ImmunoGen Inc. (IMGN) entered into a third licensing deal with Novartis (NVS) under a 2010 agreement. ImmunoGen’s shares were positively impacted by the news which shot up more than 10% on Nov 11, 2013 to end the day’s trading at $15.05. This was also the company’s fifth licensing deal in 2013 with a major company.
As per the terms of the deal, Novartis will gain the exclusive right to use ImmunoGen’s antibody-drug conjugate (ADC) technology to develop anticancer candidates to an undisclosed target. Last month ImmunoGen entered into a similar licensing agreement with Novartis, which was their second licensing deal. Novartis also extended the initial three-year term by an additional one-year period for a $5 million fee.
As per the initial agreement, inked in 2010, Novartis is responsible for the development, manufacturing and marketing of any product successful from the license agreement. For each licensing deal under the agreement for a specific target, ImmunoGen receives an exercise fee of $1 million along with upfront and milestone payments of up to $199.5 million. ImmunoGen will also receive royalties on sales of any resulting products.
We note that Novartis has the right to terminate any development and commercialization license with prior notice. Moreover, both the companies may terminate each license for a material breach by the other company.
ImmunoGen’s revenues primarily consist of research and development support fees, license and milestone fees. For the first quarter of fiscal 2014 (ending Sep 30), ImmunoGen received $13.2 million of license and milestone fees. ImmunoGen expects revenues for fiscal year 2014 in the range of $71–$75 million.
We are encouraged by ImmunoGen’s association with companies likes Novartis and Eli Lilly and Company (LLY). The company is expected to ink more deals in the future.
ImmunoGen presently carries a Zacks Rank #3 (Hold). Stocks such as Jazz Pharmaceuticals Public Limited Company (JAZZ) look better positioned with a Zacks Rank #1 (Strong Buy).
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