IGM stock crashed Tuesday after the biotech company scrapped development of a cancer drug and announced three of its executives — including former CEO Fred Schwarzer — have stepped down.
The company is now pivoting to autoimmune diseases, prioritizing a drug called imvotamab. IGM Biosciences is developing imvotamab as a treatment for rheumatoid arthritis and systemic lupus erythematosus. In the shift, IGM is winding down efforts to develop aplitabart, a potential colon cancer treatment.
RBC Capital Markets analyst Brian Abrahams called the move prudent.
"While aplitabart discontinuation is disappointing, asset was high risk in our view and was not a high investor focus," he said in a report. "Spend reductions should help cash runway."
IGM stock plummeted 12.3%, closing at 14.50. IGM shares have a best-possible Relative Strength Rating, according to IBD Digital. This puts them in the top 1% of all stocks when it comes to 12-month performance.
IGM Stock And The Pivot To Autoimmune Diseases
RBC's Abrahams noted aplitabart had shown some promise in open-label studies — tests in which patients know they're receiving the drug. But the results weren't strong enough in previously treated colon cancer patients.
"We believe that the decision to discontinue the asset and fully pivot into autoimmune disease is prudent," he said. "The workforce reductions, though not specified, and ramp down of the oncology program should help to conserve spend and the company now anticipates the current balance sheet will fund operations into 2027."
He kept his outperform rating on IGM stock, but cut his price target to 17 from 20.
Early data suggests imvotamab and another drug, IGM-2644, "deserve the attention," says Wedbush analyst Robert Driscoll. These are T-cell engagers, or drugs that help stoke the immune system to attack specific targets. In this case, they're focused on B cells, white blood cells that belong to the adaptive immune system and have ties to numerous autoimmune diseases.
"Imvotamab has shown dose-dependent depletion of B cells in the spleen, lymph nodes and bone marrow, indicating potential for deep responses alleviating a range of disease manifestations," he said in a report.
In addition to arthritis and lupus, IGM is planning to study imvotamab in patients with myositis, a condition in which the immune system attacks the muscles. Before the end of the year, IGM Bio is planning to begin an early-stage test of IGM-2644 in patients with generalized myasthenia gravis, another autoimmune condition that causes muscle weakness.
Driscoll maintained his outperform rating on IGM stock, but shifted his price target down by 3 to 22.
C-Suite Changes Highlight Strategic Shift
In addition to the departure of Schwarzer, Chief Scientific Officer Bruce Keyt and Chief Medical Officer Chris Takimoto are also stepping down. Schwarzer and Keyt are expected to consult for the company, while Takimoto is pursuing an opportunity outside IGM Biosciences.
The board appointed Mary Beth Harler as the new CEO. Harler headed up IGM's autoimmunity and inflammation unit.
Harler called the strategic pivot to autoimmune disease a "transformational stage" for IGM Bio.
"We've made great progress in our clinical development of imvotamab in autoimmune indications and we believe the clinical, and ultimately commercial, potential of our pipeline of T cell engaging antibodies in treating autoimmune diseases is significant," she said in a written statement.
But investors were still unsure Tuesday. Shares broke out of a cup base with a buy point at 14.38 on Sept. 16. The move Tuesday put IGM stock in line with that entry, MarketSurge chart analysis shows.
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