotherapy, based on promising results in that population in earlier studies. A new study, dubbed Soraya, is expected to read out mid-2021, and positive results could lead to accelerated approval in 2022.
ImmunoGen stock plunged after the company made public the trial failure last year, but increasing optimism about mirvetuximab has pushed the share price up 291% from its low last spring. The company said that between income from partners, cost-cutting, and a secondary stock offering that raised $98 million, it will have enough cash to fund operations through 2022.