$IMGN - Short it (Early analysis, the stock still can rally up)
Updated
IMGN - Received ELAHERE approval with conditions. The condition is that they have to prove their claims with a single arm pivot.
ELAHERE - Approved on Nov 2022, market reacted negative. (Opened 6.27, closed 5.00)
Since approval the stock slid down to $4.00
Drug is expected to increase the longevity from 12 months to 16 months, for patient with ovarian cancer (specifically on the Platinum resistance cancer).
The drug sale price is $6,500, cost of production is $450. Leaves them a healthy margin of 93%.
The treatment according to article is 4 doses. ($26,000 per patient)
So Why short it? READ>>>>>>>>>>>>>>
Although Ovarian cancer affect nearly 19,700 patient yearly. Small market for the treatment in general. This product is targeted at platinum-resistant disease. Thus making it a niche.
Assumption - Lets say this treatement is suggested for 50% of patient nearly 256MUSD yearly Revenue. But that is when it is fully approved by FDA, Unconditional approval.
Income Statement
29MUSD in a quarter = 1115 units sale of Elahere approximately. (Understand that the income is not just from the sale, it includes other licenses and deals).
Company burns about 93MUSD in a quarter (Operation Expense 2023 March) - 372MUSD per year. This proves the company needs more debt and Share issue or Debt Issues even when the drug is fully approved by FDA (We are not here yet). In addition, the important drug MIRASOL is still under Phase 3 (Need money for this, a lot of it).
Dilution of Shares
Previously company dilutes shares at 24% rates yoy (year over year).
With the recent pump, the company added 26MUSD shares @$12.50. Very Common for bio tech to issue below trading value to attract investors.
Debt
As of March, company secured 175MUSD in debt. 75M issued right away, 50M issued later, can be 100M if the expected sale of Elahere is met (Pretty Much). I dont see a problem here.
Maturity - April 2028. With only interest due for 36 months (3 years) @10.25% = Expense of 18MUSD Per year for 3 years.
In the next 12 months the company needs 101MUSD of debt repayment. Cannot borrow or role over more debts, due to the interest rates. This again shows the dilution was absolutely needed.
Coming to Recent price action
May 1st - Earning reported - initial sale of Elahere and revenue.
May 3rd - Company is Marketing Elahere with the initial approval and adding data. The news reported on May 9th is another mirror copy of the same.
Analyst rating
May 3rd - Piper Sandler increased the target to $16. - Makes the first entry price to be $16 for a short. (Note that the company will boost the share price by pumping, with the newly acquired wealth).
UNDERGROUND OPERATION - I.E., Companies spending on marketing, Paying media networks, etc has significatly increased. Evident from the coverage of stocks news. If the company want to sell Elahere, they would be advertising the product. Wont they?
Over all, this is nothing but another dilution from IMGN.
RISK FACTOR from Company
*We have outstanding indebtedness in the form of a term loan and may incur additional indebtedness in the future, which could adversely affect our financial position and prevent us from implementing our business strategy.
*Significant expected operating expenses to commercialize ELAHERE
*Significant expected operating expenses to conduct research and development activities and to potentially commercialize our portfolio
*Noncancelable in-process and future manufacturing obligations, including commercial supply of ELAHERE
Risk for Traders
1. Company has a ton of money for this quarter, so they could keep boosting the stock price by additional marketing events or campagin. [$24 - could be possible]
2. Realizing a downward target would take 3- 6 months. As the stocks wont erode at rapid pace.
Disclosures
- Investing involve risk, so invest only what you are willing to lose.-
- This & future update is just an analysis, not an advice.-
- I do not hold a short position at the time of publishing, will evaluate and take short position accordingly-
ELAHERE - Approved on Nov 2022, market reacted negative. (Opened 6.27, closed 5.00)
Since approval the stock slid down to $4.00
Drug is expected to increase the longevity from 12 months to 16 months, for patient with ovarian cancer (specifically on the Platinum resistance cancer).
The drug sale price is $6,500, cost of production is $450. Leaves them a healthy margin of 93%.
The treatment according to article is 4 doses. ($26,000 per patient)
So Why short it? READ>>>>>>>>>>>>>>
Although Ovarian cancer affect nearly 19,700 patient yearly. Small market for the treatment in general. This product is targeted at platinum-resistant disease. Thus making it a niche.
Assumption - Lets say this treatement is suggested for 50% of patient nearly 256MUSD yearly Revenue. But that is when it is fully approved by FDA, Unconditional approval.
Income Statement
29MUSD in a quarter = 1115 units sale of Elahere approximately. (Understand that the income is not just from the sale, it includes other licenses and deals).
Company burns about 93MUSD in a quarter (Operation Expense 2023 March) - 372MUSD per year. This proves the company needs more debt and Share issue or Debt Issues even when the drug is fully approved by FDA (We are not here yet). In addition, the important drug MIRASOL is still under Phase 3 (Need money for this, a lot of it).
Dilution of Shares
Previously company dilutes shares at 24% rates yoy (year over year).
With the recent pump, the company added 26MUSD shares @$12.50. Very Common for bio tech to issue below trading value to attract investors.
Debt
As of March, company secured 175MUSD in debt. 75M issued right away, 50M issued later, can be 100M if the expected sale of Elahere is met (Pretty Much). I dont see a problem here.
Maturity - April 2028. With only interest due for 36 months (3 years) @10.25% = Expense of 18MUSD Per year for 3 years.
In the next 12 months the company needs 101MUSD of debt repayment. Cannot borrow or role over more debts, due to the interest rates. This again shows the dilution was absolutely needed.
Coming to Recent price action
May 1st - Earning reported - initial sale of Elahere and revenue.
May 3rd - Company is Marketing Elahere with the initial approval and adding data. The news reported on May 9th is another mirror copy of the same.
Analyst rating
May 3rd - Piper Sandler increased the target to $16. - Makes the first entry price to be $16 for a short. (Note that the company will boost the share price by pumping, with the newly acquired wealth).
UNDERGROUND OPERATION - I.E., Companies spending on marketing, Paying media networks, etc has significatly increased. Evident from the coverage of stocks news. If the company want to sell Elahere, they would be advertising the product. Wont they?
Over all, this is nothing but another dilution from IMGN.
- IMGN will run this campagin through promoters to clear out the 26MUSD shares to flood the market.
- Even with Elahere going strong, they would not have enough money to cover the operation.
Elahere is still needs marketing, and awareness campagin has to start - 25MUSD expense in general.
RISK FACTOR from Company
*We have outstanding indebtedness in the form of a term loan and may incur additional indebtedness in the future, which could adversely affect our financial position and prevent us from implementing our business strategy.
*Significant expected operating expenses to commercialize ELAHERE
*Significant expected operating expenses to conduct research and development activities and to potentially commercialize our portfolio
*Noncancelable in-process and future manufacturing obligations, including commercial supply of ELAHERE
Risk for Traders
1. Company has a ton of money for this quarter, so they could keep boosting the stock price by additional marketing events or campagin. [$24 - could be possible]
2. Realizing a downward target would take 3- 6 months. As the stocks wont erode at rapid pace.
Disclosures
- Investing involve risk, so invest only what you are willing to lose.-
- This & future update is just an analysis, not an advice.-
- I do not hold a short position at the time of publishing, will evaluate and take short position accordingly-
Note
Zacks Equity Research - Stocks marketing propaganda.Note
finance.yahoo.com/news/heres-why-add-immunogen-imgn-150903003.html+++ Only Important Message ++++
ImmunoGen plans to submit a supplemental biologics license application (sBLA) to the FDA in the second half of 2023 , seeking to convert the accelerated approval for Elahere to full approval. The sBLA will be based on positive data from the phase III MIRASOL study, evaluating the safety and efficiency of Elahere.
Note
Note
Monitor tightly this week. There will be an opportunity for a starter position.Note
Got a entry short position. Small position in. The pump is still going. So will slowly average up to build the position.Note
Second Positions - Now close to 50% Commitment. All to be held post earnings. Will deploy hedges utilizing the remainder.Note
Earnings - Hedge to be deployed. watch my previous earning hedges for an idea.Note
This is another page from a text book.Immunogen is helping IMMUNOBIOCHEM. Runing their reputation they built in 3 months.
crunchbase.com/o...ew/overview_timeline
Company webpage - Is this in Canada or China?
immunobiochem.com/pipeline
Biotech CEO - Venture Capitalist?
linkedin.com/in/neschadim/?originalSubdomain=ca
Seems like a company that would raise money through Biotech for their venture capitalistic endeveours. Over All a bad news. Nothing to get excited about.
Note
One of many Risk of Shorting - BUYOUT - Its ok. Take the loss and move on. There is always another.
Uday C Santhakumar
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