MacroGenics Inc (MGNX) 2016 Q2 法說會逐字稿

Good afternoon. We will begin the MacroGenics 2016 second quarter conference call in just a moment.

(Operator Instructions)

At this point, I will turn the call over to Jim Karrels, Senior Vice President and Chief Financial Officer of MacroGenics.

Thank you, operator. Good afternoon, and welcome to MacroGenics' conference call to discuss our second quarter financial and operational results.

For anyone who's not had the chance to review our results, we issued a press release this afternoon outlining today's announcement, which is available under the Investors tab on our website at www.macrogenics.com. You can also listen to this conference call via webcast on our website, where it will be archived for 30 days beginning approximately two hours after the call is completed.

I would like to alert listeners that today's discussion will include statements about the Company's future expectations, plans, and prospects that constitute forward-looking statements for purposes of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our Annual, Quarterly, and current reports filed with the SEC.

In addition, any forward-looking statements represent our views only as of today, and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change.

And now I would like to turn the call over to Dr. Scott Koenig, MacroGenics' President and Chief Executive Officer.

Thank you, Jim. I'd like to welcome everyone participating via conference call and webcast today. Thanks for joining us.

Building on our accomplishments in the first quarter, we have continued our clinical progress and ended the second quarter of 2016 with a broad portfolio of molecules in clinical development, the majority of which are focused on immune oncology. We also had our first partner-developed DART molecule enter the clinic, which makes a total of six DART molecules currently being evaluated in clinical studies.

As you may know, MacroGenics' achievements are driven by our state-of-the-art antibody-based technologies, including our Fc optimization platform, which enhances an antibody's ability to interact with immune effector cells; our DART platform that enables the targeting of two antibody specificities to a single recombinant molecule; and our recently introduced Trident platform, which extends our DART platform to create molecules with three specificities. As we continue to grow, our team remains committed to researching and developing innovative treatment options for patients suffering from cancer, autoimmune disorders and infectious diseases.

As always, I will use our brief time today to review our growing pipeline of antibody-based programs, beginning with the most advanced clinical candidate in our portfolio, margetuximab, for which we continue to activate sites and enroll patients in our Phase 3 SOPHIA trial. I will then cover our B7-H3 franchise, which includes multiple candidates that utilize our Fc optimization and DART technologies, as well as our ever-growing portfolio of DART programs.

A notable highlight of this quarter was our recently closed collaboration and license agreement with Janssen to develop MGD015, a DART molecule designed to simultaneously target CD3 plus a nondisclosed tumor target for the potential treatment of various hematological malignancies and solid tumors. I will provide more detail on this agreement and our greater pipeline shortly, but now I'd like to turn the call over to Jim to give an overview of our financial results.

Thanks, Scott.

This afternoon we reported financial results with expenses in line with our expectations. And briefly, as we described in our release MacroGenics had research and development expenses of $33.3 million for the quarter ended June 30, 2016, compared to $22.7 million for the quarter ended June 30, 2015. This increase was due primarily to increased activity in our preclinical immune checkpoint programs, including MGD013, the initiation of the Phase 1 clinical trial of MGD009, and the initiations of two Phase 1 clinical trials combining enoblituzumab with other compounds.

We had general and administrative expenses of $7.2 million for the quarter ended June 30, 2016, compared to $5.3 million for the quarter ended June 30, 2015. This increase is primarily due to increased professional fees, recruiting costs and stock-based compensation expense.

We recorded total revenues consisting primarily of revenue from collaborative agreements of $80.7 million for the quarter ended June 30, 2016, compared to $6.7 million for the quarter ended June 30, 2015. This increase in revenue is due to recognition of the $2 million milestone payment received from Pfizer for the first patient dose in their Phase 1 clinical trial of PF-06671008 and the closing of a global collaboration and license agreement with Janssen Biotech for the development of MGD015.

I'll point out that under GAAP the $75 million license fee paid by Janssen was fully recognized during the second quarter of 2016. However, the cash was received in the beginning of the third quarter of 2016. Therefore, our accounts receivable balance as of June 30, 2016 included a $75 million receivable from Janssen.

For the quarter ended June 30, 2016 we had net income of $40.5 million, compared to a net loss of $21.4 million for the quarter ended June 30, 2015. The previously mentioned collaboration agreements were the reason for the quarter-over-quarter increase.

Our cash, cash equivalents and marketable securities balance as of June 30, 2016, was $265.6 million. Again, this did not reflect Janssen's $75 million payment to MacroGenics that was received early in the third quarter of 2016.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities combined with collaboration payments we anticipate receiving should fund MacroGenics' operations into 2018, assuming all of our programs in collaboration advance as currently contemplated.

And with that let me hand the call back to you, Scott.

Thank you, Jim.

As I previously mentioned, we ended the second quarter with a broad portfolio of molecules in clinical development, with the majority focused on immune oncology. There are currently six DART molecules in Phase 1 clinical development, which includes PF-06671008, being led by our collaboration partner Pfizer, and MGD011, being led by our collaboration partner Janssen.

While we have had notable growth in our clinical programs, MacroGenics continues to build a rich pipeline behind these candidates. This work includes the discovery and identification of new antibodies that have shown promising preclinical results.

As a result of this productivity we plan to submit one IND later this year and two additional INDs in 2017, which keeps us on track to continue achieving the goal we had laid out in 2013 of submitting at least one new IND per year. Please note that this objective excludes any new molecules being developed by partners based on MacroGenics' technology.

Let me now update you on our current pipeline and provide some milestone highlights from our productive quarter.

First off, margetuximab, our Fc-optimized monoclonal antibody that targets HER2, continues to be our furthest advanced clinical program and is actively enrolling patients and initiating new trial sites for the pivotal Phase 3 SOPHIA study for patients with metastatic HER2-positive breast cancer. In SOPHIA we are evaluating the efficacy of margetuximab plus chemotherapy as compared to trastuzumab plus chemotherapy following progression after at least two lines of previous therapy in approximately 530 patients in the US and Europe. As of June 30 we had activated approximately three-quarters of the sites we have planned in the US and Europe.

We have also continued to actively enroll and treat patients in our Phase 1b/2 trial of margetuximab in combination with pembrolizumab, an anti-PD-1 therapy for patients with advanced HER2-positive gastric cancer. Treatment options for these patients are limited, and our proposed combination regimen would avoid chemotherapy while exploiting the expected enhanced immune-mediated killing properties of both margetuximab and pembrolizumab. This Phase 1b/2 trial is being conducted in collaboration with our partner Merck, and we plan to open trial sites in Asia later this year.

We also continue to see good progress in our other oncology-focused programs, including those molecules that make up our B7-H3 franchise. These wholly owned programs target B7-H3 within the B7 family of molecules which are involved in immune regulation. We feel that our multiple programs targeting B7-H3 through a variety of complementary mechanisms of action represent the industry's leading B7-H3 franchise, and we intend to explore the full potential of this antigen's broad expression across multiple solid tumor types.

The most advanced B7-H3 targeted candidate we have in development is enoblituzumab, which is an Fc-optimized monoclonal antibody. We continue to actively recruit patients for our three ongoing Phase 1 studies of enoblituzumab. These studies include one monotherapy study and two combination studies with ipilimumab and pembrolizumab.

As we reported last quarter, the additional dose expansion cohorts in the monotherapy trial were expanded to include additional prostate and bladder cancer cohorts based on the interim data presented at the SITC Annual Meeting last November. We plan to release updated results from the monotherapy study of enoblituzumab by the end of this year.

MGD009, our B7-H3 x CD3 targeted DART molecule, is another program included in our B7-H3 franchise and continues to be evaluated in a Phase 1 study in patients across multiple solid tumor types. In addition to MGD009 we have advanced several programs in our portfolio of DART molecules across multiple therapeutic areas.

Within oncology, MGD006, a CD123 x CD3 targeting DART molecule, and MGD007, a gpA33 x CD3 targeting DART molecule, are two molecules that are currently being studied in Phase 1 trials, with clinical updates expected by the end of this year or in early 2017. MGD006 is being developed to treat patients with AML or MDS, and MGD007 is being developed to treat patients with primary metastatic colorectal cancers.

Also in Phase 1 development is MGD011, also known as JNJ-64052781, or duvortuxizumab, a DART molecule targeting CD19 x CD3, which is being developed by our collaboration partner Janssen.

In an important development that demonstrates the value of our DART platform, Pfizer, our collaboration partner, dosed the first patient in its Phase 1 study of PF-06671008, a DART molecule that targets P-cadherin x CD3. This is our first partner-developed DART molecule that has entered clinical development, and we are delighted with the progress that Pfizer has made. This milestone triggered a $2 million payment to us during the second quarter under the terms of the 2010 agreement between our companies.

Late in the second quarter we announced the closing of a new global collaboration and license agreement with Janssen Biotech for the development of MGD015, a preclinical bispecific molecule designed to simultaneously target CD3 and an undisclosed tumor target for the potential treatment of various hematological malignancies and solid tumors. MacroGenics had previously entered into a collaboration arrangement with Janssen a year and a half ago for the development of MGD011, and we are thrilled to expand this partnership with the addition of MGD015.

Under the terms of this recent agreement, MacroGenics received a $75 million upfront license fee while Janssen will complete IND-enabling studies and will be responsible for future clinical development of MGD015. Assuming successful development and commercialization of this DART molecule, MacroGenics could receive up to an additional $665 million in clinical, regulatory and commercialization milestone payments and may elect to fund a portion of late-stage clinical development in exchange for a profit share in the US and Canada.

If commercialized, MacroGenics would be eligible to receive double-digit royalties on any global net sales and have the option to co-promote MGD015 with Janssen in the United States. This agreement helps further highlight the capabilities and flexibility of our cutting-edge DART technology platform, and we look forward to Janssen advancing MGD015 into the clinic.

MacroGenics continues to develop DART molecules in therapeutic areas outside of cancer, including autoimmune disorders and infectious diseases. MGD010 is a DART molecule designed to simultaneously target the B-cell surface proteins CD32B and CD79B and is being developed for the treatment of autoimmune disorders.

CD32B is a checkpoint molecule expressed on B lymphocytes that when co-ligated with CD79B, a component of the B-cell antigen receptor complex, delivers a co-inhibitory signal that dampens B-cell activation. MGD010 is our first clinical autoimmune-focused DART program.

MacroGenics recently presented clinical data from our Phase 1 study of MGD010 at the Annual European Congress of Rheumatology, or EULAR meeting in London. The Phase 1 study of MGD010 was a first-in-human, double-blind, placebo-controlled study in which a single dose of MGD010 was intravenously administered to 49 healthy subjects.

Data from this study showed that MGD010 was well tolerated at all dose levels, and no serious adverse effects were reported. None of the subjects participating in this study had premature discontinuations or infusion reactions, hypersensitivity reactions or injection site reactions.

Data also demonstrated linear pharmacokinetics and dose-dependent selected binding to B lymphocytes without B-cell depletion. We were very pleased with these results and believe that they would support the continued development of MGD010 in patients with autoimmune disorders.

We intend to use the momentum and success of our DART platform to submit additional IND applications for two new DART molecules in 2017. One of these submissions will be for MGD013, a DART molecule designed to simultaneously block PD-1 and LAG-3, which are two immune checkpoint molecules that are coexpressed on T cells. MGD013 preclinical data was presented at the AACR Annual Meeting in April.

The other candidate for which we expect to submit an IND is MGD014. MGD014 is expected to be our first infectious disease DART molecule planned for clinical testing. We are developing this molecule to eliminate latent HIV infection under a contract awarded to MacroGenics by the National Institute of Allergy and Infectious Diseases for up to $24.5 million.

We believe we have struck a nice balance of advancing our current pipeline assets while also identifying and researching new clinical candidates to add to our growing pipeline.

From a corporate standpoint, we entered the quarter with a strong balance sheet, having sufficient capital to advance the many listed clinical developments included in our pipeline. We intend to remain highly focused on execution, and we look forward to providing you updates on our ongoing clinical studies and operations through the second half of 2016.

This concludes my prepared comments, and we'd now be glad to discuss questions that callers may have.

Operator?

Thank you.

(Operator Instructions)

Michael Schmidt, Leerink Partners.

Hi. This Jonathan Chang stepping in for Michael. First, on enoblituzumab, when might we see data from the combination studies with ipilimumab and pembrolizumab?

Thank you, Jonathan. Good question. As I mentioned earlier, we'll present later this year the update on the monotherapy studies. We've advanced the combination studies with ipilimumab and pembrolizumab quite nicely.

As you recall, it's in dose escalation at 3 mg/kg, 10 mg/kg and 15 mg/kg. We're getting close to completing the dose escalation phase of this study, and then we'll -- once completed, we will then move on to expanding, in the case of ipilimumab, into three different tumor types, in the case of pembrolizumab, four tumor types in the expansion cohorts.

As I had mentioned earlier, if there's sufficient data that is meaningful, we'll try to present it at the same time of the monotherapy data. But it's more likely that the data will be presented sometime in 2017.

Great. Thank you. That's helpful. And secondly on margetuximab for the SOPHIA study, you mentioned that three-quarters of the anticipated study sites have been activated. Can you provide more color here? Is this in line or not in line with what you guys expected?

Well, as I had mentioned on our previous call, I had anticipated by midyear that we would have most of those sites up and rolling. As you recall, that was between 190 and 200 sites.

We're a little behind. The expectation now is that within approximately one quarter more we should have those sites based on the guidance of our CRO. And at that time we will have a better idea of where things are going. So it's a little bit behind, but not too far.

Okay, great. Thanks for that. And maybe just last question, can you talk about how we should be thinking about the upcoming 006 data in AML and 007 data in colorectal cancer?

I have nothing really in terms of previewing that at this time. As I've indicated previously, for 006 we initially started the trial in a Phase 1 study with feedback from regulatory agencies identifying an initial dose that we could treat this patient, of AML patients. And then we subsequently expanded to patients with MDS.

After identifying a starting dose we were also able with good safety data to expand that study to continue treating those patients longer than a month. We then went further along and began to do interpatient dose escalation.

And, as you recall, initially the study was designed as a 4-day-on therapy, 3-day-off therapy, and then retreated on a weekly basis. We have now expanded that study somewhat. We are looking at continuing the interpatient dose escalation with a 4-day-on, 3-day-off schedule, but we're also in parallel looking at treating patients continuously over the course of the month.

So we hope that by -- we expect by the end of the year or so to give you an update on where the trial stands for that study. And I have nothing more at this point. The point is because we have not hit the dose-limiting toxicities for this study.

With regard to 007, as I've pointed out previously, we saw this as a particularly challenging target, gpA33, given that the antigen is expressed both on the normal GI tract as well as on colorectal cancers and other GI tumors. And what we were trying to identify is the dose that would give us the best therapeutic index with the lowest toxicities as a result of the targeting of normal tissues.

Right now we are looking at fine-tuning the dosing of the drug. And, again, we hope to have additional patients treated, identifying a dose by the end of the year. And at that time we'll provide you updates where we are on that trial.

Great. Thank you.

Stephen Willey, Stifel Nicolaus.

Congrats on the progress. Just a question, I guess, on the ongoing work that Janssen's conducting with the CD19 DARTs. And I understand that Janssen is obviously kind of steering the ship, but just wonder if you can maybe just give us a little bit of an overview as to how Janssen is thinking about this dose escalation study right now.

I think if you look at clintrials.gov I think they've made a number of amendments in terms of it being either classified as a Phase 1 or Phase 2, and I think patient numbers in terms of targeted enrollment have kind of been all over the place the last couple of months.

And then specifically it also looks like they're evaluating the utilization of a priming dose. Just wondering if you could also provide some kind of rationale for that, as well.

So, Steve, I'd love to be able to help you here, but, frankly, I am only able to disclose based on our agreement what is now in the public setting and it's on clintrials.gov. As they've said previously they were interested in looking at the utility of this across all B-cell malignancies.

They were looking at the opportunity to potentially combine with Imbruvica. And at this point with the noted increased numbers of patients that they've had on clintrials.gov I know the trial is ongoing, but I have no ability to provide any further insight in terms of either their strategy or actual data at this point. Sorry.

Could you provide some kind of theoretical rationale for why they would choose to use a priming dose, or is that also off limits?

Well, I can't comment too well on why they chose priming doses. I mean, what I can say in the context of many of our studies where we've gotten experience with redirected CD3-targeted DART molecules, we have anticipated, depending on the tumor density and expression patterns, various degree of cytokine release, and which we have developed treatment regimens either to pretreat patients or treat them at first signs of any CRS, and have actually managed this quite well.

For many of these cases what we have noted is that if we see the CRS it is typically associated with a first dose or possibly a second dose. So if they are thinking the same way, they may be providing a priming dose to modify either the incidence or severity of cytokine release.

That's -- it's speculation. This has not been discussed with us. But I presume that may be a reason why they have gone in that direction.

Okay. And then just a follow-up to the prior question regarding the fine-tuning of the 007 dosing, is --

Yes?

-- does that -- is that fine-tuning with respect to dosing schedule or is that just fine-tuning with respect to dosage strength?

It's fine-tuning with respect to dosing. We are right now the particle is set up as a once every 3 week dosing regimen.

Okay. Thank you for the color.

Debjit Chattopadhyay, Janney.

Firstly on margetuximab, so based on your prior guidance you had expected to enroll the study by end of 2017 and have data out 2018. Are you still in that ballpark, or is this getting pushed out into 2019 at this point?

So, Debjit, I don't think you're correct with the assumption on 2017 in terms of enrolling the patients. Our guidance had been to have data in 2018 to be able to read out. And at this point we are not modifying the plan at this time.

And, as I said, our plan is once we have all the sites fully initiated and we have a better sense of the trajectory of patient enrollment, I think we can get a little more finer guidance with regard to when the study would end. But I don't believe we've ever said anything about a 2017 completion.

Great. And then on to enoblituzumab, the monotherapy expansion cohorts, I may have missed it, but any time guidelines in terms of when you might see the data from the expansion cohorts and the specific chemo subtypes?

Did you say enoblituzumab on the expansion cohorts?

The monotherapy cohorts?

Yes, the monotherapy cohorts.

Yes, I mean, our plan is to present it by the end of the year. We have enrolled the full cadre of patients. And, remember, there were five additional expansion cohorts that we had initiated and had completed at the end of last year, enrolling about half of those patients.

So what I'm referring to would be those five remaining cohorts we've essentially completed enrollment. I think we have one more patient that we need to enroll. So we'll update folks at the end of the year on that part of the trial.

What we did announce, though, on our last earnings call is that we decided to expand to two new additional cohorts of patients with bladder cancer and -- prostate.

Prostate.

Yes, prostate cancer, and for that we'll provide updates of what we have, but we don't expect by the end of the year to have those two new cohorts completely enrolled.

Great. And just one last question, on the CD123 program, there was a plan to expand the -- open up new sites in Europe to push the enrollment? Is that still on cards, or until you've come to some sort of a understanding in terms of the dosing schedule you're holding off on the Europe expansion?

No. No, not at all, Debjit. In fact, we are -- we had to go through regulatory submission and approval, ethics committee approval and site initiation. And what I can say is is that we see regulatory approval in two of the countries. We expect a third one to be approved very shortly, this month.

We have two ethics committees approved, expect a third one to be approved very shortly. And we've completed site initiation visits at a couple of sites. So there is a projected enrollment in Europe in the course of the next quarter.

Scott, on a technical basis, if you were to compare the DART CD123 program versus the CAR-T CD123 program, and knowing the relatively fragile nature of these relapsed refractory AML patients, what are your (inaudible) thinking about, whether if they are given a choice between a DART program and a CAR-T program?

Well, it's too early for us to speculate on efficacy. As I indicated, we're still in dose escalation. We haven't gotten to the dose that we would like to move into later-stage studies. So it's obviously too early to begin to speculate either activity or safety vis-a-vis CAR-Ts.

Having said that, as we've discussed before, we're seeing preclinically very robust activity of all our DART molecules, and if you actually look comparatively of data that's (inaudible) for CAR-Ts versus that of the DARTs, they're quite comparable. And given the ease and the control and the delivery, the ease of manufacturing here and the costs associated with this, we think that there's great opportunities to have a very favorable both efficacy and safety outcome as compared to CAR-Ts. But we're way too early to begin to make those comparisons.

Yigal Nochomovitz, Citi.

Yes, hi, this is Steve Seedhouse on for Yigal. So, my first question is about MGD015. Is this one of the DARTs that you guys presented at AACR this year, and are you able to give any more detail on -- beyond just generally hematologic and solid tumors, what cancers express the target of 015?

I'd like to help you out here again, but unfortunately we're precluded from discussing the specific target involved here or giving any guidance there. All we can say as we have publicly disclosed that it is a DART molecule that targets CD3 and an antigen that's expressed both on hematological and solid tumors.

Okay, fair enough. So just to clarify, going forward updates from this program will be similar to the previous partnership with 011, where you guys won't be able to present any data at medical meetings, etc.

That's correct. And even further, when we -- for MGD011, we had completed the preclinical studies and had filed the IND on this molecule and then transferred the IND over to Janssen. For MGD015, this is a preclinical molecule, and they will be responsible for all the preclinical development going forward.

We're obviously bridging and completing some studies that we agreed to. But they are ultimately responsible for making -- manufacturing the molecule and ultimately clinically testing it. So we're a little more even removed compared to MGD011.

Okay. And if I could just switch gears completely, there was a recent article a week or two out of a group at Scripps, and they used you guys' DART technology to make chemically programmed bispecific antibodies. It didn't look like you were collaborators or sort of funded the work.

I'm just curious if this is something you're working on internally or if you're aware of academic groups. Like what is the scope of academic work out there independent of MacroGenics using the DART technology?

Well, thank you very much for telling us about this. I didn't know about this Scripps initiative. And certainly we appreciate for you to forward any information about that.

We have many academics that have reached out to us. Usually it's a situation where they have a particular antigen of interest that they would like to use our technology.

Clearly we obviously have multiple publications and patents out there where they can do that independent of us. But we are always interested in working with new investigators both in industry as well as in the academic community to advance the platform.

Okay, great, and I can follow up after. It was a paper in JBC just a couple weeks back, very recent.

Thank you so much.

If I could just slide one more in, I don't imagine you'll have much more detail here, but I have to ask. MGD012, can you provide any more detail on the target for that antibody?

Actually it's MGA012. The A stands for antibody, as we've said. This is not a DART molecule. Stay tuned. We're on target for filing an IND and initiating a clinical study and we will update folks later this year about the molecule.

Okay. Thanks very much for taking the questions.

(Operator Instructions)

Matthew Harrison, Morgan Stanley.

Hello. This is David Lebowitz in for Matthew Harrison. A quick question on MGD010. I'm just curious, given the data that you had this summer, what are your thoughts on next steps? Which autoimmune diseases might we see you move towards?

David, thank you very much for the question. We're very excited about MGD010, which is, as we've noted, is our lead autoimmune DART program.

As I pointed out today and previously presented at the EULAR meeting, we had very exciting data showing a very clean safety profile, beautiful B-cell targeting without B-cell depletion. And ex vivo the B cells had marked decrease in B-cell activation, and this was accompanied by a reduction in many of the markers of -- that are on the surface of B cells.

And it was also accompanied after a single dose in these normal volunteers of a reduction in IgM, which would be expected because of the dual expression of 32B and 79B on plasma blasts. So we're very excited about the prospects for this molecule.

As you know we have an option-based deal with Takeda currently, and it was anticipated then when we completed all the clinical data and provide it to them they would have a period of time to evaluate it and then opt in if they planned to pursue it for conducting Phase 1b and later studies for various autoimmune diseases. We've had discussions with them specifically about particular autoimmune diseases, many different types of autoimmune diseases.

But what you should also note last week Takeda had a press release where they have indicated a refocus of their clinical and preclinical initiatives, which doesn't have a large effort, at least as via the press release, for working in autoimmune diseases. So right now we don't know what their state of interest on pursuing that irrespective of the very favorable data.

As I have said, given the results of the data and presuming that this continues to look favorably, we would like to find a way to advance this in testing in autoimmune diseases, either by ourselves or potentially in partnership with others, if Takeda decides not to pursue it.

Obviously, given the importance of B cells in many different autoimmune diseases, which include obviously RA, lupus, other (inaudible) autoimmune diseases like pemphigus and others, we see that there are many different avenues that we could potentially explore with this molecule, either alone or in combinations with other therapies.

So given the unique mechanism of action of this molecule and the quite favorable safety data we've seen to date and very good pharmacokinetics, we're excited about the prospects of moving this forward in different autoimmune diseases.

Thank you for that. Just jumping over to the margetuximab gastric cancer data, is that still on pace for 2017?

So, thanks for the question, David, on that. As you recall, the study was designed initially to test margetuximab at 10 mg/kg and 15 mg/kg in combination with pembrolizumab. And then when the dose escalation was complete we then flip over into expanding into patients at their -- for second-line treatment, patients with gastric cancer.

We're just about at that point to expand into that population. We anticipate in the US to enroll approximately 30 patients for this study. We have multiple sites up and ready to go. And so we think we're on target sometime next year to be able to update you on the progress we have in this 30-patient expanded cohort.

As I mentioned earlier, we're also looking at an additional trial in Asia, in particular filing the regulatory papers in Korea and Taiwan. The expectation is that we would have the approval to start studies sometime late this year or early next year. And there again we expect to enroll approximately 30 patients in Asia.

So sometime in 2017 we hope to be able to give you a fairly comprehensive update on the studies, most likely in the latter part of 2017. But stay tuned. Let us get going on the expansion part of the studies.

Thanks again for that. One more quick question, more housekeeping. What should we think about for R&D spend going forward, because it did have an uptick in the second quarter?

Yes, thanks, David. This is Jim. We've not provided guidance with that, but you did note correctly that there was an uptick. We would expect, as we've been telling the Street, we do expect higher burn going forward. So I can't tell you more than that other than this was in line with our expectations.

Thank you.

David Nierengarten, Wedbush.

Maybe just a quick follow-up on 010, is there a drop-dead date for Takeda to decide to option the molecule, or --?

Yes, David, so thanks for the question. So it's actually still in our ballpark. We have one additional cohort that we had planned from the beginning to conduct in this study. So post EULAR we had initiated our last cohort of patients that we wanted to test.

That's right in the middle of enrolling those patients. We expect sometime in the next quarter to complete that enrollment, and then a follow-up of patients would come soon thereafter. And then we need to provide them with a report.

So my -- so they are not -- they don't have any obligation right now until we provide them the final reports of the study to come back with an answer. It is possible they may tell us sooner, given their recent announcement about realigning their programs.

So the earliest I would expect anything from them would be either very late this year or early next year in terms of their obligation.

And is there a time limit after you present them the data, then, is it --?

Yes. Yes. There's a contractual defined time period that they have to come back to us.

That's six weeks? A month.

He's not disclosed that at this point.

I haven't disclosed that, but it's some small reasonable period of time for them to review --

It's reasonable.

-- review the data and come back to us.

Okay. All right. Thanks.

Thank you. And I'm showing no further questions at this time. I'd like to turn the conference back over to Dr. Koenig for any closing remarks.

Thank you, operator, and thanks to everyone listening and participating. As always, we appreciate your interest and look forward to providing updates throughout the quarter. Have a good afternoon.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Have a great day, everyone.