UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-17999

ImmunoGen, Inc.

Massachusetts		04-2726691
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

830 Winter Street, Waltham, MA 02451

(Address of principal executive offices, including zip code)

(781) 895-0600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

	Title of Each Class		Trading Symbol		Name of Each Exchange on Which Registered
	Common Stock, $.01 par value		IMGN		Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ⌧ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12-b2 of the Exchange Act.

Large accelerated filer ⌧	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ⌧ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Shares of common stock, par value $.01 per share: ~~202,619,488~~ 220,713,090shares outstanding as of ~~October 26, 2021.~~July 25, 2022.

Table of Contents

IMMUNOGEN, INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER~~JUNE 30, ~~2021~~2022

TABLE OF CONTENTS



Item		Page Number		Page Number
	Part I		Part I
	Financial Information		Financial Information
1.	Financial Statements (Unaudited)	2	Financial Statements (Unaudited)	2

1a.	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	2	Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	2

1b.	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020	3	Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2022 and 2021	3

1c.	Consolidated Statements of Shareholders’ Equity (Deficit) for the three months ended March 31, June 30, and September 30, 2021 and the three months ended March 31, June 30, September 30, and December 31, 2020	4	Consolidated Statements of Shareholders’ Equity for the three months ended June 30, 2022 and March 31, 2022 and the three months ended March 31, June 30, September 30, and December 31, 2021	4

1d.	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	5	Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	5

1e.	Notes to Consolidated Financial Statements	6	Notes to Consolidated Financial Statements	6

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

3.	Quantitative and Qualitative Disclosures about Market Risk	24	Quantitative and Qualitative Disclosures about Market Risk	23

4.	Controls and Procedures	24	Controls and Procedures	23

	Part II		Part II
	Other Information		Other Information
1A.	Risk Factors	24	Risk Factors	23

6.	Exhibits	25	Exhibits	24

	Signatures	26	Signatures	25

Forward-looking statements

This ~~report~~Form 10-Q includes forward-looking statements. Forward-looking statements ~~within the meaning~~are neither historical facts nor assurances of ~~the Private Securities Litigation Reform Act of 1995. These~~future performance. Instead, these forward-looking statements relate to analyses and other information ~~which~~that are based on beliefs, expectations, assumptions, and forecasts of future results and estimates of amounts that are not yet determinable.

These statements also relate to our prospects, future ~~prospects,~~ developments, product candidates, and business strategies.

These forward-looking statements are identified by their use of terms and phrases, such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” and other similar terms and phrases, including references to assumptions. These statements are contained in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections, as well as the notes to our financial statements andother sections of this report.

~~These~~We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and investors should not place undue reliance on our forward-looking statements. Additionally, these forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from those contemplated by our forward-looking statements. These known and unknown risks, uncertainties, and other factors are described in detail in the “Risk Factors” section and in other sections of this report and our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission (SEC) on February 28, 2022, as supplemented by our Quarterly Report on Form 10-Q for the quarter ended March ~~1, 2021,~~31, 2022, and as updated and/or supplemented in subsequent filings with the SEC. Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Table of Contents

ITEM 1. Financial Statements

IMMUNOGEN, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

In thousands, except per share amounts


	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
ASSETS
Cash and cash equivalents	$	245,761	$	293,856	$	373,874	$	478,750
Accounts receivable		221		35		909		4,467
Unbilled receivables		4,706		11
Unbilled receivable						1,874		2,345
Contract assets		2,500		—		—		3,000
Non-cash royalty receivable		3,369		22,451		3,168		4,115
Prepaid and other current assets		14,330		7,901		14,099		7,322
Total current assets		270,887		324,254		393,924		499,999
Property and equipment, net of accumulated depreciation		4,636		5,760		4,334		4,663
Operating lease right-of-use assets		12,745		14,072		11,361		12,392
Other assets		8,535		10,986		12,676		8,711
Total assets	$	296,803	$	355,072	$	422,295	$	525,765
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	10,520	$	9,538	$	17,245	$	18,434
Accrued compensation		4,718		4,620		4,960		5,469
Other accrued liabilities		34,718		29,320		36,588		23,077
Convertible 4.5% senior notes, net of deferred financing costs of $0 and $7, respectively		—		2,093
Current portion of liability related to the sale of future royalties, net of deferred financing costs of $206 and $319, respectively		4,945		44,357
Current portion of liability related to the sale of future royalties, net of deferred financing costs of $187 and $198, respectively						8,772		6,077
Current portion of operating lease liability		3,358		3,146		3,870		3,537
Current portion of deferred revenue		53,526		29,249		15,636		44,351
Total current liabilities		111,785		122,323		87,071		100,945
Deferred revenue, net of current portion		52,479		80,860		43,611		47,717
Operating lease liability, net of current portion		16,045		18,651		13,254		15,244
Liability related to the sale of future royalties, net of current portion and deferred financing costs of $427 and $584, respectively		37,322		41,082
Liability related to the sale of future royalties, net of current portion and deferred financing costs of $282 and $381, respectively						28,062		34,967
Other long-term liabilities		2,079		2,586		466		1,306
Total liabilities		219,710		265,502		172,464		200,179
Commitments and contingencies (Note I)
Commitments and contingencies (Note H)
Shareholders’ equity:
Preferred stock, $.01 par value; authorized 5,000 shares; 0 shares issued and outstanding as of each of September 30, 2021 and December 31, 2020		—		—
Common stock, $.01 par value; authorized 300,000 shares; issued and outstanding 202,443 and 194,998 shares as of September 30, 2021 and December 31, 2020, respectively		2,024		1,950
Preferred stock, $.01 par value; authorized 5,000 shares; 0 shares issued and outstanding as of each of June 30, 2022 and December 31, 2021						—		—
Common stock, $.01 par value; authorized 600,000 shares; 220,644 and 220,361 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively						2,206		2,204
Additional paid-in capital		1,509,040		1,419,460		1,804,934		1,794,525
Accumulated deficit		(1,433,971)		(1,331,840)		(1,557,309)		(1,471,143)
Total shareholders’ equity		77,093		89,570		249,831		325,586
Total liabilities and shareholders’ equity	$	296,803	$	355,072	$	422,295	$	525,765

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

IMMUNOGEN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

In thousands, except per share amounts



	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Revenues:
License and milestone fees									$	6,973	$	252	$	37,865	$	409
Non-cash royalty revenue related to the sale of future royalties	$	6,533	$	18,087	$	38,768	$	45,159		7,116		16,690		13,544		32,235
License and milestone fees		2,677		97		3,086		1,325
Research and development support		—		5		10		17		73		6		831		10
Total revenues		9,210		18,189		41,864		46,501		14,162		16,948		52,240		32,654
Operating expenses:
Research and development		33,147		24,685		102,149		75,014		51,422		34,589		95,704		69,002
General and administrative		10,297		10,231		30,234		28,862
Restructuring charges		—		—		—		1,524
Selling, general and administrative										23,793		9,728		40,441		19,937
Total operating expenses		43,444		34,916		132,383		105,400		75,215		44,317		136,145		88,939
Loss from operations		(34,234)		(16,727)		(90,519)		(58,899)		(61,053)		(27,369)		(83,905)		(56,285)
Investment income, net		11		11		35		719		590		11		644		24
Non-cash interest expense on liability related to the sale of future royalties and convertible senior notes		(2,751)		(5,645)		(10,952)		(17,428)		(1,078)		(3,557)		(2,327)		(8,201)
Interest expense on convertible senior notes		—		(24)		(47)		(71)		—		(23)		—		(47)
Other (expense) income, net		(365)		11		(648)		(81)		(480)		197		(578)		(283)
Net loss	$	(37,339)	$	(22,374)	$	(102,131)	$	(75,760)	$	(62,021)	$	(30,741)	$	(86,166)	$	(64,792)
Basic and diluted net loss per common share	$	(0.18)	$	(0.13)	$	(0.51)	$	(0.44)	$	(0.24)	$	(0.15)	$	(0.34)	$	(0.32)
Basic and diluted weighted-average common shares outstanding		204,844		174,508		201,212		172,215		253,336		199,890		253,263		199,365
Total comprehensive loss	$	(37,339)	$	(22,374)	$	(102,131)	$	(75,760)	$	(62,021)	$	(30,741)	$	(86,166)	$	(64,792)

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

IMMUNOGEN, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY ~~(DEFICIT)~~

(UNAUDITED)

In thousands


				Additional				Total					Additional				Total
	Common Stock			Paid-In		Accumulated		Shareholders’		Common Stock			Paid-In		Accumulated		Shareholders’
	Shares	Amount		Capital		Deficit		Equity (Deficit)		Shares	Amount		Capital		Deficit		Equity
Balance at December 31, 2019	150,136	$	1,501	$	1,209,846	$	(1,287,468)	$	(76,121)
Net loss	—		—		—		(29,088)		(29,088)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	86		1		239		—		240
Issuance of common stock, net of issuance costs	24,524		245		97,499		—		97,744
Restricted stock units vested	2		—		—		—		—
Restricted stock award forfeitures	(487)		(4)		4		—		—
Stock option and restricted stock compensation expense	—		—		3,122		—		3,122
Balance at March 31, 2020	174,261	$	1,743	$	1,310,710	$	(1,316,556)	$	(4,103)
Net loss	—		—		—		(24,298)		(24,298)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	122		1		424		—		425
Adjustment of issuance costs	—		—		(1)		—		(1)
Restricted stock units vested	157		1		(1)		—		—
Stock option and restricted stock compensation expense	—		—		3,409		—		3,409
Directors’ deferred share unit compensation	—		—		45		—		45
Balance at June 30, 2020	174,540	$	1,745	$	1,314,586	$	(1,340,854)	$	(24,523)
Net loss	—		—		—		(22,374)		(22,374)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	45		1		127		—		128
Stock option and restricted stock compensation expense	—		—		3,729		—		3,729
Directors’ deferred share unit compensation	—		—		149		—		149
Balance at September 30, 2020	174,585	$	1,746	$	1,318,591	$	(1,363,228)	$	(42,891)
Net loss	—		—		—		31,388		31,388
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	205		2		676		—		678
Issuance of common stock, net of issuance costs	19,972		200		96,328		—		96,528
Restricted stock units vested	236		2		(2)		—		—
Stock option and restricted stock compensation expense	—		—		3,718		—		3,718
Directors’ deferred share unit compensation	—		—		149		—		149
Balance at December 31, 2020	194,998	$	1,950	$	1,419,460	$	(1,331,840)	$	89,570	194,998	$	1,950	$	1,419,460	$	(1,331,840)	$	89,570
Net loss	—		—		—		(34,051)		(34,051)							(34,051)		(34,051)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	397		4		1,282		—		1,286	397		4		1,282		—		1,286
Issuance of common stock, net of issuance costs	4,544		45		33,447		—		33,492	4,544		45		33,447		—		33,492
Restricted stock units vested	2		—		—		—		—	2		—		—		—		—
Stock option and restricted stock compensation expense	—		—		3,674		—		3,674	—		—		3,674		—		3,674
Directors’ deferred share unit compensation	—		—		149		—		149	—		—		149		—		149
Balance at March 31, 2021	199,941	$	1,999	$	1,458,012	$	(1,365,891)	$	94,120	199,941	$	1,999	$	1,458,012	$	(1,365,891)	$	94,120
Net loss	—		—		—		(30,741)		(30,741)	—		—		—		(30,741)		(30,741)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	75		1		377		—		378	75		1		377		—		378
Conversion of convertible senior notes	239		3		997		—		1,000	239		3		997		—		1,000
Common stock issuance costs	—		—		(34)				(34)	—		—		(34)				(34)
Stock option and restricted stock compensation expense	—		—		3,598		—		3,598	—		—		3,598		—		3,598
Directors’ deferred share unit compensation	—		—		144		—		144	—		—		144		—		144
Balance at June 30, 2021	200,255	$	2,003	$	1,463,094	$	(1,396,632)	$	68,465	200,255	$	2,003	$	1,463,094	$	(1,396,632)	$	68,465
Net loss							(37,339)		(37,339)	—		—		—		(37,339)		(37,339)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	95		1		367		—		368	95		1		367		—		368
Issuance of common stock, net of issuance costs	2,150		21		12,336		—		12,357	2,150		21		12,336		—		12,357
Issuance of pre-funded warrant, net of issuance costs	—		—		29,765		—		29,765	—		—		29,765		—		29,765
Restricted stock award forfeitures	(57)		(1)		1		—		—	(57)		(1)		1		—		—
Stock option and restricted stock compensation expense	—		—		3,298		—		3,298	—		—		3,298		—		3,298
Directors’ deferred share unit compensation	—		—		179		—		179	—		—		179		—		179
Balance at September 30, 2021	202,443	$	2,024	$	1,509,040	$	(1,433,971)	$	77,093	202,443	$	2,024	$	1,509,040	$	(1,433,971)	$	77,093
Net loss										—		—		—		(37,172)		(37,172)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan										431		4		1,733		—		1,737
Issuance of common stock, net of issuance costs										17,487		176		108,039		—		108,215
Issuance of pre-funded warrant, net of issuance costs										—		—		169,280		—		169,280
Stock option and restricted stock compensation expense										—		—		6,224		—		6,224
Directors’ deferred share unit compensation										—		—		209		—		209
Balance at December 31, 2021										220,361	$	2,204	$	1,794,525	$	(1,471,143)	$	325,586
Net loss										—		—		—		(24,145)		(24,145)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan										173		1		619		—		620
Restricted stock units vested										2		—		—		—		—
Stock option and restricted stock compensation expense										—		—		4,196		—		4,196
Directors’ deferred share unit compensation										—		—		211		—		211
Balance at March 31, 2022										220,536	$	2,205	$	1,799,551	$	(1,495,288)	$	306,468
Net loss										—		—		—		(62,021)		(62,021)
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan										108		1		410		—		411
Stock option and restricted stock compensation expense										—		—		4,760		—		4,760
Directors’ deferred share unit compensation										—		—		213		—		213
Balance at June 30, 2022										220,644	$	2,206	$	1,804,934	$	(1,557,309)	$	249,831

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

IMMUNOGEN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

In thousands




	Nine Months Ended				Six Months Ended
	September 30,				June 30,
	2021		2020		2022		2021

Cash flows from operating activities:
Net loss	$	(102,131)	$	(75,760)	$	(86,166)	$	(64,792)
Adjustments to reconcile net loss to net cash used for operating activities:
Non-cash royalty revenue related to sale of future royalties		(35,035)		(45,159)		(5,590)		(31,721)
Non-cash interest expense on liability related to sale of future royalties and convertible senior notes		10,952		17,428		2,327		8,201
Depreciation and amortization		1,555		1,569		931		1,093
Gain on sale/disposal of fixed assets and impairment charges		—		(691)
Stock and deferred share unit compensation		11,042		10,454		9,380		7,565
Change in operating assets and liabilities:
Accounts receivable		(186)		2,450		3,558		28
Unbilled receivable		(4,695)		996		471		(4,216)
Contract asset		(2,500)		3,631		3,000		—
Prepaid and other current assets		(6,429)		(2,450)		(6,777)		(6,603)
Operating lease right-of-use assets		1,327		1,110		1,031		866
Other assets		2,451		(4,786)		(3,965)		2,100
Accounts payable		1,354		(1,028)		(1,249)		2,482
Accrued compensation		98		(4,651)		(509)		(893)
Other accrued liabilities		5,153		8,829		12,643		(146)
Deferred revenue		(4,104)		3,094		(32,821)		(837)
Operating lease liability		(2,394)		(2,191)		(1,657)		(1,627)
Net cash used for operating activities		(123,542)		(87,155)		(105,393)		(88,500)
Cash flows from investing activities:
Purchases of property and equipment		(1,065)		(815)		(514)		(940)
Proceeds from sale of equipment		—		1,426
Net cash (used for) provided by investing activities		(1,065)		611
Net cash used for investing activities						(514)		(940)
Cash flows from financing activities:
Payments upon settlement of convertible senior notes		(1,100)		—
Proceeds from issuance of common stock under stock plans		2,032		793		1,031		1,664
Proceeds from warrant issuance, net of $181 of transaction costs		29,765		—
Proceeds from common stock issuance, net of $143 and $230 of transaction costs, respectively		45,815		97,743
Proceeds from common stock issuance, net of $106 of transaction costs						—		33,458
Net cash provided by financing activities		76,512		98,536		1,031		35,122
Net change in cash and cash equivalents		(48,095)		11,992		(104,876)		(54,318)
Cash and cash equivalents, beginning of period		293,856		176,225		478,750		293,856
Cash and cash equivalents, end of period	$	245,761	$	188,217	$	373,874	$	239,538

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

IMMUNOGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2021~~2022

A.	Nature of Business and Plan of Operations

ImmunoGen, Inc. (the Company) was incorporated in Massachusetts in 1981 and is focused on the development and commercialization of antibody-drug conjugates (ADCs). for the treatment of cancer. The Company has generally incurred operating losses and negative cash flows from operations since inception, incurred a net loss of ~~$102.1~~$86.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, and has an accumulated deficit of approximately ~~$1.4~~$1.6 billion as of ~~September~~June 30, ~~2021.~~2022. The Company has primarily funded these losses through payments received from its collaborations and equity, convertible debt, and other financings. To date, the Company has had 0 ~~product revenue~~revenues from commercial sales of its own products and management expects to continue to incur substantial operating losses for at least the near term as the Company incurs significant operating expenses related to research and development and potential commercialization of its ~~portfolio over the next several years.~~portfolio.

As of ~~September~~June 30, ~~2021,~~2022, the Company had ~~$245.8~~$373.9 million of cash and cash equivalents on hand. The Company anticipates that its current capital resources will enable it to meet its operational expenses and capital expenditures for more than twelve months after the date these financial statements were issued. The Company ~~may~~expects to raise additional funds through equity, debt, or other financings, or generate revenues from ~~collaborators~~product sales as well as revenues from collaborations through a combination of upfront license payments, milestone payments, royalty payments, and research ~~funding.~~funding to support its planned operating activities. There can be no assurance, however, that the Company will be able to obtain additional equity, debt, or other financing or generate revenues from ~~collaborators~~product sales or from collaborations on terms acceptable to the Company or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial condition and require the Company to defer or limit some or all of its research, development, and/or clinical projects.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, the development by its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, manufacturing and marketing limitations, complexities associated with managing collaboration arrangements, third-party reimbursements, and compliance with governmental regulations.

B.	Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. The consolidated financial statements include all of the adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of the Company’s financial position in accordance with accounting principles generally accepted in the U.S. for interim financial information. The December 31, ~~2020~~2021 consolidated balance sheet presented for comparative purposes was derived from the Company’s audited financial statements, and certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. The preparation of interim financial statements requires the use of management’s estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenditures during the reported periods. The results of the interim periods are not necessarily indicative of the results for the entire year. Accordingly, the interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC on ~~March 1, 2021.~~February 28, 2022.

Significant Accounting Policies

~~Common Stock Warrants~~The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2022 are consistent with those discussed in Note B to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, ~~Distinguishing Liabilities from Equity~~ ~~(“ASC 480”) and ASC 815,~~ ~~Derivatives and Hedging~~ (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC

Table of Contents

815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance and remeasured each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash gain or loss in the accompanying consolidated statements of operations and comprehensive loss.

Other than the accounting for warrants noted above, the significant accounting policies used in preparation of these condensed consolidated financial statements for the three and nine months ended September 30, 2021 are consistent with those discussed in Note B to the consolidated financial statements included in the Company’s 2020 Annual Report on Form 10-K, except as described under ~~Recently Adopted Accounting Pronouncements~~ ~~below.~~

Revenue Recognition

Transaction Price Allocated to Future Performance Obligations

Deferred revenue under ~~ASC 606,~~Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), Revenue from Contracts with Customers(ASC 606), represents the portion of the transaction price received under various contracts ~~for which the associated~~attributed to performance ~~obligation has~~obligations that have not been satisfied (or ~~has~~have been partially satisfied) and includes unexercised contract options that are considered material rights. As of ~~September~~June 30, ~~2021,~~2022, the aggregate amount of the transaction price allocated to remaining performance obligations comprising deferred revenue was ~~$106.0~~$59.2 million. The Company expects to recognize revenue on approximately ~~50%~~26%, ~~38%~~62%, and 12% of the remaining performance obligations over the next 12 months, 13 to 60 months, and 61 to 120 months, respectively; however, ~~it does not control when~~the timing of recognition may vary due to such factors as the amount and timing of future sales of KADCYLA, the timing of exercise of contract options considered to be material rights, or ~~if any collaborator will terminate~~termination of existing development and commercialization licenses.

Contract Balances from Contracts with Customers

The following tables present changes in the Company’s contract assets and contract liabilities during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


	Balance at								Balance at		Balance at								Balance at
Nine months ended September 30, 2021	December 31, 2020		Additions		Deductions		Impact of Netting		September 30, 2021
											December 31, 2021		Additions		Deductions		Impact of Netting		June 30, 2022
Contract asset	$	—	$	2,500	$	—	$	—	$	2,500	$	3,000	$	—	$	(3,000)	$	—	$	—
Contract liabilities (deferred revenue)	$	110,109	$	25	$	(4,129)	$	—	$	106,005	$	92,068	$	3,803	$	(36,624)	$	—	$	59,247



	Balance at								Balance at		Balance at								Balance at
Nine months ended September 30, 2020	December 31, 2019		Additions		Deductions		Impact of Netting		September 30, 2020
											December 31, 2020		Additions		Deductions		Impact of Netting		June 30, 2021
Contract asset	$	3,631	$	0	$	(8,000)	$	4,369	$	—	$	—	$	0	$	—	$	—	$	—
Contract liabilities (deferred revenue)	$	127,432	$	50	$	(1,325)	$	4,369	$	130,526	$	110,109	$	—	$	(837)	$	—	$	109,272

~~Table of Contents~~

The Company recognized the following revenues as a result of changes in contract asset and contract liability balances in the respective periods (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Revenue recognized in the period from:
Amounts included in contract liabilities at the beginning of the period	$	3,292	$	72	$	4,129	$	1,300	$	10,864	$	765	$	36,624	$	837

Pursuant to the Company’s license agreement with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. (Huadong), upon delivery of clinical materials in the six months ended June 30, 2022, the Company recognized as license and milestone fee revenue the remaining $28.5 million of the deferred revenue balance as of December 31, 2021 related to the $45.0 million of upfront and development milestone payments previously received. Additionally, pursuant to a license agreement executed with Eli Lilly and Company (Lilly), during the six months ended June 30, 2022, the Company received an upfront payment of $13.0 million, of which $9.2 million was recognized as license and milestone fee revenue and the remainder deferred, further details of which can be found in Note C, “Agreements.” The Company also recognized $8.0 million of previously deferred non-cash royalty revenue related to the sale of rights to KADCYLA^®royalties, further details of which can be found in Note E, “Liability Related to Sale of Future Royalties,” and recognized $0.2 million of license and milestone fee revenue related to numerous collaborators’ rights to technological improvements that had been previously deferred.

During the ~~nine~~six months ended ~~September~~June 30, 2021, the Company recorded a contract asset of $2.5 million for a probable development milestone pursuant to its license agreement with Viridian Therapeutics, Inc. (Viridian), which was subsequently achieved in October 2021. The Company also recordedrecognized $0.2 million as license and milestone fee revenue for delivery of certain materials to Viridian Therapeutics that had been previously deferred and ~~$0.2~~recognized $0.1 million of license and milestone fee revenue related to numerous collaborators’ rights to technological improvements that had been previously deferred. Additionally, the Company recorded ~~$3.7~~$0.5 million of previously deferred non-cash royalty

Table of Contents

revenue related to the sale of rights to ~~Kadcyla royalties, further details of which can be found in Note~~ ~~E, “Liability Related to Sale of Future Royalties.”~~

During the nine months ended September 30, 2020, the Company recorded $0.2 million as license and milestone fee revenue for delivery of certain materials to CytomX that had been previously deferred, and $1.1 million of license and milestone fee revenue related to numerous collaborators’ rights to technological improvements that had been previously deferred, which included $0.9 million related to the termination of a license agreement with Takeda. Additionally, a contract asset of $3.6 million, net of $4.4 million of related contract liabilities, was recorded for two probable milestones in 2019 pursuant to license agreements with CytomX and Novartis, which were subsequently achieved and paid during the nine months ended September 30, 2020.

KADCYLA royalties. The timing of revenue recognition, billings, and cash collections results in billed receivables, unbilled receivables, contract assets, and contract liabilities on the consolidated balance sheets. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded (under the caption deferred revenue). Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Financial Instruments and Concentration of Credit Risk

Cash and cash equivalents are primarily maintained with 3 financial institutions in the U.S. Deposits with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. The Company’s cash equivalents consist of money market funds with underlying investments primarily being U.S. Government-issued securities and high quality, short-term commercial paper. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and marketable securities. The Company held 0 marketable securities as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The Company’s investment policy, approved by the Board of Directors, limits the amount it may invest in any one type of investment, thereby reducing credit risk concentrations.

Cash and Cash Equivalents

The Company considers all highly liquid financial instruments with maturities of three months or less when purchased to be cash equivalents. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company held ~~$245.8~~$373.9 million and ~~$293.9~~$478.8 million, respectively, in cash and money market funds, which were classified as cash and cash equivalents.

Non-cash Investing and Financing Activities

During the nine months ended September 30, 2021, $1.0 million of outstanding convertible 4.5% senior notes were converted into 238,777 shares of the Company’s common stock. There was 0 similar activity during the nine months ended September 30, 2020.

~~Table of Contents~~

The Company had ~~$0.1~~$0.3 million and ~~$0.7~~$0.2 million of accrued capital expenditures as of ~~September~~June 30, ~~2021 or~~2022 and December 31, ~~2020,~~2021, respectively, which have been treated as a non-cash investing activity and, accordingly, are not reflected in the consolidated statement of cash flows.

Fair Value of Financial Instruments

Fair value is defined under ASC 820, Fair Value Measurements and Disclosures, as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a hierarchy to measure fair value, which is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

●

Level 1 - Quoted prices in active markets for identical assets or liabilities.

●

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

●

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company held certain assets that are required to be measured at fair value on a recurring basis. The fair value of the Company’s cash equivalents is based on quoted prices from active markets (Level 1 inputs). The carrying amounts reflected in the consolidated balance sheets for accounts receivable, unbilled receivables, prepaid and other current assets, accounts payable, accrued compensation, and other accrued liabilities approximate fair value due to their short-term nature. ~~The~~

As of June 30, 2021, the Company had outstanding convertible 4.5% senior notes (convertible notes) with a gross carrying amount and estimated fair value of ~~the convertible 4.5% senior notes was $2.1~~$1.1 million and ~~$4.3~~$2.3 million, ~~respectively, as of December 31, 2020.~~respectively. The fair value of the convertible notes was influenced by interest rates, the Company’s stock price and stock price volatility, and by prices observed in trading activity for the convertible notes. ~~However, because~~Because there were 0 trades involving the convertible notes since September 2019, however, the fair value as of ~~December 31, 2020~~June 30, 2021 used Level 3 inputs. ~~During the nine months ended September 30,~~In June 2021, ~~$1.0~~$1.0 million of outstanding convertible 4.5% senior notes converted into 238,777 shares of the Company’s common stock, par value $0.01 per share

Table of Contents

(common stock), with the remaining $1.1 million of convertible 4.5% senior notes paid in cash upon maturity on July 1, 2021.

Common Stock Warrants

The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance included in ASC 480, Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Computation of Net Loss per Common Share

Basic and diluted net loss per share is calculated based upon the ~~weighted-average~~weighted average number of shares of common stock outstanding during the period. Shares of the Company’s common stock underlying pre-funded warrants are included in the calculation of basic and diluted earnings per share. During periods of income, participating securities are allocated a proportional share of income determined by dividing total weighted-average participating securities by the sum of the total ~~weighted-average~~weighted average common shares ~~of common stock~~ and participating securities (the two-class method). Shares of the Company’s restricted stock participate in any dividends that may be declared by the Company and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, no loss is allocated to participating securities since they have no contractual obligation to share in the losses of the Company. Diluted loss per share is computed after giving consideration to the dilutive effect of stock options, convertible notes, and restricted stock that are outstanding during the period, except where such non-participating securities would be anti-dilutive.

~~Table of Contents~~

The Company’s common stock equivalents, as calculated in accordance with the treasury-stock method for options and unvested restricted stock, and the if-converted method for the convertible notes, are shown in the following table (in thousands):


	Three Months Ended		Nine Months Ended		Three Months Ended		Six Months Ended
	September 30,		September 30,		June 30,		June 30,
	2021	2020	2021	2020	2022	2021	2022	2021
Options outstanding to purchase common stock, shares issuable under the employee stock purchase plan, and unvested restricted stock/units at end of period	20,862	19,181	20,862	19,181	29,528	21,681	29,528	21,681
Common stock equivalents under treasury stock method for options, shares issuable under the employee stock purchase plan, and unvested restricted stock/units	2,116	929	2,743	1,112	958	2,772	1,306	3,138
Common stock equivalents under if-converted method for convertible notes	-	501	-	501

The Company’s common stock equivalents have not been included in the net loss per share calculation because their effect is anti-dilutive due to the Company’s net loss position.

Stock-Based Compensation

As of June 30, ~~2021,~~2022, the Company was authorized to grant future awards under 3 employee share-based compensation plans, which are the ImmunoGen, Inc. Amended and Restated 2018 Employee, Director and Consultant Equity Incentive Plan (the 2018 Plan), the Employee Stock Purchase Plan (the ESPP), and the ImmunoGen Inducement

Table of Contents

Equity Incentive Plan (the Inducement Plan). At the annual meeting of shareholders on June ~~16, 2021,~~15, 2022, the 2018 Plan was amended to provide for the issuance of stock grants, the grant of options, and the grant of stock-based awards for up to an additional ~~6,600,000~~13,000,000 shares of the Company’s common stock, as well as up to ~~22,392,986~~28,742,013 shares of common stock, which represent the number of shares of common stock remaining under the 2018 Plan as of ~~March 31, 2021,~~April 1, 2022, and awards previously granted under the 2018 Plan and the Company’s former stock-based plans, including the ImmunoGen, Inc. 2016 and 2006 Employee, Director and Consultant Equity Incentive Plans, that forfeit, expire, or cancel without delivery of shares of common stock or which resulted in the forfeiture of shares of common stock back to the Company subsequent to ~~March 31, 2021.~~April 1, 2022. The Inducement Plan was approved by the Board of Directors in December 2019, and pursuant to subsequent amendments, provides for the issuance of non-qualified option grants for up to ~~3,500,000~~10,500,000 shares of the Company’s common stock. Options awarded under the 2 plans are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Options vest at various periods of up to four years and may be exercised within ten years of the date of grant under each of these plans.

The stock-based awards are accounted for under ASC 718, Compensation—Stock Compensation (“ASC ~~718”)~~718). Pursuant to ASC 718, the estimated grant date fair value of awards is charged to the statement of operations over the requisite service period, which is the vesting period. The fair value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model with the weighted-average assumptions noted in the following table. As the Company has not paid dividends since inception, nor does it expect to pay any dividends for the foreseeable future, the expected dividend yield assumption is 0. Expected volatility is based exclusively on historical volatility of the Company’s stock. The expected term of stock options granted is based exclusively on historical data and represents the period of time that stock options granted are expected to be outstanding. The expected term is calculated for and applied to one group of stock options as the Company does not expect substantially different exercise or post-vesting termination behavior among its option recipients. The risk-free rate of the stock options is based on the U.S. Treasury rate in effect at the time of grant for the expected term of the stock options.


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020	2022	2021	2022	2021
Dividend	NaN	NaN	NaN	NaN	NaN	NaN	NaN	NaN
Volatility	82.7%	88.3%	85.2%	85.0%	83.4%	84.7%	83.1%	85.3%
Risk-free interest rate	0.95%	0.36%	0.68%	1.23%	3.00%	1.01%	2.180%	0.67%
Expected life (years)	6.0	6.0	6.0	6.0	6.0	6.0	6.0	6.0

Using the Black-Scholes option-pricing model, the weighted-average grant date fair values of options granted during the three months ended June 30, 2022 and 2021 were $3.12 and $4.92 per share, respectively, and $3.57 and $5.40 for options granted during the six months ended June 30, 2022 and 2021, respectively.

A summary of option activity under the Company’s equity plans for the six months ended June 30, 2022 is presented below (in thousands, except weighted-average data):


		Weighted-
	Number	Average
	of Stock	Exercise
	Options	Price
Outstanding at December 31, 2021	21,219	$	6.28
Granted	8,670		5.03
Exercised	(173)		3.59
Forfeited/Canceled	(263)		6.72
Outstanding at June 30, 2022	29,453	$	5.92

In 2020, the Company issued 2.6 million performance-based stock options to certain employees that will vest upon the achievement of specified performance goals. Upon assessment of the performance-based stock option awards as of December 31, 2021, the Company determined the first performance goal to be probable of vesting and, as such, recorded $2.6 million of stock-based compensation expense for the year ended December 31, 2021. In May 2022, the first performance goal was achieved, resulting in the vesting of 25% of the 2.6 million performance-based stock options. The fair value of the remaining unvested performance-based stock options that could be expensed in future periods is $7.8 million.

Table of Contents

Using the Black-Scholes option-pricing model, the weighted-average grant date fair values of options granted during the three months ended September 30, 2021 and 2020 were $3.99 and $4.56 per share, respectively, and $5.34 and $4.57 for options granted during the nine months ended September 30, 2021 and 2020, respectively.

A summary of ~~option activity under the Company’s equity plans for the nine months ended September 30, 2021 is presented below (in thousands, except weighted-average data):~~

Weighted-


Number

Average

of Stock

Exercise

Options

Price

Outstanding at December 31, 2020

18,398

$
6.10

Granted

4,380

7.53

Exercised

(503)

3.34

Forfeited/Canceled

(1,415)

8.06

Outstanding at September 30, 2021

20,860

6.34

In 2020, the Company issued 2.6 million performance-based stock options to certain employees, all of which remain outstanding as of September 30, 2021, that will vest upon the achievement of specified performance goals. As of September 30, 2021, the Company determined it was not probable that any of these performance goals will be achieved and, therefore, 0 expense had been recorded to date. In October 2021, upon approval by the Compensation Committee of the Company’s Board of Directors, certain terms of the performance-based stock option award agreements were modified. Pursuant to ASC 718, the Company determined the modification to be a Type IV (improbable-to-improbable) modification, revalued the modified awards as of the modification date, and determined the modified performance goals were not probable of being achieved. The modified fair value of the performance-based stock options that could be expensed in future periods is $10.5 million.

~~A summary of restricted stock and~~ restricted stock unit activity under the Company’s equity plans for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 is presented below (in thousands, except weighted-average data):


	Number of	Weighted-		Number of	Weighted-
	Restricted	Average Grant		Restricted	Average Grant
	Stock Shares	Date Fair Value		Stock Shares	Date Fair Value
Unvested at December 31, 2020	61	$	2.47
Unvested at December 31, 2021				77	$	5.59
Granted				-		-
Vested	(2)		2.53	(2)		2.53
Forfeited	(57)		2.47
Unvested at September 30, 2021	2	$	2.53
Unvested at June 30, 2022				75	$	5.68

In June 2018, the Company's Board of Directors, with shareholder approval, adopted the ~~ESPP.~~Employee Stock Purchase Plan (ESPP). Following the automatic share increase on January 1, 2021, pursuant to the ESPP’s “evergreen” provision, an aggregate of 2,000,000 shares of common stock have been reserved for issuance under the ESPP. ~~On June 30, 2021~~ESPP purchase periods are six months and ~~2020, approximately 64,000,~~begin on January 1 and ~~78,000 shares, respectively, were issued to participating employees at a fair value~~July 1 of ~~$2.14 and $1.86 per share, respectively.~~each year, with purchase dates occurring on the final business day of the given purchase period. The fair value of each ESPP award is estimated on the first day of the offering period using the Black-Scholes option-pricing model. The Company recognizes share-based compensation expense equal to the fair value of the ESPP awards on a straight-line basis over the offering period.

Stock compensation expense related to stock options and restricted stock unit awards granted under the stock plans and the ESPP was ~~$3.3~~$4.8 million and ~~$10.6~~$9.0 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, compared to stock compensation expense of ~~$3.7~~$3.6 million and ~~$10.3~~$7.3 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. As of ~~September~~June 30, ~~2021,~~2022, the estimated fair value of unvested employee awards, exclusive of performance awards, was ~~$28.3~~$50.1 million. The weighted-average remaining vesting period for these awards is approximately three years.

Segment Information

During all periods presented, the Company continued to operate in 1 reportable business segment under the management approach of ASC 280, Segment Reporting, which is the business of the discovery and development of ADCs for the treatment of cancer.

~~Table of Contents~~

During the three ~~and nine~~ months ended ~~September~~June 30, ~~2021, 71%~~2022, Roche and ~~93%~~Huadong each represented 50% of revenue, compared to 99% of revenue from Roche during the three months ended June 30, 2021. During the six months ended June 30, 2022, 56%, ~~respectively,~~26%, and 17% of revenues were from Huadong, Roche, ~~consisting primarily of non-cash royalty revenue,~~and Lilly, respectively, compared to 99% ~~and 97%~~ of revenue from Roche in the ~~three and nine~~six months ended ~~September~~June 30, ~~2020, respectively. During the three months ended September 30, 2021, 28%~~2021. Revenue from Roche in all periods consisted of ~~revenues were from Viridian.~~non-cash royalty revenue. There were 0 other customers of the Company that generated significant revenues in the three ~~or nine~~and six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

Recently Adopted Accounting Pronouncements

~~In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~, which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted the standard on January 1, 2021, and it did not have a material effect on the Company’s consolidated financial statements.

~~No other~~There were no recently issued or effective ~~ASUs~~FASB Accounting Standards Updates (ASUs) that had, or are expected to have, a material effect on the Company's results of operations, financial condition, or liquidity.

C.Agreements

Significant Collaborative Agreements

Lilly

In February 2022, the Company entered into a license agreement with Eli Lilly and Company (Lilly), pursuant to which the Company granted Lilly worldwide exclusive rights to research, develop, and commercialize antibody-drug conjugates based on the Company’s novel camptothecin technology. Under the terms of the license agreement, the Company received a non-refundable upfront payment of $13.0 million, reflecting initial targets selected by Lilly. Lilly may select a pre-specified number of additional targets, with the Company eligible to receive an additional $32.5 million in exercise fees if Lilly licenses the full number of additional targets over the four year period following the effective date of the license agreement, with the potential for up to $1.7 billion in development and sales-based milestone payments if all targets are selected and all milestones are realized. In addition, the Company is entitled to receive tiered royalties, on a product-by-product basis, as a percentage of worldwide annual net sales by Lilly, based on certain net sales thresholds.

Table of Contents

Lilly is responsible for all costs associated with the research, development, and commercialization of any ensuing products.

The Company evaluated the agreement and determined it was within the scope of ASC 606. The Company determined the promised goods and services included an exclusive license to use the Company’s intellectual property and know-how to research, develop, and commercialize products related to each of the initial targets selected by Lilly. Each of these licenses is distinct, as Lilly can derive benefit from each license independent of any other initial target licenses. Accordingly, the license to each of the initial targets selected by Lilly represents a separate performance obligation. Lilly has the right to replace each of the initial licensed targets once during a specified term for no additional consideration. If Lilly fails to advance an initial or replacement target to a specified stage within a specified period from the date the target was selected, Lilly’s rights to the respective target will cease and will revert back to the Company. The Company determined Lilly’s right to a replacement target for each of the initial targets represented a material right. Each material right is therefore a separate performance obligation.

Lilly’s right to select additional targets does not represent a material right as the target fee for each additional target is the same and is also consistent with the target fee for each of the initial targets selected by Lilly. Accordingly, each additional target selected by Lilly, if any, will be accounted for as a separate arrangement.

The transaction price was determined to consist of the upfront payment of $13.0 million. Future development milestones have been fully constrained. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license granted to Lilly. The transaction price of $13.0 million was allocated to the performance obligations based on their relative stand-alone selling prices. In consideration of each target being at the same stage of development at the time of the initial license or at the time of replacement and each target having approximately the same earnings potential, the Company allocated the $13.0 million transaction price equally across the initial target licenses and the corresponding material rights to obtain licenses to replacement targets, adjusted based on the probability that Lilly would exercise those rights. The Company considered pharmaceutical industry data of the probability of early-stage assets to advance to clinical stage in determining the probability that Lilly would exercise its option to a replacement target. Accordingly, $9.2 million and $3.8 million of the total transaction price was allocated to the initial targets and the material rights to obtain licenses to replacement targets, respectively. The Company re-evaluates the transaction price, including its estimated variable consideration included in the transaction price and all constrained amounts, at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Upon completion of the transfer of intellectual property and know-how to Lilly during the six months ended June 30, 2022, the Company recognized $9.2 million of license and milestone fee revenue related to the portion of the transaction price allocated to the initial target licenses. The $3.8 million allocated to the material rights to obtain licenses to replacement targets is included in long-term deferred revenue as of June 30, 2022 and will be recognized when the right is either exercised or expires.

Roche

In ~~May~~ 2000, the Company granted Genentech, now a ~~member~~unit of ~~the~~ Roche, ~~Group,~~ an exclusive development and commercialization license to use the Company’s maytansinoid ADC technology. Pursuant to this agreement, Roche developed and received marketing approval for its HER2-targeting ADC, ~~Kadcyla,~~KADCYLA, in the U.S., Japan, the European Union, and numerous other countries. In accordance with the Company’s revenue recognition policy, ~~$38.8~~$13.5 million and ~~$45.2~~$32.2 million of non-cash royalties on net sales of ~~Kadcyla~~KADCYLA were ~~recorded~~recognized and included in non-cash royalty revenue for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020,~~ respectively. Kadcyla sales occurring after January 1, 2015 were covered by a royalty purchase agreement whereby the associated cash, except for a residual tail, was initially remitted to Immunity Royalty Holdings, L.P. (IRH). In January 2019, theThe Company sold its ~~residual tail~~rights to receive royalty payments on the net sales of KADCYLA through two separate transactions in 2015 and 2019. Following the 2019 transaction, OMERS, the defined benefit pension plan for municipal employees in the Province of Ontario, Canada, ~~for~~is entitled to receive all of these royalties.

Huadong

In October 2020, the Company entered into a ~~net~~collaboration and license agreement with Huadong. The collaboration and license agreement grants Huadong an exclusive, royalty-bearing, and sublicensable right to develop and commercialize mirvetuximab soravtansine (the Licensed Product) in the People’s Republic of China, Hong Kong, Macau, and Taiwan (collectively, Greater China). The Company retains exclusive rights to the Licensed Product outside of Greater China. Under the terms of the collaboration and license agreement, the Company received a non-refundable

Table of Contents

upfront payment of ~~$65.2~~$40.0 million ~~as discussed further~~with the potential for approximately $265.0 million in ~~Note E. Simultaneously, OMERS purchased IRH’s right~~development, regulatory, and sales-based milestone payments. In December 2021, the Company received a $5.0 million payment upon achievement of a development milestone.

The Company determined that revenue related to the ~~royalties~~agreement would be recognized as the clinical supply of the Licensed Product is delivered to Huadong, estimated to be completed over approximately two years. Accordingly, based on clinical supply delivered to Huadong during the six months ended June 30, 2022, the Company ~~previously sold as described above, therefore obtaining~~recorded the ~~rights to 100%~~remaining $28.5 million of the ~~royalties on~~deferred revenue balance as of December 31, 2021 related to the ~~commercial sales~~$45.0 million of ~~Kadcyla received from that date on.~~upfront and development milestone payments previously received.

Viridian

In October 2020, the Company entered into a license agreement with Viridian Therapeutics, Inc. pursuant to which the Company granted Viridian the exclusive right to develop and commercialize an insulin-like growth factor-1 receptor (IGF-1R) antibody for all non-oncology indications that do not use radiopharmaceuticals in exchange for an upfront payment, with the potential to receive up to a total of $143.0 million in development, regulatory, and sales-based milestone payments plus royalties on the commercial sales of any resulting product. ~~The total milestones are categorized as follows: development and regulatory milestones—$48.0 million; and sales milestones—$95.0 million. During~~In the ~~quarter~~three months ended ~~September 30,~~December 31, 2021, a $3.0 million development milestone became probable of being achieved, which ~~resulted in $2.5 million that~~ was allocated to the previously delivered license ~~being recorded~~and recognized as revenue ~~and included in~~as a component of license and milestone fees for the three ~~and nine~~ months ended ~~September 30,~~December 31, 2021. The development milestone was subsequently achieved in ~~October 2021.~~April 2022.

For additional information related to ~~this agreement,~~these agreements, as well as the Company’s other significant collaborative agreements, please read Note C, “Agreements - Significant Collaborative Agreements,” to the audited financial statements included within the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC on ~~March 1, 2021.~~February 28, 2022.

D.~~Convertible~~ ~~4.5%~~ ~~Senior Notes~~

In 2016, the Company issued convertible notes with an aggregate principal amount of $100.0 million, of which $2.1 million remained outstanding as of December 31, 2020. In June 2021, $1.0 million of outstanding convertible notes were converted into 238,777 shares of the Company’s common stock and the remaining $1.1 million outstanding was repaid in full by a cash payment upon maturity on July 1, 2021. The convertible notes were senior unsecured obligations with an interest rate of 4.5% per year, paid semi-annually in arrears on January 1 and July 1 of each year, commencing on January 1, 2017. The Company recorded $47,000 and $71,000 of interest expense for the nine months ended September

~~Table of Contents~~

30, 2021 and 2020, respectively. The Company analyzed the terms of the convertible notes and determined that under current accounting guidance the notes were entirely accounted for as debt, and none of the terms of the notes required separate accounting.

E.D.

Liability Related to Sale of Future Royalties

In 2015, ~~IRH~~Immunity Royalty Holdings, L.P. (IRH) purchased the right to receive 100% of the royalty payments on commercial sales of ~~Kadcyla subsequent to December 31, 2014~~KADCYLA arising under the Company’s development and commercialization license with Genentech, until IRH had received aggregate royalties equal to $235.0 million or $260.0 million, depending on when the aggregate royalties received by IRH reach a specified milestone. Once the applicable threshold was met, the Company would thereafter have received 85% and IRH would have received 15% of the ~~Kadcyla~~KADCYLA royalties for the remaining royalty term. At the consummation of the transaction, the Company received cash proceeds of $200 million. As part of this sale, the Company incurred $5.9 million of transaction costs, which are presented net of the liability in the accompanying consolidated balance sheet and are being amortized to interest expense over the estimated life of the royalty purchase agreement. Although the Company sold its rights to receive royalties from the sales of ~~Kadcyla,~~KADCYLA, as a result of its then ongoing involvement in the cash flows related to these royalties, the Company continues to account for these royalties as revenue and recorded the $200.0 million in proceeds from this transaction as a liability related to sale of future royalties (Royalty Obligation) that is being amortized using the interest method over the estimated life of the royalty purchase agreement.

In January 2019, the Company sold its residual rights to receive royalty payments on commercial sales of ~~Kadcyla~~KADCYLA to OMERS ~~the defined benefit pension plan for municipal employees in the Province of Ontario, Canada,~~ for a payment of $65.2 million (amount is net of $1.5 million in broker fees). Simultaneously, OMERS purchased IRH’s right to the royalties the Company previously sold to IRH as described above, therefore obtaining the rights to 100% of the royalties received from that date on. Because the Company will not be involved with the cash flows related to the residual royalties, the $65.2 million of net proceeds received from the sale of its residual rights to receive royalty payments was recorded as deferred revenue and will be amortized as the royalty revenue related to the residual rights is earned using the units of revenue approach. During the second quarter of 2021, the aggregate royalty threshold was met and, in accordance with the Company’s revenue recognition policy, ~~$3.7~~$8.0 million and $0.5 million of revenue related to the residual rights was ~~recorded~~recognized and is included in non-cash royalty revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022 and 2021, respectively. Additionally, the purchase of IRH’s interest by OMERS did not result in an extinguishment or modification of the original instrument and, accordingly, the Company continues to account for the remaining obligation as a liability as outlined above.

Table of Contents

The following table shows the activity within the liability account during the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2021~~2022 (in thousands):



	Nine Months Ended		Six Months Ended
	September 30, 2021		June 30, 2022
Liability related to sale of future royalties, net — beginning balance	$	85,439	$	41,044
Proceeds from sale of future royalties, net		—		—
Kadcyla royalty payments received and paid		(54,117)
KADCYLA royalty payments received and paid				(6,537)
Non-cash interest expense recognized		10,945		2,327
Liability related to sale of future royalties, net — ending balance	$	42,267	$	36,834

The Company receives royalty reports and royalty payments related to sales of ~~Kadcyla~~KADCYLA from Roche one quarter in arrears. As royalties are remitted to OMERS, the balance of the Royalty Obligation will be effectively repaid over the life of the agreement. In order to determine the amortization of the Royalty Obligation, the Company is required to estimate the total amount of future royalty payments to be received and remitted as noted above over the life of the agreement. The sum of these amounts less the $200 million proceeds the Company received from IRH will be recorded as interest expense over the life of the Royalty Obligation. Since inception, the Company’s estimate of this total interest expense has resulted in an imputed annual interest rate of 10.5%, and a current imputed interest rate of ~~19.1%~~10.6% as of ~~September~~June 30, ~~2021.~~2022. The Company periodically assesses the estimated royalty payments to IRH/OMERS, and to the extent such payments are greater or less than its initial estimates, or the timing of such payments is materially different than its original estimates, the Company will prospectively adjust the amortization of the Royalty Obligation. There are a number of factors that could materially affect the amount and timing of royalty payments from Genentech, most of which are not within the Company’s control. Such factors include, but are not limited to, changing standards of care, the introduction of competing products, manufacturing or other delays, biosimilar competition, patent protection, adverse

~~Table of Contents~~

events that result in governmental health authority imposed restrictions on the use of the drug products, significant changes in foreign exchange rates as the royalties are paid in U.S. dollars (USD) while significant portions of the underlying sales of ~~Kadcyla~~KADCYLA are made in currencies other than USD, and other events or circumstances that could result in reduced royalty payments from ~~Kadcyla,~~KADCYLA, all of which would result in a reduction of non-cash royalty revenues and the non-cash interest expense over the life of the Royalty Obligation. Conversely, if sales of ~~Kadcyla~~KADCYLA are more than expected, the non-cash royalty revenues and the non-cash interest expense recorded by the Company would be greater over the term of the Royalty Obligation.

E.	Income Taxes

As part of the Tax Cuts and Jobs Act of 2017 (TCJA), beginning with the 2022 tax year, the Company is required to capitalize research and development expenses, as defined under Internal Revenue Code section 174. For expenses that are incurred for research and development in the U.S., the amounts will be amortized over 5 years, and expenses that are incurred for research and experimentation outside the U.S. will be amortized over 15 years. The Company expects that this provision will result in a significant decrease to its 2022 tax loss, but will not result in an actual tax liability for 2022.

During the three and six months ended June 30, 2022, the Company transferred certain of its intellectual property rights to a newly formed Swiss subsidiary. This transfer resulted in a significant income inclusion for U.S. tax purposes which has been completely offset by utilization of a portion of the Company’s net operating loss carryforwards that existed before the transaction, resulting in no income tax.

F.	Capital Stock

Pre-Funded ~~Warrant~~Warrants

On August 11, 2021, the Company entered into a Securities Purchase Agreement (SPA) with RA Capital Healthcare Fund, L.P. ~~(the Investor)~~(RA Capital), pursuant to which the Company agreed to sell to ~~the Investor~~RA Capital a pre-funded warrant ~~(the Pre-Funded Warrant)~~ to purchase up to an aggregate of 5,434,782 shares of the Company’s common stock ~~par value $0.01 per share (common stock),~~ for $5.51 per share of common stock underlying the ~~Pre-Funded Warrant,~~pre-funded warrant. The per share exercise price of the pre-funded warrant is $0.01. The private placement resulted in aggregate net proceeds of $29.7 million.

In connection with a public offering in December 2021, the Company issued pre-funded warrants to purchase up to an aggregate of 16,000,000 and 11,363,636 shares of the Company’s common stock to RA Capital and Redmile Group,

Table of Contents

LLC, respectively, for $6.59 per share of common stock underlying the pre-funded warrants, which, together with the per share exercise price of $0.01, is equal to ~~$5.52. The private placement resulted in aggregate gross proceeds~~$6.60, the public offering price of ~~$29.9 million, before $0.2 million of transaction costs.~~

~~The issuance and sale of the Pre-Funded Warrant under the SPA and~~ the shares of common stock ~~issuable upon exercise~~in the public offering, which resulted in aggregate net proceeds of ~~the Pre-Funded Warrant were registered~~$169.3 million. RA Capital and Redmile Group, LLC are each considered related parties pursuant to ~~the Company’s shelf registration statement on Form S-3 (File No. 333-251502)~~ASC 850, Related Party Disclosures.

The ~~Pre-Funded Warrant’s~~pre-funded warrants’ fundamental transaction provision does not provide the warrant holders with the option to settle any unexercised warrants for cash in the event of any fundamental transactions; rather, in all fundamental transaction scenarios, the warrant holder will only be entitled to receive from the Company or any successor entity the same type or form of consideration (and in the same proportion) that is being offered and paid to the ~~stockholders~~shareholders of the Company in connection with the fundamental transaction, whether that consideration be in the form of cash, stock or any combination thereof. The ~~Pre-Funded Warrant~~pre-funded warrants also ~~includes~~include a separate provision whereby the exercisability of the warrants may be limited if, upon exercise, the warrant holder or any of its affiliates would beneficially own more than 9.99% of the Company’s common stock. This threshold is subject to the ~~Investor’s~~holder’s rights under the ~~Pre-Funded Warrant~~pre-funded warrants to increase or decrease such percentage to any other percentage not in excess of 19.99% upon at least 61 days’ prior notice from the ~~Investor~~holder to the ~~Company~~

Company.

The Company ~~has~~ assessed the ~~Pre-Funded Warrant~~pre-funded warrants for appropriate equity or liability classification pursuant to the Company’s accounting policy described in Note B, “Summary of Significant Accounting Policies.” During this assessment, the Company determined the ~~Pre-Funded Warrant is a~~pre-funded warrants are freestanding ~~instrument~~instruments that ~~does~~do not meet the definition of a liability pursuant to ASC 480 and ~~does~~do not meet the definition of a derivative pursuant to ASC 815. The ~~Pre-Funded Warrant is~~pre-funded warrants are indexed to the Company’s common stock and ~~meets~~meet all other conditions for equity classification under ASC 480 and ASC 815. Based on the results of this assessment, the Company concluded that the ~~Pre-Funded Warrant is a~~pre-funded warrants are freestanding equity-linked financial ~~instrument~~instruments that ~~meets~~meet the criteria for equity classification under ASC 480 and ASC 815. Accordingly, the ~~Pre-Funded Warrant is~~pre-funded warrants were classified as equity and is accounted for as a component of additional paid-in capital at the time of ~~issuance.~~issuance and at each subsequent balance sheet date. The Company also determined that the ~~Pre-Funded Warrant~~pre-funded warrants should be included in the determination of basic and diluted earnings per share in accordance with ASC 260, Earnings per Share.

Compensation Policy for Non-Employee Directors

Pursuant to the Compensation Policy for Non-Employee Directors, as amended, non-employee directors are granted deferred share units upon initial election to the Board of Directors and annually thereafter. Initial awards and annual retainers vest quarterly over approximately three years and one year from the date of grant, respectively, contingent upon the individual remaining a director of ImmunoGen as of each vesting date. The number of deferred share units awarded is fixed per the policy on the date of the award. All unvested deferred share units will automatically vest immediately prior to the occurrence of a change of control. The redemption amount of deferred share units issued will be paid in shares of common stock of the Company on the date a director ceases to be a member of the Board of Directors.

~~Table of Contents~~

Pursuant to the Compensation Policy for Non-Employee Directors, as amended, non-employee directors also receive stock option awards upon initial election to the Board of Directors and annually thereafter. The directors received a total of ~~308,000~~approximately 322,000 and ~~300,000~~352,000 options ~~during the nine months ended September~~in 2022 and 2021, ~~and 2020,~~ respectively, and the related compensation expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 is included in the amounts discussed in the “Stock-Based Compensation” section of Note B above.

G.~~Restructuring Charges~~

During the nine months ended September 30, 2020, the Company recorded a $(0.1) million adjustment to severance charges and $1.6 million in incremental benefits related to the 2019 corporate restructuring.

~~A summary of payments made against the corporate restructuring charge related to the employee terminations in 2021 is as follows:~~

Employee

Termination

Benefits Costs
Balance at December 31, 2020

$
784
Payments during the period

(278)
Balance at September 30, 2021

$
506

In addition to the termination benefits and other related charges, the Company has subleased laboratory and office space at 830 Winter Street in Waltham, Massachusetts no longer used in the business. The decision to vacate part of its corporate office resulted in a change in asset groupings and also represented an impairment indicator. The Company determined and continues to believe that the right-of-use asset and leasehold improvements are recoverable based on expected sublease income, and therefore, no impairment has been recorded.

H.G.

Leases

The Company currently has aone real estate lease ~~with CRP/King 830 Winter L.L.C.~~ for the rental of approximately 120,000 square feet of laboratory and office space at 830 Winter Street, Waltham, Massachusetts through March 2026. The Company uses this space for its corporate headquarters and other operations. The Company may extend the lease for 2 additional terms of five years and is required to pay certain operating expenses for the leased premises subject to escalation charges for certain expense increases over a base amount. DuringIn 2020, the Company executed 4 subleases for approximately 65,000 square feet of this space in the aggregate through the remaining initial term of the lease. The balance of the space is being used by the Company. A second real estate lease with PDM 930 Unit, LLC for the rental of 10,281 square feet of additional office space at 930 Winter Street, Waltham, Massachusetts expired on August 31, 2021. The Company was required to pay certain operating expenses for the leased premises based on its pro-rata share of such expenses for the entire rentable space of the building.

The Company’s operating lease liabilities related to its real estate lease agreements were calculated using a collateralized incremental borrowing rate. The weighted average discount rate for the operating lease liability is approximately 11%. A 100 basis point change in the incremental borrowing rate would result in less than a $1 million impact to the ROU assets and liabilities recorded. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term, which was $3.0 million in each of the nine-month periods ended September 30, 2021 and 2020 and is included in operating expenses in the consolidated statement of operations. Cash paid against operating lease liabilities was $4.1 million in each of the nine-month periods ended September 30, 2021 and 2020. As of September 30, 2021, the Company’s ROU asset and lease liability for operating leases totaled $12.7 million and $19.4 million, respectively, and the weighted-average remaining term of the operating leases is ~~4.5 years~~.

~~Table of Contents~~

~~The maturities of operating lease liabilities discussed above are as follows (in thousands):~~

2021 (three months remaining)

$
1,265
2022

5,389
2023

5,510
2024

5,470
2025

5,490
Thereafter

1,376
Total lease payments

24,500
Less imputed interest

(5,097)
Total lease liabilities

$
19,403

In addition to the amounts in the table above, the Company is also responsible for variable operating expenses and real estate taxes that are expected to approximate $3.1 million per year through March 2026.

~~Sublease Income~~

~~In 2020, the Company executed 4 agreements to sublease a total of approximately 65,000 square feet of the Company’s leased space at 830 Winter Street, Waltham, Massachusetts through March 2026.~~ During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the Company recorded ~~$3.7~~sublease income of $2.2 million and ~~$1.6~~$2.4 million, ~~of sublease income,~~ respectively, inclusive of the sublessees’ proportionate share of operating expenses and real estate taxes for the period. Except as disclosed below, there have been no material changes in lease obligations from those disclosed in Note J, “Leases,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

~~Two~~In June 2022, in order to reclaim laboratory and office space, the Company modified one of ~~the four~~its sublease agreements ~~include~~to terminate the sublease early, targeting an ~~early termination option after certain periods~~end date of ~~time for an agreed-upon fee. Assuming no early termination option is exercised,~~March 31, 2023. Pursuant to the amended sublease agreement, the Company is ~~entitled~~required to ~~receive $14.0~~pay the sublessee $3.5 million as a lease incentive, of which $1.8 million was paid

Table of Contents

in June 2022 and the remainder will be paid at the end of the sublease term. No other terms from the original sublease agreement were modified. In accordance with ASC 842, Leases, the $3.5 million lease incentive is being recognized on a straight-line basis over the remaining sublease term. As a result of the early termination, the Company will forego $2.1 million in minimum future rental ~~payments~~payments. The Company assessed the underlying right-of-use asset and determined there was 0 impairment.

H. Commitments and Contingencies

Research Collaboration Agreement

In June 2022, the Company entered into a research collaboration agreement with Oxford BioTherapeutics Ltd (OBT) to develop novel ADCs utilizing the Company’s linker-payload technology directed to targets identified via OBT's proprietary OGAP® discovery platform. Under the terms of the agreement, OBT received a non-refundable $7.5 million upfront payment reflecting OBT's preclinical programs to be included in the collaboration. Additionally, over the ~~remaining~~initial three-year term of the ~~subleases, which~~agreement, the Company is committed to reimbursing OBT up to $2.8 million annually to support research activities dependent on the number of active programs. Otherwise, each party is responsible for its own costs associated with the joint research plan. After antibodies generated by OBT have been conjugated with the Company's proprietary linker-payload technology, each party will have the opportunity to select one or more development programs to further develop on its own. Each party will be eligible to receive milestone payments based on the achievement of pre-specified development and regulatory milestones, as well as tiered royalties as a percentage of worldwide commercial sales, with respect to each program selected by the other party. Once a party has selected a given program, it will be solely responsible for all research and development costs associated with that specific program. If at the end of the initial three-year term, either party elects not to extend the research term, predetermined opt-out fees may apply based on the number of programs selected for further development by each party. At any time starting twelve months after the effective date of the agreement, the Company may terminate the agreement in its sole discretion upon 90 days written notice to OBT. Otherwise, the agreement may be terminated by either party for a material breach by the other party, subject to notice and cure provisions.

In accordance with ASC 730, Research and Development, the $7.5 million upfront payment made to OBT was expensed as incurred and is included in research and development expense for the ~~operating lease liability table above.~~three and six months ended June 30, 2022. The ~~sublessees are also responsible for their proportionate share of variable operating expenses~~committed reimbursement to OBT and ~~real estate taxes.~~

~~I. Commitments and Contingencies~~other research costs will be expensed as incurred over the research term.

Manufacturing Commitments

As of ~~September~~June 30, ~~2021,~~2022, the Company had noncancelable obligations under several agreements related to in-process and future manufacturing of antibody, drug substance, and cytotoxic agents required for supply of the Company’s product candidates totaling ~~$3.1~~$13.0 million. Additionally, pursuant to commercial agreements for future production of antibody, our noncancelable commitments total ~~$33.4~~$45.1 million at ~~September~~June 30, ~~2021.~~2022.

Litigation

The Company is not a party to any material litigation.

I.Related Party Transactions

The Company’s chief executive officer has served as a director on the board of directors of Ergomed PLC since June 2021. During the six months ended June 30, 2022, the Company executed agreements with Ergomed Clinical Research, Inc. and PrimeVigilance USA, Inc., subsidiaries of Ergomed PLC, for clinical trial and pharmacovigilance-related services. Ergomed Clinical Research, Inc. and PrimeVigilance USA, Inc. are each considered related parties pursuant to ASC 850, Related Party Disclosures. In the six months ended June 30, 2022, the Company made payments totaling $3.0 million to Ergomed Clinical Research, Inc. Payments made pursuant to the agreement with PrimeVigilance USA, Inc. during the six months ended June 30, 2022 were not material to the Company’s consolidated statement of operations.

J.Subsequent Events

~~Debiopharm~~

In May 2017, Debiopharm International S.A. (Debiopharm) acquired the Company’s IMGN529 program, a clinical-stage anti-CD37 ADC for the treatment of patients with B-cell malignancies, such as non-Hodgkin lymphomas (NHL). Under the terms of the Exclusive License and Asset Purchase agreement, the Company received a $25.0 million upfront payment for specified assets related to IMGN529 and an exclusive license to additional intellectual property necessary or useful for Debiopharm to develop and commercialize IMGN529. The Company also received a $5.0 million milestone payment upon transfer of ImmunoGen technologies related to the program.

In October 2021, the Company and Debiopharm amended their agreement, pursuant to which the Company is entitled to receive a percentage of all payments generated from future sublicenses of naratuximab emtansine, including upfront fees, milestones, and royalties, up to an aggregate of $30.0 million and in lieu of a potential $25.0 million development milestone payment under the original agreement.

~~Table of Contents~~

~~License Commitment~~

In October 2021, as a result of a dispute regarding terms of a 2012 license agreement with a contract manufacturing vendor, the Company and vendor amended their agreement to replace certain annual fees and potential royalties payable by the Company on future sales of mirvetuximab with capped development and sales-based milestone payments totaling $18.0 million, of which $3.0 million was recorded as research and development expense during the nine months ended September 30, 2021.

The Company has evaluated all ~~other~~ events or transactions that occurred after ~~September~~June 30, ~~2021,~~2022, up through the date the Company issued these financial statements. The Company did not have any ~~other~~ material ~~recognized or unrecognized~~ subsequent ~~events during this period.~~

events.

1716

Table of Contents

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the unaudited financial statements and the notes thereto included elsewhere in this report, and the consolidated financial statements and notes thereto for the year ended December 31, ~~2020,~~2021, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the United States Securities and Exchange Commission, or the SEC, on ~~March 1, 2021.~~February 28, 2022.

OVERVIEW

We are a clinical-stage biotechnology company focused on developing and commercializing the next generation of antibody-drug conjugates (ADCs) to improve outcomes for cancer patients. By generating targeted therapies with enhanced anti-tumor activity and favorable tolerability profiles, we aim to disrupt the progression of cancer and offer patients more good days. We call this our commitment to “target a better now.”

An ADC with our proprietary technology comprises an antibody that binds to a target found on tumor cells and is conjugated to one of our potent anti-cancer agents as a “payload” to kill the tumor cell once the ADC has bound to its target. ADCs are an expanding approach to the treatment of cancer, with ~~eleven~~twelve approved products and the number of agents in development growing significantly in recent years.

We have established a leadership position in ADCs with a portfolio of differentiated product candidates to address both solid tumors and hematological malignancies.

~~Managing the impact of the COVID-19 pandemic~~

Since the first quarter of 2020, we have continued to move our clinical studies forward while adapting to meet the evolving challenges of the COVID-19 pandemic. We implemented business continuity plans that enabled our workforce to remain productive while working from home; and our workforce returned to the office in mid-September 2021. From a manufacturing and supply chain perspective, we believe we have sufficient inventory on hand for all of our ongoing and upcoming studies. From a regulatory perspective, since the beginning of the pandemic, we have received timely reviews of our submissions to the U.S. Food and Drug Administration (FDA) and other health authorities covering our clinical trial applications.

The impact of COVID-19 slowed site activation and patient enrollment for both SORAYA, our single-arm clinical trial to support accelerated approval of mirvetuximab in folate receptor alpha (FRα)-high, platinum-resistant ovarian cancer, and MIRASOL, our randomized Phase 3 confirmatory study to support full approval in this setting, which resulted in a limited delay in patient accrual for each of these studies.

Our business

Our lead program is mirvetuximab soravtansine (MIRV), a first-in-class investigational ADC targeting FRα, a cell-surface protein ~~overexpressed~~over-expressed in a number of epithelial tumors, including ovarian, endometrial, and non-small-cell lung cancers. In 2019, FORWARD I, our Phase 3 clinical trial of mirvetuximab in patients with FRα-positive platinum-resistant ovarian cancer scored by the 10X method, did not meet its primary endpoint. In post hoc exploratory analyses in the FRα-high population scored by the PS2+ method, however, mirvetuximab was associated with longer progression-free survival, a higher overall response rate, and longer overall survival.

Following consultation with the FDA, we ~~moved forward with~~initiated two ~~new~~ trials of ~~mirvetuximab~~MIRV in ~~FRα-high,~~patients with platinum-resistant ovarian ~~cancer:~~cancer whose tumors express high levels of FRα: SORAYA, a single-arm clinical trial that ~~if successful,~~ could lead to accelerated approval, ~~in this setting;~~pending FDA review; and MIRASOL, a randomized Phase 3 clinical trial that, if successful, could lead to full approval in this setting. ~~With patient enrollment in SORAYA completed in the second quarter of~~In November 2021, we ~~expect to announce~~reported positive top-line data from ~~this trial~~SORAYA with an overall response rate (ORR) by investigator of 32.4%. At the Society of Gynecologic Oncology (SGO) 2022 Annual Meeting in March 2022, we reported the ~~fourth quarter~~full data set from SORAYA, including the median duration of ~~2021.~~response of 6.9 months. ~~We are actively enrolling~~In March 2022, we submitted a biologics license application (BLA) to the FDA for acceleratedapprovalofMIRVinsecondthroughfourth-linepatientswithFRα-positive,platinum-resistantovariancancer.The FDA accepted the BLA under Priority Review designation in May 2022 and set a Prescription Drug User Fee Act (PDUFA) action date of November 28, 2022. In June 2022, we presented additional efficacy and safety analyses from the MIRV program at the American Society of Clinical Oncology and in July, we completed enrollment in MIRASOL and expect to report top-line data from this ~~trial~~study in ~~the third quarter of 2022.~~early 2023.If SORAYA is successful, we plan to submit a biologics license application (BLA) for accelerated approval of mirvetuximab in the applicable patient population to the FDA in the first quarter of 2022 and, thereafter, seek full approval on the basis of the confirmatory Phase 3 MIRASOL trial.

Beyond platinum-resistant ovarian cancer,ourstrategyistomove ~~mirvetuximab~~ MIRVinto ~~earlier lines~~platinum-sensitive disease and become the combination agent of choice in ovarian ~~cancer therapy.~~ cancer.Tothisend,we ~~are supporting investigator-sponsored trials of mirvetuximab in combination with carboplatin in~~initiated PICCOLO, a single-arm study of MIRV monotherapy in later-line platinum-sensitive patients. We have also generated encouraging data in recurrent platinum-sensitive disease with the ~~neoadjuvant setting~~combination of MIRV plus carboplatin and ~~in a randomized study comparing mirvetuximab combined~~aresupportinginvestigator sponsored trials (ISTs) with this combination inasingle-armstudyintheneoadjuvantsettingandinarandomizedstudycomparingMIRVcombinedwith carboplatin to standard of care in patients with recurrent platinum-sensitive disease. We are also initiating a single-arm Phase 2 study (0420) of this combination followed by MIRV continuation in FRα-low, medium, and high patients with platinum-sensitive disease. Results from this study and our ongoing ISTs will inform a path to the potential registration for MIRV plus carboplatin and, in parallel, could support compendia listing for this combination.

In addition,wehave generated data fromourPhase1bFORWARDIItrialofMIRVplusAVASTIN^® (bevacizumab) in recurrent ovarian cancer and believe these data could support compendia listing for this combination in close proximity to the initial monotherapy approval of MIRV. We also aligned with the FDA on GLORIOSA, a randomized Phase 3 study of MIRV plus bevacizumab maintenance in FRα-high recurrent platinum-sensitive disease, and have initiated ~~PICCOLO,~~this potentially label-enabling study.

Pivekimab sunirine (PVEK), formerly known as IMGN632, is an ADC comprised of a high-affinity antibody designed to target CD123 with site-specific conjugation to a DNA-alkylating payload of the novel IGN (indolinobenzodiazepine pseudodimer) class. OurIGNsaredesignedtoalkylateDNAwithoutcross-linking,whichhas

1817

Table of Contents

~~single-arm study of mirvetuximab monotherapy~~providedabroadtherapeuticindex in ~~later-line platinum-sensitive patients, in the third quarter of 2021.~~preclinical models. ~~In addition, we presented mature data from our Phase 1b FORWARD II trials of mirvetuximab plus Avastin~~^® ~~(bevacizumab) in recurrent ovarian cancer in an oral presentation at the American Society for Clinical Oncology Annual Meeting in June 2021.~~With a 64% overall response rate, 11.8 month median duration of response, and 10.6 month median progression free survival, we believe the combination of mirvetuximab plus bevacizumab shows compelling activity in patients with high FRα recurrent ovarian cancer.

~~IMGN632 is an ADC comprised of a high-affinity antibody designed to target CD123 with site-specific conjugation to our most potent IGN payload.~~ We are advancing ~~IMGN632~~PVEK in clinical trials for patients with blastic plasmacytoid dendritic cell neoplasm (BPDCN) and acute myeloid leukemia (AML).

BPDCN is a rare form of blood cancer, with an annual incidence of between 500 and 1,000 patients in the US. In October 2020, the FDAgrantedBreakthroughTherapydesignationfor ~~IMGN632~~ PVEKforthetreatmentofpatientswithrelapsed or refractory BPDCN. ~~We have aligned with~~Based on feedback from the FDA, ~~on a path to full approval in BPDCN, with an amendment to~~we amended our ongoing 801 Phase 2 study,knownasCADENZA,to ~~add~~ includeanewcohortofupto20frontline BPDCN patients.Wenow expect to ~~complete enrollment and~~ generate top-line data for this frontline cohort inbefore the ~~first half of 2022, with potential BLA submission in the second half~~end of 2022.

~~Our~~ We are also conducting our802study for PVEK,whichisaPhase1b/2studydesignedtodeterminethesafety,tolerability,andpreliminary antileukemia activity of ~~IMGN632~~PVEK when administered in combination with ~~azacitidine and/or~~azacytidine and venetoclax to patients with relapsed and frontline CD123-positive ~~AML, is in the dose-escalation phase, enrolling relapsed and refractory patients to determine~~AML. Having identified the recommended ~~Phase~~phase 2 dose ~~of IMGN632~~ for ~~combination regimens. We anticipate sharing~~the triplet, patients are accruing in both expansion cohorts and we expect to share initial data from ~~this study~~these cohorts at the American Society of Hematology Annual Meeting later this year.

~~We continue to advance additional~~In addition, we are advancing our earlier-stage pipeline programs. IMGC936 is an ADC in co-development with MacroGenics,Inc., thatisdesignedtotargetADAM9,anenzyme ~~overexpressed~~ over-expressedinarangeofsolidtumors and implicated in tumor progression and metastasis. IMGC936 incorporates a number of innovations, including antibody engineering to extend ~~the~~ half-life, site-specific conjugation with a fixed drug-antibody ratiotoenablehigherdosing,andanext-generationlinkerandpayloaddesignedforimprovedstabilityand ~~a next-generation linker and payload for improved stability and~~ bystander activity. We ~~presented preclinical data on IMGC936 at the American Association for Cancer Research Annual Meeting in April 2021, demonstrating anti-tumor activity in multiple solid tumor models, and we~~ continue to enroll patients in the Phase 1 study for this ~~program.~~program and expect initial data in 2022.

IMGN151 is our next generation anti-FRα product candidate in ~~preclinical~~ development. This ADC integrates innovation in each of its components, which we believe may enable IMGN151 to address patientpopulationswithlowerlevelsofFRαexpression,includingtumortypesoutsideofovarian ~~cancer. We presented encouraging data for IMGN151 at the American Academy of Cancer Research Virtual Annual Meeting II in June 2020. We expect to file the~~cancer. In January 2022, we submitted an IND application ~~for~~to evaluate IMGN151 byin a planned Phase 1 clinical trial in patients with recurrent endometrial cancer and recurrent, high-grade serous epithelial ovarian, primary peritoneal, or fallopian tube cancers. In February 2022, the ~~end~~FDA placed a hold on our IND application pending responses to certain chemistry, manufacturing, and controls, or CMC, information requests. We are generating data responsive to these requests and anticipate enrolling our first patient following submission of ~~2021.~~this information to the agency.

We have selectively licensed restricted access to our ADC platform technology to other companies to expand the use of our technology and to provide us with cash to fund our own product programs. These agreements typically provide the licensee with rights to use our ADC platform technology with its antibodies or related targeting vehicles to a defined target to develop products. The licensee is generally responsible for the development, clinical testing, manufacturing, registration, and commercialization of any resulting product candidate. As part of these agreements, we are generally entitled to receive upfront fees, potential milestone payments, and royalties on the sales of any resulting products.

~~We expect that substantially all of our revenue for at least~~In February 2022, we entered into a license agreement with Eli Lilly and Company (Lilly), pursuant to which the ~~next year~~Company granted Lilly worldwide exclusive rights to research, develop, and commercialize ADCs based on the Company’s novel camptothecin technology. Additionally, in June 2022, we entered into a research collaboration agreement with Oxford BioTherapeutics Ltd (OBT) to develop novel ADCs utilizing the Company’s linker-payload technology directed to targets identified via OBT's proprietary OGAP® discovery platform. After antibodies generated by OBT have been conjugated with ImmunoGen's proprietary linker-payload technology, each company will ~~result from payments under our collaborative arrangements.~~have the opportunity to select one or more development programs to further develop on its own. For more information concerning these relationships, including their ongoing financial and accounting impact on our business, please read Note C, ~~“Agreements - Significant~~“Significant Collaborative Agreements,” and Note H, “Commitments and Contingencies,” to our consolidated financial statements included in this ~~report and in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 1, 2021.~~report.

To date, we have not generated revenues from commercial sales of internal products, and we expect to continue to incur significant operating expenses related to research and development and the potential commercialization of our portfolio over the next several years. As of ~~September~~June 30, ~~2021,~~2022, we had ~~$245.8~~$373.9 million in cash and cash equivalents compared to ~~$293.9~~$478.8 million as of December 31, ~~2020.~~2021.

Managing the impact of the COVID-19 pandemic

1918

Table of Contents

workforce returned to the office. From a manufacturing and supply chain perspective, we believe we have sufficient inventory on hand for all of our ongoing and near-term studies and to support the launch of MIRV, if approved. From a regulatory perspective, since the beginning of the pandemic, we have received timely reviews of our submissions to the FDA and other health authorities covering our clinical trial applications, as well as timely acceptance by the FDA of our BLA submitted in March 2022 for accelerated approval of MIRV.

The impact of COVID-19 slowed site activation and patient enrollment for both SORAYA and MIRASOL, which resulted in a limited delay in patient accrual for each of these studies. COVID-19 related conditions may also affect accrual of our currently-enrolling studies.

Critical accounting policies and estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the ~~United States.~~U.S. The preparation of these financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets and liabilities, ~~revenues, and expenses and related~~the disclosure of contingent assets and ~~liabilities. On an on-going basis, we evaluate our~~liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reported periods. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates ~~including those related to our collaborative agreements, clinical trial accruals, and stock-based compensation.~~could occur in the future. Changes in estimates are reflected in reported results for the period in which the change occurs. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from ~~these estimates.~~ our estimates if past experience or other assumptions do not turn out to be substantially accurate.

We believe that our application of the following accounting policies, each of which requires significant judgments and estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial results:

●

revenue recognition;

●

clinical trial accruals; and

●

stock-based compensation.

During the ~~third quarter~~three and ~~first nine~~six months ~~of 2021,~~ended June 30, 2022, there were no material changes to our critical accounting policies and estimates as reported in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC on ~~March 1, 2021, other than as described in Note B “Common Stock Warrants,” included in the Notes to the Consolidated Financial Statements for the period ended September 30, 2021 included herein.~~February 28, 2022.

RESULTS OF OPERATIONS

Revenues

InFor the ~~third quarter and nine~~three months ended ~~September~~June 30, ~~2021,~~2022, our total revenues decreased ~~$9.0~~$2.8 million ~~and $4.6 million, respectively,~~ compared to the ~~third quarter and nine~~three months ended ~~September~~June 30, ~~2020,~~2021, driven by lower non-cash royalty revenue, partially offset by ~~increases~~an increase in license and milestone fees. For the six months ended June 30, 2022, our total revenues increased $19.6 million compared to the six months ended June 30, 2021, driven by an increase in license and milestone fees, ~~both of which are discussed further below.~~

~~Non-cash royalty revenue related to the sale of future royalties~~

Kadcyla is a marketed ADC resulting from one of our development and commercialization licenses with the Roche Group, through its Genentech unit. We receive royalty reports and payments related to sales of Kadcyla from Roche one quarter in arrears. In the third quarter and nine months ended September 30, 2021,partially offset by lower non-cash royalty revenue decreased $11.6 million and $6.4 million, respectively, compared to the third quarter and nine months ended September 30, 2020. We sold our rights to receive royalty payments on the net sales of Kadcyla through two separate transactions in 2015 and 2019. Following the 2019 transaction, OMERS, the defined benefit pension plan for municipal employees in the Province of Ontario, Canada, is entitled to receive all of these royalties.The decreases in the current year periods are a result of the aggregate royalty threshold being met in the second quarter of 2021, effectively reducing the royalty payments under the 2015 transaction from 100% to 15% of Kadcyla royalty payments received over the remaining royalty term.revenue. See further ~~details regarding the royalty obligation in Note E, “Liability Related to Sale of Future Royalties,” to our consolidated financial statements included in this report.~~discussion below.

License and milestone fees

The amount of license and milestone fees we earn is directly related to the number of our collaborators, the advancement of product candidates covered by the agreements with our collaborators, and the overall success in the clinical trials of these product candidates. As such, the amount of license and milestone fees recognized may vary significantly from quarter to quarter and year to year. License and milestone fee revenue increased ~~$2.6~~$6.7 million and $37.5 million in the ~~third~~three and six months ended June 30, 2022, respectively, compared to the three and six months ended June 30, 2021. Driving the increases, pursuant to our license agreement with Huadong executed in October 2020, upon delivery of clinical supply in the three and six months ended June 30, 2022, we recognized $6.9 million and $28.5 million of the remaining deferred revenue balance as of December 31, 2021 related to upfront and development milestone payments previously received. Additionally, pursuant to a license agreement with Lilly, during the six months ended June 30, 2022, we recognized $9.2 million of the $13.0 million upfront payment received.

Table of Contents

Non-cash royalty revenue related to the sale of future royalties

KADCYLA is a marketed ADC resulting from one of our development and commercialization licenses with Roche, through its Genentech unit. We receive royalty reports and payments related to sales of KADCYLA from Roche one quarter in arrears. We sold our rights to receive royalty payments on the net sales of KADCYLA through two separate transactions in 2015 and 2019. In accordance with our revenue recognition policy, $7.1 million and $13.5 million of non-cash royalties on net sales of KADCYLA were recorded and included in non-cash royalty revenue for the three and six months ended June 30, 2022, respectively, compared to $16.7 million and $32.2 million in non-cash royalty revenue recorded for the three and six months ended June 30, 2021, respectively. The decrease in non-cash royalty revenue is a result of the aggregate royalty threshold, as outlined in the 2015 royalty purchase agreement, being met in the second quarter of 2021, effectively reducing the royalty payments under the 2015 transaction from 100% to 15% of KADCYLA royalty payments received over the remaining royalty term. Pursuant to the terms of these agreements, we expect to recognize less non-cash royalty revenue in 2022 and subsequent years as compared to 2021 and prior years. See further details regarding these agreements in Note F, “Liability Related to Sale of Future Royalties,” of the third quarter of 2020 and increased $1.8 million in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to a $2.5 million partner development milestone fee determined to be probable of achievement and recorded as revenue in the current period. No partner milestones were recorded during the prior year periods; however, during the nine months ended September 30, 2020, $0.9 million of previously deferred revenue was recognized related to the right to future technological improvements upon termination by Takeda of its license agreement.Consolidated Financial Statements.

Research and development expenses

Our research and development expenses relate to (i) research to evaluate new targets and to develop and evaluate new antibodies, linkers, and cytotoxic agents, (ii) preclinical testing of our own and, in certain instances, our collaborators’ product candidates, and the cost of our own clinical trials, (iii) development related to clinical and commercial manufacturing processes, (iv) regulatory activities, and (v) external manufacturing operations.

~~Table of Contents~~

We do not track our research and development costs by project. Since we use our research and development resources across multiple research and development projects, we manage our research and development expenses within each of the categories listed in the following table and described in more detail below (in thousands):


	Six Months Ended						Six Months Ended
	June 30,				Increase/		June 30,						Increase/
Research and Development Expenses	2022		2021		(Decrease)		2022			2021			(Decrease)
Research	$	7,500	$	—	$	7,500		$	7,500		$	—		$	7,500
Preclinical and clinical testing		31,775		24,085		7,690			63,270			48,611			14,659
Process and product development		1,714		1,421		293			3,175			2,868			307
Manufacturing operations		10,433		9,083		1,350			21,759			17,523			4,236
Total research and development expenses	$	51,422	$	34,589	$	16,833		$	95,704		$	69,002		$	26,702

Three Months Ended


Nine Months Ended


September 30,

Increase/

September 30,

Increase/
Research and Development Expenses

2021

2020

(Decrease)

2021

2020

(Decrease)
Preclinical and clinical testing

$
23,484

$
17,231

$
6,253

$
72,095

$
53,835

18,260
Process and product development

2,030

1,522

508

4,898

3,999

899
Manufacturing operations

7,633

5,932

1,701

25,156

17,180

7,976
Total research and development expenses

$
33,147

$
24,685

$
8,462

$
102,149

$
75,014

$
27,135

Research

Research includes expenses to evaluate new targets and to develop and evaluate new antibodies, linkers, and cytotoxic agents. Such expenses include third-party license fees, research funding payments, and contract services. Pursuant to a research collaboration agreement executed with OBT in June 2022, we recorded an upfront license fee as expense in the three and six months ended June 30, 2022. No similar expenses were recorded in the three and six months ended June 30, 2021.

Preclinical and clinical testing

Preclinical and clinical testing includes expenses related to preclinical testing of our own, and, in certain instances, our collaborators’ product candidates, regulatory activities, and the cost of clinical trials. Such expenses include the costs of personnel, third-party staffing, patient enrollment at our clinical testing sites, consultant fees, contract services, and facility expenses. In the ~~third quarter~~three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, preclinical and clinical testing expenses increased by ~~$6.3~~$7.7 million and ~~$18.3~~$14.7 million, respectively, compared to the ~~third quarter~~three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, due primarily to ~~increased clinical trial,~~increases in personnel, ~~and~~ third-party staffing costs, ~~related to advancing the MIRASOL, SORAYA,~~ and ~~IMGC936 studies~~clinical trial costs driven by our MIRV and ~~increased third-party service fees in support of commercial readiness.~~PVEK studies.

Process and product development

Process and product development expenses include costs for development of clinical and commercial manufacturing processes for our own and collaborator compounds. Such expenses include the costs of personnel, third-

Table of Contents

party staffing, contract services, ~~laboratory supplies,~~ and facility expenses. In each of the ~~third quarter~~three and ~~nine~~six months ended ~~September~~June 30, ~~2021, process~~2022, preclinical and ~~product development~~clinical testing expenses increased ~~$0.5~~by $0.3 million ~~and $0.9 million, respectively,~~ compared to the ~~third quarter~~three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, due primarily to increased ~~personnel and third-party staffing~~personnel-related costs.

Manufacturing operations

Manufacturing operations expense includes costs to have preclinical and clinical materials manufactured for our product candidates and quality control and quality assurance activities. Such expenses include personnel, raw materials for our preclinical studies and clinical trials, non-pivotal and pivotal development costs with contract manufacturing organizations, and facility expenses. In the ~~third quarter~~three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, manufacturing operations expense increased ~~$1.7~~by $1.4 million and ~~$8.0~~$4.2 million, respectively, compared to the ~~third quarter~~three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, due primarily to increases in personnel-related costs and external manufacturing activity across our ~~programs, and to a lesser extent, increases in personnel and third-party staffing costs.~~programs.

~~General~~Selling, general and administrative expenses

~~General~~Selling, general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for commercial operations and for personnel in executive, finance, accounting, business development, information technology, legal, and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, commercial development activities, legal fees related to intellectual property and corporate matters, and fees for accounting and consulting services.

In the three and six months ended June 30, 2022, selling, general and administrative expenses increased ~~$0.1~~by $14.1 million ~~in the third quarter of 2021~~and $20.5 million, respectively, compared to the ~~third quarter~~three and six months ended June 30, 2021 due primarily to building our commercial capabilities in anticipation of ~~September 30, 2020 and increased $1.4 million~~a potential U.S. launch of MIRV in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The increase in the nine months ended September 30, 2021 was primarily due to increases in professional services and personnel expenses, including greater stock-based compensation, partially offset by greater sublease income.

~~Restructuring charges~~

~~During the nine months ended September 30, 2020, we recorded $1.6 million~~second half of incremental retention benefits related to the 2019 corporate restructuring and a $(0.1) million adjustment to severance charges. There were no restructuring charges recorded during the third quarter of 2020 or the third quarter and nine months ended September 30, 2021.

~~Table of Contents~~

~~Investment income, net~~

Investment income, net for the third quarter and nine months ended September 30, 2021 was $11,000 and $35,000, respectively, compared to $11,000 and $0.7 million for the third quarter and nine months ended September 30, 2020, respectively. The $0.7 million decrease in the nine months ended September 30, 2021 as compared to the 2020 period is due to a significant decrease in interest rates.2022.

Non-cash interest expense on liability related to the sale of future royalties

In 2015, IRH purchased our right to receive 100% of the royalty payments on commercial sales of ~~Kadcyla~~KADCYLA arising under our development and commercialization license with Genentech, subject to a residual cap. In January 2019, OMERS purchased IRH’s right to the royalties the Company previously sold in 2015. As described in Note E, “Liability Related to Sale of Future Royalties,” to our consolidated financial statements included in this report, this royalty sale transaction has been recorded as a liability that amortizes over the estimated royalty payment period as ~~Kadcyla~~KADCYLA royalties are remitted directly to the purchaser. During the ~~third quarter~~three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we recorded ~~$2.8~~$1.1 million and ~~$11.0~~$2.3 million ~~respectively,~~ of non-cash interest expense, respectively, which includes amortization of deferred financing costs, compared to ~~$5.6~~$3.6 million and ~~$17.4~~$8.2 million recorded in the ~~third quarter~~three and ~~nine~~six months ended ~~September~~June 30, ~~2020. We record interest expense at~~2021. The decrease was a result of a lower average royalty liability balance for the ~~imputed interest rate, which we currently estimate to be 19.1%. There are a number of factors that could materially affect~~period and the ~~estimated interest rate~~KADCYLA royalty threshold being met in the ~~future, in particular,~~second quarter of 2021, effectively reducing the ~~amount and timing of~~ royalty payments under the 2015 transaction from ~~future net sales~~100% to 15% of ~~Kadcyla. We will assess this estimate on a periodic basis and any such change in interest rate will be adjusted prospectively.~~

~~Other (expense) income, net~~

Other (expense) income, net consists substantially of foreign currency exchange (losses) gains related to obligations with non-U.S. dollar-based suppliers and Euro cash balances maintained to fulfill those obligations duringKADCYLA royalty payments received over the ~~respective periods.~~remaining royalty term.

LIQUIDITY AND CAPITAL RESOURCES

The tables below summarize our cash and cash equivalents, working capital, and shareholders’ equity as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, and cash flow activities for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


	As of				As of
	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
Cash and cash equivalents	$	245,761	$	293,856	$	373,874	$	478,750
Working capital		159,102		201,931		306,853		399,054
Shareholders’ equity		77,093		89,570		249,831		325,586



	Nine Months Ended September 30,				Six Months Ended June 30,
	2021		2020		2022		2021
Cash used for operating activities	$	(123,542)	$	(87,155)	$	(105,393)		$	(88,500)
Cash (used for) provided by investing activities		(1,065)		611
Cash used for investing activities						(514)			(940)
Cash provided by financing activities		76,512		98,536		1,031			35,122

Table of Contents

Cash flows

We require cash to fund our operating expenses, including the advancement of our clinical programs and to make capital expenditures. Historically, we have funded our cash requirements primarily through equity and convertible debt financings in private and public markets and payments from our collaborators, including license fees, ~~milestones,~~milestone payments, research funding, and royalties. We have also monetized our rights to receive royalties on ~~Kadcyla~~KADCYLA for ~~up-front~~upfront consideration. As of ~~September~~June 30, ~~2021,~~2022, we had ~~$245.8~~$373.9 million in cash and cash equivalents. Net cash used for operations was ~~$123.5~~$105.4 million and ~~$87.2~~$88.5 million for the ~~nine~~six months ended ~~2021~~June 30, 2022 and ~~2020,~~2021, respectively. The principal use of cash for operating activities for both periods presented was to fund our net loss, adjusted for non-cash ~~items.~~items, with the six months ended June 30, 2022 benefiting from a $13.0 million upfront payment pursuant to a license agreement with Lilly.

Net cash ~~(used for) provided by~~used for investing activities was ~~$(1.1)~~$0.5 million and ~~$0.6~~$0.9 million for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020, respectively. Cash~~respectively, consisting of cash outflows for capital expenditures in both periods, ~~consisted~~

~~Table of Contents~~

~~primarily of furniture~~including computer and ~~improvements related to COVID-19 safety measures~~office equipment and dedicated equipment at third-party manufacturing vendors. ~~During the 2020 period, as a result of the restructuring at the end of the second quarter of 2019, we sold excess equipment generating proceeds of $1.4 million.~~

Net cash provided by financing activities was ~~$76.5~~$1.0 million and ~~$98.5~~$35.1 million for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, respectively. Net cash provided by financing activities for the six months ended June 30, 2022 and ~~2020, respectively. In August~~ 2021 ~~we entered into a Securities Purchase Agreement with RA Capital Healthcare Fund, L.P., or~~includes $1.0 million and $1.7 million, respectively, of proceeds from the ~~Investor, pursuant to which~~exercise of stock options. Additionally, in the Company agreed to sell to the Investor a pre-funded warrant to purchase up to an aggregate of 5,434,782 shares of the Company’s common stock, resulting in net proceeds of $29.8 million. Additionally, duringsix months ended June 30, 2021, we sold ~~6,694,600~~4,544,424 shares of our common stock under our Open Market Sale Agreement^SM (Sale Agreement) with Jefferies, LLC as sales agent, dated December 18, 2020, generating net proceeds of ~~$45.8~~$33.5 million. In January 2020, pursuant to a public offering, we issued and sold 24.5 million shares of common stock, resulting in net proceeds of $97.7 million. Net cash provided by financing activities for the nine months ended September 30, 2021 and 2020 also includes proceeds from the exercise of stock options.

Future Capital Requirements

We have significant future capital requirements including:

●

significant expected operating expenses to conduct research and development activities and to potentially commercialize our portfolio;

●

noncancelable in-process and future manufacturing obligations; and

●

substantial facility lease obligations as described in Note J, “Leases,” included in our Annual Report on Form 10-K for the year ended December 31, 2021, and as described in Note G, “Leases,” included in this Quarterly Report on Form 10-Q.

We anticipate that our current capital resources will enable us to meet our operational expenses and capital ~~expenditures~~requirements for more than twelve months after the date of this report. We ~~may~~expect to raise additional funds through equity, debt, and other financings or generate revenues from ~~collaborators~~product sales as well as revenues from collaborations through a combination of upfront license payments, milestone payments, royalty payments, and research ~~funding.~~funding to support our planned operating activities. We cannot provide assurance, however, that we will be able to obtain additional debt, equity, or other financing or generate revenues from ~~collaborators~~product sales or from collaborations on terms acceptable to ~~the Company~~us or at all. Should we or our partners not meet some or all of the terms and conditions of our various collaboration agreements or if we are not successful in securing future collaboration agreements, we may elect or be required to secure alternative financing arrangements, and/or defer or limit some or all of our research, development, and/or clinical projects.

~~Contractual Obligations~~

We lease approximately 120,000 square feet of laboratory and office space in a building located at 830 Winter Street, Waltham, Massachusetts, with an initial term that expires on March 31, 2026. In August 2021, a second real estate lease for 10,281 square feet of office space at 930 Winter Street, Waltham, Massachusetts expired. We are obligated to pay $24.5 million in minimum rental payments over the remaining term of the 830 Winter Street lease. In addition, we are responsible for variable operating costs and real estate taxes approximating $3.1 million per year through March 2026. In 2020, we executed four agreements to sublease a total of approximately 65,000 square feet in the aggregate of the 830 Winter Street facility through March 2026. Two of the four sublease agreements include an early termination option after certain periods of time for an agreed-upon fee. Assuming these early termination options are not exercised, we will receive $14.0 million in minimum rental payments over the remaining term of the subleases. The sublessees will also be responsible for their proportionate share of variable operating expenses and real estate taxes.

As of September 30, 2021, we had noncancelable obligations under several agreements related to in-process and future manufacturing of antibody and cytotoxic agents required for supply of our product candidates totaling $3.1 million. Additionally, pursuant to commercial agreements for future production of antibody, our noncancelable commitments total $33.4 million at September 30, 2021.

Recent Accounting Pronouncements

The information set forth under Note B, “Summary of Significant Accounting Policies,” to our consolidated financial statements included in this report under the caption “Recently Adopted Accounting Pronouncements” is incorporated herein by reference.

Third-Party Trademarks

~~Kadcyla~~KADCYLA and ~~Avastin~~AVASTIN are registered trademarks of Genentech, Inc. OGAP® is a registered trademark of Oxford BioTherapeutics Ltd.

2322

Table of Contents

~~OFF-BALANCE SHEET ARRANGEMENTS~~

~~None.~~

ITEM 3. Quantitative and Qualitative Disclosure about Market Risk

Our market risks, and the ways we manage them, are summarized in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC on ~~March 1, 2021~~February 28, 2022 and there have been no material changes to our market risks, or to our management of such risks, as set forth in such Annual Report on Form 10-K.

ITEM 4. Controls and Procedures

(a)	Disclosure Controls and Procedures

Our management, with the participation of our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our principal executive and principal financial officers have concluded that, as of the end of such period, our disclosure controls and procedures were effective.

(b)	Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully review and consider the information regarding certain factors that could materially affect our business, financial condition, or future results set forth under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC on February 28, 2022, and our Quarterly Report on Form 10-Q for the quarter ended March ~~1, 2021.~~31, 2022 filed with the SEC on May 6, 2022. There have been no material changes tofrom the factors disclosed in ~~such~~our Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2021 or Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, other than the risk factor included below. We may, however, disclose changes to such risk factors, or disclose additional risk factors, from time to time in our future filings with the SEC.

Unfavorable global economic conditions could adversely affect our business, financial condition, and results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. For example, the global economy has experienced extreme volatility and disruptions, including significant volatility in commodity and market prices, declines in consumer confidence, declines in economic growth, supply chain interruptions, uncertainty about economic stability, and inflation globally. Unfavorable economic conditions could result in a variety of risks to our business, including demand and pricing for our products, if approved, difficulty in forecasting our financial results, and our ability to raise additional capital when needed and on acceptable terms. A weak or declining economy could also strain our suppliers, possibly resulting in supply chain disruptions. These and other economic factors could adversely affect our business and results of operations.

2423

Table of Contents

ITEM 6. Exhibits

Exhibit No.		Description

~~4.1~~3.1		~~Form~~Restated Articles of ~~Pre-Funded Warrant~~Organization, as amended (incorporated by reference to Exhibit ~~4.1 of~~3.1 to the Registrant’s ~~Current~~Quarterly Report on Form ~~8-K~~10-Q filed on April 30, 2010)
3.1(a)		Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on January 30, 2013)
3.1(b)		Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August ~~12, 2021)~~4, 2017)
3.1(c)		Articles of Amendment (incorporated by reference to Exhibit 3.1(c) to the Registrant’s Quarterly Report on Form 10-Q filed on August 5, 2020)
3.1(d)		Articles of Amendment
10.1		~~Securities Purchase Agreement dated August 11, 2021 between ImmunoGen, Inc.~~Inducement Equity Incentive Plan, as amended
10.2		Amended and ~~RA Capital Healthcare Fund L.P.~~Restated 2018 Employee, Director and Consultant Equity Incentive Plan (incorporated by reference to Exhibit 10.1 ofto the Registrant’s Current Report on Form 8-K filed on ~~August 12, 2021)~~June 17, 2022)
31.1		Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	†	Certifications of the principal executive officer and the principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Financial statements from the quarterly report on Form 10-Q of ImmunoGen, Inc. for the quarter ended ~~September~~June 30, ~~2021~~2022 formatted in inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations and Comprehensive Loss; (iii) the Consolidated Statements of Shareholder’s Equity (Deficit); (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

†	Furnished, not filed.

2524

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ImmunoGen, Inc.

Date: ~~October 29, 2021~~August 1, 2022	By:	/s/ Mark J. Enyedy
		Mark J. Enyedy
		President and Chief Executive Officer (Principal Executive Officer)

Date: ~~October 29, 2021~~August 1, 2022	By:	/s/ Susan Altschuller, Ph.D.
		Susan Altschuller, Ph.D.
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

2625


	Employee
	Termination
	Benefits Costs
Balance at December 31, 2020	$	784
Payments during the period		(278)
Balance at September 30, 2021	$	506


2021 (three months remaining)	$	1,265
2022		5,389
2023		5,510
2024		5,470
2025		5,490
Thereafter		1,376
Total lease payments		24,500
Less imputed interest		(5,097)
Total lease liabilities	$	19,403