Replies to post #105196 on Biotech Values

[poorgradstudent]

IMGN:

Admittedly I'm rather negative on this company, and I've mentioned before that I don't think their royalties will be all that great.

If the market sees IMGN simply as a vehicle to receive royalties on a single drug, I don't think Mr. Market will afford them much of a multiple on their earnings. For IMGN to unlock any real value for shareholders, they'll have to actually develop a drug by themselves. To date, they have been *horrible* at this part of the game.

There's no there there, imo.

[DewDiligence]

…but IMGN will be entitled to mid single-digit royalties on T-DM1, which still could be material if the drug turns out to be the blockbuster that some are predicting.

Is IMGN’s mid-single-digit royalty rate net or gross?

One pitfall of biotech investing is assuming that a royalty % quoted by management of the royalty recipient is net. More often than not, the figure disclosed to investors is actually gross.

For some companies this distinction is not material, but for companies that have high pass-though obligations to third-party licensors, the distinction makes all the difference in the world.