ImmunoGen stock nearly doubled on Thursday: what happened?

Shares of ImmunoGen Inc (NASDAQ: IMGN) close to doubled this morning after AbbVie Inc (NYSE: ABBV) said it will buy the cancer therapies company for $10.1 billion.

ImmunoGen stock priced at a massive premium

The all-cash transaction values each share of ImmunoGen at $31.26 – about a 100% premium on their previous close.

AbbVie is attempting to make up for the loss of exclusivity in Humira by “integrating ImmunoGen’s potentially multi-billion-dollar Elahere”, as per Evan Seigerman. He’s an analyst at BMO Capital Markets.

Elahere is an antibody-drug conjugate or ADC that particularly targets cancer cells all the while keeping toxicity at a minimum for other cells. It generated sales worth $212 million in the nine months through September and is expected to be a blockbuster drug by the end of this decade.

ImmunoGen stock has now soared over 500% year-to-date.

Why is AbbVie paying such a huge premium?

Note that Elahere is already approved in the United States for adult patients of ovarian cancer. AbbVie expects the said agreement to complete in the first half of 2024, as per the press release today.

It’s paying such a massive premium for ImmunoGen stock because of “increasing interest from large biopharma companies wanting to increase exposure to ADDCs – an attractive area”, as per Michael Schmidt – a Guggenheim analyst.

Earlier this year, Pfizer also agreed to buy Seagen for a whopping $43 billion to expand its footprint in antibody-drug conjugates (find out more).

ImmunoGen is attractive for AbbVie also because sales of its Imbruvica tanked 20% due to rising competition in its third financial quarter.