Analyst Conference Summary

conference date: April 29,2016
for quarter ending: March 31, 2016 (first calendar quarter 2016, third fiscal quarter)

Forward-looking statements

Note: this is my first reporting on ImmunoGen. I first bought IMGN on April 29, 2016, the day of this conference, but these notes are being made on June 29, as I have become increasingly interested in the company.

Overview: Emphasized positive pipeline developments and $10 million Bayer milestone payment. Lowered guidance for 2016.

While Immunogen has received royalties from its contribution to a Roche commercial therapy, Kadcyla, for practical purposes it is a clinical-stage pharmaceutical company.

Basic data (GAAP):

Revenue was $19.7 million, up from $11.4 million year-earlier.

Net income was negative $31.9 million, down from negative $21.6 million year-earlier.

Diluted EPS was negative $0.37, down from negative $0.25 year-earlier.

Guidance:

Fiscal year 2016 revenues are now estimated between $60 million and $70 million, down from previous guidance of between $70 and $80 million due to changes in the expected timing of partner events and is mainly non-cash. Operating expenses are now estimated between $180 million and $185 million, up from previous guidance of between $175 and $180 million. Net loss expected between $135 and $140 million, worse than the previous estimate of $120 million and $125 million, but most of this change is non-cash.

Cash and equivalents at June 30, 2016 estimated between $155 and $160 million, down from previous guidance of $165 million to $170 million. Capital expenditures remain unchanged, between $13 million and $15 million.

Conference Highlights:

"We are making important progress with our key product programs," commented Daniel Junius, CEO. "In early June, expanded Phase 1 findings with mirvetuximab soravtansine will be presented at ASCO. Based on these data, we are modifying the design of our FORWARD I trial to be a Phase 3 study intended to support full marketing approval. Patient enrollment is proceeding well in our Phase 1b/2 FORWARD II trial that is assessing this novel ADC in combination regimens, and patient dosing has begun in Phase 1 testing of IMGN779, the first ADC utilizing one of our new DNA-alkylating cancer-killing agents."

Revenue consisted of: $10.1 million licensing and milestones, $7.4 million non-cash royalty revenue (Kadcyla), $1.2 million for clinical materials, and $1.1 million reimbursed R&D.

The $10 million milestone from Bayer was for advancing to Phase 2 for anetumab ravtansine.

Mirvetuximab soravtansine Phase 1 expansion cohort for FRα-positive platinum-resistant ovarian cancer to be presented at ASCO [May 18: data was positive]. The Phase 2 trial is being modified to be a Phase 3 trial. " A key observation coming out of this assessment is that the confirmed responses were primarily in patients who received three or fewer prior treatment regimen," so for the trial the limit will be 3, and medium to high folate receptor alpha expression will also be required. PFS will be the primary endpoint. The estimate of potential treatable U.S. patients was revised upward to 7000 per year. A separate trial is testing combination regimens.

IMGN779 started a Phase 1 trial for AML (acute myeloid leukemia).

IMGN529 will start a Phase 2 trial soon for DLBCL (diffuse large B-cell lymphoma).

Partner Programs: Sanofi's SAR566658 will present Phase 1 results at ASCO. Bayer's anetumab revtansine Phase 1 results also at ASCO. Presentations were made at AACR by Novartis and Sanofi about ADCs using maytanisoid technology. Takeda also reported data from a therapy using an ImmunoGen IGN agent.

Cash and equivalents ended at $182.9 million. Long-term liabilities were $223.7 million, mostly long-term deferred revenue from Kadcyla future royalty deal.

Operating expenses were $47.3 million consisting of: $36.1 million R&D and $11.2 million general and administrative. Loss from operations $27.6 million. Non-cash interest expense of on future royalty $5.0 million. Other income $0.7 million. No tax.

Daniel Junius will be retiring as President and CEO. Mark Enyedy will replace him on May 16.

See also March 30, 2015 press release ImmunoGen Announced $200 Million Royalty Transaction.

Q&A:

Mirvetuximab response rate under 30%? Yes, for the full population studied. But better for patients who had less prior therapies. Response rate will be a secondary endpoint in the Phase 3 study. "We believe that if we can move the Progression-Free Survival to six months or higher, then that would be a substantial improvement, both clinically and statistically. And that's the kind of thing we'll be powering for."

Ocular side effect management? There has been improvement by being a bit more restrictive about previous eye conditions, lubricating the eyes, asking them not to wear contact lenses, and corticosteroid eye drops if necessary.

Timeline for Phase 3 trial? We need to complete discussions with the FDA about the design. But if PFS is the primary endpoint, the trial will take about 6 months longer than previous projections.

One reason for the change to PFS is that there are already approved agents despite high unmet needs. We think PFS is the most likely to give good results, based on the data so far.

Would not the FDA require OS as a primary endpoint? They have approved PFS in other Phase 3 trials. "I think they will want to see a trend in overall survival."

Expansion cohort response rate drop from prior 35%? Would not call it significant. We have more heavily pretreated patients in the expanded data. We believe we are now targeting a population with a response rate "meaningfully higher" than 30%.

Note: because I did this summary late, and ImmunoGen removes its conference audio files from its web site rather quickly (not a good practice), I used the seekingalpha.com transcript to prepare this summary. I write for Seeking Alpha: William Meyers Seeking Alpha articles

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