ImmunoGen, Inc. (IMGN) stock gained for a third day on Tuesday, soaring more than 10%. The rally comes after Leerink analyst Michael Schmidt reiterated his Outperform rating and raised his price target to $11 per share, saying that the divestment of non-core antibody-drug conjugate (ADC) assets should result in a lower cost of capital moving forward. The move could provide the company with a cash runway through the third quarter of 2018.
Under the May 23 agreement with Debiopharm, ImmunoGen will receive $25 million up front and $30 million in milestone payments primarily after Phase III clinical trials begin. The move follows a strategic review of ImmunoGen's portfolio last fall that resulted in the prioritization of the company's mirvetuximab soravtansine -- a potential new treatment for patients with folate receptor alpha-positive cancer -- and ING programs, along with near-term value creation from its IMGN529/DEBIO1562 program. (For more, see: ImmunoGen Posts Narrower-Than-Expected Loss in Q1.)
On a technical level, the stock reached highs made in mid-May near R1 resistance at $5.52, but it failed to break through at close. Traders should watch for a breakout toward the upper end of the price channel at R2 resistance at $6.42 or a potential retracement downward back to its pivot point, 50-day moving average and lower trendline support at around $4.60.
Technical indicators suggest that the stock may be approaching overbought territory with a relative strength index (RSI) reading of 64.34, but the moving average convergence divergence (MACD) experienced a possible bullish crossover. This could translate to a bullish trend reversal and an opportunity for traders, although there could be a period of consolidation below R1 resistance before any move higher given the significant move over the past three sessions. (For additional reading, check out: Invest in Cancer Research With These 3 Stocks.)
Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.