[As noted in this article from today’s Boston Globe, IMGN’s “TAP” technology has produced a number of licenses but hasn’t yet borne fruit for the licensees or for IMGN itself.]
Cambridge biotech gets $1m upfront, chance of royalties
By Jeffrey Krasner December 28, 2004
ImmunoGen Inc. of Cambridge is expected to disclose today that it is licensing its cancer-fighting technology to Centocor Inc., a biotech subsidiary of healthcare giant Johnson & Johnson Inc.
The move is the latest in a series of partnership deals with larger biotech companies.
Under the agreement, ImmunoGen will get a payment of $1 million and as much as $42.5 million if experimental cancer drugs meet goals in trials with patients. The company could also earn royalties from sales of any drugs that are approved.
Mitchel Sayare, chairman and chief executive of ImmunoGen, said the deal is part of the company's strategy to earn cash from licensing and what are known as milestone payments so it can fund its own drug-discovery program without having to sell more stock.
"Every time we do another one of these deals, it provides some comfort to Wall Street that there are really smart, disinterested companies that are willing to pay millions of dollars for our technology," he said. "Our objective is to try to keep from hemorrhaging cash and become profitable not on the basis of milestone payments but on product sales -- either our own or one of our partners."
Sayare declined to specify which type of cancer Centocor, based in Malverne, Pa., will target.
In October, ImmunoGen signed a deal with Biogen Idec Inc. of Cambridge with a similar structure: a $1 million upfront payment and possible milestone payments of $42 million.
"Each deal ratchets up slightly and is slightly better than the previous deal," Sayare said.
ImmunoGen's other licensing partners include Millennium Pharmaceuticals Inc. of Cambridge, Genentech Inc. of South San Francisco, Abgenix Inc. of Fremont, Calif., and Sanofi-Aventis SA of France.
ImmunoGen's technology seeks to improve upon standard chemotherapy with the use of antibodies, the particles in the bloodstream that recognize intruders such as viruses and bacteria. Many firms have sought to use antibodies to target cancer cells. But sometimes antibodies may attach to cancer cells without killing them. Or they may fail to stimulate the immune system to target the cancer.
ImmunoGen's technology attaches a proprietary cancer-killing agent to antibodies. The antibodies then become the mechanism to deliver that "payload" directly to the cancerous cells. In theory, the targeted approach makes ImmunoGen's cancer-killing substances more effective than typical cancer chemotherapies, which damage healthy cells as well as the malignant cells.
However, neither ImmunoGen's internal research nor a partner's drug development have yet yielded an approved drug or a study that provides definitive validation of the firm's technology.
In its quarter ended Sept. 30, ImmunoGen had revenue of $9 million, up from $3.9 million a year earlier. The firm had a net loss of $2.4 million, or 6 cents a share, narrower than the year-earlier loss of $4.1 million, or 10 cents a share. The firm had cash and securities worth $95 million at the end of the quarter.
Jason Kantor, an analyst with WR Hambrecht in San Francisco, said ImmunoGen's long-term success is based on moving from one-time payments to streams of income from approved drugs.
"As with most biotechs, money from corporate partners is necessary but not sufficient to get to being profitable," he said. "Every successful biotech company is really based on a drug."
Deals such as those ImmunoGen has completed, when drugs are in very early experimental stages, often have single-digit royalty payments, he said. For the coming year, ImmunoGen's success will depend on whether its partners make progress with their experimental drugs, Kantor said.
Kantor rates ImmunoGen a "buy" and has a 12-month price target of $9 a share. He said he doesn't own shares of ImmunoGen, nor does his firm provide investment banking services to the firm. <<
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