https://www.barrons.com/articles/macrogenics-soars-in-the-biotech-casino-51549672445
MacroGenics Soars in the Biotech Casino
Feb. 8, 2019 7:34 pm ET
Elias Stein
Investors in MacroGenics can be excused for feeling a bit of whiplash.
Before the market opened this past Wednesday, the little biotech announced positive results for a phase 3 trial of margetuximab, a breast-cancer treatment. The stock then roared higher, closing at $25.60, up 130%. That's the kind of move biotech investors dream of, but for every Sarepta Therapeutics, which soars on a drug's success, there's a MannKind, a multiyear money loser.
Last March, MacroGenics hit $32.74, before crumbling by almost 70% until Wednesday. That wild round trip illustrates the reality that biotechs largely trade as options on the outcome of drug trials or applications for Food and Drug Administration approval. In 2018's first three quarters, MacroGenics lost $126.8 million, on just $44.3 million in revenue.
Part of the reason for MacroGenics' surge was that expectations were so low. On Monday, a Citigroup analyst, Dr. Yigal Nochomovitz, issued a Sell rating on the stock, and gave the trial a 75% chance of failure.
Now, Evercore ISI analyst Umer Raffat sees margetuximab generating more than $650 million a year in sales. A Nomura analyst, Dr. Christopher Marai, adding in the value of other drugs in MacroGenics' pipeline, has a $41 target on the stock. FDA approval is the next hurdle for margetuximab. Uncertainty, of course, remains. So, those who've done well in the biotech casino might do what some veteran Las Vegas gamblers advise: If you win big, cash out.
--Nicholas Jasinski
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