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ImmunoGen Inc. (IMGN - Snapshot Report) reported first quarter fiscal 2014 (ending Sep 30, 2013) loss of 13 cents per share, narrower than the Zacks Consensus Estimate of a loss of 22 cents and the year-ago loss of 30 cents per share. The narrower loss was primarily due to higher revenues and lower operating costs.

ImmunoGen’s revenues in the reported quarter came in at $17.2 million, up from the year-ago figure of $4.1 million. The massive increase in revenues was primarily due to a jump in license and milestone fees. Revenues in the first quarter were also above the Zacks Consensus Estimate of $13 million.

Quarter in Details

ImmunoGen’s revenues comprise research and development support fees, license and milestone fees, royalty revenues and clinical material reimbursement. The company received $7.8 million of license and milestone fees during the quarter compared with $0.9 million received in the year-ago quarter.

The first quarter fiscal 2014 license and milestone fees included $7.8 million of amortization of upfront license fees from Eli Lilly and Company (LLY - Analyst Report) and a $5.0 million milestone from Roche (RHHBY - Analyst Report) for the approval of oncology drug Kadcyla in Japan.

We note that ImmunoGen receives and recognizes royalties on Kadcyla sales under an agreement with Roche. The drug was approved in the U.S. in Feb 2013, for the treatment of patients suffering from HER2-positive metastatic breast cancer (mBC). The drug is under review in the EU (received positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use). Kadcyla is also being studied for a number of additional indications.

The company recorded $2.0 million of research and development support fees in the first quarter of fiscal 2014 compared with $1.4 million in the year-ago period. The company also recorded $2.1 million as royalty revenues during the quarter.

The company’s total operating expenses during the quarter decreased 2.7% to $28.6 million. ImmunoGen reported research and development (R&D) expenses of $22.0 million during the quarter, down 7.1% year over year. The decrease in R&D expenses was primarily due to lower sale of clinical materials to the company’s partners, resulting in lower associated expenses.

General and administrative expenses in the reported quarter were up 15.7% to $6.5 million due to higher personnel expenses.

Outlook for Fiscal 2014

Apart from releasing its financial results, ImmunoGen adjusted its guidance for fiscal 2014. The company increased its revenue guidance for fiscal year 2014 to the range of $71–$75 million from the previous range of $66–$70 million. The pre-earnings Zacks Consensus Estimate of $67 million was however well below the company’s guidance.

ImmunoGen lowered its net loss guidance to the range of $67 million to $71 million from the previous range of $72 million to $76 million. The company meanwhile maintained its operating expenses guidance in the range of $140 million and $144 million.

Our Take

The company has multiple pipeline related events in the coming quarters. We are encouraged by ImmunoGen’s recent progress on its pipeline and expect investor focus to stay on the upcoming pipeline related events.

ImmunoGen presently carries a Zacks Rank #3 (Hold). Meanwhile, other stocks such as Actelion Ltd. (ALIOF) look better positioned with a Zacks Rank #1 (Strong Buy).


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