Rising R&D Expenses Drive ImmunoGen's Q3 Loss Significantly Higher

Higher research and development costs coupled with an absence of milestone and license fee revenue sends ImmunoGen's loss markedly higher.

Sean Williams
Sean Williams
Apr 25, 2014 at 12:32PM
Health Care

Antibody-drug conjugate developer ImmunoGen (NASDAQ:IMGN) reported disappointing third-quarter earnings results before the opening bell this morning, delivering a decline in revenue, a considerably wider loss, and lowering its outlook for the year.

For the quarter, ImmunoGen brought in $6.9 million in revenue, a 72% drop from the year-ago quarter where it netted $25 million. Understandably, a good chunk of its revenue last year was due to an amortized upfront license fee from Novartis, and a milestone payment from Roche (NASDAQOTH:RHHBY).

This year's $6.9 million includes $2.6 million in royalty payments from Roche for sales of breast cancer therapy Kadcyla, $1.9 million in research and development support fees, and $2.1 million in clinical materials revenue. ImmunoGen notes that total sales for Kadcyla, it's only FDA-approved partnered compound, totaled $115 million in the first quarter of 2014 based on Roche's report.

ImmunoGen's bottom line, however, rocketed in the wrong direction with its loss ballooning almost 2,600% to $37.5 million, or $0.44 per share, from a loss of just $1.4 million, or $0.02 per share, in the year-ago quarter. To blame was a 68% spike in operating expenses to $44.3 million, led by an 80% rise in R&D expenses, as well as a 20% boost in selling, general and administration expenses tied to a higher number of employees and patent expenses.

Looking ahead, ImmunoGen updated its financial guidance for the year by reducing its revenue outlook to a range of $60 million-$64 million from prior guidance of $71 million-$75 million, and increased its net loss estimate to $71 million-$75 million from a previous projection of $67 million-$71 million. If there was a bright spot it was a lower operating expense forecast of $133 million-$137 million compared to the $140 million-$144 million it had been expecting. ImmunoGen anticipates ending the year with cash and cash equivalents of $134 million-$138 million.