Antibody Therapeutic Drug Maker Immunogen on the Rise

usman is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The healthcare sector was introduced to a new segment of therapeutics when the first antibody drug, developed by Janssen-Cilag, came out in 1986.

Today, hundreds of drugs by various companies are in clinical trials that are based on this concept. With cancer research becoming a hot topic in the biotech industry, companies dealing in monoclonal antibody therapeutics for cancer are getting more popular. These companies are expected to be pure growth entities and investors have displayed a fair amount of admiration for these stocks.

Luckily, I found something interesting about ImmunoGen (NASDAQ: IMGN). Despite the negative profitability of the company, it has extensive growth prospects. I will be discussing these prospects along with the company’s comparison with its peers.

What is Antibody Therapeutics?

Monoclonal antibodies are created by the B-cells, part of the human body's defense mechanisms, and are a key part of your body’s defense against illnesses. Each antibody is able to acknowledge and bind to a particular target, known as an antigen. Antibodies contribute to the immunity system by preventing pathogens from entering or damaging tissues. They eliminate infection through macrophages and other cells by covering the virus, bringing it to the attention of those cells, and then inducing the destruction of infection by stimulating other immune reactions such as the complement pathway.

Immunogen’s outlook

Immunogen is a company which develops monoclonal antibody drugs for cancer and small molecule cytotoxic or cell killing agents. The company has been successful in getting FDA approval for a drug known as Kadcyla, which is an ADC for HER2-positive breast cancer. It has been developed in partnership with Genentech, a subsidiary of Roche Holdings.

The company also has a number of other drugs in clinical trials under collaborative partnerships with other  large pharmaceutical manufacturers like Sanofi, Bayer and Amgen. The company has 3 drugs of its own including IMGN901 which cures small cell lung cancer, IMGN853 which cures ovarian and small cell lung cancer, and IMGN529 which can treat leukemia and lymphoma. IMGN901 is in phase 2 stage clinical trial whereas the other two are in phase 1. Currently, cancer is the second leading cause of death in US, so the resulting increase in the demand for cancer related drugs ensures a growth oriented future for the company.

Revenue growth

With the success of Kadcyla, the company finally saw some escalation in its revenues. For the first quarter of 2013 it reported revenue of $25 million, which is more than what Immunogen generated in the whole of year 2012. The company has not yet shown profits but they are getting closer to that feat by maintaining a sound Research & Development (R&D) budget. Over the last 3 years, the company has been spending over 300% of its revenue on the research and development. This shows Immunogen’s intent to accomplish its pure growth objectives. At this rate, the company would achieve an approval for one of its own drugs in a couple of years and its revenues would shoot up at a rapid rate.

Peer comparison

One of the major competitors of Immunogen working on the antibody therapeutics is Seattle Genetics (NASDAQ: SGEN). The company has a strong portfolio comprising of some 10 different drugs. One of them is a well-known FDA approved drug known as Adcetris. The drug has been developed for the cure of leukemia and lymphoma. The other nine are in pipeline but are expected to come out soon in the market. Like Immunogen, Seattle is also conducting research on different pipeline drugs in collaboration with various companies like GlaxoSmithKline, Pfizer and Bayer. Seattle Genetics is a larger manufacturer than Immunogen and is expected to grow at a massive rate once its drugs get approved. Similarly, another smaller cap company Immunomedics (NASDAQ: IMMU) is also developing antibody therapeutics for cancer cure. It has not yet achieved a FDA approval but it is testing its compounds on various types of cancers and is getting encouraging results. Moreover, Immunomedics is also manufacturing radiotracers which can be used to locate tumors during surgeries.

Final assessment

In my opinion, if you want to invest in the US biotech industry, the companies working on antibody therapeutics are good investments. The demand for these therapies is greater than conventional drugs and the risk that these companies might not be able to develop a drug is quite lower than the Orphan drug manufacturers. With one of its drug in the market and several more in the pipeline, Immunogen is an attractive choice. Being the manufacturer of antibody drugs related cancer, it will experience the growth expected from these companies in the future. So I can easily give a strong buy in favor of Immunogen.


usman iftikhar has no position in any stocks mentioned. The Motley Fool recommends ImmunoGen and Seattle Genetics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus