ImmunoGen's Hot Start

ImmunoGen scores some positive data, but were investors expecting less?

Brian Orelli
Brian Orelli
Apr 8, 2011 at 12:00AM
Other

The better buy between ImmunoGen (Nasdaq: IMGN) and Seattle Genetics (Nasdaq: SGEN) since I wrote my article comparing the two last week? ImmunoGen by a landslide, thanks to a whopping 27% increase yesterday.

Marketing partner Roche reported that T-DM1 significantly improved the time that it takes a tumor to start growing compared to Herceptin plus chemotherapy in breast cancer patients.

The T in T-DM1 is for trastuzumab, the generic name for Herceptin, and the DM1is ImmunoGen's Targeted Antibody Payload technology, which kills the tumor cells after the Herceptin antibody delivers the chemotherapy.

I'm a little surprised at the magnitude of the jump. A positive result isn't all that surprising given the previous data. And this was only top like data; "significantly improved" sounds impressive, but it sure would be nice to have hard numbers rather than qualitative descriptions.

My best guess was that investors were worried that the Food and Drug Administration refusing to accept Roche's application for accelerated approval was bad omen and a second positive trial is giving them a little more confidence in ImmunoGen's technology and potential that other partnerships with sanofi-aventis (NYSE: SNY), Biogen Idec (Nasdaq: BIIB), and Amgen (Nasdaq: AMGN) will pan out.

Even after the increase, Seattle Genetics is still more expensive -- and rightfully so. It could have its first drug, brentuximab vedotin, on the market by the end of Aug. ImmunoGen will need to wait for the completion of a phase 3 trial, testing T-DM1 against GlaxoSmithKline's (NYSE: GSK) Tykerb before it can gain FDA approval. Seattle Genetics also owns brentuximab vedotin outright in the U.S. and Canada while ImmunoGen only gets a percentage of sales of T-DM1.

Which one is a better buy now? I'm sticking with my suggestion to buy both.

Looking for more stock ideas? Here are six stocks that David and Tom Gardner think you should be watching.