MacroGenics Inc (MGNX) 2016 Q3 法說會逐字稿

Good afternoon. We will begin the MacroGenics 2016 third 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 third quarter financial and operational results.

For anyone who's not yet 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, except to the extent required by applicable law.

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. Thank you for joining us.

I'm glad to report that during the third quarter MacroGenics continued to make good progress on our clinical developments as we advance our growing portfolio of potential treatment options for cancer, autoimmune disorders and infectious diseases.

This progress is attributable to our first-in-class antibody-based technologies, including our Fc Optimization platform, which modulates antibody interaction with immune effector cells, our DART platform that enables the targeting of two antibody specificities to a single recombinant molecule, and the TRIDENT platform we announced last year that allows us to create molecules with three specificities.

Through our progress and success in the clinic, we remain focused on our greater goal of researching and developing treatment options for patients suffering from these diseases, and we believe we are moving in the right direction.

As always, I will use our time today to review our growing portfolio of antibody-based programs, beginning with our most advanced clinical candidate in our portfolio, margetuximab, for which we continue to enroll patients and activate new clinical sites in our Phase 3 SOPHIA trial for HER2-positive metastatic breast cancer. I will then cover our B7-H3 franchise, which continues to advance through our ongoing trials of enoblituzumab and MGD009, as well as our growing pipeline of DART molecules.

As further demonstration of the continued expansion of our overall portfolio, I am pleased to announce the on-time filing and FDA clearance of an investigational new drug application for MGA012, and we remain on track to submit two additional INDs in 2017. I will provide more detail on these clinical developments and our greater pipeline shortly, but now I would like to turn the call over to Jim to give an overview of our financial results.

Thank you, Scott.

This afternoon we reported financial results, with expenses generally in line with our expectations.

Briefly, as we have described in our release, MacroGenics had research and development expenses of $30.3 million for the quarter ended September 30, 2016, compared to $24.1 million for the quarter ended September 30, 2015. This increase was due primarily to increased activity in our preclinical immune checkpoint programs, including MGD013, MGD014, which is funded by NIAID and NIH, and the initiation 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 September 30, 2016, compared to $6 million for the quarter ended September 30, 2015. This increase was primarily due to increased staff, recruiting costs and stock-based compensation expense.

On the revenue side, we recorded total revenues consisting primarily of revenue from collaborative agreements of $3.3 million for the quarter ended September 30, 2016, compared to $14.7 million for the quarter ended September 30, 2015. This decrease was primarily due to recognition of a one-time milestone received from Janssen Biotech in 2015.

For the quarter ended September 30, 2016, we had a net loss of $33.9 million, compared to a net loss of $15.4 million for the quarter ended September 30, 2015.

Our cash, cash equivalents and marketable securities balance as of September 30, 2016 was $314.1 million. 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 for approximately 2 years, assuming all of our programs and collaborations advance as currently contemplated.

Finally, let me quickly mention that today we filed a shelf registration statement with the SEC. This provides us with the flexibility to access the equity or debt capital markets most efficiently should the need arise.

However, we have no immediate plan to undertake an offering. Rather, we think of this registration as forward-looking and represents good financial planning. In that vein, we also filed an S-8 with the SEC today that relates to an employee stock purchase plan for our employees.

And with that I will hand the call back to Scott.

Thank you, Jim.

We ended the quarter with nine programs in clinical development between MacroGenics and our partners, with six DART molecules in Phase 1 clinical development. Two of these molecules are being advanced by our partners, Janssen and Pfizer, for the development of MGD011, or duvortuxizumab, and PF-06671008, respectively.

We believe that we have created a strategy that balances in-house clinical development with externalized development opportunities through partner collaborations and allows us to expand our pipeline and build value for stockholders. We continue to identify, discover and design antibodies and antibody-like molecules with therapeutic potential and are pleased to be meeting our goal of submitting at least one IND per year in 2016, with the expectation that we'll submit two more in 2017.

Before I dive into program updates, I'll quickly mention that we announced in our earnings release today that we plan to host an R&D day in New York on Tuesday, December 13, beginning at 8:30 a.m. Eastern Time. We'll provide the webcast information well in advance.

Now let me update you on our greater pipeline and provide some milestone highlights from our productive quarter.

To start, 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 previous therapy in approximately 530 patients in the United States and Europe. As of September 30, approximately 90% of anticipated trial sites have been activated in both the US and Europe.

Our Phase 1b/2 trial of margetuximab in combination with pembrolizumab, an anti-PD-1 therapy, for patients with advanced HER2-positive gastric cancer, continues to enroll patients. Treatment options for these patients are limited, and our proposed combination regimen would avoid chemotherapy while exploring 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. We are pleased to announce that this program was recently approved to expand into the first of three Asian countries. We expect to begin opening trial sites in Korea soon and believe approvals for Taiwan and Singapore will follow. We look to enroll a total of 30 patients in the United States and 30 in Asia.

Aside from our margetuximab program, we will also continue to see good progress in our other oncology-focused programs, including those molecules that make up our franchise of assets that 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 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. Recruitment for the three Phase 1 studies of enoblituzumab is ongoing. These studies include one monotherapy study and two combination studies with ipilimumab and pembrolizumab.

As reported, the additional dose expansion portion of the monotherapy trial was expanded to include additional prostate and bladder cancer cohorts based on the interim data presented at the SITC annual meeting last November. We are pleased to announce that the combination study with pembrolizumab has advanced into dose expansion cohorts, while the ipilimumab study is completing the last dosage escalation cohort. We anticipate being able to share additional monotherapy data with you at our R&D Day next month.

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 several defined solid tumor types. In addition to MGD009 there are four additional DART molecules in Phase 1 development for oncology, including MGD006, a CD123 x CD3 DART molecule that is being developed to treat patients with AML or MDS; and MGD007, a gpA33 x CD3 DART molecule that is being developed to treat patients with primary and metastatic colorectal cancers.

Both of these molecules are currently being studied in Phase 1 trials and are in dose escalation. We expect to be able to provide a clinical update on MGD006 at our R&D Day next month, with a clinical update on MGD007 likely to take place in the first half of 2017.

Also in Phase 1 development is MGD011, also known as JNJ-64052781, or duvortuxizumab, a CD19 x CD3 DART molecule which is being developed by our collaboration partner, Janssen, and Pfizer-06671008, a P-cadherin x CD3 DART molecule which is being developed by Pfizer. Also in oncology our IND for MGA012, an antibody being developed for the treatment of solid tumors, cleared the FDA, and we are working on startup for the Phase 1 clinical trial. I look forward to telling you more about this antibody at our R&D meeting next month.

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

During the quarter, MacroGenics and Takeda Pharmaceutical Company announced the conclusion of our license and option agreement for MGD010, which allowed MacroGenics to regain worldwide rights to MGD010. Takeda's decision followed their recently announced reprioritization of therapeutic focus. Based on the encouraging results we've seen to date and reported at EULAR, we plan to continue to advance MGD010.

MacroGenics recently dosed the last subject in the final cohort of our Phase 1 study of MGD010. Subjects in this cohort were vaccinated with hepatitis A vaccine and received a single dose of MGD010 to determine this DART molecule's effect on modulating antibody-specific responses. We expect to present this data the first half of 2017.

Our infectious disease program, MGD014, continues to be developed as a DART molecule designed 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 expect to submit an IND for MGD014 in the first half of 2017.

The other 2017 IND submission 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. Both of the molecules have shown promising preclinical results, and we look forward to advancing them to the clinic in 2017.

Finally, we ended the quarter with a strong balance sheet to support our growing pipeline of clinical programs and its continued progress. The next few months will be busy, and our team looks forward to providing updates on several of our mentioned programs at our R&D day on December 13 in New York City.

This concludes my prepared comments, and we now would be glad to discuss questions that callers may have. Operator?

(Operator Instructions)

Michael Schmidt, Leerink Partners.

Thanks for taking my questions. I had one on margetuximab, a question on enrollment in this trial. How is it going, and do you have any guidance regarding timing of a potential interim analysis in this study?

Thanks for the question, Michael. As I had noted on our previous call and on today's call, we have now advanced the startup to about 90% of the sites in now Europe and the US. So there's been a nice uptick there. There's also been a nice uptick in terms of enrollment over the last two months.

And so what I plan to do at the time of our R&D meeting to provide a little bit more precision about our estimates with regard to the completion of enrollment and readout of data. So I would wait until next month to give you a little bit of a better idea.

At this point, as we had previously indicated, we expected from the start of the trial, which was late last year, it would take about three years to enroll the study. I think, again, we're in that time frame, and my expectation is to provide a little more detail next month.

With regard to an interim analysis, we had indicated and we intend to conduct a futility analysis when we reach a certain number of endpoints. And my expectation is still that this will occur in 2017.

Great, thanks. And one regarding MGD011, the CD19 ADC that's partnered with Janssen, one of the studies was listed as suspended on ClinicalTrials.gov. You'd received some questions on that a while ago. I was wondering if you have some more information around that study.

Thanks, Michael. I have no new update about that study. As reported by Janssen, this was a study that was designed to look at MGD011 in combination with Imbruvica. As we understand it, Janssen had gotten questions back with the IND filing from the FDA that would require a little bit more time to respond.

The expectations as related to us was that this would not delay the start of the study. But we have not heard any further update since that initial announcement.

Great. Thank you, Scott.

Thanks, Michael.

Boris Peaker, Cowen and Company.

Great. So my first question on the SOPHIA study, I'm just curious what fraction of patients had come in from Europe versus the US, and how do those patients differ in terms of their baseline characteristics?

Thanks so much, Boris. At this point we are enrolling both in the US and Europe, so I can't give you any sense right now what the balance will be between European and US. Patients are allowed to enroll from either continent. But right now it looks to be pretty consistent and equivalent. With regard to the type of patients that are enrolling, I haven't heard any noted differences in those patients at this point.

Got you. And also in terms of catalysts coming up, I mean, certainly your Analyst Day is going to be very important, but that's right after ASH. I'm just curious, anything that you'll be presenting at the ASH meeting?

At this point there will be, I think, some submissions on trials in progress, but I think the data that we intend to present notably this year will be at the time of our R&D meeting.

Got you. And so my last question is certainly you have a very broad pipeline, and the JNJ deal has been very important to the story. I'm just curious, are there any ongoing licensing partnership discussions, maybe kind of in a somewhat advanced stages, or should we be expecting something in 2017 in terms of a partnering, licensing?

What I noted before, we have a very active business development group that is always engaging various parties. Given the broadness of our pipeline, both preclinically and clinically, that for many of these assets we fully own, there is clear interest in continuing to have a dialog with companies.

The one I would most note, which I had made a comment on before, was MGD010. After the announcement that Takeda was not going to pursue autoimmune indications, we have received a lot of inbound calls about this program, and we continue to discuss this opportunity with various partners.

And we're analyzing whether this is best served through a new partnership or advancing the program further ourselves. So nothing that is impending near term, but there clearly is active discussions around that asset and around several other preclinical assets there are discussions, but nothing that's imminent.

Great. Well, congratulations on the progress, and thank you for taking my questions.

Thank you.

(Operator Instructions)

Stephen Willey, Stifel Nicolaus.

Hi, this is Philomena Kamya in for Stephen Willey. Thanks for taking my questions. I just wanted to have a little bit more context with respect to the type of immunological information we'll be receiving from the MGD010 program. You mentioned the modulation of antibody-specific immune responses. If you could just contextualize that, that would be great.

Thanks very much, Philomena. As we've noted and what was presented at the EULAR meeting, we're very excited about the mechanism of this molecule.

Having demonstrated preclinically that we can inhibit signalling of B cells by co-engaging CD32B and CD79, we had demonstrated at EULAR with the initial data as of that point that we were reproducing the inhibitory activity in B cells, and this was also manifested by changes in surface signalling molecules, including surface Ig as well as CD40, and there was a dose-dependent reduction in circulating IgM levels which would be consistent with the coexpression of these receptors on B cell plasma blasts.

We think that the current ongoing study right now, which, as I said, just finished enrollment, is asking a more detailed question of beyond the reduction in Ig levels, can we see modulation in specific immune responses. Here in the current case we're immunizing with a vaccine for hepatitis A. We're coadministering about the same time the MGD010 molecule. So it'll be very interesting if this leads to a change in the antibody responses.

And we'll also, obviously, look again at the distribution of various activation molecules on the surface of these B cells during the conduct of the analysis. We will obviously look towards future use of this in multi-dosing, obviously in the use of specific autoimmune disease, but those that will be conducted in a future trial.

And, sorry, if I could just ask one follow-up question, do you think that there is a role that this kind of mechanism can play in an infectious disease setting, perhaps?

So, in a setting of a specific immune response we would not want to likely downregulate a specific immunity in infectious diseases. There we would obviously like to do the opposite is to enhance immunity.

And, as you know, we're using our DART platform in other ways, either from targeting combination checkpoints or recruiting T cells or other immune cells to enhance immunity for infectious diseases. That certainly was the case of our MGD014 molecule, where we're looking to eliminate the latent HIV infection.

We are looking at the potential of similar mechanisms in the future for other infectious diseases. But for MGD010, per se, I don't think it would be a useful outcome to treat infectious diseases there.

Oh, I'm sorry, just I was referencing the modulation of an antibody-specific immune response in the infectious disease setting.

Okay, I thought the specific molecule. No, absolutely, there clearly is opportunity from our platform to enhance immunity against infectious diseases, but certainly not with 010.

Thank you very much.

David Nierengarten, Wedbush Securities.

Hi. This is Dilip sitting in for David. Just wanted to get your thoughts on the hold that was placed on a JNJ study of a CD123 CD3 bispecific that they were developing, I believe, with Genmab. What impact or read-through do you believe this provides for the 006 program? Thanks.

So, I'm, again, my knowledge about the particular hold there is what is available to the public. My understanding is is that soon after the start of their trial they were placed on clinical hold, presumably for a safety concern.

What I can say quite clearly is that we continue to enroll patients in our study of MGD006 targeting CD123 and CD3. As I've noted previously, we have been very diligent in slowly moving up the dosing of our drug and looking at alternative dosing regimens to provide the best safety and ultimately efficacy signals for this molecule, and we continue on track with its development and to date have no indication that the response by the FDA to JNJ's molecule has any implications for us.

Debjit Chattopadhyay, Janney Montgomery Scott LLC.

Hey, thank you, Scott, for taking my question. So on the gpA33, any further updates on narrowing down either the dose or the dosing schedule? You had referred to it in the prior conference call.

Yes, thanks for the question, Debjit. Again, as I have indicated on previous calls and at various meetings, we are very excited about the potential for MGD007 targeting gpA33 and CD3. And, as I've noted previously, one of the challenges for this specific targeted molecule is the expression of the antigen not only on colorectal cancers but on the normal GI tract, which includes the colon, small intestine and the stomach.

As I indicated previously, we had moved to looking at some alterations in premedications for the patients, looking at alternative dosing. We have enrolled several patients since we last spoke and continue to plan to enroll additional patients.

So right now it's still too early whether we will be able to achieve an acceptable dose that provides the therapeutic range for safety and efficacy. We are including in those studies biopsying tissues from those patients to look at the infiltration of T cells, looking at hopefully in analyzing the localization of the drug, as well.

So it's still too early. And, as I indicated on the call earlier today, we hope to be able to update everybody sometime in the first part of next year.

And then on the B7-H3 program on the combo studies with checkpoints, you mentioned it has moved on to the dose expansion phase. In terms of the dosing for the B7-H3 by itself, how does that compare to the dose that you shared on your last Investor Day?

Yes, so, with regard to enoblituzumab, remember, we have two molecules in clinical development, so let me be clear that for enoblituzumab we have advanced enoblituzumab combination with pembrolizumab to the expansion cohort. And the dosing there is, as I had noted before, is 50 mg/kg of MGA271, or enoblituzumab, and 2 mg/kg of pembrolizumab, which is being given every 3 weeks.

And at the -- sorry, go ahead.

No, and as I said before, we are still in the last cohort with the combo with ipilimumab, and hopefully we'll be able to flip over very soon to the expansion for that, as well.

Great. And one last question, at your upcoming Investor Day, you said you'd be sharing some of the B7-H3 monotherapy data. Beyond the B7-H3, any other programs that you plan to highlight, especially from a clinical perspective? Thank you so much.

As I noted earlier today, we'll provide the update, really, of the journey we've been taking with MGD006, so we'll include that, obviously the monotherapy for enoblituzumab. But we expect to provide you additional data both on clinical as well as preclinical programs. So stay tuned.

Thank you so much, Scott.

(Operator Instructions)

And I'm showing no further questions. This concludes the question-and-answer session.

I will now turn the call back to Dr. Koenig for closing remarks.

Thank you, operator, and thanks to everyone listening and participating. As always, we appreciate your interest and look forward to seeing many of you at our R&D Day in December. Have a good afternoon.

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