Investing, particularly in biotech, comes with plenty of risks and uncertainties. These uncertainties are usually results of clinical trials, which are very unpredictable and unfortunately do not end up well in most cases.  Once in a while, a company and its stock price diverge in a way that substantially decreases the risk in a particular company without increasing the stock price. We believe what happened yesterday with Immunogen (IMGN) is a classic case of this phenomenon.

Immunogen, similarly to all its peers in the field of drug development for cancer is a high risk investment, and  will surely have more bad news than good news to tell its investors over  the years, simply because in drug development, successes are substantially outnumbered by failures. Yesterday should have been one of the happiest days for Immunogen’s shareholders, as a great uncertainty that has been hovering over the company was resolved, and turned into a great achievement. Genentech’s (DNA) T-DM1 is by far the most important drug for Immunogen currently, for reasons explained here, here and here. Two days ago, Genentech publically stated that by early 2009, T-DM1 will be in two registration trials for indications with blockbuster potential. Of course, there is no way of knowing the final outcomes of either study, but it is important to realize that Genentech based its decision based on much more than the data that was published  from several T-DM1 trials. Consequently, Genentech statement turned Immunogen into a company with a more attractive risk/reward ratio, simply because the risk component is substantially lower today than prior to the announcement.Regardless of the recent news, Immunogen is expected to have additional good news on several fronts in the coming 6-9 months.