MacroGenics - 2013 Fierce 15

Coming back, fast, from a Phase III setback

Based: Rockville, MD
Founded: 2000
CEO: Scott Koenig
Clinical focus: Oncology, autoimmunity and infectious diseases

The scoop: The high risk of R&D failure dogs every biotech's trail. In a business in which close to 95% of all therapies entering Phase I development go belly up, the odds are high that somewhere along the way a biotech will have to explain why something went wrong.

For MacroGenics, the big setback came in 2010 when Eli Lilly ($LLY) announced that its Phase III study of the diabetes drug in-licensed from the biotech--teplizumab--had failed. Not long afterward, the pharma giant dropped the drug rights altogether and walked away. MacroGenics, though, is a multiplatform company with some solid venture backers who are well aware of the risks involved. And after the late-stage setback, the biotech regrouped and came back strong--so strong that it now feels confident the time is ripe for an IPO.

What makes MacroGenics fierce: The pitch to investors rests on three main technologies that have been perfected at MacroGenics over the past 13 years. There's the Dual-Affinity Retargeting (DART) platform that creates engineered antibodies--as opposed to the monoclonals that pioneered this field--that can zero in on multiple antigens and cells. Think of them as a one-two punch. There's the Fc optimization platform that coordinates an antibody/immune-cell attack on a disease target. And then there's its expertise in cancer stem cells, prime suspects as one of the deadliest cancer targets in the oncology field.

Its lead program is margetuximab (or MGAH22), which MacroGenics believes could be used in a wider population of cancer patients with HER2-positive tumors than are currently helped by trastuzumab. That drug is now in Phase II.

This kind of technical know-how brought in some major-league partners: Servier, Gilead ($GILD), Pfizer ($PFE) and Boehringer Ingelheim, among others, which have shelled out $116 million so far with more than $100 million up for grabs by the end of 2015, according to its S-1. The Gilead deal alone, announced at the beginning of this year, is worth up to $1.1 billion. Boehringer signed on for a pact potentially worth more than $2 billion.

The most recent partnership cash came from Servier (which inked another $1.1 billion deal) after investigators dosed the first patient in an early-stage study of their tumor-targeting drug MGA271. It's an Fc-optimized monoclonal antibody that zeroes in on B7-H3, which is overexpressed in a variety of solid tumor types. In the Phase I, MacroGenics plans to recruit 45 patients in three cohorts of 15 each; two will include different tumor types while a third involves patients with B7-H3-expressing tumors  

And that failed drug teplizumab?

Ironically, the prominent investigators behind the drug were able to come up with some federal funds to reorganize, reformulate and redefine the patient group. And in a follow-up study, the drug produced more intriguing proof-of-concept data that could well set the stage for another Phase III showdown--without Eli Lilly.

It's still a wild card for MacroGenics. But in this business, a few wild cards can help.

Investors: Nextech Venture, Arcus Ventures, Innovis Investments, Lilly, Alexandria Real Estate, Alta Partners, CIDC, InterWest Partners, Mitsubishi UFJ, OrbiMed Advisors, Red Abbey Venture Partners, RiverVest, Texas Pacific Group Ventures and Ventures West

For more:
MacroGenics trumpets cancer immunotherapies in $60M IPO pitch
On a roll, MacroGenics scoops up $10M on tumor drug milestone
MacroGenics banks $20M in potential $1.1B cancer-drugs deal with Servier
MacroGenics pockets $20M in $450M deal with Servier

-- John Carroll (email)

MacroGenics - 2013 Fierce 15