UPDATE: Morgan Stanley Downgrades ImmunoGen Following Phase 2 Failure of IMGN901

In a report published Monday, Morgan Stanley analyst Yigal Nochomovitz downgraded the rating on

from Equal-Weight to Underweight, but named a $9.50 price target. In the report, Morgan Stanley noted, “We are lowering our rating from Equal-weight to Underweight and establishing a $9.50 price target (~$6.5 for Kadcyla, ~$3 cash + NOLs) following the Phase 2 failure of IMGN901 in front-line SCLC...Kadcyla is a great drug but expectations are high and is worth $6 per share in our base case even with ~$6B in peak sales. Proprietary program IMGN853 and earlier assets (IMGN529, IMGN289) have substantial risk and are too early to value. Partner pipeline beyond Kadcyla has yet to produce a winner. ImmunoGen closed on Friday at $13.64.