Investing in biotech stocks can test even the most long-term investor's patience. Sometimes the most promising ventures can still take decades to turn from a novel idea into a life-changing therapy.

One interesting biotech that has frustrated investors for years is ImmunoGen (NASDAQ:IMGN), a small-cap biotech with a focus on cancer. Since hitting the public markets more than two decades ago, the stock has done little for long-term holders -- and has been left in the dust of the plain old S&P 500.

IMGN Chart

However, sometimes a sleepy stock can suddenly grab the headlines and rocket higher, minting patient investors a fortune. ImmunoGen's stock has certainly been more kind to investors recently, as a slew of positive news announcements have caused the stock to more than double since the start of the year.

So, what happened this year to suddenly wake up the stock, and is it possible that ImmunoGen has finally turned the corner?

The ABC's of ADC 
ImmunoGen has developed a technology that allows for the marrying of disease-seeking antibodies with cancer-busting drugs that goes by the name antibody-drug conjugate, or ADC. When using ImmunoGen's ADC technology, its drugs look for a specific target found only on the surface of certain cancer cells, binds to them, and then kills them using either one of the company's own cancer killing agents, or one developed by a partner. The appeal of this technology is that, at least theoretically, by targeting and killing only cancer cells, healthy cells are left much better off than with other cancer treatments that simply attack both healthy and damaged cells alike. 

Of course, developing a cool-sounding concept in the lab is one thing, but successfully bringing it to market is quite another. Thankfully, the company has already had success in bringing its first drug to market through a partnership with Genentech, which is a subsidiary of pharma giant Roche. The two companies combined to create Kadcyla, which was launched after FDA approval in 2013 to as a treatment for breast cancer, and helped to validate ImmunoGen's technology as well as allow the company to receive a modest royalty from its sales.

Future ADC development
Through the decades, ImmunoGen has been active in signing deals with some of the biggest players in the industry, such as Sanofi, Amgen, and Novartis. All together, the company currently boasts a large pipeline that is currently testing 13 different compounds. 

Screen Shot

Source: ImmunoGen. 

Most of the compounds are firmly in the early stages of clinical work, but the company currently has two other indications of Kadclya in phase 3 study.

However, while these studies are the furthest along, ImmunoGen won't be immediately participating in any near-term financial gains since the company smartly sold its royalty rights earlier in the year to TPG Special Situations Partners in exchange for a $200 million cash infusion. Down the road, ImmunoGen might be able to receive a royalty on future sales of Kadcyla, but not until after its partner receives $235 million to $260 in royalty payments, which is likely to take years.

The stock wakes up
While ImmunoGen currently boasts a robust pipeline full of partnerships, the company has also kept four compounds all to itself. One in particular, mirvetuximab soravtansine (formerly known as IMGN853), has really captured investors' attention.

Earlier in the year, that company presented some very compelling data at the American Society of Clinical Oncology meeting, where they showed that in a phase 1 study of 22 patients who had all failed numerous prior treatments, mirvetuximab soravtansine demonstrated a 53% response rate, substantially above the more typical 15%-20% response rate usually observed in single-agent therapies. 

That is an outstanding response rate for a group of patients that had previously not responded to treatment, and it got investors so excited they bid up the stock 65% in a single day. The company estimates that about 2,000-3,000 new ovarian cancer cases in the U.S. fit the criteria measured in the study, which indicates that this drug could have peak sales north of $200 million. 

However, the really exciting news about mirvetuximab soravtansine is that the company believes it has the potential to treat a variety of other cancers as well, including certain lung, breast, and endometrial cancers. If that proves to be the case, then peak sales potential for the drug would soar. 

Burn notice
Of course, funding all of its research programs is an expensive endeavor, and the company is currently burning capital to keep its multiple clinical trials humming along. 

ImmunoGen ended its fiscal year on June 30th and reported having access to $278 in cash when including its recent Kadcyla royalty transaction. For the next fiscal year, the company expects to burn about $105 million, which would land it with about $165 million in the bank at that point. A rough calculation shows that it should easily have around two years of cash in the bank, which should bring some comfort to investors.

Is ImmunoGen a buy?
ImmunoGen's ADC technology is certainly impressive, as the clinical results it has been able to show should give investors and cancer patients alike a lot to hope for. It's also great to see that the FDA has also already given the green light to one of its drugs.

However, despite sporting a huge cash balance and very promising pipeline, ImmunoGen is still in money-losing mode, and it's a bit too risky for my taste. I'd be more than happy to change my tune if we see mirvetuximab soravtansine continue to show great clinical progress in its phase 2 studies, or if the Kadcyla royalty payments find their way back to ImmunoGen's pocketbook. Until that happens, I'm happy to root for this story from the sidelines.

Brian Feroldi has no position in any stocks 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.