ImmunoGen (IMGN) Reports Wider-than-Expected Loss

ImmunoGen, Inc. (NASDAQ:IMGN) reported a loss of 46 cents per share (excluding restructuring charge) in the three months ended Sep 30, wider than both the Zacks Consensus Estimate of a loss of 38 cents and the year-ago loss of 39 cents. We note that ImmunoGen is transitioning to a fiscal year ending Dec 31, effective Jan 1, 2017.

Since ImmunoGen does not have any approved product in its portfolio yet, the company earns revenues in the form of royalties, license and milestone payments, and research and development support fees paid by its partners.

Revenues came in at $7.7 million, down 48.4% year over year and missed the Zacks Consensus Estimate of $21.2 million.

Research and development (R&D) expenses decreased 6.3% from the year-ago level to $32.9 million. The decrease was primarily due to lower third party costs related to activities performed in the prior-year period. Selling, general and administrative (SG&A) expenses were up 13.6% to $9.5 million due to higher third-party service fees associated with the company's strategic review announced on Sep 29, 2016. During the quarter the company restructured its operations and reduced the company’s workforce by 17% or 65 positions in technical operations and general and administration functions. The workforce reduction is slated to be complete in the quarter ending Dec 31.

Pipeline Update

ImmunoGen continues to progress with its pipeline. The company is on track to enroll the first patient in the phase III FORWARD I study on mirvetuximab soravtansine for the treatment of platinum-resistant ovarian cancer by the end of 2016. Combination regimens with mirvetuximab soravtansine in ovarian cancer are being evaluated in the phase Ib/II FORWARD II study. The company expects to report initial data from FORWARD II in 2017.

Meanwhile, a phase I study on IMGN779 for the treatment of acute myeloid leukemia is currently underway. Initial data from the study should be out in 2017.

Outlook

The company has updated its guidance for the six-month period ending Dec 31. Revenues are now expected in the range of $25 million to $30 million (old guidance: $40–$45 million). Operating expenses, including R&D and SG&A expenditures, are now expected in the range of $90 million to $95 million (old guidance: $95–$100 million). The company now expects net loss of $70 million to $75 million (old guidance: $55–$60 million).

IMMUNOGEN INC Price, Consensus and EPS Surprise

Zacks Rank & Key Picks

ImmunoGen currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) , BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) and Exelixis, Inc. (NASDAQ:EXEL) . Infinity and BioMarin sport a Zacks Rank #1 (Strong-Buy), while Exelixis has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity’s loss estimates narrowed from $3.84 to $3.79 for 2016 and has remained stable for 2017 over the last 60 days. The company has posted a positive surprise in all the four trailing quarters with an average beat of 67.62.

BioMarin’s loss estimates narrowed from 28 cents to 25 cents for 2016 and from $1.16 to $1.11 for 2017 over the last 60 days.

Exelixis’ loss estimates narrowed from 71 cents to 61 cents for 2016 and from a loss of16 cents to earnings of 4 cents for 2017 over the last 60 days. The company has posted a positive surprise twice in the four trailing quarters with an average beat of 9.1%. Its share price has skyrocketed over 90% year to date.

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