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Why Shares of ImmunoGen Jumped 20.3% in December

What happened

ImmunoGen Inc. (NASDAQ: IMGN), an oncology biotech company that specializes in the use of antibody-drug conjugates (ADCs) to make chemotherapy treatments more effective, saw its shares rise by 20.3% in December, according to data provided by S&P Global Market Intelligence. The stock is up 15% for the year and, as of Monday, was midway between its 52-week low of $4.73 and its 52-week high of $10.88.

The stock's biggest rise in December came on the first day of the month, when it opened at $6.19 and rose as high as $7.77. The jump came on the heels of an announcement that the company's ovarian cancer drug, mirvetuximab soravtansine, had met its primary endpoint for objective response rate (ORR) in its Phase 3 trial. The company said the drug, when used as a monotherapy for patients with platinum-resistant ovarian cancer who had previously been treated with Avastin, showed a confirmed ORR of 32.4%. ImmunoGen said that it expects to submit a Biologics License Application (BLA) with the U.S. Food and Drug Administration by next quarter and anticipates accelerated approval and a launch for the drug sometime this year.

Image source: Getty Images.

So what

The positive top-line results in the trial got investors' attention for several reasons. Last year, there were roughly 21,410 new cases of ovarian cancer in the U.S., according to National Cancer Institute data, with 13,770 deaths from the disease in the U.S. One report, by Market Data Forecast, put the compound annual growth rate for the ovarian cancer market to be 10.1% through 2026.

Another salient fact in the trial was how well tolerated the drug was. The company said the rate of adverse events was only 7% in the roughly 700 patients who have been dosed with the drug. ImmunoGen is looking for more applications for mirvetuximab soravtansine, including as an earlier therapy for various forms of ovarian cancer and potentially for endometrial cancer (a cancer that begins in the uterus).

Now what

The rise was exciting for ImmunoGen's investors. However, investing in a biotech stock such as ImmunoGen carries risks and should be done with a long-term outlook. In the third quarter, it reported $9.2 million in revenue, a little more than half of the $18.2 million it made in the same period last year. The company said the reason for the drop was that royalty payments for Kadcyla, a breast cancer chemotherapy drug it helped develop with Roche, had fallen.

ImmunoGen lost $37.3 million in the quarter and, with $245.8 million in cash, will need either an infusion of cash or more revenue within the next four years at its current burn rate.

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Jim Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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