{"url_path":"/sec/mgnx/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1125345/0001125345-26-000038-index.html","accession_number":"0001125345-26-000038","cik":"0001125345","ticker":"MGNX","issuer_name":"MACROGENICS INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1125345/0001125345-26-000038-index.html","primary_entity_key":"0001125345","primary_entity_name":"MACROGENICS INC"},"word_count":2130,"has_tables":true,"body_markdown":"Item 1A.Risk Factors\n\nOur business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and trading price of our securities. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no material changes in the risk factors described in Item 1A. \"Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, aside from the risk factors included below:\n\nRisk Factors Related to the Sale of our GMP Manufacturing Operations\n\nThe announcement and pendency of the sale of our CDMO Operations could adversely affect our business, financial condition, results and operations.\n\nIn May 2026, we entered into the Asset Purchase Agreement (the “Purchase Agreement”) with Bora Pharmaceuticals Co., Ltd., a company organized under the laws of Taiwan, and Bora Biologics USA, LLC, a Delaware limited liability company (collectively, the “Purchaser”), pursuant to which we agreed to sell to the Purchaser assets and current liabilities related to our GMP manufacturing operations, including our CDMO business (the “CDMO Operations”). In connection with the sale of the CDMO Operations, the Purchaser also intends to extend offers of employment to approximately 140 of our employees currently employed in our manufacturing and related functions.\n\nThe May 2026 announcement and pendency of the closing of the sale of our CDMO Operations could cause disruptions in, and create uncertainty surrounding, our business, which could have an adverse effect on our business, financial condition, results and operations, regardless of whether the transaction is completed. These risks to our business include the following, all of which could be exacerbated by a delay in the completion of the transaction:\n\n•the diversion of significant management time and resources towards the completion of the closing of the transaction;\n\n•the impairment of our ability to attract, retain, and motivate key personnel, including our senior management, and particularly those employees to whom employment offers will be extended by the Purchaser;\n\n•difficulties maintaining relationships with customers, suppliers, and other business partners;\n\n•the inability to pursue alternative business opportunities or make appropriate changes to our business because of requirements in the Purchase Agreement that we conduct our business in the ordinary course and not engage in certain kinds of transactions prior to the completion of the transaction; and\n\n•litigation relating to the transaction and the costs and distractions related thereto, which could impact our ability to close the transaction within the expected timeframe, or at all.\n\nThe sale of our CDMO Operations may not be completed within the expected timeframe, or at all, and the failure to complete the transaction could adversely affect our business and the market price of our common stock.\n\nThe completion of the sale of our CDMO Operations is subject to a number of closing conditions as set forth in the Purchase Agreement, including the consent of our landlord to the assignment of the lease of the 9704 Medical Center Drive headquarters, which is the site of our manufacturing operations, and the warehouse operations located at 4735 Arcadia Drive, Frederick, Maryland. We cannot predict when or if these conditions will be satisfied.\n\nThere can be no assurance that our business, our relationships or our financial condition will not be adversely affected, as compared to the condition prior to the announcement of the transaction, if the transaction is not consummated. Failure to complete the sale of our CDMO Operations could adversely affect our business and the market price of our common stock in a number of ways, including the following:\n\n25\n\n•if the sale of our CDMO Operations is not completed, the share price of our common stock will change to the extent that the current market price of our stock reflects an assumption that the transaction will be completed;\n\n•we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other costs in connection with the sale of the CDMO Operations, including with respect to the transfer of our manufacturing services contracts, for which we may receive little or no benefit if the transaction is not completed. Many of these fees and costs will be payable by us even if the transaction is not completed and may relate to activities that we would not have undertaken other than to complete the transaction; and\n\n•a failed sale of our CDMO Operations may result in negative publicity and a negative impression of us in the investment community.\n\nThe transaction may also be subject to additional governmental reviews, approvals or clearances. Any such review, approval process or clearance could delay the consummation of the transaction, require the parties to agree to conditions or mitigation measures that increase costs or limit the anticipated benefits of the transaction, or result in the inability of the parties to complete the transaction on the anticipated terms or at all..\n\nWe may not realize the expected benefits from the sale of our CDMO Operations.\n\nWe may not be able to achieve the full strategic and financial benefits expected to result from the sale of our CDMO Operations, or such benefits may be delayed or not occur at all. In particular, we have made the strategic decision to dispose of our manufacturing facilities and related assets in order to focus on the advancement of our core business, the clinical and preclinical pipeline. Following the closing of the transaction, we will no longer operate our own GMP manufacturing facility and must rely on third parties, including the Purchaser for the clinical and, if approved, commercial manufacture of our product candidates. Although upon closing, we intend to enter into an agreement with the Purchaser for manufacturing services, we have not yet executed such agreement and may not realize the anticipated cost savings associated with contracting out our manufacturing requirements. The assumptions we made related to the sale of our CDMO Operations may prove to be inaccurate, including as to the expected benefits of the transaction and anticipated cost savings. Further, the transition activities following closing may disrupt our operations and divert management’s attention from our business. Moreover, the base purchase price of $122.5 million is subject to certain customary adjustments, including for working capital and indebtedness as set forth in the Purchase Agreement, which may result in lower net proceeds than we anticipate. An inability to realize the anticipated benefits of the transaction could have an adverse impact on our business, financial condition and results of operations.\n\nIf the sale of the CDMO Operations is consummated, the Purchase Agreement provides that the Purchaser will assume certain liabilities related to the CDMO Operations and that we will retain certain excluded assets and excluded liabilities. However, notwithstanding the consummation of the transaction, we may remain responsible for, and may be required to satisfy, certain liabilities and obligations, including liabilities that are retained by us under the Purchase Agreement, liabilities that are not effectively assumed by the Purchaser, liabilities that arise out of or relate to our ownership and operation of the CDMO Operations and related facilities prior to closing, and liabilities that are not discovered, asserted or quantified until after closing. These liabilities and obligations could include, among other things, liabilities related to employee matters, taxes, environmental health and safety matters, product quality matters, regulatory compliance, and claims by customers, suppliers, counterparties or other third parties (including claims alleging breaches of contract or tort or other claims arising from pre-closing conduct of the CDMO Operations). In addition, the Purchase Agreement may require us to indemnify the Purchaser for certain matters, and disputes may arise between us and the Purchaser regarding whether a particular liability is an assumed liability or a retained liability, the scope of any indemnification obligations, or the allocation of responsibility for certain claims.\n\nFollowing the closing of the sale of our CDMO Operations, we will no longer operate our own cGMP manufacturing facility and instead will rely on third parties, including the Purchaser, for the clinical and, if approved, commercial manufacture of our product candidates. The third-party manufacturing facilities on which we rely may have limited capacity or fail to meet the applicable stringent regulatory requirements.\n\nUpon the completion of the sale of our CDMO Operations, we will not have any proprietary cGMP manufacturing facilities owned or operated by us. We instead will rely on third parties, including Purchaser, for the cGMP manufacture of our product candidates for clinical development and, if approved, commercial supply. We intend to enter into a long-term manufacturing and supply agreement with the Purchaser in connection with the closing of the transaction; however, we have not yet executed such agreement. There is no guarantee that we will or have properly estimated our required manufacturing capacities or that the third parties we rely on to provide required machinery and materials for the manufacturing process, including the Purchaser, will be able to perform on our proposed timelines or meet our manufacturing demands, if at all. Also,\n\n26\n\nif we must increase production capacity for any reason, we may need to make considerable investments that could lead to significant financing needs or require us to enter into subcontracting agreements in order to outsource part of the production.\n\nIf the Purchaser or any other third-party contract manufacturing organization on which we rely experiences capacity constraints, other disruptions, or delays in manufacturing our product candidates, our planned clinical trials and necessary manufacturing capabilities will be disrupted or delayed. Third-party manufacturers may not be able to meet our needs concerning timing, quantity, or quality. If we are unable to contract for a sufficient supply of needed materials on acceptable terms, or if we should encounter delays or difficulties in our relationships with manufacturers, our clinical trials may be delayed, thereby delaying the submission of product candidates for regulatory approval or the market introduction and subsequent sales of any approved products. Any such delay may lower our revenues and potential profitability. If any third party breaches or terminates its agreement with us or fails to conduct its activities in a timely manner, the commercialization of our product candidates could be slowed down or blocked completely. It is possible that third parties relied upon by us will change their strategic focus, pursue alternative technologies, or develop alternative product candidates, either on their own or in collaboration with others, as a means for developing treatments for the diseases targeted by our collaborative programs, or for other reasons. The effectiveness of these third parties in marketing their own products may also affect our revenues and earnings. We intend to continue to enter into additional third-party agreements in the future. However, we may not be able to negotiate any additional agreements successfully. Even if established, these relationships may not be scientifically or commercially successful.\n\nThe facilities used by our contract manufacturers to manufacture our product candidates must be inspected by the FDA. We do not have control over a supplier’s or manufacturer’s compliance with laws, regulations and applicable cGMP standards or similar regulatory requirements and other laws and regulations, such as those related to environmental health and safety matters. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, we may be unable to obtain regulatory approval of our marketing applications. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority finds deficiencies with or does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.\n\nOur failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supply of our products.\n\nThese factors could cause the delay of clinical trials, regulatory submissions, required approvals or commercialization of our product candidates, cause us to incur higher costs and prevent us from commercializing our products successfully, if approved. Furthermore, if our suppliers fail to meet contractual requirements, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed or we could lose potential revenue."}