Replies to post #105184 on Biotech Values

[mcbio]

Re: SGEN vs. IMGN

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What are your thoughts on IMGN here?
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Dead money.

I would argue the same for SGEN with its now $1.45B market cap. Where do you see the stock going from here, short of a buyout? Clearly good news for the company with the news today as it does help to validate their ADC technology, but this news in no way guarantees success for the rest of the drugs in their pipeline. And is this initial indication for the lead drug enough by itself to support any meaningful appreciation in the stock from the now $1.45B market cap level?

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Do you see the seeming validation of SGEN's ADC technology having any effect on IMGN?
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No, largely because IMGN's technology has failed to be validated but T-DM1. One can argue, correctly to some extent I think, this is because of bad decision by partner and bad core MAbs but the TAP tech has way more failures than successes.

T-DM1 still appears to remain on track for approval even if it is going to be later rather than sooner. I don't see how you can say IMGN's technology has not been validated given the results for T-DM1 to date and the fact that it still appears to be on track for approval.

[HattieTheWitch]

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What are your thoughts on IMGN here?

Dead money.

For a stock at $5.70, that's a strong statement. The option premiums don't reflect your pessimism though... I wonder why?

[AlpineBV_Miller]

re: SGEN vs IMGN

I said the technology hasn't been validated "but" (except) for DM-1. All other attempts at using TAP have failed, some miserably. Whether that is learning cruve due to being first or something wrong with TAP is a valuation question. We cover them, and think they are suitable for investment capital over the long term. I think use of TAP with previously validated MAbs will likely be successful, though I think it will take more fiddling with TAP to get it right than I do with SGEN's ADC technology.

I wasn't asked about SGEN's valuation, though you assume I think it's immediately going higher. I think it can go higher, but that will wait until we know pricing and indication for SGN-35. I think their relative valuation gains (from a post ALCL-baseline) are likely to be the same until we know pricing on SGN-35 and 2nd line results on T-DM1.

When comparing technology, let's look at the prime examples:

SGN-30 was a a single-digit response rate MAb. The same MAb empowered by SGEN's ADC technology has a 75% ORR with durability likely approaching a year in the same population.

Herceptin in third line has varying repsonse rates depending on the protocol, but I think we can agree it is also single-digit response rates. T-DM1 has a 32.7% response rate.

Like any indirect data set comparisons, this only goes so far -- particularly since they are completely separate diseases and one can argue T-DM1 was used in a more heavily pre-treated population that essentially excluded any MAb-specific baseline response.

This is what potential partners and potential acquirers are looking at, however, which partically explains the price differential between the two companies. The other explanation is the TAP technology has failed more often than it has succeeded (again, not necessarily the technology's fault). The remainder (majority) of the price differential is IMGN gets ~5% of T-DM1 sales and SGEN gets 100% in NA and double-digits ex-NA.