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 mertansine 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, cantuzumab mertansine, 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 monoclonal antibody 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 trastuzumab (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