Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What's happening: Even though research firm Cannacord Genuity bumped up its price target for shares from $10 to $15, shares in ImmunoGen (NASDAQ:IMGN) fell by 10% earlier today after reporting first-quarter financials last Friday.
Why it's happening: Cannacord Genuity's increase in its price target follows Cantor Fitzgerald's reiteration of its buy rating and $12 price target over the weekend.
The two research firms appear unconcerned by recent news that ImmunoGen's collaboration partner Sanofi (NYSE:SNY) has returned its rights to coltuximab ravtansin, a CD19 targeting therapy for the treatment of B-cell lymphomas. Sanofi's decision to abandon the drug is a bit surprising, given that coltuximab ravtansin put up compelling phase 2 results last year.
Investors appear to be more skeptical.
Although ImmunoGen can continue developing this drug on its own, investors appear to be questioning whether Sanofi's decision implies that the commercial opportunity for this drug is limited.
Investors are also probably wondering whether conducting coltuximab ravtansin phase 3 trials on its own may draw down ImmunoGen's cash stockpile more rapidly than previously thought.
A decision to continue development of the drug could increase the company's burn rate; however, it's unlikely that ImmunoGen will need to dilute investors and tap equity markets for cash anytime soon.
In March, the company announced that it's collaborating with Takeda Pharmaceutical to develop two drugs in a deal that netted ImmunoGen $20 million up front. The company also announced that it had sold some of its royalty stream on Roche Holdings Kadcyla to TSP Special Situations Partners for an upfront payment of $200 million.
As a result, ImmunoGen expects to finish the fiscal year ending June 30 with between $265 and $275 million in cash. That should provide the company with plenty of financial firepower for its development programs. If so, then this sell-off may prove to be unwarranted.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not own positions in the companies mentioned. The Motley Fool recommends ImmunoGen. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.