California’s IGM Biosciences Inc (NASDAQ: IGMS) saw its share price drop significantly on Friday after revealing that it was discontinuing development of two drugs and laying off 73 per cent of its workforce. This could potentially leave the biotech company with under 55 employees.
Multiple market analysts, including Jefferies Financial Group Inc (NYSE: JEF) and Truist Financial Corp (NYSE: TFC), dropped their share targets immensely after the news broke. Many others have downgraded their ratings.
IGM has halted development of imvotamab, used to treat rheumatoid arthritis and the autoimmune disease “lupus,” and the myasthenia gravis treatment drug IGM-2644. Systemic lupus erythematosus causes the immune system to mistakenly attack healthy tissue. Myasthenia gravis is a rare neuromuscular disorder causing weakness and fatigue.
“Interim data from the Phase 1b studies of imvotamab in rheumatoid arthritis and systemic lupus erythematosus show that the depth and consistency of B cell depletion is insufficient to meet our high bar for success,” chief executive, Mary Beth Harler, said a statement. “Concurrent with discontinuation of the imvotamab program, IGM-2644 is also being terminated due to strategic considerations.”
IGM currently has a US$113-million-dollar valuation. The drug developer has been spending more than it is generating, and had a negative EBITDA of US$224 million over the past year.
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IGM now relying on Sanofi partnership as sole revenue generator
The French pharmaceutical and healthcare company Sanofi SA (NASDAQ: SNY) has been developing oncology, immunology and inflammation drugs with IGM since 2022. The cancer drug targets were discontinued in April last year though.
This partnership yielded approximately US$2 million in revenue for IGM throughout 2024. The collaboration is now the only source of revenue for IGM now that its other drugs have bit the dust. The Bank of Montreal (TSE: BMO) highlighted this in a note on Friday as it downgraded its stock rating.
Information regarding the therapeutics under development through their agreement is not publicly available.
However, IGM is known to have received an upfront sum of US$150 million from the French pharmaceutical operator with the potential to earn up to US$6 billion in milestone payments.
In exchange, Sanofi will benefit from a favourable profit sharing arrangement.
rowan@mugglehead.com
