ImmunoGen (IMGN) Burning their Cash for Positive Outcomes

On 24th February ImmunoGen Inc. (IMGN) had a rough trading day as shares tumbled -0.44%, with a loss of -$0.04 per share. The stock closed at $9.13 while it opened on $9.13. Shares of ImmunoGen Inc.  went as as high as $9.42 and as low as $9.06. Comparing with the last year, IMGN traded between a range of $10.89 and $1.96.
Because of the decline of IMGN stock, they have now a market cap of $1.77B.

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Ups and Downs:

So far as the performance of ImmunoGen was not that much impressive for this year. Now for the investors the real questions in their mind is, what is next for the stock?

For an investor, the answer to this question is not an easy task but they can explore the real picture by looking at some factors. The investors need to have an eye on the company’s earnings outlook that not only includes current earnings expectation for the coming quarters but also includes how these assumptions changed lately.

Can ImmunoGen survive:

ImmunoGen had a market capitalisation of US$2.1b and burnt through US$121m last year.IMGN is currently doing a cash burn but the ratio of this cash burn is too low that one can neglect this amount and can hope for some good news in the future. Furthermore, company would be able to raise more cash to fund growth with little dilution or even to borrow some little money.
In addition of this this company is working on the ovarian cancer candidate. Successful development and subsequent approval of the lead ovarian cancer candidate will be a huge boost to the company as the ovarian cancer market has immense potential.

When a business is not making money, it doesn’t mean that the stock won’t go up or it will keep moving down. For example, bio-tech companies often lose money for many years unless they find success with a major breakthrough as we saw in the case of Immunome stock. In addition of this, an investor also can’t ignore the fact that some unprofitable companies burn all of their cash without getting any success and resulted into collapse.

In case of ImmunoGens, they have huge reserves of US$2.1b and they are doing cash burn currently. But the ratio of cash burn is very low so it will take lots of time for company to be in serious trouble.

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