What happened

Shares of the clinical-stage oncology and autoimmune disease specialist MacroGenics (NASDAQ:MGNX) ended the day higher by a healthy 17.36% on a whopping 17.5 times the average volume.

The catalyst? Macrogenics' shares took flight after the company announced a licensing deal with Incyte Corp. (NASDAQ:INCY) for its programmed cell-death protein 1 (PD-1) inhibitor, MGA012, that's being assessed in four solid tumor types in an early-stage dose-escalation study. 

A rocket taking off, with flames shooting out of the boosters.

Image source: Getty Images.

So what

While a licensing deal with a deep-pocketed partner is certainly noteworthy from a validation standpoint, Macrogenics' most important near-term benefit from this licensing deal with Incyte is a $150 million upfront payment that should significantly extend its cash runway going forward. The biotech is also eligible for an additional $750 million in developmental and regulatory milestone payments, as well as tiered royalties of 15% to 24% on future sales of MGA012. 

Now what

According to the press release, MacroGenics plans to unveil some of MGA012's early-stage results in a poster presentation at the upcoming Society for Immunotherapy of Cancer 32nd annual meeting next month. Incyte, presumably, got an early peak at these preliminary results, and were impressed enough to sally forth with this rather generous licensing deal. Early-stage clinical candidates, after all, rarely garner these types of high-dollar upfront payments -- especially in the jam-packed PD-1 arena, where multiple big pharmas and blue-chip biotechs are racing to bring their own drugs to market in the near future. 

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