On Wednesday, B.Riley shifted its stance on MacroGenics (NASDAQ:MGNX) stock, downgrading the biopharmaceutical company's stock from Buy to Neutral. The firm also slashed the price target to $5.00 from the previous $18.00.
This adjustment follows an update from MacroGenics on their Phase II TAMARACK study, which has encountered issues leading to the discontinuation of further vobra duo (VD) treatment for the remaining metastatic castration-resistant prostate cancer (mCRPC) patients in the trial.
The company announced on Tuesday after the market closed that, based on the recommendation from the Independent Data Monitoring Committee (IDMC), it would cease administering additional doses of VD to the remaining participants in the study.
Despite the fact that many of these patients had completed 8-12 cycles of the treatment, concerns about the accumulating toxicity associated with prolonged VD exposure have overshadowed the potential benefits.
MacroGenics management pointed out that the median number of VD treatment cycles has increased significantly since the April 12th cutoff, suggesting that some patients were experiencing durable benefits from the therapy.
However, the emerging toxicity risks have led to doubts about the favorable risk/benefit ratio for the two VD dose levels tested in the study, which were 2.7 mg/kg and 2 mg/kg administered every four weeks.
The recent developments suggest a likely failure of the TAMARACK study's original hypothesis, which aimed to determine an optimal dosing regimen. This hypothesis was based on earlier Phase I/II study findings, where a 3 mg/kg dose administered every three weeks was deemed non-viable.
The decision to discontinue further treatment with VD at the current dosing levels indicates a significant setback for the trial and has impacted the analyst's outlook on the stock's potential.
In other recent news, MacroGenics experienced a series of significant developments. The company reported a decrease in total revenue to $9.1 million from $24.5 million in the prior year's quarter, alongside a net loss of $52.2 million.
Despite the financial downturn, the company highlighted positive interim data from its TAMARACK Phase 2 study for vobramitamab duocarmazine, showing promising efficacy in metastatic castration-resistant prostate cancer (mCRPC) patients.
However, the company also decided to halt treatment for the remaining mCRPC patients in the TAMARACK study following an evaluation of accumulated data. This decision led Guggenheim to adjust its stock rating for MacroGenics from "Buy" to "Neutral".
Furthermore, Citi and H.C. Wainwright revised their price targets for MacroGenics following updates from the TAMARACK trial. Citi lowered its target to $16 from $25 but maintains a Buy rating, while H.C. Wainwright reduced its target significantly to $4 from $16, retaining a Neutral stance.
Both firms adjusted their estimated probabilities of success for vobra duo due to recent safety concerns. These are part of the recent developments that investors should keep track of.
InvestingPro Insights
MacroGenics (NASDAQ:MGNX) has recently faced a notable downgrade from B.Riley, and the investment community is keenly observing the company's financial health and stock performance. According to InvestingPro data, MacroGenics holds a market capitalization of $328.83 million, with a P/E ratio that stands at -14.13. The company's revenue over the last twelve months as of Q1 2024 has experienced a sharp decline of 73.78%. These figures underscore the challenges MacroGenics is facing, especially in light of the halted Phase II TAMARACK study.
InvestingPro Tips suggest that while MacroGenics holds more cash than debt, which is a positive sign for financial stability, the company is quickly burning through cash. This could be a matter of concern for investors, considering the company's expected drop in net income this year. Additionally, the stock has been characterized by high price volatility, and analysts do not anticipate the company will be profitable this year.
For investors seeking a deeper analysis of MacroGenics, there are additional InvestingPro Tips available, which could provide further insight into the company's prospects. Remember to use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and unlock a total of 12 additional InvestingPro Tips for a comprehensive investment strategy.
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