Why Shares of ImmunoGen, Inc. Sank Today

Shares of ImmunoGen (NASDAQ: IMGN) closed down 10.6% on Tuesday after the company disclosed that it exchanged some of its 4.5% convertible senior notes due in 2021 for newly issued shares.

The biotech exchanged $15.1 million of the $84.9 million in outstanding notes in exchange for 22,604,196 shares. If the company had waited until the notes matured, it would have been able to give the note holders 2,331,986 fewer shares, but the premium exchange rate allows ImmunoGen to avoid the interest due on the notes in the meantime.

For ImmunoGen, cash is king right now. The biotech has raised cash by partnering some assets, as well as trading future royalties for up-front cash from current partners, so a move such as the one in question shouldn't come as much of a surprise.

Source: Fool.com