ImmunoGen Inc. (IMGN) filed Quarterly Report for the period ended 2009-09-30.
ImmunoGen Inc. develops pharmaceuticals primarily for the treatment of cancer. The company's product candidates are called tumor-activated prodrugs and are based on its proprietary immunoconjugate technology platform. Unlike conventional chemotherapeutic agents tumor-activated prodrugs are intended to deliver potent chemotherapy specifically to a tumor. Each tumor-activated drug immunoconjugate comprises a small-molecule drug which has been chemically linked to a monoclonal antibody. Immunogen Inc. has a market cap of $388.5 million; its shares were traded at around $6.81 with and P/S ratio of 13.9. Immunogen Inc. had an annual average earning growth of 6.4% over the past 5 years.
Highlight of Business Operations:
In August 2008, sanofi-aventis exercised its option under a 2006 agreement for expanded access to our TAP technology. We received $3.5 million with the exercise of this option in August 2008, in addition to the $500,000 we received in December 2006 with the signing of the option agreement. The agreement has a three-year term from the date of the exercise of the option and can be renewed by sanofi-aventis for one additional three-year term by payment of a $2 million fee. We have deferred the $3.5 million exercise fee and are recognizing this amount as revenue over the initial three-year option term.
Bayer HealthCare—In October 2008, we entered into a development and license agreement with Bayer HealthCare AG. The agreement grants Bayer HealthCare exclusive rights to use our maytansinoid TAP technology to develop and commercialize therapeutic compounds to a specific target. We received a $4 million upfront payment upon execution of the agreement, and—for each compound developed and marketed by Bayer HealthCare under this collaboration—we could potentially receive up to $170.5 million in milestone payments; additionally, we are entitled to receive royalties on the sales of any resulting products. We will be compensated by Bayer HealthCare at a stipulated rate for work performed on behalf of Bayer HealthCare under a mutually agreed-upon research plan and budget which may be amended from time to time during the term of the agreement. We also are entitled to receive payments for manufacturing any preclinical and clinical materials made at the request of Bayer HealthCare as well as for any related process development activities. We have deferred the $4 million upfront payment and are recognizing this amount as revenue over the estimated period of substantial involvement. In September 2009, Bayer reached a preclinical milestone which triggered a $1.0 million payment to us. This milestone is included in license and milestone fees for the quarter ended September 30, 2009.
Amgen, Inc.—In September, 2009, we entered into a development and license agreement with Amgen Inc. granting Amgen the exclusive right to use our maytansinoid TAP technology to develop anticancer therapeutics to a specific target. This license was taken under an agreement established in 2000 between ImmunoGen and Abgenix, Inc., which later was acquired by Amgen. Under the terms of the license, we received a $1 million upfront payment. We have deferred the $1 million upfront payment and are recognizing this amount as revenue ratably over the estimated period of substantial involvement. We also are entitled to receive milestone payments potentially totaling $34 million plus royalties on the sales of any resulting products. When milestone fees are specifically tied to a separate earnings process and are deemed to be substantive and at risk, revenue will be recognized when such milestones are achieved. Amgen is responsible for the development, manufacturing, and marketing of any products resulting from this license. The agreement established in September 2000 grants Amgen certain rights to test our maytansinoid TAP technology with antibodies and to license — on agreed-upon terms — the right to use the technology with antibodies to individual targets to develop products.
Revenues from license and milestone fees for the three months ended September 30, 2009 decreased $392,000 to $1.8 million from $2.2 million in the same period ended September 30, 2008. Included in license and milestone fees for the three months ended September 30, 2009 was a $1 million preclinical milestone earned pursuant to our development and license agreement with Bayer. Included in license and milestone fees for the three months ended September 30, 2008 was a $500,000 milestone related to the initiation of Phase I clinical testing of BT-062 by Biotest. Also in this prior year period, Millennium Pharmaceuticals and Boehringer Ingelheim agreed to terminate their licenses with us that were no longer being used to develop products and as a result, we recognized as license and milestone fees $361,000 and $486,000, respectively, of upfront fees previously deferred. Total revenue from license and milestone fees recognized from each of our collaborative partners in the three-month periods ended September 30, 2009 and 2008 is included in the following table (in thousands):
General and administrative expenses for the three months ended September 30, 2009 decreased $86,000 to $3.6 million compared to $3.7 million for the three months ended September 30, 2008. This decrease is primarily due to a $690,000 decrease in salaries and related expenses. During the three months ended September 30, 2008, we recorded $747,000 of compensation expense related to the modification of the terms regarding the exercise of certain options previously granted to the former chief executive officer of the Company in accordance with the succession plan approved by ImmunoGen’s Board of Directors in September 2008. Partially offsetting this decrease, director fees, patent expenses and other general corporate expenses increased during the current quarter compared to the same period last year.
Other income (expense) for the three months ended September 30, 2009 was $86,000 and $(118,000), respectively. During the three months ended September 30, 2009 we recorded net gains on forward contracts of $16,000 compared to net losses on forward contracts of ($103,000) for the three months ended September 30, 2008. We incurred $69,000 and $(17,000) in foreign currency translation gains (losses) related to obligations with non-U.S. dollar-based suppliers during the three months ended September 30, 2009 and 2008, respectively.
IMGN is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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