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Here's Why MacroGenics Jumped 156.6% in the First Half of 2020

By Maxx Chatsko – Updated Jul 9, 2020 at 5:23PM

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Investors remain optimistic that the leading drug candidate can earn marketing approval before the end of the year.

What happened

Shares of MacroGenics (MGNX -3.33%) soared over 156% in the first six months of the year, according to data provided by S&P Global Market Intelligence. For comparison, the S&P 500 limped through the first half of 2020 with a 4% decline. 

The biopharma stock jumped after the company announced progress in the commercialization efforts of margetuximab. MacroGenics expects the U.S. Food and Drug Administration (FDA) to make a decision on a Biologics License Application (BLA) in HER2 positive breast cancer treatment by December 18. 

Can the small-cap stock keep its gains ahead of the decision date?

A businessman tossing cash into the air.

Image source: Getty Images.

So what

Margetuximab is a monoclonal antibody based on the blockbuster cancer drug Herceptin, which is a leading treatment for HER2 positive solid tumor cancers. The difference is that researchers have engineered the crystallizable fragment (Fc) of margetuximab to boost efficacy of the biologic drug.

The Fc-engineered drug candidate has performed well in studies conducted to date, demonstrating improved progression-free survival (PFS) and overall survival (OS) in HER2 positive breast cancer compared to Herceptin. Meanwhile, an ongoing phase 2/3 clinical trial in gastroesophageal cancer, as well as other studies, is seeking to expand its potential use for genetically defined cancers.

Recent decisions suggest regulators won't create unnecessary barriers to market. In May, the FDA told MacroGenics that an advisory committee meeting will not be required to review the BLA for margetuximab in breast cancer (saving time) and that it intends to make a decision by the original Prescription Drug User Fee Act (PDUFA) goal date of December 18. If all goes smoothly, then the drug could launch in 2021. 

Now what

MacroGenics was an early mover with Fc-engineered antibody research, which could soon pay off handsomely for the business and investors. That said, investors need to carefully consider a range of outcomes now that the company's market valuation is sitting at $1.5 billion. 

Future gains will likely be determined by the magnitude of the difference in survival rates between margetuximab and Herceptin in each indication, which will affect everything from selling price to the willingness of doctors to prescribe the new drug. It could prove more difficult than investors expect for the drug candidate to steal market share from Herceptin, even if it delivers successful clinical trial data.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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