Macrogenics Inc. shares (NASDAQ:MGNX) sank 18 percent to $13.43 on Monday as investors fretted over the implications of a partial clinical hold the FDA slapped on a phase I test of the company's bispecific antibody candidate, MGD-009. High transaminase levels seen in some participants were "likely a cytokine-mediated event," said Macrogenics President and CEO Scott Koenig. Trial protocol amendments to mitigate the issue are under discussion, with Macrogenics planning to submit answers to questions from the regulator before the end of the year, he told BioWorld.

The partial hold, announced after Friday's market close, is also impacting a combination study of MGD-009 and MGA-012, an anti-PD-1 candidate Macrogenics licensed to Incyte Corp. in October 2017. Under terms of the hold, no new patients will be enrolled in either study until the hold is lifted. However, current study participants may continue to receive the drugs at their preassigned dose, the company said. If all goes well, the studies could be back on track as early as January, Koenig said. (See BioWorld, Oct. 26, 2017.)

The adverse events, including "reversible elevations of transaminases with or without concurrent elevations of bilirubin," have been "uncomplicated and short-lived in duration," the Rockville, Md.-based company said.

MGD-009 is a humanized, bispecific DART molecule that recognizes both B7-H3 and CD3. B7-H3 is a member of the B7 family of molecules involved in immune regulation and is overexpressed on a wide variety of cancer cells, including cancer stem cells, as well as on the supporting tumor vasculature and underlying tissues, according to Macrogenics.

The hold does not impact other Macrogenics molecules also targeting B7-H3, such as enoblituzumab and MGC-018. Enoblituzumab, also referred to as MGA-271, is an antibody that recognizes a specific epitope of B7-H3 but has a minor change in its tail designed to promote the recruitment of natural killer cells and macrophages to kill tumor cells. MGD-009 recognizes the exact same site on B7-H3 as enoblituzumab, but instead has a second arm that recognizes the CD3 molecule on T cells, recruiting them to kill the target.

MGC-018, another early stage program, is a humanized antibody-drug conjugate targeting a different epitope of B7-H3. It's designed to bind to the B7-H3 molecule and to be taken up inside a cancer cell, where its toxin is cleaved and binds to the cell's DNA, destroying it.

Analysts expressed minimal concerns over implications of the issue for Macrogenics' larger Dual-Affinity Re-Targeting (DART) platform. "We see limited read-through of the partial clinical hold to the other MGNX B7-H3 programs (including enoblituzumab and MGC-018) with the other B7-H3 studies ongoing," said Leerink analyst Jonathan Chang, a sentiment echoed in other analyst notes. However, at least one analyst worried about MGD-009's engagement of CD3.

"This program isn't critical in isolation, but it's a CD3 bispecific," Evercore ISI analyst Umer Raffat wrote, "so the immediate question is: Does this raise concerns on all CD3-engaging bispecific pipeline, or is this an isolated observation?"

Koenig pointed out that cytokine release syndrome is a familiar potential side effect of the sole FDA-approved CD3-targeting product, Blincyto (blinatumomab, Amgen Inc.). "I think this is known and should be navigable. But for this molecule, we'll have to see what the next step is," he said.

Meanwhile, the company has plenty of other activities underway. Koenig said his team is looking forward to top-line results from a phase III trial of its Fc-optimized HER2-targeting antibody, margetuximab, in the first quarter of 2019 — a much bigger focus for investors. Furthermore, he said, the company is continuing to advance its CD123 x CD3 bispecific antibody, flotetuzumab, in relapsed/refractory acute myeloid leukemia and to work on a recently announced partnership with Shanghai-based Zai Lab Ltd.