| | Courtesy of Larry Macc and others:
(Excerpts from SG Cowen 12/15)
Christmas Arriving Early - IMGN Shares A Holiday Bargain
ImmunoGen (IMGN: $18 15/16) Bill Tanner, Ph.D.
RATING: 1 Strong Buy
Cash: $156MM Cash/Share: $4.11
Key Points:
1. IMGN Shares Down 30% This Week On No Change In Fundamentals.
3. Significant Triggers Lie Ahead That Should Serve As Positive Catalysts.
4. TAP Technology Well Positioned To Become Integral Component of
Cancer MAb Therapies.
5. Believe IMGN Shares Are Most Attractive Value Play Amongst
MAb Thenology Companies.
6. Recommend Investors Take Advantage of Over-Sold Situation.
INVESTMENT THESIS: ImmunoGen is developing technologies to deliver cytotoxic drugs using monoclonal antibodies (MAbs). The company's tumor-activated pro-drug (TAP) platform may provide means to increase the efficacy of cell-Killing MAbs. The most obvious application of the technology is in the treatment of cancer. Partnerships such as one established with Genentech (DNA) VALIDATE THE APPROACH, in our opinion. Genentech has licensed the technology for use with multiple MAbs, including Herceptin and call for IMGN to receive $40MM for each MAb successfully developed and roayalties on sales. IMGN entered into an agreement with SmithKline Beecham (SBH) to develop the propietary MAb C242. A collaboration with Abgenix (ABGX) underscores the potential value of TAP as an “add-on” for companies with enabling MAb development technologies. Our investment thesis is based on an emerging belief that the effectiveness of cytotoxic MAbs which do not carry cytotoxic payloads may be limited, the initial success with Herceptin and Rituxan, notwithstanding. If so, given the abundance of anti-cancer MAbs likely to emerge in the outgoing years, we believe IMGN is well positioned to capture significant value.
MPORTANT TRIGGERS LIE AHEAD - We believe IMGN is positioned to make considerable progress on broad corporate development fronts. The most near-term event we anticipate occurring is the filing of an IND for the MAb huN901-DM1 by year-end. The MAb is partnered with British Biotech and will be tested for the treatment of small-cell lung cancer. We would anticipate IMGN to engage in more TAP licensing agreements with MAb developers as well as obtain rights for targets against with the company would develop proprietary MAb therapeutics.
ANTICIPATED UPCOMING MILESTONES:
huN901-DM1 IND Filing By end of year
TAP Technology Deals Continually
TAP Data ASCO 2001 (May)
BEST VALUE AMONGST MAB COMPANIES - If the market's sentiment towards stocks of MAb technology companies contnues to vacillate, we recommend investors buy shares that are the most undervalued. It stands to reason that those stocks should have an upward bias in their volatility. Our thesis remains unchanged that IMGN shares should be valued as a derivative of the aggregate value of stocks of MAb technology companies. If cancer MAbs comprise half, by number, in development, SCORES OF THEM COULD BE MADE BETTER WITH IMGN'S TECHNOLOGY. Key to our argument is the fact that TAP is “technology neutral” in that it could be useful for any cancer MAb, whether of the humanized or human variety. ImmunoGen's customers could be all those divided amongst the MAb technology companies.
GLPAL
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