Wider Loss at ImmunoGen

ImmunoGen Inc. ( IMGN - Snapshot Report ) reported second quarter fiscal 2013 adjusted loss of 29 cents per share, wider than both the Zacks Consensus Estimate of a loss of 24 cents and the year-ago loss of 17 cents per share. The year-over-year miss was primarily due to lower revenues and higher expenses.

ImmunoGen’s revenues in the reported quarter came in at $2.6 million, compared with $7.6 million in the second quarter of fiscal 2012. The huge difference in revenues was primarily due to the presence of $5.0 million milestone payments in the year-ago quarter. Revenues in the second quarter were much lower than the Zacks Consensus Estimate of $6 million.

Quarter in Details

ImmunoGen’s revenues comprise of research and development support fees, license and milestone fees and clinical material reimbursement. The company recorded $2.0 million of research and development support fees in the second quarter of fiscal 2013 compared with $0.9 million in the year-ago period.

ImmunoGen received $0.4 million of license and milestone fees and $0.1 million of clinical material reimbursement during the quarter in comparison to a respective $6.0 million and $0.6 million in the same period last year.

The company’s total operating expenses during the quarter increased 33% to $27.1 million. ImmunoGen reported research and development (R&D) expenses of $21.7 million during the quarter, up 39.2% year over year. The increase in R&D expenses during the quarter was primarily due to higher expenses related to pipeline development.

General and administrative expenses in the second quarter of fiscal 2013 came in at $5.5 million, up 13% year over year due to higher patent related expenses and recruitment costs.

Pipeline Update

ImmunoGen’s metastatic breast cancer candidate, trastuzumab emtansine (T-DM1) is currently under review both in the US and the EU. The candidate is being developed for the treatment of patients suffering from HER2+, unresectable locally advanced or metastatic breast cancer who have received prior treatment with Roche Holding’s ( RHHBY ) Herceptin (trastuzumab) and a taxane. A final decision from the US Food and Drug Administration (FDA) regarding the approval of the candidate should be out by Feb 26, 2013.

The company also expects to report clinical findings on three of its wholly owned compounds - IMGN901 (small-cell lung cancer, multiple myeloma), IMGN853 (ovarian and non-small cell lung cancers) and IMGN529 (non-Hodgkin's lymphoma).

ImmunoGen also has plans to advance its EGFR-overexpressing solid tumors candidate, IMGN289, into clinical trials. The company expects to submit an Investigational New Drug (IND) application for the candidate in mid-2013.

Outlook for Fiscal 2013

Apart from releasing its financial results, ImmunoGen announced its guidance for fiscal 2013. The company expects net loss of $70–$74 million for the fiscal year ending Jun 30, 2013. ImmunoGen expects to exit fiscal year 2013 with cash and cash equivalents of $172–$176 million.

We expect investor focus to stay on the FDA’s decision regarding the approval of T-DM1 in Feb this year. ImmunoGen currently carries a Zacks Rank #3 (Hold). However, other pharma stocks such as Warner Chilcott plc ( WCRX - Analyst Report ) and Valeant Pharmaceuticals ( VRX - Snapshot Report ) carry a Zacks Rank #1 (Strong Buy).