FDA's Clinical Hold Doesn't Affect Magenta Therapeutics' (MGTA) MGTA-117 Prospects - Analyst

July 21, 2021 10:51 AM EDT
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On July 21st, 2021, Magenta Therapeutics, Inc. (Nasdaq: MGTA) announced that it has received a clinical hold letter from the U.S. Food and Drug Administration (FDA) related to its Investigational New Drug Application (IND) filed in June 2021 to initiate a Phase 1/2 clinical trial of MGTA-117 in patients with acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS).

In the letter, the FDA is requiring that Magenta develop an additional bioassay to be used in conjunction with the PK/PD model to inform dose escalation decisions in addition to safety monitoring. This was the only clinical hold item identified by the FDA and does not relate to the toxicology or manufacturing of MGTA-117.

Reacting to the letter, Magenta’s CEO Jason Gardner quotes: “We are actively developing the bioassay requested by the FDA and do not expect significant technical challenges in its completion. We expect to request a ‘Type A’ meeting in the coming weeks and, if successful in resolving this remaining issue, we would anticipate opening the study in Q4 2021.”

Given the bioassay was the FDA’s only concern and management’s firm plan to address it, Wedbush analyst David Nierengarten doesn’t expect any significant changes to the development process outside of the delay.

The analyst highlights: “Going forward, we have made the necessary adjustment to our model, incorporating the added time needed to satisfy the new FDA requirement. Therefore, our updated model reflects a 6-mo adjustment to our model across all ‘117 programs. We continue to expect that '117 will enter the clinic and, based on non-human primate data, selectively deplete stem cells and allow for successful transplantation without the toxicities associated with current conditioning regimens (potentially enabling a broader access to the benefits of stem cell transplantation across different indications including gene therapies).”

Wedbush reiterates an “Outperform” rating, but reduces its price target to $20 from $22, adjusting for the 6 months postponement.

MGTA shares are trading 8% lower following the announcement.

Writtern by Vlad Schepkov | Vlad@StreetInsider.com



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