What happened

After a key investment research firm on Wall Street issued a discouraging assessment for its most advanced clinical drug program, MacroGenics (NASDAQ:MGNX) saw its shares lose over 10% of their value in early trading before bouncing back to a 7.5% drop at 11:30 a.m. EST on Thursday.

So what

MacroGenics is developing margetuximab, an optimized formulation of the top-selling breast cancer drug Herceptin. Earlier this year, management reported margetuximab delivered improved progression-free survival (PFS) versus Herceptin in late-stage studies. Specifically, the median PFS was 5.8 months versus 4.9 months in the Herceptin arm of the study. Also, PFS was 6.9 months versus 5.1 months for Herceptin in those with the CD16A 158F allele, a particularly tough-to-treat subgroup.

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Image source: Getty Images.

At the time, the data also suggested an overall survival (OS) advantage. In this study, OS was prolonged by 1.7 months in 158 patients and 6.8 months in the CD16A 158F allele population.

In October, a second interim OS analysis showed an OS advantage of 1.8 months versus Herceptin plus chemotherapy (21.6 months versus 19.8 months). In the CD16A 158F allele group, the advantage was 4.3 months (23.7 months versus 19.4 months). But the p-value -- a measure of statistical significance -- was 0.326 and 0.087, respectively. For perspective, a p-value below 0.05 is considered the gold standard.

As a result, Morgan Stanley analyst David Lebowitz lowered his rating today to underweight from equal-weight, citing concerns over the drug's commercial viability if a final evaluation of OS also fails to reach statistical significance when data is reported in 2020. 

Now what

MacroGenics plans to file for Food and Drug Administration approval of margetuximab by the end of this year based upon its PFS data. The OS data, however, is also a primary endpoint of this study, so it will be important to see what the final data looks like, and subsequently, how the FDA views those results relative to the PFS results. For this reason, most investors are likely better off focusing on other stocks, at least until the final OS data can be parsed.