2004 Annual Report

The Power to Deliver Letter to Our Shareholders ImmunoGen, Inc.

s many of you know, a central objective of our business model is the development of our Aown products. We help to fund our product programs by selectively outlicensing our Tumor-Activated Prodrug (TAP) technology to other companies for use with their proprietary antibodies. Our TAP technology is designed to increase the anticancer power of tumor- targeting monoclonal antibodies while maintaining the good tolerability that antibody-based treatments can offer.

Our Clinical-Stage TAP Compounds Partly as a result of the collaboration we established with Aventis, we now have the financial wherewithal to conduct clinical trials with our product candidates huN901-DM1 and cantuzumab before we determine whether to partner either or both. HuN901-DM1 targets the cell-surface antigen CD56 found on small-cell lung cancers (SCLC), other neuroendocrine cancers, and certain hematologic malignancies including multiple myeloma. In January 2004, we regained all rights to this compound from Vernalis (formerly British Biotech). We recently assumed responsibility for the Phase I/II study that is underway in the United States, while Vernalis continues to conduct the Phase I study initiated in the United Kingdom. We expect these trials to provide information important for the development of huN901-DM1 for SCLC and other ust over a year ago we types of CD56-expressing solid tumors. Indeed, the initial clinical findings indicate that this compound is well toler- established a collaboration ated at doses that show evidence of biological activity. J Now that we control the development of huN901- with Aventis that has DM1, we plan to assess its usefulness in a hematologic greatly enhanced our financial cancer setting as well – specifically multiple myeloma. strength and opened up new And depending upon the outcome of this study, a shorter opportunities for us to develop development pathway than for SCLC may emerge. We expect to begin patient dosing in this new study within our own products. the next six months. Our other wholly-owned clinical product, , targets the CanAg antigen found on colorectal, pancreatic, other gastrointestinal cancers, and many non-small-cell lung cancers. In Phase I trials conducted by a former partner, this compound also was found to be well tolerated and to demonstrate evidence of biological activity. We are preparing to start our own clinical program with cantuzumab mertansine, or a slightly modified version of it, to establish its clinical utility, and expect to begin patient dosing in 2005.

Progress by Our Partners Our technology outlicense partner, Millennium Pharmaceuticals, Inc., is investigating MLN2704 in Phase I/II trials. MLN2704 is composed of the Millennium MLN591 antibody and our DM1. In June 2004, the first clinical data were reported on this compound. In a Phase I study in patients with androgen-independent metastatic prostate cancer, clinical advancement of our compounds and those of MLN2704 was found to be well tolerated. Additionally, our partners. And we’ve increased our manufacturing evidence of anticancer activity was reported, including capacity and added headcount in production, process significant tumor shrinkage. development, quality systems, and related functions. Another of our technology outlicense partners, We ended our 2004 fiscal year with several TAP Boehringer Ingelheim, has several clinical trials compounds in clinical trials, multiple partnerships in underway with its TAP compound, bivatuzumab place with major pharmaceutical and biotech companies, mertansine, in Europe. and $94.6 million in cash and marketable securities. Our collaborator Aventis is also making progress, We and our partners continue to make solid progress, and we expect the first product candidate to come out and I look forward to updating you on our advances as of this relationship – the anti-CD33 TAP compound for they develop. acute myeloid leukemia – to advance into the clinic in Sincerely, the near future.

Enhancement of Our Infrastructure To support the progress being made by us and by our partners, we’ve expanded our infrastructure in key areas. Mitchel Sayare, Ph.D. We’ve established a clinical department, headed by a Chairman, President, and Chief Executive Officer very experienced oncologist, to lead the development of huN901-DM1 and cantuzumab mertansine. We’ve September 10, 2004 enhanced our regulatory department to support the

Page ImmunoGen Annual Report 1 Expanding the Potential for Antibodies in the Treatment of Cancer

n recent years, several used to impart anticancer activity to those that don’t, products have gained strong market acceptance, and to improve the performance of those that do. For Iprincipally because these compounds can provide example, Genentech has licensed the right to use our anticancer activity while avoiding many of the side effects technology with antibodies to the target HER2,

of traditional anticancer drugs. Monoclonal antibodies including (Herceptin®), an approved can selectively affect cancer cells because scientists can antibody treatment for breast cancer. engineer them to bind to antigen targets present on We used our TAP technology together with our own cancer cells and not on normal cells. antibodies to create our product candidates huN901-DM1 Although with some targets, binding of an antibody and cantuzumab mertansine and the two preclinical TAP leads to the death of the cancer cell, with many targets compounds that we licensed to Aventis. In each case, we binding of an antibody has little, if any, anticancer effect. used our internal expertise to identify, evaluate prom- Our Tumor-Activated Prodrug (TAP) technology is ising cancer targets. designed to provide tumor-targeting antibodies with In some cases, a promising target is owned by significant anticancer activity and yet maintain their another company and not accessible to us for our own excellent tolerability. We attach a potent cell-killing agent product development. In this situation, we may do the to the antibody as a payload. The antibody serves to next best thing and outlicense our technology to the deliver the payload selectively to a cancer cell, while the other company. This enables the other company to payload is designed to kill the cell to which it is delivered. develop a TAP compound with its antibody and Our portfolio of payload molecules includes DM1 – enables ImmunoGen to derive a financial return that the payload in all TAP compounds now in clinical would not otherwise be possible. testing – plus other highly potent, proprietary molecules. Our TAP technology outlicenses typically include Each is able to be attached to an antibody using one of upfront and milestone payments that potentially our linkers. Our linkers are designed to keep the payload total over $40 million per target, plus royalties on attached to the antibody until it binds to its target on a product sales. We also manufacture preclinical and cancer cell and is internalized by the cell. This design clinical material for our partners and are reimbursed on serves to focus the killing power of the TAP compound a cost- or cost-plus basis. Our partners are responsible for on cancer cells rather than on normal tissue to avoid the product development, later-stage manufacturing, clinical debilitating side effects of traditional anticancer drugs. testing, registration, and commercialization. Generally speaking, antibodies that target cancer cells Each new TAP compound in development, either fall into one of two categories – those that have anticancer by us or by our partners, increases our opportunity for activity and those that don’t. Out TAP technology can be commercial and financial success.

Page 2 ImmunoGen Annual Report Illus. 1 Expanding the Potential Illus. 2 Increasing Clinical Support Increasing Clinical Support for Our TAP Technology

linical data are essential for the validation of study was designed to assess the safety of the compound, any novel therapeutic. The body of clinical evidence of anticancer activity was reported. Among the Cdata with TAP compounds is growing, and nine patients that received either of the two highest dose we expect this growth to accelerate in the future. levels studied, four had tumors that could be accurately The first clinical data with a partner-developed measured. After receiving MLN2704, one of these TAP compound – MLN2704 – were reported at patients had a sustained reduction in tumor size and the American Society of Clinical Oncology (ASCO) two of these patients had stable disease. At the time of 2004 annual meeting. MLN2704, developed by ASCO, the patient with the tumor shrinkage had Millennium Pharmaceuticals, Inc., is composed of our received MLN2704 once every four weeks for 46 weeks DM1 payload and the Millennium MLN591 antibody. and had no disease progression. This antibody targets the prostate-specific membrane As a rise in PSA level is an indicator of prostate antigen (PSMA) expressed on virtually all prostate cancer progression, PSA blood levels were measured in cancers. The findings reported were from a Phase I all study patients. Among the nine “high dose” patients, dose escalation study in patients with metastatic two had their PSA levels stabilize and two additional androgen-independent prostate cancer. patients had pronounced, sustained, reductions in PSA MLN2704 was found to be very well tolerated, even at levels. One of these patients was the individual with

doses as high as 343 mg/m2. Additionally, even though the marked tumor shrinkage.

ImmunoGen TAP Technology: Widely Applied Compound Target Tumors that Express Target

Clinical-Stage HuN901-DM1 CD56 Solid tumors: Small-cell lung cancer, Proprietary other neuroendocrine cancers Compounds Liquid tumors: Multiple myeloma, other

Cantuzumab mertansine CanAg Solid tumors: Colorectal, pancreatic, and other gastrointestinal cancers; non-small-cell lung cancers

Clinical-Stage MLN2704 PSMA Solid tumors: Prostate cancers Partner Compounds CD44v6 Solid tumors: Head and neck, breast

Preclinical Anti-CD33 TAP CD33 Liquid tumors: Acute myeloid leukemia, Proprietary other hematologic malignancies and Partner Compounds Compound for B-cell Undisclosed Liquid tumors: Non-Hodgkin’s malignancies lymphoma, other B-cell malignancies

Trastuzumab-DM1 HER2 Solid tumors: Breast

Others Undisclosed Undisclosed

Page ImmunoGen Annual Report 5 Similar evidence of tolerability and activity have been myeloma. Preclinical work conducted at the Dana- reported with our wholly-owned TAP compounds. In Farber Cancer Institute confirms that a majority of Phase I clinical trials, cantuzumab mertansine was found multiple myeloma cases express CD56. The researchers to be well tolerated and evidence of anticancer activity also found that huN901-DM1 very effectively kills these was reported. For example, a patient with a large, diffuse, multiple myeloma cells. We expect to begin our abdominal tumor had the signs of his disease all but huN901-DM1 multiple myeloma clinical trial within disappear for more than a year with regular treatment the next six months. Demonstration of efficacy in such with cantuzumab mertansine. A patient with treatment- a liquid tumor malignancy provides another possible resistant colon cancer had a marked reduction in the size route to marketing approval for huN901-DM1 that of the tumors that had metastasized to her lungs. And a could be shorter than the one for SCLC. number of patients with treatment-resistant CanAg- Our other product candidate, cantuzumab mertansine, positive cancer, including a patient with pancreatic has undergone Phase I evaluation in studies completed cancer, experienced stable disease. by a former partner. We plan to initiate our own clinical While less data have been reported to date with program with this compound, and expect to test either huN901-DM1, it too has been found to be well tolerated cantuzumab mertansine or a slightly modified version at doses that show evidence of anticancer activity. For of it. We will provide details on our clinical study plans example, a patient with a neuroendocrine cancer had a later in 2004. substantial, although transient, reduction in tumor size While we are making progress with our clinical after receiving huN901-DM1, and additional patients programs, our partners are also making progress with experienced stable disease. theirs. Millennium is now studying MLN2704 in Looking forward, we expect the body of clinical data Phase I/II trials. Outlicense partner Boehringer Ingelheim with TAP compounds to increase substantially through is studying its TAP compound, bivatuzumab mertansine, studies conducted both by us and by our partners. in multiple Phase I trials. Additionally, we expect Aventis, On July 1, 2004, we assumed responsibility for the now a part of the Sanofi-Aventis group, to initiate clinical huN901-DM1 Phase I/II study underway in the US, testing in the near future with the anti-CD33 TAP and are working to expedite its completion. Patients compound licensed from us. with small-cell lung cancer (SCLC) are being enrolled We believe that the results from studies we conduct in the Phase II leg of this study. Additionally, our former with our own products, the results from studies our tech- partner, Vernalis, is making progress with the Phase I nology outlicense partners conduct with their products, study it initiated in SCLC in the United Kingdom. and the results from studies initiated by Aventis can all We also plan to initiate our own clinical trial with provide further validation of our technology. huN901-DM1 in a hematologic malignancy, multiple

Page 6 ImmunoGen Annual Report Illus. 3 Building Our Infrastructure Building Our Infrastructure to Reflect Our Opportunities

ver the past eighteen months, there has We have bolstered our regulatory department, both been a growing appreciation among our to support our own clinical-stage compounds and to O partners and peers of our unique expertise assist partners with those aspects of regulatory submis- in functions essential to the development and advance- sions unique to TAP compounds. ment of antibody-based anticancer compounds. To We have expanded our manufacturing capacity and provide the support our partners need and are willing are adding more production personnel. We also have to fund, and to provide internal support for our own increased our headcount in manufacturing-related areas compounds, we have expanded our human and physical such as process development, analytical assay develop- resources in selected areas. ment, and quality systems. We have established an internal clinical department We believe we are well positioned – in our human to lead the clinical development of huN901-DM1 and resources, our physical resources, and our financial cantuzumab mertansine and to provide input on other resources – to advance our own compounds and to compounds in development. It is headed by a well- support our partners in the advancement of theirs. We are respected oncologist with extensive experience both committed to the development of high-value anticancer in cancer drug development and in the practice of products that can make a real difference to patients. clinical oncology.

Product Pipeline Compound Stage Developer/Collaborator

HuN901-DM1 Clinical ImmunoGen

Cantuzumab mertansine Clinical ImmunoGen

MLN2704 Clinical Millennium

Bivatuzumab mertansine Clinical Boehringer Ingelheim

Anti-CD33 TAP Preclinical ImmunoGen/Aventis

Anti-IGF-IR antibody Preclinical ImmunoGen/Aventis

Compound for B-cell malignancies Preclinical ImmunoGen/Aventis

Trastuzumab-DM1 Preclinical Genentech

Page 8 ImmunoGen Annual Report Corporate Information ImmunoGen, Inc.

Directors Corporate Headquarters Mitchel Sayare, Ph.D. ImmunoGen, Inc. Chairman, President and Chief Executive Officer, 128 Sidney Street ImmunoGen, Inc. Cambridge, Massachusetts 02139 Walter A. Blättler, Ph.D. (617) 995-2500 Executive Vice President, Science and Technology, www.immunogen.com ImmunoGen, Inc.

David W. Carter Annual Meeting Chairman and Chief Executive Officer, Tuesday, November 9, 2004 Xenogen Corporation At the Offices of the Company 128 Sidney Street Stuart F. Feiner Cambridge, Massachusetts 02139 Executive Vice President, General Counsel and Secretary, Inco Limited Transfer Agent and Registrar Mark Skaletsky Mellon Investor Services LLC Chairman and Chief Executive Officer, 85 Challenger Road Trine Pharmaceuticals, Inc. Ridgefield Park, New Jersey 07660 (201) 329-8660 Joseph J. Villafranca, Ph.D. (800) 288-9541 Executive Vice President, www.melloninvestor.com Pharmaceutical Drug Development and Operations, Neose Technologies, Inc. Legal Counsel Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Executive Officers Boston, Massachusetts Mitchel Sayare, Ph.D. President and Chief Executive Officer Auditors Walter A. Blättler, Ph.D. Ernst & Young LLP Executive Vice President, Science and Technology Boston, Massachusetts John M. Lambert, Ph.D. Senior Vice President, Pharmaceutical Development

Virginia Lavery Vice President, Finance and Treasurer

Pauline Jen Ryan Senior Vice President, Business Development

This report includes forward-looking statements based on management’s current expectations. For these statements, ImmunoGen claims the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Various factors could cause the Company’s actual results to differ materially from those discussed or implied in the forward-looking statements and you are cautioned not to place undue reliance on these forward-looking state- ments, which are current only as of the date of this report. Factors that could cause future results to differ materially from such expectations include, but are not limited to: the outcome of the Company’s research and clinical development processes, including the anticipated advancement into the next stages of clinical testing of cantuzumab mertansine and huN901-DM1; the outcome of the Company’s collaboration partners’ research and clinical development processes, including the antici- pated clinical advancement of partner compounds; the difficulties inherent in the development of pharmaceuticals, including uncertainties as to the timing, expense and results of preclinical studies and clinical trials; the Company’s dependence upon existing and potential collaborative partners, and the outcome of the clinical testing of TAP compounds being developed by the Company’s existing partners; uncertainty as to whether the Company’s potential products or those of the Company’s collabora- tors will succeed in entering human clinical trials and uncertainty as to the results of such trials; the uncertainty of the payment terms in the Company’s future TAP technology outlicenses; the ability of the Company’s current capital resources and anticipated future collaborator payments to enable the Company to meet its current and projected operational expenses and capital expenditures for the next three to five years; the risk that the Company and/or its collaborators may not be able to obtain regulatory approvals necessary to commercialize their product candidates; the potential development by competitors of competing products and technologies; uncer- tainty whether the Company’s TAP technology will produce safe, effective and commercially viable products; and other factors more fully described in ImmunoGen’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004 and other reports filed with the Securities and Exchange Commission.

Herceptin® is a registered trademark of Genentech. 128 Sidney Street Cambridge, MA 02139 (617) 995-2500 www.immunogen.com