MGNX - MacroGenics downgraded at BMO after discontinuation of cancer trial

BMO Capital Markets has downgraded MacroGenics ( NASDAQ: MGNX ) to Market Perform from Outperform after the oncology-focused biotech announced the termination of a Phase 2 trial for a cancer regimen targeted at the squamous cell carcinoma of the head and neck. The price target lowered to $4 from $31 per share implies a premium of ~14% to the last close.

The company said it halted the CP-MGA271-06 study for a therapeutic combination involving monoclonal antibody enoblituzumab after a safety review revealed seven fatalities, including one potentially related to the experimental therapy.

Acknowledging that enoblituzumab was not a key contributor to its previous valuation BMO analysts argue: “….the update has eroded our confidence in MGNX's ability to address the unresolved safety issues” with an antibody-drug conjugate called B7H3.

The company’s platform, consisting of multiple clinically active molecules and the commercial program, Margenza appears to have no program, with the potential to act as a meaningful value-creating driver for the next 12 – 18 months, the team added.

Wall Street has remained bullish on MacroGenics ( MGNX ), with an average rating of Strong Buy from analysts, while the Seeking Alpha quant rating system, which consistently beats the market, rated MGNX as a Strong Sell.

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