MacroGenics Inc.

08/14/2026 | Press release | Distributed by Public on 08/14/2026 14:29

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations is based upon our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared by us in accordance with U.S. generally accepted accounting principles (GAAP), for interim periods and with Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended. This discussion and analysis should be read in conjunction with these unaudited consolidated financial statements and the notes thereto as well as in conjunction with our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Overview
We are a clinical-stage biopharmaceutical company focused on developing innovative antibody-based therapeutics for the treatment of cancer. We generate our pipeline of product candidates from our proprietary suite of antibody technology platforms. We are currently developing therapeutics utilizing multiple modalities, including antibody-drug conjugates (ADCs) and multi-specific antibodies (which we refer to as DART and TRIDENT molecules). The combination of our technology platforms and antibody engineering expertise has allowed us to generate promising product candidates - three of which have received marketing approval by the U.S. Food and Drug Administration (FDA) - and to enter into several strategic collaborations with global biopharmaceutical companies. These collaborations have provided us with over $1.6 billion of non-dilutive funding since our inception in 2000, and have enabled us to leverage the additional expertise of our collaborators to advance the development of multiple partnered product candidates. In addition, we operated a commercial-scale cGMP antibody manufacturing facility in our Maryland headquarters. We utilized the facility to support our clinical programs and we also provided outsourced contract development and manufacturing services to our collaborators and other third parties for commercial and clinical products to offset a significant portion of the operating costs of this facility. Effective June 30, 2026, we completed the sale of certain assets and liabilities related to our GMP manufacturing operations, including our CDMO business (the CDMO Operations) conducted at our manufacturing facility and related warehouse operations located in Frederick, Maryland to Bora Pharmaceuticals Co., Ltd. and Bora Biologics USA, LLC (collectively, Bora). The transaction was conducted pursuant to the Asset Purchase Agreement, dated as of May 11, 2026 (the Bora Agreement). Under the terms of the Bora Agreement, Bora paid us $119.6 million in July 2026, which represented the purchase price of $122.5 million net of customary adjustments, including for working capital and indebtedness, and Bora assumed responsibility for the CDMO Operations.
We currently have multiple proprietary product candidates. These include three clinical-stage ADCs incorporating a novel topoisomerase I inhibitor (TOP1i)-based linker-payload: MGC026, which targets B7-H3; MGC028, which targets ADAM9; and MGC030, which is directed against an undisclosed target. We are also developing lorigerlimab, a clinical-stage bispecific DART molecule targeting the immune checkpoint receptors PD-1 and CTLA-4. In addition, we are developing multiple preclinical-stage ADC and next-generation T-cell engager programs.
We and our partners are developing or commercializing product candidates for which we retain certain economic rights. These include three products approved by the FDA: ZYNYZ (retifanlimab-dlwr), an anti-PD-1 monoclonal antibody (mAb) that we out-licensed; MARGENZA (margetuximab-cmkb), an anti-HER2 mAb that we sold to a partner; and TZIELD (teplizumab-mzwv), an anti-CD3 mAb that we sold to a partner. We are also collaborating with Gilead Sciences, Inc. (Gilead) on the development of MGD024, a bispecific DART molecule targeting CD123 and CD3 that utilizes our next-generation T-cell engager technology, as well as two additional undisclosed pre-clinical DART and TRIDENT molecule development programs.
Our operations to date have concentrated on developing our technology platforms, identifying potential product candidates, undertaking preclinical studies, conducting clinical trials, developing collaborations, operating manufacturing facilities, business planning and raising capital. We have financed our operations primarily through the public and private offerings of our securities, and collaborations with other biopharmaceutical companies. Although it is difficult to predict our funding requirements, we anticipate that our cash, cash equivalents and marketable securities as of June 30, 2026, combined with the $119.6 million received from Bora in July 2026, the $24.5 million milestone due from Sanofi in September 2026 and the $10.0 million for the First Research Program option exercise due from Gilead, as well as projected and anticipated future payments from our partners and anticipated savings from our ongoing cost-reduction initiatives, supports our cash runway through 2028. We have implemented, and will continue to evaluate and execute, various cost-saving measures that are intended to extend our financial runway while continuing to progress our pipeline.
Through June 30, 2026, we had an accumulated deficit of $1.3 billion. We expect that over the next several years this deficit will increase as we continue to incur research and development expense in connection with our ongoing activities and several clinical trials.
Macroeconomic Conditions
The global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of significant worldwide events, including, fluctuating interest rates, geopolitical upheaval and tariffs or other restrictions imposed by the United States government or governments of other nations (collectively, the Macroeconomic Conditions). These Macroeconomic Conditions have and may continue to create supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment. It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions. Prolonged uncertainty with respect to Macroeconomic Conditions could cause further economic slowdown or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.
Collaborations
We pursue a balanced approach between product candidates that we develop ourselves and those that we develop with our collaborators. Under our strategic collaborations to date, we have received significant non-dilutive funding and continue to have rights to additional funding upon completion of certain research, achievement of key product development milestones and royalties and other payments upon the commercial sale of products. Our current collaborations include the following:
•Incyte Corporation (Incyte). We have an exclusive global collaboration and license agreement with Incyte for retifanlimab, an investigational monoclonal antibody that inhibits PD-1 (Incyte License Agreement). Under this agreement, as amended, Incyte has obtained exclusive worldwide rights for the development and commercialization of retifanlimab in all indications, while we retain the right to develop our pipeline assets in combination with retifanlimab. We received an upfront payment of $150.0 million and milestone payments totaling $215.0 million from Incyte through June 30, 2026. We are eligible to receive up to an additional $210.0 million in development and regulatory milestones and $330.0 million in commercial milestones. We receive tiered royalties of 15% to 24% on any global net sales, other than with respect to ZYNYZ (see Note 5. Royalty Monetization Arrangement for further information), and we have the option to co-promote retifanlimab with Incyte. We retain the right to develop our pipeline assets in combination with retifanlimab, with Incyte commercializing retifanlimab and us commercializing our asset(s), if any such potential combinations are approved. We also had an agreement under which we were entitled to manufacture a portion of Incyte's global commercial supply of retifanlimab (Incyte Commercial Supply Agreement). This agreement was assigned to Bora under the Bora Agreement.
•Gilead. In October 2022, we and Gilead entered into an exclusive option and collaboration agreement (Gilead Agreement) to develop and commercialize MGD024 and create bispecific cancer antibodies using our DART platform and undertake their early development under a maximum of two separate bispecific cancer target research programs. Under the Gilead Agreement, we will continue the ongoing phase 1 trial for MGD024 according to a development plan, during which Gilead will have the right to exercise an option granted to Gilead to obtain an exclusive license to develop and commercialize MGD024 and other bispecific antibodies of ours that bind CD123 and CD3 (CD123 Option). The agreement also granted Gilead the right, within its first two years, to nominate a bispecific cancer target set for up to two research programs conducted by us and to exercise separate options to obtain an exclusive license for the development, commercialization and exploitation of molecules created under each research program (Research Program Option). As part of the Gilead Agreement, Gilead paid us a non-refundable upfront payment of $60.0 million and we will be eligible to receive up to $1.7 billion in target nomination, option fees, and development, regulatory and commercial milestones, assuming Gilead exercises the CD123 Option and Research Program Option, successfully develops and commercializes MGD024 or other CD123 products developed under the agreement, and products result from the two additional research programs. Assuming exercise of the CD123 Option, we will also be eligible to receive tiered, low double-digit royalties on worldwide net sales of MGD024 (or other CD123 products developed under the agreement) and assuming exercise of the Research Program Option, a flat royalty on worldwide net sales of any products resulting from the two research programs. In 2023, Gilead nominated the first of the two research programs contemplated in the Gilead Agreement (First Research Program) and paid us a $15.7 million nomination fee. We granted Gilead a
research license, and the parties agreed on a research plan for the First Research Program under which we will provide research and development services. In January 2024, the parties amended the Gilead Agreement to revise certain matters related to intellectual property in the performance of the research plans under the agreement. In June 2024, Gilead paid us variable consideration totaling $3.3 million upon achievement of a research plan milestone. In September 2025, Gilead nominated the second of the two research programs contemplated in the Gilead Agreement (Second Research Program) and we granted Gilead a research license. Gilead also exercised their exclusive option to obtain a license to exploit the research molecule and research product with respect to the Second Research Program. Gilead is obligated to pay us a total of $25.0 million related to the nomination and option exercise. Additionally, in August 2026, Gilead exercised its option to obtain a license to exploit the research molecule and research product with respect to the First Research Program (see Note 6, Revenue, for additional information). In accordance with the terms of the First Letter Agreement under the Gilead Agreement, Gilead will pay the Company $10.0 million related to this option exercise.
Critical Accounting Estimates
Our critical accounting estimates are policies which require the most significant judgments and estimates in the preparation of our consolidated financial statements. A summary of our critical accounting estimates is presented in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no material changes with respect to our critical accounting estimates during the six months ended June 30, 2026.
Results of Operations
Revenue
The following represents a comparison of our revenue for the three and six months ended June 30, 2026 and 2025 (dollars in millions):
Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
2026 2025 2026 2025
Collaborative and other agreements $ 25.5 $ 5.6 $ 19.9 355 % $ 26.1 $ 12.2 $ 13.9 114 %
Royalty revenue 7.3 1.3 6.0 462 % 13.4 1.7 11.7 688 %
Total revenue $ 32.8 $ 6.9 $ 25.9 375 % $ 39.5 $ 13.9 $ 25.6 184 %
The increase in revenue of $25.9 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to:
•the achievement of a $24.5 million regulatory milestone related to TZIELD; and
•an increase of $6.0 million in royalty revenue recognized due to higher sales of ZYNYZ.
These increases were partially offset by:
•a decrease of $5.6 million in revenue recognized under the Gilead First Research Program, as it was completed in the second quarter of 2025.
The increase in revenue of $25.6 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to:
•the achievement of a $24.5 million regulatory milestone related to TZIELD; and
•an increase of $11.7 million in royalty revenue recognized due to higher sales of ZYNYZ.
These increases were partially offset by:
•a decrease of $11.0 million in revenue recognized under the Gilead First Research Program, as it was completed in the second quarter of 2025.
Revenue from collaborative and other agreements may vary substantially from period to period depending on the progress made by our collaborators with their product candidates and the timing of milestones achieved under current agreements, and whether we enter into additional collaboration agreements.
Research and Development Expense
The following represents a comparison of our research and development expense for the three and six months ended June 30, 2026 and 2025 (dollars in millions):
Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
2026 2025 2026 2025
MGC028 $ 10.2 $ 4.7 $ 5.5 117 % $ 16.6 $ 8.7 $ 7.9 91 %
MGC026 7.2 3.0 4.2 140 % 14.0 8.9 5.1 57 %
Lorigerlimab 6.1 10.5 (4.4) (42) % 13.6 19.4 (5.8) (30) %
Next-generation T-cell engagers 6.0 3.5 2.5 71 % 10.6 5.8 4.8 84 %
MGC030 5.0 5.7 (0.7) (12) % 8.9 8.2 0.7 9 %
MGD024 2.1 2.7 (0.6) (22) % 4.9 4.9 - - %
Vobramitamab duocarmazine (vobra duo) 0.2 4.4 (4.2) (95) % 0.6 12.7 (12.1) (95) %
Preclinical antibody-drug conjugates (ADCs) - 2.1 (2.1) (100) % 0.1 3.9 (3.8) (98) %
Other programs (a) 2.0 4.2 (2.2) (52) % 4.5 8.0 (3.5) (44) %
Total research and development expense $ 38.8 $ 40.8 $ (2.0) (5) % $ 73.8 $ 80.5 $ (6.7) (8) %
(a) Includes discontinued projects.
The decrease in our research and development expense for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 was primarily due to:
•decreased lorigerlimab costs related to the LORIKEET study;
•decreased vobra duo costs due to the decision to discontinue further internal development of that program; and
•decreased development costs related to certain pre-clinical ADCs.
These decreases were partially offset by:
•increased clinical trial costs related to MGC026 and MGC028; and
•increased development costs related to certain next generation T-cell engagers.
There are uncertainties associated with our research and development expenses for future quarters which are impacted by multiple variables, including timing of wind down activities for recently closed studies and current and expected expenditures associated with our ongoing clinical studies.
General and Administrative Expense
For the three months ended June 30, 2026 and 2025, general and administrative expenses were $7.9 million and $9.3 million, respectively. For the six months ended June 30, 2026 and 2025, general and administrative expenses were $17.6 million and $20.0 million, respectively. The decrease for both periods is primarily due to lower personnel related costs, including stock-based compensation expense.
Income from discontinued operations, net of tax
On May 11, 2026, the Company entered into an agreement with Bora to sell substantially all of the assets and liabilities comprising its CDMO Operations for cash consideration of $122.5 million, subject to certain closing adjustments. The sale was completed on June 30, 2026, and the Company received net cash proceeds of $119.6 million in July 2026.
The disposal represents a strategic shift that has a material effect on the Company's operations and financial results, reflecting the Company's exit from its contract manufacturing line of business and its decision to focus its resources on its pre-
clinical and clinical-stage research and development pipeline. Accordingly, the results of the CDMO Operations are presented as discontinued operations for all periods presented.
During the three months ended June 30, 2026, the Company recognized a pretax net gain on sale of $86.1 million within discontinued operations, in connection with the sale. Refer to Note 11, Discontinued Operations, for further information.
Net income from discontinued operations, net of tax includes the results of operations from the CDMO operations for the three and six months ended June 30, 2026 and 2025 as well as the net gain on sale for the three and six months ended June 30, 2026.
The following table summarizes the results of the CDMO Operations reported as net income from discontinued operations, net of taxes for the three and six months ended June 30, 2026 and 2025.
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
(dollars in millions)
Contract manufacturing revenue $ 13.1 $ 15.4 $ 27.2 $ 21.5
Cost of manufacturing services (10.1) (8.9) (19.6) (14.3)
Income from operations of the CDMO Operations 3.0 6.5 7.6 7.2
Net gain on sale of the CDMO Operations 86.1 - 86.1 -
Net income from discontinued operations, net of taxes $ 89.1 $ 6.5 $ 93.7 $ 7.2
Liquidity and Capital Resources
Cash Flows
The following table represents a summary of our cash flows for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
2026 2025
(dollars in millions)
Net cash provided by (used in):
Operating activities $ (76.6) $ (93.9)
Investing activities 73.3 (27.7)
Financing activities 60.0 69.5
Net change in cash and cash equivalents $ 56.7 $ (52.1)
Operating Activities
Net cash used in operating activities consists of our net loss adjusted for non-cash items such as depreciation and amortization expense, stock-based compensation, our loss on extinguishment of royalty monetization liability, gain on sale of our CDMO Operations before transaction costs and changes in working capital.
Investing Activities
Net cash provided by investing activities during the six months ended June 30, 2026 is primarily due to maturities of marketable securities, partially offset by purchases of marketable securities. and net cash used in investing activities during the six months ended June 30, 2025 was primarily due to purchases of marketable securities, partially offset by maturities of marketable securities.
Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2026 and 2025 includes net cash proceeds from Sagard Healthcare Partners (Sagard) under a Purchase and Sale Agreement (Royalty Purchase Agreement) pursuant to which we sold to Sagard our right to receive royalties on global net sales of ZYNYZ (retifanlimab-dlwr), and the subsequent amendment to the Royalty Purchase Agreement. See Note 5. Royalty Monetization Arrangement for further information.
Our multiple product candidates currently under development will require significant additional research and development efforts that include extensive preclinical studies and clinical testing, and regulatory approval prior to commercial use. Our future success is dependent on our ability to identify and develop our product candidates, and ultimately upon our ability to attain profitable operations. We have devoted substantially all of our financial resources and efforts to research and development and general and administrative expense to support such research and development. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders' equity and working capital, and accordingly, our ability to execute our future operating plans.
As a biotechnology company, we have primarily funded our operations with proceeds from the sale of our common stock in equity offerings and revenue from our multiple collaboration agreements. Management regularly reviews our available liquidity relative to our operating budget and forecast to monitor the sufficiency of our working capital, and anticipates continuing to draw upon available sources of capital, including equity and debt instruments, to support our product development activities. There can be no assurances that new sources of capital will be available to us on commercially acceptable terms, if at all. Also, any future collaborations, strategic alliances and marketing, distribution or licensing arrangements may require us to give up some or all rights to a product or technology at less than its full potential value. If we are unable to enter into new arrangements or to perform under current or future agreements or obtain additional capital, we will assess our capital resources and may be required to delay, reduce the scope of, or eliminate one or more of our product research and development programs or clinical studies, and/or downsize our organization. Although it is difficult to predict our funding requirements, we anticipate that our cash, cash equivalents and marketable securities as of June 30, 2026, combined with the $119.6 million received from Bora in July 2026, the $24.5 million milestone due from Sanofi in September 2026 and the $10.0 million for the First Research Program option exercise due from Gilead, as well as projected and anticipated future payments from our partners, and anticipated savings from our ongoing cost-reduction initiatives, supports our cash runway through 2028. We have implemented, and will continue to evaluate and execute, various cost-saving measures that are intended to extend our financial runway while continuing to progress our pipeline.
Material Cash Requirements
During the six months ended June 30, 2026, there were no significant changes to our material cash requirements, including contractual and other obligations, as presented in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
MacroGenics Inc. published this content on August 14, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 14, 2026 at 20:30 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]