Congratulations to anyone lucky enough to own shares of ImmunoGen (IMGN) before the closing bell rang on Friday. IMGN stock soared nearly 70% as of Monday afternoon, making at least some portfolios significantly bigger right out of the day’s gate.
As is always the case with such a move from any biotech stock, however, investors are understandably wondering two things: Why was IMGN catapulted higher today, and can ImmunoGen shares hold on to this big gain?
The answers to these questions?
- Some key news regarding one of its drug was unveiled this weekend in front of all the right people.
- It depends.
ImmunoGen Pounds Its Chest
This past weekend, ImmunoGen was not only in attendance at this year’s ASCO (American Society of Clinical Oncology) conference, but it actually was one of the event’s highlighted presenters.
In focus was the company’s lead drug candidate, IMGN-853 — a treatment for ovarian cancer in patients that have not responded well to other forms of treatment. Specifically, ovarian cancer patients who have not seen encouraging results to platinum-based drugs may find better efficacy with IMGN-853.
The drug is a monoclonal antibody that could be viewed as a double-barreled approach to treating cancer. First, the drug itself will attach to tumor cells to interfere with replication, then it will release a chemotherapy into those cancerous cells.
And the approach (more or less) works for this small subset of ovarian cancer patients. IMGN-853, or mirvetuximab soravtansine, mathematically showed a 53% response rate. Of the 17 patients in question, one saw her cancer completely cured, while eight saw at least some sort of efficacy from the drug. No data was provided regarding the other eight patients, but presumably the drug had no measurable meaningful benefit.
Still, the results were encouraging enough to lead Immunogen to believe it would be able to start phase 2 testing of the drug later this year.
The ASCO Impact
While IMGN stock has made an impressive move, it’s not an unusual one for shares of companies that present new (and often unexpected) information at the annual ASCO conference.
While the American Society of Clinical Oncology is broadly organized for doctors, by doctors, the investment community is tuned into the event as well as a means for gleaning information that may boost a particular stock’s value at some point in the future. In fact, several other stocks of companies that presented at 2015’s ASCO event were also up firmly on Monday.
For instance, Oncothyreon (ONTY) jumped more than 18% on Monday after discussing its orally delivered HER2 inhibitor, ONT-380, as a treatment for breast cancer. CTI BioPharma (CTIC) were up more than 20% today after the company talked about the merits of its pacritinib drug as a therapy for myelofibrosis.
IMGN stock was up by a similar amount not so much because mirvetuximab soravtansine is a game-changer, but because the results were better than expected. As TheStreet.com’s Adam Feuerstein noted, Immunogen had been increasingly perceived as a lost cause on the drug development front.
That perception seemed to change — at least for the time being — on Monday.
Bottom Line for IMGN Stock
While the news from ImmunoGen on Monday was a much-needed win for owners of IMGN stock, this could also be short-lived bullishness once investors start crunching the numbers.
First and foremost, while IMGN-853 might offer hope to platinum-resistant ovarian cancer patients, the drug would only be appropriate for between the 2,000 and 3,000 women each year who develop platinum-resistant ovarian cancer. In other words, it’s a relatively small market for a $755 million company with not a lot of its own drugs in its developmental pipeline, and not a lot of sales with its current portfolio.
Second, while all drugs most go through the testing and approval process, the road between the beginning of phase 2 trials and an actual FDA approval can take years to travel. It’s likely that the market will lose interest in IMGN several times over as it moves toward the end zone.
In other words, Monday’s big gain may best be viewed as a profit-taking opportunity. True long-term fans of ImmunoGen can simply buy it back later, most likely at a lower price.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
