MacroGenics Inc (MGNX) 2018 Q1 法說會逐字稿

Good afternoon.

We will begin the MacroGenics 2018 First Quarter Corporate Progress and Financial Results Conference Call in just a moment.

(Operator Instructions)

At this time, 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 2018 financial operational results.

For anyone who has not had a chance to review our results, we issued a press release this afternoon outlining today's announcements, 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 2 hours after the call has 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.

And now, I'd like to turn the call over to Dr. Scott Koening, 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.

During the first quarter of 2018, we made significant progress on several fronts, and I'm happy to provide an update that is focused on our most advanced product candidates and our financial position.

But before I do so, let me first turn the call back to Jim, who will review our financial results for the quarter and year.

Thanks, Scott.

This afternoon, we reported financial results for the first quarter, which highlight our strong financial position.

As described in our release, MacroGenics' had research and development expenses of $45.7 million for the quarter ended March 31, 2018, compared to $32.8 million for the quarter ended March 31, 2017.

This increase was primarily due to the continuous enrollment in our 2 margetuximab clinical studies, namely the SOPHIA Phase III trial for metastatic breast cancer and our combination trial with an anti-PD-1 in gastric cancer as well as the INCMGA0012 monotherapy clinical trial.

And you'll note that this is Incyte's new designation for what we had called MGA012.

We had general and administrative expenses of $9.2 million for the quarter ended March 31, 2018, compared to $7.5 million for the quarter ended March 31, 2017.

This increase was primarily due to consulting and other costs incurred related to the implementation of our new enterprise resource planning or ERP system.

We recorded total revenue, consisting primarily of revenue from collaborative agreements, of $4.7 million for the 3 months ended March 31, 2018, compared to $2.1 million for the 3 months ended March 31, 2017.

Revenue from collaborative agreements includes the recognition of deferred revenue from payments received in previous periods as well as payments received during the year.

For the quarter ended March 31, 2018, we had a net loss of $49.5 million compared to a net loss of $37.7 million for the 3 months ended March 31, 2017.

Our cash, cash equivalents and marketable securities as of March 31, 2018, were $260.1 million, which compared to $305.1 million as of December 31, 2017.

In April of this year, after the close of our first quarter, we completed a public offering of our common stock for net proceeds of $103 million.

This strengthened our financial position, and as a result, our pro forma cash, cash equivalents and marketable securities were $363.1 million at March 31, 2018, which includes the net proceeds from our recent offering.

Based on our current operating plan, we believe that our pro forma cash, which again includes the net proceeds from our recent offering, our cash, cash equivalents, marketable securities, combined with collaboration payments we anticipate receiving, should enable us to fund our operations into mid-2020, assuming our programs and collaborations advance as currently contemplated.

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

Thank you, Jim.

As I mentioned in the opening, MacroGenics has made considerable progress across multiple fronts recently.

I will limit my comments this afternoon to selected programs, which represent the most significant value-creation opportunities for us in 2018.

Let me begin with a review of our most advanced program, margetuximab, our novel immune optimizing anti-HER2 anybody, which has Fc domain engineered to enhance engagement and activation of the innate immune system.

Our pivotal SOPHIA study is evaluating the efficacy of margetuximab plus chemotherapy compared to trastuzumab plus chemotherapy in approximately 530 relapsed refractory HER2-positive metastatic breast cancer patients.

In January, we announced the completion of a preplanned interim futility analysis with a recommendation of an independent data safety monitoring committee to continue SOPHIA as planned without modification.

This analysis was based on a prespecified assessment of progression-free survival as determined by independent central review and did not allow for early stopping due to efficacy.

We also announced that the U.S. FDA had granted Fast Track designation for the investigation of margetuximab for treatment of patients with metastatic or locally advanced HER2-positive breast cancer who have previously been treated with anti-HER2-targeted therapy.

Enrollment of the SOPHIA study (inaudible) and we remain on track to complete enrollment by the end of 2018 when the anticipated disclosure of top line progression-free survival data expected in the first half of 2019.

In January 2018, MacroGenics presented interim clinical data from a Phase II study of margetuximab plus the anti-PD-1 agent, pembrolizumab, in patients with gastric and gastroesophageal junction cancer at the ASCO GI conference.

These results include an encouraging tolerability and durable anti-tumor activity in a subpopulation of 25 gastric cancer patients.

Based on these results, we are expanding the margetuximab gastric study by enrolling 25 additional gastric cancer patients, and we'll continue to evaluate biomarkers to determine the patients who are most likely to benefit from margetuximab plus anti-PD-1 therapy.

We will present an updated clinical and biomarker data for this study at the 2018 ASCO Annual Meeting next month.

In summary, we are encouraged by our progress with margetuximab, both in the SOPHIA breast cancer trial and in our Phase II gastric cancer study.

We believe that our approach of optimizing the Fc domain to enhance engagement and activation of the immune system using our novel anti-HER2 antibody has great potential for the treatment of patients in these 2 indications, and we look forward to presenting additional data on the gastric study in the near future.

Our next program is flotetuzumab, our DART molecule that recognizes both CD123 and CD3, which is being developed as the monotherapy for the treatment of acute myeloid leukemia or AML.

You may recall that we provided a clinical update on patients from our ongoing dose expansion study of flotetuzumab in patients with AML and MDS at last year's ASH meeting in December.

Flotetuzumab demonstrated acceptable tolerability as well as evidence of antileukemic activity.

We have now fully enrolled the 24-patient AML dose expansion cohort and decide at this time to stop enrollment of MDS patients to focus on further development of flotetuzumab in AML.

We anticipate presenting updated clinical data as defining a potential registration path during the second half of 2018.

Servier is our partner on flotetuzumab and has development and commercialization rights outside of North America, Japan, Korea and India.

At the ASH meeting, we also present the data supporting the rationale for using checkpoint blockade as an approach to potentially enhance the antileukemic activity of flotetuzumab.

Based on those results, we intend to initiate a combination study in the third quarter of 2018 of flotetuzumab and INCMGA0012.

Moving on to our PD-1-directed immuno-oncology franchise.

As I just noted, in December, we closed a global collaboration and licensing deal with Incyte for INCMGA0012.

We transferred the INCMGA0012 U.S. IND to Incyte during the first quarter of this year.

While Incyte has exclusive worldwide rights for the development and commercialization of INCMGA0012, MacroGenics retains the right to develop our pipeline assets in combination with this anti-PD-1 antibody.

The trial in combination with flotetuzumab I just mentioned is an example of this strategy.

We also recently began a study of INCMGA0012 with MGD009, our B7-H3 x CD3 DART molecule.

INCMGA0012 will remain a core strategic asset and will be the basis for potential combination therapy with other molecules in our pipeline, including MGD007 as well as margetuximab and enoblituzumab.

In addition to INCMGA0012, we have 2 other programs in development within our PD-1-directed immuno-oncology franchise.

We are developing MGD013, an Fc-bearing DART molecule, to provide co-blockade of PD-1 and LAG-3, 2 immune checkpoint molecules expressed on T-cells, for the potential treatment of a range of solid tumors and hematological malignancies.

We believe that MGD013 was the first bispecific checkpoint blockade molecule in the industry to enter the clinic.

MGD013 is currently being evaluated in a Phase I dose-escalation study, and we expect to establish the dose and schedule for MGD013 administration in the second half of 2018 at which point we will initiate dose expansion cohorts.

We anticipate presenting Phase I clinical data in 2019.

MGD019 is designed to provide co-blockade of 2 immune checkpoint molecules expressed on T-cells, namely PD-1 and CTLA-4.

We are completing IND-enabling studies and anticipate submitting the IND application for MGD019 in the second half of this year and initiating this study in the first half of 2019.

Let me quickly provide an update on our B7-H3 franchise, another opportunity for potential value creation in 2018.

Our most advanced candidate, enoblituzumab, is an Fc-optimized monoclonal antibody that targets B7-H3.

We have completed enrollment in our ongoing study with enoblituzumab in combination with an anti-PD-1 mAb in patients with bladder cancer, non-small cell cancer, squamous cell cancer of the head the neck and melanoma.

We intend to present clinical data in the second half of this year and provide guidance on future developments of the enoblituzumab.

The second clinical candidate in our B7-H3 franchise is MGD009, a DART molecule targeting B7-H3 and CD3, which is being evaluated in a Phase I study across multiple solid tumor types.

Consistent with what we have previously stated, we expect to establish the dose and schedule for MGD009 administration as well as initiate monotherapy dose expansion cohorts in the second half of 2018.

In addition, we initiated a combination study of MGD009 and INCMGA0012 during the first quarter.

The third candidate in our B7-H3 franchise is MGC018, an anti-B7-H3 antibody drug conjugate, that has shown potent antitumor activity in preclinical models.

We are completing IND-enabling activities to support submission of an IND application for MGC018 and initiation of a Phase I study in the second half of 2018.

We have 2 additional DART molecules in Phase I clinical development: MGD007 and MGD014.

We've completed a monotherapy study of MGD007, a DART molecule that recognizes gpA33 and CD3, and we anticipate commencing a combination study with INCMGA0012 in the second half of 2018.

MGD014 is our first DART molecule designed to target an infectious agent.

MGD014 recognizes the envelope protein of HIV-infected cells and the T-cell CD3 component to redirect the immune system's T-cells to kill HIV-infected cells.

The company expects to commence the Phase I study during the second quarter of 2018.

Finally, I would like to provide a brief corporate update.

We've completed construction of the GMP manufacturing site in our Rockville, Maryland headquarters and expect to commence production runs in this facility in the third quarter of 2018.

This is an important step to support larger-scale clinical and commercial manufacturing.

We have a ribbon-cutting ceremony at the facility next week.

Our technology platforms and protein engineering expertise have allowed us to continually generate promising product candidates and enter into several strategic collaborations with global pharmaceutical and biotechnology companies.

Our recent agreements with Incyte and Roche are great examples and have provided us with meaningful upfront payment and the potential to receive future payments based on milestones and royalties.

MacroGenics continues to advance our clinical and preclinical programs, and I look forward to sharing additional clinical data with you at ASCO and at other conferences later this year.

This concludes my prepared remarks.

And now, we'd be glad to address any questions that callers may have.

Operator?

(Operator Instructions)

And our first question will come from the line of Stephen Willey with Stifel.

I was maybe just wondering, Scott, if you could provide just a little bit of more commentary around, perhaps, the decision to stop enrollment into the MDS cohort for flotetuzumab.

And then just with respect to the comments you made regarding a potential registrational path being outlined at some point in the second half of the year, is it possible that this could be a program by which we see 2 separate registrational tracks occurring simultaneously?

And I say that obviously because we have the MGA012 combination that's going to be initiating here shortly as well.

Steve, thanks for the questions.

With regard to the MDS cohort, we -- as I have noted on our previous calls, the AML component of that study was enrolling very quickly, while the MDS was enrolling slowly.

It's just the nature of the patients.

And we decided that given the slow pace of enrollment with that and with prioritization of things in the program, it behooves us to just stay focused on the AML for the time being and then come back and look at MDS patients later on.

We obviously want to analyze the ongoing study.

Patients are still being treated and evaluated.

And we will have plans for engagement of the regulatory agencies on what the appropriate next steps are for developing this drug.

This could include expansion to additional patients in AML, looking at particular subsets of patients with relapsed/refractory diseases.

And so the analysis is continuing but the expectation is given where we are in this program is that we'll meet with the regulatory agencies over the next couple of months and be able to define a path forward later this year.

Obviously, without any feedback at this time, I can't speculate on specific registration pathway.

With regard to your question, with regard to 2 separate tracks, clearly, the -- that analysis will come from the efficacy and safety we see as single agent and the combination together.

As I pointed out, we plan to initiate the combination study with the -- our anti-PD-1, the MGA012, in likely the third quarter of this year.

So I don't have any data yet.

Given the strong signal that we saw with regard to upregulation of the PD-L1 on the AML blast, post a single course of flotetuzumab, I would expect that, that combination strategy would make sense, but I am not excluding the possibility that registration can come, as you alluded to, in 2 separate tracks.

One in which we see population with flotetuzumab alone, and a separate effort on looking at patients with baseline have upregulation of PD-L1 on AML blast and those that will further up regulate them after a course of flotetuzumab.

So again, I think, as more data comes in over the next couple of months and we have these regulatory interactions, we'll be able to better define ways of going forward.

Got it.

That's helpful.

And then just a quick question on the ADC018.

Just kind of curious as to what some of your initial manufacturing work.

I know that you're going to be presumably running this out at the new GMP facility, but just kind of curious as to what you would expect the homogeneity of the finished product to look like.

I know some of these ADCs can be fairly heterogeneous, specifically with respect to the drug-to-antibody ratio.

So just kind of curious as to what kind of consistency that you can achieve there from a manufacturing perspective.

Yes.

So thank you very much for that question.

We're very excited about this first new ADC molecule going into the clinic.

Just a little bit on the granular detail.

The particular epitope that this B7-H3 molecule recognizes is different than is incorporated in our other B7-H3 directed to markets.

So in theory, both these molecules -- this molecule could be combined with potentially other B7-H3-targeted molecules, number one.

With regard to your specific question, the average DAR on the molecule was 2.7.

It is looking like a pretty homogeneous molecule.

We are manufacturing the antibody here but through the collaboration with Synthon, they are doing the conjugations and then ship it back to us and to our contractors for the ultimate filling of these products.

But we've been very pleased with the -- at least the runs we've seen to date with regard to the consistency of the molecule.

And our next question will come from the line of Debjit Chattopadhyay with H.C. Wainwright.

So just wondering, in terms of -- given the failure that you've seen with the I-O, does that change your thought process on the LAG-3 PD-1 combo?

And in terms of positioning the LAG-3 PD-1 combo, I know it's early days, but which line of therapy does it make the most sense to go after?

Thanks, Debjit, for the questions.

The -- obviously, the unfortunate responses to the PD-1 combos with I-O has no impact at all on our strategy, the scientific rationale and our prospects for the combined PD-1 LAG-3 3 molecule.

I think that just the -- first of all, the body of data preclinically says that, that combination should work exceptionally well, particularly on restoring cells, T cells, that are refractory to signaling through the PD-1 pathway.

And we are continuing to generate larger amounts of data in terms of the coexpression patterns of PD-1 on LAG-3 on very large numbers of different solid tumor types.

As you know, a lot of different companies are pursuing this combination pathway as 2 separate agents.

Today, we're the only ones I know that are pursuing a single combined molecule.

And as we've shown previously, this combination in our model systems and in vitro using human cells suggests a added or synergistic effect as a DART molecule compared to 2 separate antibodies to the individual molecules.

So we are, right now, in the middle of dose escalation.

We expect that to be completed sometime in the second half of this year.

And we're all guns going forward on at least 6 different tumor types, then maybe expand it to 7 or 8. And as you know, the data that we know from other programs, the most notable one is the Bristol-Myers program has, to date, indicated positive results in PD-1 experience populations in metastatic melanoma.

And as you know, they've expanded their clinical study to over 1,000 patients.

So I think that there's a general interest in the industry.

There's nothing out there that we know of based on our own experience or others' experience, that suggests that this combination won't do well together.

Just to stay on that topic.

So where does it make the most sense?

Patients who have relapsed -- so let me rephrase that.

So patients who come in and have very high PD-1 expression levels respond to checkpoint inhibition and then relapse.

Is that the population you're looking at or you're looking at patients with very low levels of PD-1 expression to begin with, specifically, say, non-small cell?

So I would say that our goal right now is to get experience in both the PD-1 experience -- an anti-PD-1 and anti-PD-L1 experienced population, those that have either responded and failed -- continue to respond so they progressed or those who have been naïve to that treatment.

I think that there is an opportunity to enhance -- to restore responsiveness to those patients that have progressed on anti-PD-1 and PD-L1 therapy that upregulate LAG-3 in that population.

Those patients, we believe, will -- a significant portion of those patients will respond.

In addition, from the get-go, even in those patients that have not been anti-PD-1 or anti-PD-L1 experienced, we think there's a sizable number of those patients that could even respond better to this combination from the get-go.

But we will be analyzing those in the course of our expansion studies that I have alluded to before, and then we'll make decisions on which ones to prioritize based on those results.

Great.

And then on MGD007, you indicated completion of monotherapy studies.

So any thoughts on the dose that you can -- or can you dose MGD007 as a [monotherapy entity] when you combine it with an anti-PD-1?

Yes.

So as I noted today, we recently completed the dosing and the dose finding from MGD007 as monotherapy.

As I pointed out numerous times in the past 1.5 years, our biggest challenge was on target toxicity that we were observing.

And so we had to define a pathway where we would -- we knew that we were getting occupancy, other receptor on the tumors and mitigating the side effect profiles, which was mostly nausea, vomiting and diarrhea, particularly in the first several doses of drug.

We've hit upon a dosing schedule and a support regimen that warrants going forward with this program.

I would say that as a monotherapy, the activity with respect to response rate would not indicate that we should continue with that alone as a drug.

Although there are opportunities that patients could be stabilized on this therapy as monotherapy, we think that the best prospect for this drug is to combine this with our anti-PD-1 strategy.

Consistent with what we had talked about before with flotetuzumab, we have seen that this molecule will upregulate PD-L1 expression and PD-1 on the T cells.

And so as a result, we think this combination has the best prospects of going forward.

We are starting that combination study this quarter.

It is starting at a lower dose of the molecules, obviously.

Again, looking at -- number one, most important is safety in these patients but hope to quickly be able to move up to the targeted doses of both molecules at the maximum effective dose.

So again, this will start this quarter, and hopefully, this will bear out the hope we have for this drug.

And one more, if I may.

I assume you haven't started the PD-1 CTLA-4 combo yet but in terms of gating factor, the go, no-go decision, how soon do you think you want to get to that in terms of -- because obviously, you (inaudible) you know where the hurdle is from a safety perspective.

Is that your kind of gate going forward if you don't seem to get to a safer -- safe -- cleaner safety profile than that combo, there is no real commercial value in pushing this forward?

Well, actually, I don't quite agree with that but let me sort of set the stage of how I perceive the utility and the value of this drug.

We have been very encouraged by the preclinical data of this molecule targeting the PD-1 specificity that we've incorporated, the same specificity as our MGA0012 molecule.

And as you know, from the get-go, the characteristics of this PD-1 specificity were somewhat better in terms of half-life, in terms of its ability to block PD-L1 and PDL-2 bonding.

And with regard to the CTLA-4 specificity, we've also seen the enhanced activity with regard to the interaction between P71 and CTLA-4 and the effects of the specificity we have incorporated in our bispecific DART molecule.

Taking this forward into primate toxicology studies in cynomolgus monkeys, we were extremely encouraged by the biological activity that was observed.

Number one is KI67, which is a reflection of dividing cells in the T cell population were significantly increased similar to what is seen with reported data for nivo and YERVOY.

In addition, the side effect profile that we observed in these monkey studies, we got the doses -- extremely high doses in combination with scant amount of side effect profile as exhibited as diarrhea.

And this was dramatically different than what had been observed, for example, in the toxicology studies that Bristol had published for YERVOY and nivolumab.

So from the get-go, we think that this has been a characteristic as a single molecule.

Getting back to your original question.

If the animal data, it doesn't predict a good safety profile in humans, obviously, all bets are off.

But if we're seeing either equivalent safety or what I'm hoping to be better safety with efficacy that could potentially be as good or better than that of the ipi-nivo combination, then we're off to the races.

Obviously, it's better to have a single agent as a DART molecule to be available for patients.

And clearly, I think that while Bristol has done as good a job as possible looking at the number of different tumors that are responding to this combination, I don't think that this landscape has been fully explored.

And so we think that the opportunity for us to develop this drug in pathways that BMS has not perceived, I think, can put us in a very good position.

So I'm very excited about the prospects of these molecules, getting this IND filed late in this year.

Hope to start very early next year in the dosing of patients, and we'll see where it takes us.

And our next question will come from the line of Yigal Nochomovitz with Citi.

This is Samantha on for Yigal.

For the gastric cancer data that you're planning to present at ASCO, are we going to see any new patients included in this update?

Thanks for the question, Samantha.

Yes, you will see some new patients.

As I pointed out, we are dosing an additional 25 patients now in this cohort of IHC 3 plus HER2 positive gastric patients in second line.

Our plan is to present up-to-date data, which goes beyond whatever the abstract included at the time.

Obviously, that was submitted a long time ago.

There'll be a, I think, a very nice analysis looking at subset populations based on different biomarkers.

And as I noted in my earlier remarks, I'm very encouraged by this data, and I think if we get the support from the additional 25-patient cohort, I think we have a very nice pathway forward for developing margetuximab with an anti-PD-1.

Great.

That's helpful.

And one more.

So for -- in the enoblituzumab trial in prostate cancer that's being run by JHU, we saw that it was switched from a Phase I to a Phase II, and they doubled enrollment.

Do these design changes in the trial suggest that it's going well?

And do the JHU investigators, are they seeing signs of efficacy?

Can you elaborate on any details there?

It's a little too early to comment on this investigative, sponsored trial with JHU.

Obviously, we had seen some initial encouraging data in the population, but the size of the study was too small to make any specific conclusions.

So we both agreed that we wanted to do some more data analysis and have a further data set to evaluate.

So that was the reason why, essentially, there was a doubling of the enrollment plan.

So stay tuned for that.

They are very encouraged by the initial results, but I think, again, the data set is too small to come to any conclusions.

And our next question will come from the line of Reni Benjamin with Raymond James.

Maybe just based on the previous speaker's questions, can we talk a little bit about the go, no-go decision for marge plus pembrolizumab?

How are you thinking about that and the path forward?

Do you think this will get expanded into a randomized Phase II?

Do you want to just go right into a Phase III if it's -- if it hits that go decision?

And then can you remind us about the subpopulation and, I guess, what biomarkers we should be paying most attention to?

All great questions.

You got to come to see our poster at ASCO, and you'll see a lot of the insights there.

So let me sort of give you what my thought process is right now and what our thought process is right now.

Again, if you look at the comparative data for approved drugs, either Ramucirumab or Ramucirumab plus taxane in second-line therapy, obviously, this is a little bit apples and oranges because this is a small Phase Ib-type study to date, and they obviously did randomized studies.

But we've been exceptionally encouraged by the overall response rate where we're in the 30s in the HER2-positive gastric population.

And if you actually segregate them to the higher expresses, it's even higher.

We're seeing a PFS that's beating, again, everything in second line.

And as of the last data set that we presented, we haven't even reached the OS.

And again, that is continuing to look very good.

And this is in the context, as you know, that patients on Ramucirumab plus taxane, a lot of those patients can't tolerate that combination.

And ultimately, those patients have put on -- a lot of them on Ramucirumab alone where the overall response rate as only about 3%.

So I'm extremely encouraged by what we've seen to date.

And again, as I pointed out, if the expansion data holds up, there is really no reason not to pursue this at least in second line.

And one could even consider, given the rate of responsiveness, to think about first-line studies with this combination in the future.

With regard to the design of the molecule -- of the study, whether it be expansion versus randomized compared to the standard of care, that's a conversation we'll have with the regulatory agencies.

The expectation is that once we have this data on this expanded 25 patients, we'll be talking very soon to the regulators.

So again, everything looks good as of this point.

Got it.

And then just -- I know you can't comment more on the interim results for SOPHIA but are there any more DSMB meetings scheduled between now and kind of when the data is supposed to be available in 2019?

Unless there was an unseen safety issue that came up the DSMB had to address, there is nothing.

This is -- the data is going to read out.

And we're all -- we're ready.

We're excited about the prospects there.

The study is enrolling very nicely, knock on wood.

We're expecting and hoping for a successful SOPHIA study sometime in the first part of next year.

Got it.

And then just finally, switching gears to flotetuzumab.

Obviously, we're going to see some monotherapy data.

We have the combination with PD-1.

Can you talk a little bit about what the flotetuzumab monotherapy strategy in terms of registration could be going forward?

Yes.

So again, as I said before, we're taking a very good look at the response rates in the various populations.

As you know, patients who are relapsed/refractory that are heterogeneous, they have differences in mutations, the tolerability of different agents.

And so what we are looking for is defining either a global population or specific population that we think will best benefit from this drug as the initial entrée towards a registration study.

And again, this will be gleamed from the ongoing patients that we just included in expansion.

And we're also talking about expanding the studies in various ways, looking at particular populations.

So it would be the hope that if we can define a particular population and look at response rates, maybe a single-arm study for monotherapy might be acceptable to the regulators.

But as I said, we have not discussed this with the regulatory agencies.

And until we get their feedback, we won't know whether we need to go forward with a monotherapy dosing in a particular population or this needs to be controlled studies.

And our next question will come from the line of Jonathan Chang with Leerink Partners.

First question, can you help set investor expectations ahead of the Phase I in enoblituzumab plus KEYTRUDA combination data in solid tumors?

How are you thinking about the benchmarks for moving forward in a particular indication?

Jonathan, thanks for the question.

As you know, there's large literatures on looking at PD-1 combination data, both with KEYTRUDA, with nivo and other PD-1 agents.

We've taken all the data that's available out there to set out benchmarks for populations that have been exposed to these agents as monotherapy plus our own experience with enoblituzumab as a single agent although the numbers of patients for individual tumors aren't particularly vast.

So we've set those internal benchmarks.

We don't -- we're not ready to make a decision yet because many of these patients are still on the combination therapy.

And that's why we've -- even though the study has been enrolled, we're continuing to dose patients and follow those patients.

And we're not ready yet to declare particular tumor types that meet our internal criteria.

We expect that to happen in the second half of this year and expect to present that at one of the scientific medias later this year.

And of course, as you know, at any given time, the landscape may change based on other individual -- other companies' experience with their combinations of molecules using PD-1-targeted therapies.

So we expect, though, to be very definitive before the end of the year on go, no-go decisions for any given tumor type for that combination.

Okay.

And then second question, how should investors be thinking about MGA012 as the anti-PD-1 partner with Incyte post some of the changes they're making to their development strategy?

Actually, with regard to their, at least, reported development strategy and with our interactions with them since the epacadostat data has come out, it's been all encouraging that they are moving forward with their initial plans for combining the now INCMGA0012 with, I guess, up to 8 molecules in their portfolio.

They have not changed their request for the amount of material they have asked us to make in our manufacturing facilities, and we are going to be supplying the drug to them.

So from what we know as of now, there's been no change to their strategy.

And as you know, we've outlined our combination strategy going forward.

And our next question will come from the line of Christopher Marai with Nomura.

Scott, just a quick one on 007.

Maybe help frame for us some of the results we should expect to see from single-agent studies.

And then with respective to path forward, any thoughts with respect to looking at subsets of CRC patients maybe [CM assets], patients, et cetera?

Yes.

Thanks, Chris.

As I commented before, as I said -- this -- the results of our study was not greatly different than what had been previously reported by Roche with regard to the -- their CACD3 monotherapy studies.

We saw some degree of responsiveness or low response rates.

We saw some hints of extension of patients in terms of being on drug than what would be expected normally for this really end-stage CRC population.

But it was -- the date -- the results were not sufficient for us to continue developing this as a monotherapy drug.

And so right now, our goal is to establish the safety of the combination with the INCMGA0012 in combination, find the dose.

And our goal here is, as you know, looking at populations based on various histological profiles.

As you know, that there are some outcomes, just differences with regard to the degree of T cell localization in the sites, obviously, different markers.

We'll be monitoring this.

Obviously, genetic markers as well.

But right now, I can't give you any specific guidance with a particular subpopulation of patients that may be most affected or benefit by the combination.

And our next question will come from the line of Peter Lawson with SunTrust Robinson.

Just any updates on your thoughts about how you commercialize margetuximab, what rights you hold onto?

Great question, Peter.

We've been obviously spending a lot of time here in preparing going forward with this.

Given that this is -- will be the first drug we plan to commercialize, it obviously takes a lot of foresight in terms of what infrastructure we need to develop internally.

One thing that you heard about today is the expansion and development of an ERP system to support the whole manufacturing and supply distribution, which was very important for us.

We are, at this point, looking for the ultimate participation and commercialization.

In the U.S., we are -- have outreach and discussions with various organizations that have interest, particularly in regions that we don't have the capability to commercialize in the near term.

Particularly, as we highlight some of the opportunities now beyond breast cancer, gastric cancer, for example, you can imagine there are organizations that would be interested in Asia that -- like the profile we've seen with this drug as well.

So our plan right now is to work on the U.S. launch plans probably designed as some internal hires as well as some external support for sales and marketing and then look for additional partnerships for distribution outside the U.S.

Got you.

And then just on the gastric cancer data at ASCO.

Do you think we'll have 50 patients by then?

And what will we get in terms of response rates or PFS or OS numbers?

I mean, how should we think about what we'll get?

And will you segregate that based upon the new patients and the old patients?

Nice try, Peter.

I'm not going to tell you the data.

No.

But realistically, we're not going to have all 50 patients from the additional 25 patients.

We'll have some additional patients from the expansion part of the study, and obviously, even beyond the original 25 patients.

As you remember, from the data we presented in January, a sizable -- I think half the patients in that population were still on the combination study.

So you're going to see maturation of the original 25 patients, some additional new patients that have been on study.

You'll start seeing biomarker analysis of subsets of patients.

And I think you'll begin to start seeing a very consistent response rate that's predictable based on the biology that's involved here.

It's all coming together and making sense from a molecular standpoint.

Got you.

And then just on trastuzumab.

How many patients do you think you'll have by the second half to help you kind of look at different response rates and in different populations?

Yes.

Remember that in December, we had -- at the ASH Meeting, we had 8 -- of the expansion cohorts in -- we were targeting 25 patients with relapsed/refractory AML.

We had 8 patients reported on as of December.

And so as I've indicated, we have the rest of those patients now enrolled.

Some continue on drug and analysis.

So the expectation is that in the second half of this year, we will allow that data to mature.

We'll present that data, and we may actually have some additional studies ongoing by that time that we present that data.

It's still to be determined.

But again, as I pointed out, based on cytogenetics, based on the age of the population, based on whether they were relapsed or refractory, these break down to smaller and smaller numbers, and we want to be -- begin to become comfortable with identifying the best predictable population that's going to respond to flotetuzumab.

We clearly have a signal here.

The question is, can we select the patients that will most benefit from this?

And we'll make a decision over the next couple of months.

And our next question will come from the line of Dane Leone with BTIG.

I wanted to ask firstly on 009.

I just want to ask what we should think about in terms of data from the monotherapy program for the remainder of the year, and whether there would be an off chance that we would see any initial combination data later this year with the PD-1.

And any commentary specifically on the treatment algorithm, whether you have a selected dose for 009 that's going with the PD-1 or there will be dose adjustments for both therapeutics?

Yes, thanks very much for the question.

So with regard to the timing, as you know, abstract submissions always require a big lead time.

We're still in the final stages of identifying the monotherapy dose.

Just let me be pretty granular about it.

As we had pointed out in the initial data sets that we presented when we got 10 micrograms per [cube] on a Q2 weekly basis, while we're starting to see any tumor responses, we were also seeing cytokine release at that dose.

And so we again step back like what we did with flotetuzumab to design both strategies for support care as well as lead-in dosing strategies.

And so we've adapted the lead, particularly both of those for 009 as monotherapy.

That is patients have done very well on -- we started on the lead-in dose, and on a Q2 weekly basis, we've now been able to up the dose, getting close to what the targeted dose was.

We are either at the dose or probably 1 dose away from completing that dose selection.

So my expectation is, is that over the course of the next couple of months, we'll have the dose for the monotherapy.

And then as we pointed out, we're going into cohorts of 6 different tumor types, 16 patients each.

And we expect that to start sometime in the second half of this year.

With regard to the combo data, as you know, we started out with a lower dose of MGD009 and again a fixed dose of the MGA0012.

Our expectations are that we will up the dose of 009 going forward.

We want to make sure we're establishing that the combinations don't exacerbate the safety profile.

And so by now, I don't have anything to report on with regard to the combination.

Is it possible that some monotherapy data at a late breaker or something later this year?

Sure, it's possible but it's more likely that this will be in the first part of 2019.

And if I could follow up with kind of a more global question that we get a lot with investors.

And I guess, I would bridge across flotetuzumab to 009 to 007.

As we think about these programs and even some of the conversation on this call, a lot of the discussion is about these different algorithms that we're going through to try and get optimal response while containing some of the toxicity associated with the T cell redirection.

And a lot of the direction seems to be going in the combination with PD-1.

I just want to understand your thoughts again from a higher level here.

Is it your thinking now with some of the data in hand across these programs that using a PD-1 with these T-cell-redirected antibodies or bispecifics is going to allow you to contain dosing in a certain way that will allow you to kind of cap some of that CRS, potentially neurotox and allows you to bring forth kind of -- move it up on the utility curve, I guess, clinically a little bit?

So let me -- you threw out a couple of different things.

So let me clarify a couple of things that, I think, are a little bit of a misperception.

We're not seeing the neurotox -- any neurotoxicity.

I mean, we have had patients with some CNS effects, but one had been observed in the CD19-targeted therapy.

We're not in general seeing that as a consequence of any of these drugs.

So let me separate that out.

Also, the nature of the toxicities, while I would say that all the CD3 redirected killing drugs will induce cytokine release to some degree, I think we have hit upon a strategy both in terms of support care as well as lead-in dosing strategies that have mitigated for a large part of these side effect profiles that made them both tolerable and allow us to get to higher dosing levels.

So I think we have a strategy in hand.

Obviously, we have to fine tune it for each one of those drugs to the ultimate maximum dose.

But I think, clearly, getting doses in ranges that allow for occupancy, activation and expansion of T cells and the induction of killing responses.

Now there are some of these idiosyncratic toxicities one observes that's related to the target, and that, in fact, the cytokine release wasn't a big issue of what we believe, at least from a systemic standpoint, for MGD007.

It was more on the on-target effects on the GI tract possibly due to local production of cytokines, possibly due to signaling through the gpA33 molecule.

So I think you'll see the idiosyncratic side effect profiles based on particular targets.

So with respect to what the rationale for the PD-1, it's not just to give lower doses of the drug to a great -- get greater tolerance.

If anything, it's actually to allow for a good safety profile but for mitigating the activation process that induces the PD-L1 upregulation on the tumor cells and the PD-1 on the T cells, which then would blunt the ongoing therapeutic benefits for a CD3-redirected killing strategy.

So our goal is that we can get clinical benefit from the individual agents, but we are looking at ways to maximizing this initially with PD-1 blockade.

But as I pointed out before, historically, it isn't just PD-1 blockade down the line as we developed PD-1 LAG-3 and PD-1 CTLA-4 and other combination DART molecules, the ability of combining these other checkpoint blockade inhibitors as well as we pointed out before, many of the checkpoint agonists that could be also used in combination with these molecules.

So we have a pretty comprehensive strategy going forward.

We obviously have to build the individual blocks to show the biology is working.

But ultimately, our goal here is to maximize the therapeutic benefit of immune-based therapeutics.

(Operator Instructions)

And our next question will come from David Leibowitz with Morgan Stanley.

This is Vikram on for David.

So just a quick one from us.

So with regards to the Roche collaboration, I know that the release says that targets are currently undisclosed.

But could you speak about the clinical areas that are being targeted?

Any detail you could provide around that collaboration will be helpful.

So thank you very much for the question.

While we have not publicly disclosed the specific therapeutic areas, I have seen in the public domain Roche commenting of development of this combination in the autoimmune therapeutic setting.

And this is very much in keeping in what we have identified that we're focusing a lot of our strategy now on the cancer therapeutics and the value of having a very experienced partner as Roche in the autoimmune space, and their interest on the targets that we're both pursuing that made this a very excellent collaboration going forward.

So -- and I would say that, to date, we've been very happy with how this program is going, both in terms of our own efforts on the research side as well as theirs, and the partnership is going extremely well.

And I'm showing no further questions at this time.

So now, it's my pleasure to hand the conference back over to Dr. Koenig for some closing comments or remarks.

Please proceed, sir.

I'd just like to thank everyone again for joining us and let you all know that we look forward to updating you on each of the programs that we discussed today as we continue to make progress.

Have a nice day.

Ladies and gentlemen, thank you for your participation on today's conference.

This does conclude the program, and we may all disconnect.

Everybody, have a wonderful day.