ImmunoGen (IMGN) Beats on Earnings in Q3, Lowers Guidance

ImmunoGen, Inc. IMGN reported adjusted loss of 31 cents per share for the third quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 34 cents. The adjusted loss excludes restructuring charges. Moreover, the reported loss of 32 cents was narrower than the year-ago loss of 61 cents per share on higher revenues.

ImmunoGen’s shares were down 4.6% on Nov 2, presumably on sales miss and reduced revenue guidance for 2018. Moreover, shares of ImmunoGen have significantly underperformed the industry in the past six months. The stock has declined 44.4% compared with the industry’s decrease of 2.5%.

Revenues

Since ImmunoGen has no approved product in its portfolio, the company earns revenues through royalties, license and milestone payments plus research and development (R&D) support fees paid by its partners.

Revenues came in at $10.9 million in the quarter, missing the Zacks Consensus Estimate of $12 million. However, sales increased by 28.9% from the year-ago figure of $8.5 million. The revenue consists of $0.7 million in license and milestone fees and $8.4 million in non-cash royalty revenue. Revenues from R&D support and clinical materials were $0.4 million and $1.4 million, respectively. License and milestone fees included milestone payment of $0.5 million from privately-held Fusion Pharma.

Operating Expenses & Cash Details

Research and development expenses increased almost by 50% from the year-ago level to $47.2 million, mainly on additional manufacturing costs to support commercial validation of mirvetuximab soravtansine and higher costs to support phase Ib/II FORWARD II study. Selling, general and administrative (SG&A) expenses were up 5.1% to $8.3 million in the third quarter of 2018.

The company recorded net proceeds of $162.5 million from the sale of its common stock in June.

ImmunoGen’s cash and cash equivalents decreased to $303.2 million at the end of September 2018 compared with $345.1 million at the end of June 2018. The company expects its current cash and estimated cash to fund its operations atleast through the first half of 2020, which is a year after the anticipated announcement of top-line data from the phase III FORWARD I study.

Pipeline Update

ImmunoGen has been progressing well with its pipeline product, mirvetuximab soravtansine. In October, the company announced preliminary data from the phase Ib/II FORWARD II study evaluating combination regimens with mirvetuximab soravtansine in ovarian cancer. Data showed that the candidate in combination with Merck’s MRK Keytruda achieved encouraging anti-tumor activity, especially in patients with medium or high FRα expression levels.

The company anticipates to initiate an expansion cohort in the study to evaluate the candidate in combination with Roche’s RHHBY Avastin in recurrent ovarian cancer in the first quarter of 2019.

The company continues to expect top-line data from the phase III study, FORWARD I, in first half of 2019. The study is evaluating mirvetuximab soravtansine as a single-agent therapy for treating patients with platinum-resistant ovarian cancer, whose tumors express high or medium levels of FR alpha.

Apart from mirvetuximab soravtansine, ImmunoGen is working to develop a couple of other candidates in early stage studies including IMGN779 (relapsed or refractory adult acute myeloid leukemia) and IMGN632 (hematological malignancies including acute myeloid leukemia). IMGN632 was granted orphan-drug designation for acute myeloid leukemia during the quarter.

The company’s most advanced partner program using its ADC platform is Roche’s Kadcyla (trastuzumab emtansine). In October, Roche announced that Kadcyla is superior to Herceptin as an adjuvant treatment in reducing risk of disease recurrence or death in HER2-positive early breast cancer.

2018 Outlook Downgraded

The company decreased its revenues guidance to a range of $50-$55 million for 2018 from $60-$65 million, expected previosuly. The Zacks Consensus Estimate for the metric is pegged at $56.14 million.

The company also reduced its expectation for cash and cash equivalents to the range of $250 million to $255 million from the previous expectation of $265 million to $270 million.

ImmunoGen however maintained its operating expenses guidance for 2018 in the range of $215-$220 million.

ImmunoGen, Inc. Price, Consensus and EPS Surprise

 

ImmunoGen, Inc. Price, Consensus and EPS Surprise | ImmunoGen, Inc. Quote

Zacks Rank & Stock to Consider

ImmunoGen currently carries a Zacks Rank #3 (Hold).

A better-ranked stock from the same space is CRISPR Therapeutics CRSP, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CRISPR Therapeutics’ loss per share estimates have narrowed from $2.95 to $2.92 for 2018 over the past 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters with an average beat of 19.50%. Share price of the company has increased 56.8% year to date.

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