What: Shares of ImmunoGen (NASDAQ:IMGN), a biopharmaceutical company focused on developing targeted therapies to treat cancer, plunged as much as 13% in October, based on closing price data from S&P Capital IQ, after whiffing on its first-quarter earnings report.
So what: ImmunoGen shares hit a speed bump last month after the company reported its fiscal 2015 first-quarter earnings on Oct. 24 and missed by a mile. For the quarter, ImmunoGen delivered revenue of $13.2 million, down 23% from the year-ago quarter when it reported $17.2 million in revenue. ImmunoGen recorded $6.2 million in license and milestone fees this quarter compared to $4 million in the year-ago period. More importantly, royalty revenue with Roche (NASDAQOTH:RHHBY) for breast cancer drug Kadcyla doubled to $4.2 million from $2.1 million in Q1 2014.
The big problem for ImmunoGen was that its net loss practically doubled to $22.3 million, or $0.26 per share, from $11.2 million, or $0.13 per share in the prior-year period. This can be blamed on higher operating expenses, which ImmunoGen cited to higher third-party costs related to advancing its internal products, as well as higher material manufacturing costs. Comparably speaking, ImmunoGen's $0.26 per-share loss was $0.11 wider than the Street's expectations, while its $13.2 million in revenue was $10.4 million shy of estimates.
On the bright side, the company did reaffirm its full-year revenue guidance of $100 million-$105 million, and is on track to report a number of key findings on its internally developed drugs soon, including IMGN529 which will have data presented in December at the American Society of Hematology's annual meeting.
Now what: Put plainly, this wasn't a shining quarter for ImmunoGen. But, it's also not too surprising as milestone and licensing revenue can be somewhat lumpy for the company. Additionally, we have to remember that ImmunoGen has just a single drug (Kadcyla) with a single indication currently on pharmacy shelves, but is working with nearly two dozen unique compounds undergoing clinical and preclinical studies.
Looking ahead Wall Street expects that ImmunoGen could turn the corner to profitability as soon as fiscal 2018. In the meantime, however, ImmunoGen's share price is likely to remain volatile as new data emerges on its internal and collaborative products. Investors would be wise to keep a close eye on ImmunoGen's cash balance going forward, but they also could find quite the bargain here with ImmunoGen sporting a diverse portfolio with seven high-profile drug-development partners. I believe this is an above-average risk investment, but given my higher personal tolerance for risk I admit to being intrigued by ImmunoGen at its current price.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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