What happened
Shares of MacroGenics(NASDAQ: MGNX) were tanking by 19.7% as of 12:22 p.m. ET on Wednesday. The steep decline came after the company provided its first-quarter update following the market close on Tuesday.
MacroGenics reported Q1 revenue of $11.1 million, with $3.6 million in sales of breast cancer drug Margenza and the rest from collaborative agreements. This result was lower than the $16.9 million in revenue recorded in the prior-year period. It also came in well below the consensus revenue estimate of $20 million.
The company posted a net loss in the first quarter of $66.4 million, or $1.08 per share. This was worse than the average analysts' estimate of a Q1 net loss of $0.91 per share.
So what
It's not surprising that the MacroGenics stock fell after it missed Q1 estimates. However, there's a bigger concern for investors.
MacroGenics plans to kick off a phase 2/3 clinical study evaluating MGC018 in treating prostate cancer by the end of 2022. The problem, though, is that the company doesn't have enough cash to fund the clinical trial. MacroGenics ended the first quarter with $184 million in cash, cash equivalents, and marketable securities.
The drugmaker's management team stated that they will be able to obtain the funds needed to initiate the phase 2 portion of the MGC018 study before year-end. But executives didn't specify exactly how they'll do so. More dilution could be on the way if another stock offering is in the cards.
Image source: Getty Images.
Now what
MacroGenics should have plenty of catalysts on the way. The company expects to provide an update during the second half of 2022 on the PD-L1-positive patient cohort of its phase 2 study of enoblituzumab in treating squamous cell carcinoma of the head and neck. It plans to share data from a phase 1/2 study of lorigerlimab in treating various solid tumors later this year as well.
Also, the U.S. Food and Drug Administration assigned a PDUFA date of Aug. 17, 2022, for a decision on teplizumab in delaying type 1 diabetes. Although Provention Bio now owns the rights to the drug, MacroGenics stands to receive milestone payments and royalties on any net sales.
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Keith Speights 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.
