MacroGenics Inc (MGNX) 2017 Q1 法說會逐字稿

Good afternoon. We will begin the MacroGenics 2017 First Quarter Conference Call in just a moment. All participants are in listen-only mode at the moment and we will conduct a question-and-answer session at the conclusion of the call. 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 first quarter financial and operational results. For anyone who has 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 our 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 the conference call and webcast today. Thank you for joining us. The first quarter of 2017 was one of continued clinical and preclinical advancements for MacroGenics. Our continued commitment to building a broad pipeline was showcased through eight posters featuring MacroGenics developed programs at the 2017 American Association for Cancer Research Annual Meeting, and we fulfilled our annual goal of filing one IND for a new molecular entity per year through the submission recently made for MGD013, a member of our PD-1 franchise that targets PD-1 and LAG-3.

Once that Phase 1 [is ending] it will be the 10th MacroGenics program in clinical development. I will provide an overview of MacroGenics progress on these programs after Jim's review of the financial results for the quarter. I will now turn the call back over to Jim.

Thank you, Scott. This afternoon we reported financial results generally in line with expectations. As described in our release, MacroGenics had research and development expenses of $32.8 million for the quarter ended March 31, 2017, compared to $27.3 million for the quarter ended March 31, 2016. This increase was due primarily to the initiation of a Phase 1 clinical trial of MGA012, continued enrollment in the margetuximab SOPHIA study, and increased activity in the Company's other preclinical and clinical programs. These increases were partially offset by decreased manufacturing costs for duvortuxizumab, which are reimbursed by our collaborator Janssen.

We had general and administrative expenses of $7.5 million for the quarter ended March 31, 2017, compared to $6.1 million for the quarter ended March 31, 2016. This increase was primarily due to increased staff recurring costs and stock-based non-cash compensation expense.

On the revenue side, we recorded total revenues consisting primarily of revenue from collaborative agreements of $2.1 million for the quarter ended March 31, 2017, compared to $2.8 million for the quarter ended March 31, 2016. Revenue from collaborative agreements includes the recognition of deferred revenue from payments received in previous periods, as well as payments received during the period.

For the quarter ended March 31, 2017, we had a net loss of $37.7 million compared to net loss of $30.4 million for the quarter ended March 31, 2016. Our cash, cash equivalents and marketable securities as of March 31, 2017, totaled $248.1 million, which does not include the additional $23.7 million in proceeds before any expenses that we received through a registered direct offering we closed with an institutional healthcare investor yesterday. The $248.1 million balance as of March 31, 2017 compares with $285 million as of December 31, 2016.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities, including the net proceeds from the recently completed registered direct offering, combined with anticipated revenue under our current strategic collaborations, can fund our operations through 2018.

And now, I'll hand the call back to Scott.

Thank you, Jim. As I mentioned earlier, we recently submitted an IND for MGD013, the first of our next-generation PD-1-based bispecific molecules with the potential for enhanced anti-tumor activity. Assuming clearance of the MGD013 IND, we will have 10 proprietary and collaborator-led programs in clinical development, eight focused on immune oncology and two focused on autoimmune and infectious diseases.

This is two more product candidates in the clinic than this time last year. Six of these molecules are created through our DART platform, which we believe is the industry's most versatile bispecific antibody technology. Each of MacroGenics' 10 product candidates were derived from our proprietary antibody engineering platforms. We remain committed to maximizing the productivity of these platforms as we continue to develop and advance our robust and diverse pipeline.

Let me now update you on our current pipeline and provide further details into the data presented at AACR. Margetuximab is our Fc-optimized monoclonal antibody that targets the human epidermal growth factor receptor 2 or HER2. We are actively enrolling patients in 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. This study will enroll approximately 530 patients across trial sites in North America, Europe and Asia, and remains on track for enrollment completion by late 2018.

We are also continuing to enrolling three patients in our Phase 2 study of margetuximab in combination with pembrolizumab, an anti-PD-1 therapy for patients with advanced HER2 positive gastric cancer. The proposed combination regimen will allow patients, all of whom have limited treatment options to avoid chemotherapy, while utilizing the immune-mediated killing properties of both margetuximab and pembrolizumab. We plan to enroll a total of 30 patients in the US and 30 in Asia, including Korea, Taiwan and Singapore by the end of 2017.

MacroGenics is pursuing multiple B7-H3 directive programs, giving us the leading franchise of product candidates that target this member of the B7 family of immune regulatory molecules. MacroGenics fully owns this franchise, which includes multiple programs that target B7-H3 through complementary mechanisms of action and takes advantage of this target's broad expression across many solid tumor types with little expression on normal tissues.

The most advanced B7-H3 candidates we have in development is enoblituzumab, which is an Fc-optimized monoclonal antibody that targets B7-H3. Recruitment in multiple Phase 1 studies of enoblituzumab is ongoing. These studies include a monotherapy study expanded last year to include additional bladder and prostate cancer cohorts and a combination study with an anti-PD-1 monoclonal antibody.

The second clinical candidate in the B7-H3 franchise portfolio is MGD009, our B7-H3 x CD3 targeted DART molecule. MGD009 is being evaluated in a Phase 1 study in patients across several defined solid tumor types. We expect to establish a dosing schedule for MGD009 with administration, as well as initiate dose expansion cohorts in multiple tumor types this year.

The third molecule in our B7-H3 franchise is MGC018, an anti-B7-H3 antibody drug conjugate. We are conducting IND-enabling activities to support an IND application for this anti-B7-H3 ADC in 2018. The Company's poster on MGC018 at the recent AACR meeting showed that this molecule had potent in vivo antitumor activity in animal models. These results support further development to evaluate the potential of MGC018 as an ADC therapeutic for the treatment of the B7-H3 expressing solid tumors.

Additional to our molecules in Phase 1 clinical development include flotetuzumab, a CD123 x CD3 DART molecule that's being developed to treat patients with AML or MDS, and MGD07, a gpA33 x CD3 DART molecule that's being developed to treat patients with primary metastatic colorectal cancers. Both are currently being studied in Phase 1 trials and are currently recruiting patients. We expect to establish a recommended dosing schedule for flotetuzumab, as well as initiate dose expansion cohorts for this program in 2017.

With regard to MGD07, we are dosing patients at 1 microgram per kg every three weeks, and we will explore more frequent dosing intervals. I expect to be able to provide an update with regard to both programs, including future development plans later this year. MGD010 is a DART molecule designed to simultaneously target the B-cell surface proteins CD32B and CD79B, and is the first DART molecule developed for the treatment of autoimmune disorders. We expect to present updated clinical pharmacodynamic activity results from the completed Phase 1 study of MGD010 in June.

The final programs I will discuss today make up our PD-1 directed immuno-oncology franchise. We are advancing several PD-1 directed programs, which will enable both a broad set of combination opportunities across our own portfolio molecules and provide further differentiation from existing PD-1 base treatment options. MGA012, a proprietary anti-PD-1 monoclonal antibody is enrolling patients in a dose escalation segment of the Phase 1 clinical study and we expect to define a target dosing schedule in the coming months.

With anti-PD-1 therapy becoming a mainstay of cancer treatment across multiple tumor types, MacroGenics believes MGA012 will be the basis for potential combination therapy with several of the molecules in our pipeline, including our redirected T-cell DART molecules.

MGD013 is intended to provide co-blockade of two immune checkpoint molecules expressed on T-cells, PD-1 and LAG-3 for the potential treatment of a range of malignancies. I'm not aware of any other combined checkpoint by specific molecules in the clinic today. Assuming clearance of our MGD013 IND, I would expect this to be the first.

Among the Eight Posters we and our collaborators had at AACR was one showing preclinical bispecific DART and trispecific TRIDENT molecules that bind to and inhibit ligand interaction with PD-1 and CTLA-4, resulting in enhanced T-cell activation.

Combinatorial blockade of PD-1 and CTLA-4 has shown improved anti-tumor activity in the clinic. By targeting these clinically validated checkpoint molecules simultaneously, MacroGenics' DART and TRIDENT proteins hold the promise of enhanced anti-tumor activity.

Other posters at AACR covered our B7-H3 ADC program, our Adam-9 ADC programs in collaboration with Immunogen and multiple DART molecules including two posters regarding duvortuxizumab, also known as MGD011, which is a CD19 x CD3 DART molecule being developed by Janssen. Collectively, these preclinical data presentations demonstrate the depth of our pipeline, as well as the quality of our science.

As Jim alluded to during the financial update, the progress we've made this year was accomplished while maintaining a strong balance sheet and overall financial position. We look forward to continued advancement of our programs and to continuing to update you as the Company and our science progresses.

This concludes my prepared comments. And we now would be glad to address any questions that callers may have. Operator?

(Operator instructions) Michael Schmidt, Leerink.

Thanks for taking my questions. What, if any, data should investors expect from your clinical stage bispecific programs this year?

Michael, thanks very much for the question. We're very happy that our programs are proceeding nicely. As I pointed out for flotetuzumab, the MGD006 molecule targeting CD123 x CD3, we continue in the lead-in dosing schedule with very good support of care, and this strategy is working quite nicely since a recent update at our R&D Day in December. We're continuing to dose escalate and they anticipate that with continued enrollment, we should achieve a dosing that we think is preferable, we will be able to understand the side effect profiles, as well as clinical benefit in populations at the targeted dose. We expect that to be reported at a scientific meeting, either one more before the end of the year.

With regard to MGD007, our gpA33 x CD3 molecule, which as you know is targeting metastatic primary colorectal cancer, we've indicated that we are continuing to dose patients at 1 microgram per kg every 3 weeks. We are anticipating to enrolling up to 20 patients at that dose, and we recently submitted an amendment of the protocol that is being reviewed and we anticipate patients getting enrolled on a more frequent dosing basis, again at the 1 microgram per kg dosing.

The expectation is that we will have enough data by the end of the year enrolling those very dosing regimens, so that either late this year or early next year, we should be able to provide updates on the MGD007 molecule. In addition, we have expectations on our PD-1 molecule MGA012. We are right now at the 10 microgram per kg Q2 -- Q2 weekly Q4 weekly dosing, recruiting patients at that dose. Assuming no other expected toxicities, which to-date the program has gone quite favorably, we expect the completion, the dose escalation sometime probably by early third quarter.

At that point, we will be in an excellent position to begin to advance that program forward in combination with one or more of our other molecules likely by the end of the year. And we're also potentially exploring the use of that molecule as a single agent in particular specific indications.

Furthermore, enoblituzumab, as I've noted, we are enrolling some additional patients in the monotherapy study, particularly patients with prostate cancer and bladder cancer. We've completed the recruitment of patients in the prostate arm of the monotherapy studies. We still have additional patients that we need to recruit on the bladder cancer side. But again, by end of the year, we should have that part of the study complete and we will find hopefully a good form to be able to present an update on the monotherapy data. I have also pointed out in the combination studies with both anti-PD-1 and CTLA-4 those are progressing nicely with the anti-PD-1 combination with enoblituzumab advancing a little faster than the CTLA-4 targeted molecule. The expectation as I had alluded to earlier this year, is that approximately a 100 patients were going to be enrolled in the arms -- the PD-1 combined with the enoblituzumab and patients with head and neck cancer, lung cancer, melanoma and bladder cancer.

And what we are guiding people is that we expect probably about two-thirds of those patients to be enrolled by the end of the year. That will then obviously continue into 2018. As I have said before, it's that if the data progresses faster than that and we have opportunities to present completed data on any given cohort, we would be happy to do so. So I think those are the key takeaways.

The only other molecule that we should have some additional data on, is MGD009, the B7-H3 x CD3. As I pointed out earlier, we are defining the dose, we expect probably sometime in the third quarter to have that dose defined and then we are going to flip over into six different tumor types as monotherapy. But that doesn't preclude us from even starting combination studies with anti-PD-1 for any of these molecules by late this year.

Great, thanks for that detail answer. Follow-up on the enoblituzumab PD-1 combination study, are you selecting patients based on B7-H3 antigen expression levels or is there post-op biomarker analysis plan of those data?

A very good question. So to-date, we have been selecting patients based on the entry criteria on -- we were trying to create diagnostic for that in parallel with a vendor and we had been selecting patients based on a screening criteria about two plus, three plus entry criteria. We actually will make probably modifications of that entry requirement given that it does take time to get that data back. And we have gotten feedback from investigators that recruitment could be even faster, if we don't require that upfront.

And we found that, virtually all the patients were B7-H3 positive, so rather than put that into an impediment for enrollment, we're allowing patients on those particular tumor types to enroll and then retrospectively will analyze for the expression level, the B7-H3. This is very consistent with what originally when we started that trial that the FDA had asked us that at some time also testing a subset of patients that did not have B7-H3 expression. So this may allow us to get some exposure of the drug to those individuals as well.

Stephen Willey, Stifel.

Thanks for taking the question. Scott, have you said whether or not MGA012 has had the ADCC engineered out of the molecule? And I guess I asked the question because I know there has been some speculation regarding the Zeneca PD-1 that some of the infusion reactions that they're seeing may be a byproduct of the ADCC activity. Just wondered if you can provide some comment --

Yes, so the antibody is an IGT 4, I believe, and therefore it will not have intrinsic ADCC activity by itself. We didn't -- as I recall we didn't engineer out any binding to FcRs like we do with many of our DART molecules as you know. So I think it's a wild type G4 that's in clinical development.

Okay. And just on the AACR poster, one of the AACR process whereby you are comparing the PD-1 CTLA for bispecific in both TRIDENT and DART formats, so you made a decision as to which one of those may be moving forward and maybe provide a little bit of a rationale for the trivalent format and which I think you are looking at monovalent CTLA for binding.

Yes, now thanks very much for that question. We're very excited about both constructs and the preliminary data has been extremely promising. We have been developing these things in parallel. So just to give you a little bit of granular detail on that, the PD-1 specificities, first of all, in both is the same one that's an MGA012. So we have a direct parallel there.

And as we've reported before the binding properties of the PD-1 are quite favorable with a higher affinity and longer off-rate and probably longer half-life of that molecule compared to several of our marketed products in that regard.

The CTLA-4 specificity also has very favorable binding characteristics as compared to ipilimumab. We typically make a copy of the reported sequences of both the marketed as well as the experimental specificity so that we can have a comparison to the gold standard there.

Now when we created the bispecific that has -- which is the DART molecule, it's a tetravalent bispecific. So it has two binding domains for PD-1 and two binding domains for CTLA-4. And so, if you're looking at the targeting of particular populations there will be certainly a large number of cells that will up regulate PD-1 and CTLA-4. As you know these molecules are expressed temporally at different parts of the activation process of T-cell.

So what will happen is is that for any cell that co-expresses PD-1 and CTLA-4 that tetravalent bispecific will bind to both. The same thing is is that for cells that only express PD-1, the tetravalent bispecific T-1 will bind as efficiently as a wild-type PD-1 there. So you'll get all the anti-PD-1 effects of the molecule if it expressed as both molecules or one molecule. It also -- will also hit a target that only express CTLA-4. So you basically cover all populations with that tetravalent bispecific.

Now turning to the TRIDENT, the TRIDENT is designed so you have two copies of the PD-1 and one copy of the CTLA-4. So only in the case when the cells co-express PD-1 and CTLA-4 will that molecule efficiently bind to that population.

In cases where you only have CTLA-4 expression, it won't bind very well to that population, it will fall off very quickly and will not impede the signaling. What we were looking at is both biological and salutary effects, but also our concern is that we want to maybe manage certain toxicities there. And so by not binding in the TRIDENT version of this molecule and not binding to CTLA-4, we may obviate some of the side effect profiles.

Right now, I would say that the lead molecules, the tetravalent bispecific, just because of timing, is a little ahead on that. But, we will continue to develop the other one in parallel, and we'll make some decisions later this year on which one will move into the clinic first.

Okay, that's helpful. And then have you also [taken the] balance sheet question via the DART and TRIDENT scaffold with PD-1 LAG-3 combo?

Yes, we did that. So that's an excellent question, as well. And in fact, the specific version that has just moved into the clinic. The PD-1 x LAG-3 is a tetravalent bispecific. We had actually constructed a monovalent bispecific versions molecule and the tetravalent bispecific, which became the clinical candidate. What we found is, is that you have dramatically improved biological activity, the tetravalent bispecific.

As we have noted in previous presentations and also at the AACR Meeting, the DART molecule in that configuration induces better T-cell restoration activity than to two separate antibodies to that molecule. And you only see that when you have the tetravalent bispecific. When we use the monovalent bispecific version of that molecule, you would have blockade effect to a certain degree, but you didn't get that added benefit that we reported.

And what we have found is, is that molecule is very effective at cross-linking PD-1 x LAG-3, and in addition to the ability advantages of that molecule, you may be also inducing certain advantageous signaling properties by that cross-linking downstream that is giving the enhanced immune restoration function.

Boris Peaker, Cowen.

Great, thank you for taking my questions. So my first one is on margetuximab. Just curious, do you test all the incoming patients for the Fc gamma R3a mutation? And is it also known -- what fraction do you anticipate to be heterozygous or homozygous for the low affinity variant?

Boris, thanks for the question. As has been shown by work that we have done and also reported in the literature, both the low affinity F variant, [FH] homozygous variant of CD16, and the heterozygous variant of the [FZ] represents approximately 80% of the population, there are some minor differences among different ethnic groups. We are not prospectively screening those patients for those mutations, but we are actually accumulating that data retrospectively for our analysis. Given that it's such a predominant type and given that we had seen in our Phase I study, particularly in breast cancer patients frankly every breast cancer patient that was randomly enrolled into the study turned out to be either heterozygous or homozygous for the low affinity allele, we found -- we felt that we would be in a favorable position to naturally recruit the majority of the patients with that low binding version of the molecule, but we will be monitoring it going forward.

Great. And maybe on enoblituzumab, since it has the same modification, is it safe to assume that you'll also just be monitoring not including a screening criteria or is there any way to incorporate any kind of learnings from margetuximab into enoblituzumab future studies?

That's a good question. We haven't done that in the Phase I studies to date that I know of that I don't think that data has been captured. The rationale on margetuximab was based on published data that suggested that that population will be preferentially benefit in particular by enhancing the binding to CD-16. But it's a good point that we might have additional learnings on responding populations based on looking at that. So thanks for the suggestion.

Great. And my last question, maybe you've answered it to some extent, is on flotetuzumab CD123 -- kind of a long name, hard to say, so I'll just say CD123 x CD3 bispecific. So do you think we'll have some data at ASH? I mean, you said later in the year. I just want to kind of try to pin it down to a medical meeting.

So you're not going to break my legs. I didn't -- we haven't submitted the abstract here on any of these things, but ASH is among the meetings that would be good candidates for presentation of data. So sometime later this year ASH is one of the candidates.

Yigal Nochomovitz, Citigroup.

Thanks for taking the question. We were looking on ClinTrials and it seems that there is some very recent changes as recently as the 24th of April on duvortuxizumab for the CD19 x CD3 with respect to changes in dose and possibly changes in dosing schedule. Can you comment at all on that, and just broadly, where this program stands in terms of effort to recruit and potential for data? Thank you.

Thank you, Yigal. As you know, we're precluded to making any statements about the study apart from the answer and we haven't had any discussions. We are aware of some of these changes that they implemented in the protocol in terms of dosing. In fact, they are continuing to do dose escalation of the molecule and they have actually guided us on where they're going in terms of the dosing and dosing intervals on this.

It was also favorable from their plans from what we glean from that conversation that dosing is going to continue in all B cell malignancies probably through the latter part of the year. What they had indicated to us is that once they've established the proper dose for the drug, as you recall, they had anticipated doing a second study in combination with Imbruvica and I think that's all -- all those plans are still in place. So, that's all I know as of now.

Okay, thanks. So you can't really comment on data timing for that program?

Not really, it's -- again, I know they were recruiting patients, but I really have no guidance in terms of the rate of enrollment for that study.

Okay. And I just had a question on MGC018 on the B7-H3. What was the thought process in choosing the linker, the DUBA linker with Synthon and other linkers that you're considering with Synthon that you could use for future ADC to develop? Thanks.

Yes. So, thanks for that question. We had -- as you recall, had spent, I would say, a good part of over two years to three years, actually just probably since the time of our IPO, doing evaluations of many different toxins and toxin conjugates and linkers. And so this included companies that are in the ADC space, that are public companies, as well as private companies with new technologies. We saw a very favorable profile with the duocarmycin toxin, the collaboration with Synthon with this particular linker-toxin technology in the context of our B7-H3 program, has been performed very nicely, as you know we had a poster at AACR highlighting that data.

So we are continuing that. I know of no other activities, specifically for other taxing conjugate linkered toxins with Synthon. As you know, we had two posters with ImmunoGen looking at a toxin conjugate. Out of nine molecule, we have a collaboration with them using, again, different molecules both from (inaudible) series and other new next-generation molecules that ImmunoGen is developing targeting DNA. And again, that collaboration is going well and I could say, we also have other work going on in the area. But with regard to your original question, nothing specific about other linker toxins from Synthon is ongoing that I know of at MacroGenics.

David Nierengarten, Wedbush.

Sort of quick question on potential competitor or another molecule in space and that's Roche's CD3 CA molecule, and I just wondering, when they present data at ASCO, if any read-through we could have on the gpA33 x CD3 DART that you're developing? Thanks.

David, thank you very much for the question. As many of you know, I think Roche recently highlighted on the call last week some data that they are planning to present at ASCO discussing their CD-3 x CDA bispecific, which has I think two copies of targeting CA and one copy targeting CD-3 plus their anti-PD-1. With the presumption that they are discussing that because the data is likely to be quite favorable, we're very excited about the prospects.

As you've heard today and I pointed out, and our long-term strategy is taking advantage of our whole PD-1 franchise PD-1 alone, PD-1, LAG-3 . I heard about PD-1 CTLA-4, how these will combine with our own molecules, which include redirected T-cell DART molecules, as well as the Fc-engineered antibodies. So if they have favorable results there, that certainly bodes well for the strategy that we are going to be taking and we will be in an excellent position given the advancements, particularly as you mentioned MGD007 gpA33 for colorectal cancer.

So combining that molecule with our anti-PD-1. But I should also -- if you just want to talk about colorectal cancer, I should remind first that B7-H3 is highly expressed on a large population of colorectal cancer. So there is an opportunity to take advantage for MGD009 in the context of colorectal cancers as well as others as well. So we are very, we are looking forward to hearing that data and that we hope it's positive.

Ren Benjamin, Raymond James.

Hi Scott, thanks for taking the questions. I actually have the first one having to do with the SOPHIA study. Can you -- now that we're in May, provide us with any more granularity as to when the futility analysis may happen and just remind us in this case, what the hurdle for futility might be and if the study can be stopped for efficacy?

So we have not disclosed publicly specifics about the targeting for the futility and I will not do so today. I will say though we are consistent in terms of the number of events we're looking at, that we expect that data to be ready by the end of the year and potentially could be stopped for efficacy if not just a safety look.

Got it and then just switching gears, you mentioned the next generation of P1 based programs and should we be thinking about more combinations for example with TIM-3, OX40, does it kind of just keep running the gambit? Do you have it fairly well selected and can you do the exact same thing with, let's say, PD-L1 and those same combinations, and where does ADAM9 fit in with this entire mix?

Okay. I'll start with the last question. We're focused on the use of ADAM9 specifically for the ADC. Mo specific plans for a bispecific although that -- ADAM9 is an interesting target. It goes beyond today's questions. But right now, we don't have any bispecifics targeting ADAM9.

With regard to all the other members of the checkpoint family that you mentioned, plus probably about another five or six more, we have a lot of combinations in our back pocket here. Obviously, these are going to be guided by the preclinical data, what has come down in the clinical arena and the advantages of having a bispecific or trispecific with particular combination. So, remember two years ago, we set out a very clear strategy that we were going to acquire or develop variable domains from many of the checkpoints in the checkpoint login and look at combinations together. So some of the molecules you've described, we have in our back pocket.

Got it, okay. And then just maybe switching gears to the tox profiles of some of the molecules that are now under clinical evaluation. Can you -- I know that you've been experimenting with different doses and different dosing schedules. But maybe based on kind of what's happening in the cell therapy industry, are you taking -- can you provide us any additional color as to how you might be able to [mitigate] some of the toxicities that you might be seeing, and any changes that are going on right now on the clinical trials?

Yes, thanks for that question, Ren. If you recall at our R&D Day, Jon Wigginton, our Chief Medical Officer provided some insights on how we were managing the cytokine release associated particularly with MGD006, flotetuzumab, and some on-target toxicities in the GI tract associated with MGD006. And as I commented on earlier today, I think that strategy is bearing nice fruit for us as we advance both those molecule into further testing.

First of all, I should state outright that the magnitude of the cytokine release that we're observing does not come close to what has been reported for CAR-T type infusions. The large part of these events can be managed in an outpatient setting. At times patients are kept for observation overnight. We are into what we have instituted is treatments that are very modest from a dosing of steroids and in particular interventions with anti-cytokine, such as [OZ] for anti-Io6.

Very early, when we see first signs of that and that seems to have enabled us to manage the toxicity profiles quite nicely. I should also note that typically seeing these events in the first infusion and second infusion, sometimes we'll see in the third, but usually it's an early event and is a natural modulation of this further on. So the other strategy that we have exploited is the lead and dosing regimen. We have done this for MGD006. In particular, we are looking at employing this first on some of the solid tumors as well, and we think that this strategy is also a bit very helpful at mitigating some of those cytokine effects.

David Lebowitz, Morgan Stanley.

You had mentioned earlier in the call that you had modified the protocol for MGD007. Could you just quickly run us through what changes were made?

Yes, thanks David. Just to reiterate, our dosing patients at 1 microgram per kg are a Q3 weekly basis and we expanded out the number of patients that we anticipate to dose a regimen. And as I indicated earlier, we are targeting up to 20 patients at that dose.

In addition, we submitted a protocol over revision that we can give the drug more frequently at same dose or lower dose, so that they get shorter-term exposures to small fractions of the drug. And that was submitted recently. We expect to hear from IRB and don't expect any pushback on that. But we will hear very shortly and expect to expand additional patients in those cohorts as well.

Debjit Chattopadhyay, Janney Capital.

This is [Earl] in for Debjit. Couple of questions. So in the MGD007 program, what is the distribution of the MSI positive versus negative patients and beyond the initial PR and MSI negative patients, has there been any other anecdotal PR?

So I'm not going to comment on response rate this time, we will be able to get an update later this year. The first patient has -- we have reported, what was a confirmed PR, was on drug for substantial time. But I'm not going to comment further on new patients.

I'm sorry, with the second part of that was --

Beyond the initial PR had there been any other anecdotal PRs?

No, that beyond that question. I am Going to respond to that. Was there another part to that question?

The distribution.

The distribution, I'm sorry, that's right. I'm sorry. I didn't know what you said. We are monitoring that, we're not prospectively looking at that. The particular patient that had the PR with the MSI stable, was not MSI high, but we are monitoring those patients. But we are not particularly selecting that population to treat at this point and we will obviously report out data for the MSI when we have it.

Okay. And for the CD123 targeted bispecific in AML, have you now tuned out the CRS in an initial patient? And a follow-up is, what is the level of physician enthusiasm to drive recruitment in the relapse/refractory population?

I'm sorry, can you repeat that second question. I heard the first, I didn't hear what you said -- repeat the second?

The level of physician enthusiasm to drive recruitment in the relapse/refractory population?

Okay. So the answer for the CRS part is, we have a leading dose that we described and then patients are then treated for a week and then either given continuous infusion over a month or put on a four-day or three-day schedule. And as I was alluding to before, that strategy has really paid off for us very well, as a very manageable CRS at much lower grades than were observed earlier when we were giving higher initial dosing.

So I would say that the response from clinicians is extremely favorable, both in the US and Europe that are participating in the trial for relapsed/refractory. And I can say there's also been encouragement from a number of investigators for us to expand the use of this drug in other CD123 bearing tumor populations as well.

Dane Leone, BTIG.

Hi, thank you. So the first one for me is, how do you see, I guess, going back to MGC018, how do you see that program evolving and is there a timeline that you may think could be accelerated versus some of the other B7-H3 programs? The reason I ask is, you do -- obviously with some of the other parts of the B7-H3 program, you do have some tangible real world data from peer companies that have been using B7-H3 targeted ADC that do seem to be getting pretty good results with manageable toxicities profiles?

Dane, thanks very much for the question. Obviously, we're enthusiastic about the program. I don't want to get ahead of ourselves with regard to specific timelines given that we're just starting out formal toxicology study of the molecule.

So, once we get through that and as you know, we've been looking at repeat dosing, if that all looks favorable, we are on target sometime next year to start the clinical studies.

The opportunity is a great one for us, given that there are so many different tumor types and as you saw from the preclinical data with a single dose of the drug we basically cured tumors in different model systems. And so we're going to have to obviously judiciously give the drug at a very safe dose. We're going to have to work our way up. We can't be too rapid on this because you're dealing with a very, very potent toxin that binds to both dividing and non-dividing cells. So we'll see how things come through in terms of the pre-clinical development and the initial dosing and then we'll be able to give guidance if we get to that point probably in the latter part of 2018.

Okay. And then a follow-up maybe on and MGD013. The question that we've gotten back a lot, and as you stated you will be the first, expected to maybe be the first with IND clearance and making into the clinic, the question we get back a lot is on the sociometry when you have this bispecific targeting, in this case, PD-1 and LAG-3 with some concerns coming back that it may actually be hard to effectively dose both of those targets, and you may actually be need to put quite a bit of antibody into the patient. I'd just be curious for your thoughts of how you think of that, I guess more a systemic modeling versus obviously the preclinical data which you're not going to encounter those types of issues?

Yes. So, I'm actually surprised that you think that there is going to be some large sync with regard to dosing. As you know for PD-1 targeted molecules, they tend to have a fairly long both pharmacogenetics and pharmacodynamics profile and in particular, as I pointed out earlier the PD-1 component of this molecule is quite favorable to approve drugs. And in fact, we are looking at the possibility of giving our all 12 parts -- less frequently than the currently marketed products. We will have to see what the PK is, I don't have it at this point in terms of occupancy given. So I should also say and reiterate that I said earlier that the LAG-3 component of this molecule was quite favorable to the 25F7 copy that we made of the Bristol molecule that's now in clinical development.

As you know, Bristol presented some data at SIPC with four anecdotal cases of giving their anti-LAG-3 or anti LAG-3 in combination with nivo and showed some very nice clinical responses in four different tumor types. And I see on the abstracts for ASCO that they're going to present a poster of -- in melanoma patients of that combination.

So we actually think that given the point I made earlier that having a tetravalent bispecific should lead to a better avidity and we're seeing better functional activity. I have to say, I'll be the first one surprised that we're going to have troubles with regard to dosing this molecule. But we'll wait and see what the other data turns out.

Okay. And then maybe one final one for me, just from a macro question of people looking at the stock you guys did do, I guess registered direct offering recently in maybe announced another share offering today. As you think about how you guys are messaging versus the value -- of the value creation that's being built within the MacroGenics platform, you're up kind of around the 30 level, 30 plus level hang into the R&D Day last year that came in quite a bit down to kind of the low 20s here. Maybe you can just kind of give us some direct messaging of what you're thinking -- anything about the context of giving raising cash down at these levels versus waiting for some of the clinical catalysts in the back half of this year.

Yes, thanks Dane, this is Jim, just to be clear, we actually announced the close -- in our earlier comments, we announced the closing of the registered direct offering with an individual healthcare investor -- an institutional healthcare investor. Today we actually -- so just take a step back. For the past several years, we've really done our best to bring non-dilutive capital. We remain very active on the business development front, and we think it's prudent to maintain a two-year cash runway. So last November, we filed a shop registration statement that would cover the potential issuance of securities as we continue to build out our business. So we announced last week that we had entered into a registered direct placement with a particular group, and so that brought in $23.7 million that closed yesterday.

So today, we added to our financial tool kit, our flexibility to offer up to $75 million via what's called an ATM or at-the-market offering of our common stock. We believe that an ATM would provide us with cost-efficient financial flexibility, especially on certain markets and we think it's very prudent to have in place. We have not made a decision yet, as to whether we will use that or what levels, but we think it's smart to have that in place. We'll have to see sort of where the stock goes.

You heard about all the programs we were asked obviously earlier in the question period about preclinical programs, and we just want to be in the best financial position and from our vantage point, as you know historically, we've tried to maintain two or more years' cash. We believe that given the breadth and depth of our program that our stock is trading low, but ultimately time will find out. But we have to keep our runway appropriate.

Peter Lawson, SunTrust Robinson.

Scott, just thinking about 013, when could we see data for that?

As you know, I'd love to see it as fast as we can. But, first, we've got to get the FDA to say, we can start with the trial. We are -- the clinical team is doing a great job and then getting the trial sites lined up to start the study. Obviously it has to go through the IRB review at the particular sites. But we're very excited about the prospects of this molecule, and just given that here we are in early May and it's going to be a couple of months before start-up, and then we have to do our prudent dose escalation. I think we'll be able to better comment about this in 2018. My clinical folks will be very unhappy with me if I give you any specific guidance about timing of clinical results.

Got you. And then just beyond 010, what program is going to yield the next clinical data for you this year?

We will provide an update, as we stated today, in June for 010, but after that, as I pointed out, second half of the year will be flotetuzumab 006, 007 and then some potential data on the dose escalation for all 012, as well as an enoblituzumab monotherapy and potentially combination of studies.

Got you. And then Jim, just following up on questions about cash and cash burn. How should we think about spending for the rest of the year, and which things cash runway takes you to now?

Yes, Peter on the call, we referenced that with this additional $23.7 million gross proceeds into the company, we can now comfortably say that our cash runway takes us all the way through 2018, and into very early 2019.

We're not providing any guidance with respect to operating expenses, I mean, I can tell you we do anticipate that our burn will become greater and greater as we move into later stages of development and as we move and more programs into the clinic. I'll also share with you that despite the fact that we have a very active BD effort, we model that very conservatively, and we don't like to overestimate the probability of or the likelihood of completing BD deals, because you never really know.

So we've taken a very conservative stance on that, and that's why today we can say that the, it's $248 million at the end of Q1, plus another $23 million-ish, give or take, of the registered direct that just closed yesterday, takes us all the way through 2018.

(Operator Instructions) This concludes the question-and-answer session. I'll now turn the call back to Dr. Koenig, for closing remarks.

I would like to thank everyone again for joining us and we look forward to updating you on each of these programs that we discuss today as we continue to make progress throughout the year. Have a great rest of the day.