) entered into a third licensing deal with
) 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.
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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
Eli Lilly and Company
). The company is expected to ink more deals in the future.
ImmunoGen presently carries a Zacks Rank #3 (Hold). Stocks such
Jazz Pharmaceuticals Public Limited Company
) look better positioned with a Zacks Rank #1 (Strong Buy).