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TAPping into ImmunoGen
Tuesday, Apr. 17, 2001 06:36 PDT

By Paul Schneider,

It's first-quarter earning season, but I'd like to set the numbers aside for a bit to focus on ImmunoGen (IMGN), a promising small-cap working on a cancer treatment.

As a rule, I recommend investors steer clear of small biotechnology companies. Life will inevitably bring at least occasional bouts of trouble and despair, so don't add to your share of misery by throwing money away on money-losing little biotechs working on science you don't understand, and more importantly, may never earn a dime.

But when a small outfit 1) has a technology that wins the implied endorsement of research collaborations with one or more big pharmaceuticals or biotechs and 2) has enough dough socked away to stay in business for a decade or longer and 3) is trading toward the south end of its 52-week range, then I can't help but look.

So let's look at ImmunoGen and its TAPs (short for tumor-activated prodrugs), combinations of anti-cancer drugs with monoclonal antibodies that recognize and bind directly to tumor cells. A monoclonal antibody is a tailor-made, highly specific protein that has the ability to zero in on cancer cells and bind to them tightly.

By attaching potent anti-cancer drugs to monoclonal antibodies, ImmunoGen is able to produce an agent that seeks out and specifically kills cancer cells. And since the cancer-fighting agents go right to a tumor, the dosages can be increased, thereby speeding up the time required to stop their growth.

Cambridge, Mass.-based Immunogen is working with GlaxoSmithKline (GSK) on a TAP now in Phase I/II testing that targets colorectal cancer. A second TAP for treating small-cell lung cancer is being developed with British Biotech (BBIOY) and is scheduled to go into clinical trials later this year. The company has also formed relationships with Abgenix (ABGX) and Millennium Pharmaceuticals (MLNM), also in Cambridge. Clearly, substantial names in pharmaceuticals and big biotech have at least some faith in ImmunoGen.

And finance isn't an immediate concern. ImmunoGen finished its most recent quarter with $158.5 million in cash, equal to $4.12 per share. Like most developmental-stage biotechs, ImmunoGen loses money as it works on bringing its technologies through development.

The company operated $5 million in the red for the six months ended Dec. 31. But with its substantial bankroll, ImmunoGen should be able to work its way toward profitability for some time. ImmunoGen shares closed the April 16 session at $15.74, compared with a range of $6.63 to $45.50 per share over the past year."

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