It’s a very rewarding trading day for investors in MacroGenics (MGNX) with shares up over 120%, making the stock Wall Street’s bull of the day. Why the excitement? The Monoclonal antibody maker announced positive clinical results from SOPHIA, the Company’s Phase 3 study of margetuximab in HER2-positive metastatic breast cancer patients. The trial met the primary endpoint of prolongation of progression-free survival (PFS) in patients treated with the combination of margetuximab plus chemotherapy compared to trastuzumab plus chemotherapy.
Evercore ISI analyst Umer Raffat commented, “This is probably one of the biggest surprises of the year so far… MGNX appears to have delivered an improved HER2 mAb. This trial was always high risk, and expectations were low – so this success is a big deal. MGNX is already up significantly pre-market, and we expect this result to drive lots of new attention to the stock; we wouldn’t be surprised if market cap goes to $2Bn+… potential sales in this indication are $400M by our estimates. The company expects to file on these results in 2H19.”
“Investors are concerned that given the likely ~1 mo PFS benefit, it may not translate to an OS benefit. In our opinion, management’s body language is +ve on this. For reference, here’s a quote from the call when we asked about OS trends: “OS trend was favorable to marge” – “data quite consistent”. In addition, management flagging some of the durable responses and immune cell engagement which may explain that. Hard to read much into that, but our impression of overall body language implies OS will hit. So why does the company need 6 mo to file? We don’t have a clear answer on that one. Our concern was whether a tox signal (e.g., HER2 mabs have cardiotox concerns) emerged. But in our conversation with MGNX, they flagged that there was no safety imbalance. Perhaps its just because it’s a first filing for MGNX?” Raffat continued.
Raffat reiterates an Outperform rating on MGNX stock, without providing a price target. (To watch Raffat’s track record, click here)
H.C. Wainwright’s Debjit Chattopadhyay added, “Given this background and margetuximab’s Fcmodified construct, we continue to expect a statistically significant OS benefit, during 1H20. Note, MacroGenics is expected to file it BLA based on the PFS data during 2H19, and OS is not likely to be a hold-up for the BLA, which is being analyzed sequentially with no shared p value. Importantly, the Phase 3 SOPHIA win is likely to cast margetuximab as potentially superior to Herceptin, increasing the likelihood of it moving upstream and throwing a new light on MacroGenics, which has been pioneering Fc-modified mAbs in solid tumors.”
Chattopadhyay maintains a Buy rating on MGNX shares, while raising his 12-month price target to $39 (from $34), which implies about 55% upside from current levels. (To watch Chattopadhyay’s track record, click here)
These analysts are not the only fans of the biotech company on Wall Street, as TipRanks analytics exhibit MGNX as a Buy. Based on 7 analysts polled in the last 3 months, 4 rate a ‘buy’ on MacroGenics stock while 1 maintains ‘hold’, and 2 issue ‘sell’. However, bear in mind that the current average price target stands at $22.50, which implies about 10% downside from current levels. (See MGNX’s price targets and analyst ratings on TipRanks)