What happened

Shares of MacroGenics (NASDAQ:MGNX), a small-cap clinical-stage biopharma focused on cancer, dropped 15% as of 3:13 p.m. EDT on Wednesday. The double-digit swoon is traceable to a clinical update that was shared with investors.

So what

MacroGenics announced top-line results from its second pre-specified interim overall survival (OS) analysis for its Phase 3 SOPHIA study. This trial is testing its lead compound margetuximab as a treatment for patients with HER2-positive metastatic breast cancer who have already failed on other therapies. 

The OS analysis was based on 270 events. In the intent-to-treat (ITT) population, the median OS of patients treated with MacroGenics' margetuximab and chemotherapy was 21.6 months, which compares favorably to 19.8 months that was observed in the group of patients who received Roche's blockbuster drug Herceptin (trastuzumab) and chemotherapy. However, the p-value for this data was 0.326, which is well above the 0.05 that statisticians like to see.

The data also showed that patients carrying a specific allele known as CD16A 158F, which occurred in 85% of participants, showed a median OS of 23.7 months for the margetuximab arm versus only 19.4 months in the Herceptin arm. However, the p-value here was 0.087, which was also above the gold-standard threshold.

Finally, in the 15% of patients who were homozygous for the CD16A 158V allele, the patients who received Herceptin performed better than those who received margetuximab.

Drugs and pills on top of hundred dollar bills

Image source: Getty Images.

The data also showed that both arms of the trial had comparable safety profiles.

However, given today's price action, it's clear that traders were not impressed with the data.

Now what

MacroGenics stated that a final OS analysis will be performed after 385 events have accrued, which is expected to occur in 2020. Detailed results from this analysis are scheduled to be presented at the upcoming San Antonio Breast Cancer Symposium in December. MacroGenics also continues to expect that it will submit a Biologics License Application to the Food and Drug Administration before the end of 2019.

Time could prove that margetuximab is the real deal, which would be transformative for MacroGenics. The breast cancer market pulls in billions of dollars in revenue annually, so success would certainly drive the company's share price higher.

However, today's clinical update clearly fell short of the results that investors were hoping to see. This showcases why investing in high-risk biotech stocks is so difficult.