MacroGenics Inc (MGNX) 2020 Q1 法說會逐字稿

Good afternoon.

We will begin the MacroGenics 2020 First Quarter Corporate Progress and Financial Results Conference Call in just a moment.

(Operator Instructions) At this point, I will turn the call over to Anna Krassowska, Vice President, Investor Relations and Corporate Communications of MacroGenics.

Thank you.

Good afternoon.

And welcome to the MacroGenics conference call to discuss our first quarter 2020 financial and operational results.

For anyone who has not had a 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 macrogenics.com.

You may also listen to this conference call via our webcast on our website, where it will be archived for 30 days, beginning approximately 2 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.

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

Scott?

Thank you, Anna.

I'd like to welcome everyone participating via conference call and webcast today.

Given the ongoing COVID-19 pandemic, it goes without saying that I hope all of you as well as your family members are safe.

Thank you for joining us.

This afternoon, I will provide an update on our clinical programs and the data expected during the year.

But before I do so, let me first turn the call over to Jim Karrels, Senior Vice President and Chief Financial Officer, who will review our financial results for the quarter.

Thank you, Scott.

This afternoon, MacroGenics reported financial results for the quarter ended March 31, 2020, which highlight our financial position as well as our recent progress.

As described in our release, MacroGenics had research and development expenses of $48.9 million for the quarter ended March 31, 2020, compared to $47.1 million for the quarter ended March 31, 2019.

This increase was primarily due to an increase in development and clinical trial costs for multiple programs.

We had general and administrative expenses of $10.2 million for the quarter ended March 31, 2020, compared to the same amount for the quarter ended March 31, 2019.

We recorded total revenue consisting primarily of revenue from collaborative agreements of $13.7 million for the quarter ended March 31, 2020, compared to $9.7 million for the quarter ended March 31, 2019.

This increase was primarily due to revenue recognized for manufacturing services under the Clinical Supply Agreements with Incyte and Zai Lab as well as milestone payments under the Zai Lab agreement for clinical trial initiations in Greater China.

We recorded net loss of $44.7 million for the quarter ended March 31, 2020, compared to a net loss of $45 million for the quarter ended March 31, 2019.

And finally, our cash, cash equivalents and marketable securities as of March 31, 2020, were $170.8 million compared to $215.8 million as of December 31, 2019.

We anticipate that our cash, cash equivalents and marketable securities as of March 31, 2020, combined with anticipated and potential collaboration payments, should now enable us to fund our operations into 2022, assuming our programs and collaborations advance as currently contemplated.

We had previously guided into 2021.

This extension was made possible through several factors, including our program prioritization efforts.

And now I'll turn the call back to Scott.

Thank you, Jim.

We are encouraged by the progress in clinical activity that we continue to observe across our broad portfolio of 7 antibody-based product candidates and anticipate presenting clinical data from all these molecules this year.

While we expect some near-term impact on clinical trial site initiation and patient enrollment due to the unprecedented challenges posed by the COVID-19 pandemic, we have not changed our guidance for the timing of key anticipated 2020 clinical data readouts or regulatory events.

I will start with flotetuzumab, our investigational bispecific CD123 x CD3 DART molecule.

During our plenary session at the virtual AACR Annual Meeting held last week, Dr. Sergio Rutella presented translational data suggesting that TP53 mutated acute myeloid leukemia, or AML, was correlated with an immune-infiltrated tumor microenvironment in the bone marrow, which, as previously reported, predicts and was, in fact, associated with response to flotetuzumab.

This new analysis built on prior data by Dr. Rutella presented at ASH last year showing the same immune signature was associated with a lack of response to chemotherapy or with a response for flotetuzumab immunotherapy in the ongoing Phase I/II dose expansion study.

Separately, we are scheduled to meet with the FDA in the coming weeks to gain feedback on our planned registration path in the U.S. for flotetuzumab for the treatment of patients with AML who are refractory to induction treatment, defined as primary induction failure or PIF patients and patients who relapsed within 6 months of initial response.

We intend to share these plans with you before the end of the second quarter.

Of the approximately 20,000 patients diagnosed with AML in the U.S. annually, at least 30% failed to achieve a complete response with an intensive induction therapy.

These AML patients have a poor prognosis with limited options to treat this particularly challenging disease.

We expect to present updated data from the ongoing expansion study of flotetuzumab in this AML population in the second half of 2020.

Separately, we stopped enrollment in an ex U.S. Phase I/II study combining flotetuzumab with retifanlimab, an anti-PD-1 molecule also known as MGA012, in patients with relapsed or refractory AML.

This decision follow the successful completion of the first planned dose escalation cohort of 390 grams per kg per day of flotetuzumab, plus 3 mgs per kg of retifanlimab and was not due to any safety finding or lack of activity.

We plan to resume the study at U.S. sites in the future.

I would like to turn to the clinical abstracts that have been selected for presentation at the upcoming ASCO Annual Meeting that will be held virtually at the end of May.

The first is an oral presentation covering dose escalation and select expansion cohorts from the ongoing Phase I study of MGD013, our investigational bispecific PD-1 x LAG-3 DART molecule.

The overall safety profile of MGD013 as it relates to immune-mediated toxicity is generally consistent with anti-PD-1 molecules with respect to event type and frequency.

We have not identified the maximum tolerated dose.

Tumor-specific expansion cohorts are being treated at a flat dose of 600 milligrams once every 2 weeks.

Among the evaluable patients, we are observing activity of MGD013 across expansion cohorts in several tumor types, including after anti-PD-1 therapy, which warrants further investigation.

While expression of LAG-3 or PD-L1 were not a criteria for study entry, high LAG-3 expression on archival biopsy tissue seems to associate with response to MGD013 monotherapy.

We are also conducting further translational work into other potential correlative biomarkers.

Because we noted that margetuximab, our investigational Fc-engineered monoclonal antibody targeting HER2, enhances LAG-3 expression on effector cells, we initiated an expansion cohort for a combination with MGD013.

Most notably, and as you will hear more about at ASCO, in a cohort of over a dozen evaluable patients with advanced HER2-positive tumors treated with a combination of MGD013 and margetuximab, we observed confirmed and unconfirmed objective responses in excess of 40%.

All responses remain on therapy.

We are very encouraged by this observation that we believe represents synergistic activity of the 2 molecules based on our results in monotherapy studies.

For additional context, published data indicate that responses among HER2-positive breast cancer patients treated with trastuzumab plus anti-PD-1 or anti-PD-L1 antibodies are 0% among PD-L1-negative patients and 15% among PD-L1-positive patients.

Given the strong early efficacy signal and favorable safety profile, we expect to prioritize the combination of MGD013 and margetuximab for further development.

We believe that the combination of Fc engineering and dual checkpoint blockade engages both innate and adaptive immune responses against a broad range of tumors with varied tumor microenvironments.

Separately, Zai Lab, our regional partner in Greater China, is continuing to explore MGD013 in combination with their pipeline assets, including niraparib, a PARP inhibitor in patients with advanced gastric cancer, and brivanib, a dual target tyrosine kinase inhibitor of the VEGF, FGF receptors in patients with hepatocellular carcinoma.

The second presentation of clinical results at ASCO will be a poster covering initial dose escalation data from the ongoing Phase I study of MGC018, our investigational antibody-drug conjugate targeting B7-H3.

Dose escalation in the study is ongoing.

Among enrolled patients, the safety profile, which includes hematologic and skin toxicities, as expected, has been manageable.

In dose escalation, we have also observed early evidence of clinical activity, especially in patients with metastatic castration resistant prostate cancer, or mCRPC, with reductions in PSA levels of 50% or more in 5 of 7 patients treated, including 1 with substantial regression of bone disease.

Based on these encouraging observations, we are planning a dose expansion in patients with metastatic CRPC once the dose escalation is completed.

The third and final of our clinical presentations at ASCO will be a poster of results stratified by chemotherapy from the Phase III SOPHIA study of margetuximab plus chemotherapy compared to trastuzumab plus chemotherapy in patients with HER2-positive metastatic breast cancer.

A note regarding the timing of the final analysis of overall survival in SOPHIA.

We continue to anticipate reporting final OS results in the second half of 2020, pending the accrual of death events needed per the protocol to conduct the analysis.

Separately, as a reminder, the FDA has indicated, as planned, to schedule an Oncologic Drugs Advisory Committee, or ODAC, meeting, in the second half of 2020 and has a Prescription Drug User Fee Act, or PDUFA, target action date for margetuximab for the treatment of HER2-positive metastatic breast cancer in December 2020.

While we are discussing margetuximab, beyond breast cancer, we are opening clinical sites globally to enroll patients in the Phase II/III MAHOGANY study evaluating the combination of margetuximab and checkpoint blockade as a front-line treatment for advanced gastric and gastroesophageal junction cancer.

Initially, MAHOGANY is evaluating margetuximab plus retifanlimab, our investigational anti-PD-1 antibody licensed Incyte in patients with HER2 IHC 3+ and PD-L1-positive disease.

The single-arm part of the MAHOGANY study, which we refer to as Module A, is designed to support the potential accelerated approval of margetuximab plus retifanlimab in the U.S. based on a primary efficacy endpoint of objective response rate.

I can comment on our initial observations.

We have observed objective responses in the first 3 of 4 evaluable patients treated on the study with this chemo-free regimen.

These are very early observations, but support our optimism around possibilities from margetuximab in this indication.

As you will recall, we observe responses in approximately 50% with second-line patients with HER2 IHC 3+ and PD-L1-positive disease in the study of margetuximab and pembrolizumab.

We expect to report initial data from MAHOGANY Module A in the second half of 2020.

The second component of the MAHOGANY study, which we refer to as Module B, is designed as a randomized controlled trial to evaluate the combination of margetuximab with chemotherapy, plus either retifanlimab or MGD013, compared to trastuzumab and chemotherapy in a broader population of patients with advanced HER2-positive gastric cancer.

We expect to first initiate Module B in Greater China in collaboration with our regional partner, Zai Lab, in the second half of 2020.

To briefly discuss retifanlimab, Incyte plans to present data in the second half of 2020 from their potentially registration-enabling monotherapy study in patients with anal cancer, which is now fully enrolled.

Two other monotherapy studies of retifanlimab are also ongoing in MSI-high endometrial cancer and Merkel cell carcinoma and could potentially support registration.

In addition, we expect Incyte to initiate a Phase III study known as POD1UM-304 in patients with metastatic non-small cell lung cancer in 2020.

In all, there are currently 5 registration-directed clinical studies ongoing or planned in 2020 by either company across a broad range of tumor types.

Let me next turn to MGD019, an investigation of bispecific PD-1 x CTLA-4 DART molecule.

The dose escalation is ongoing in all-comer population with advanced cancers.

We have not restricted the study to tumor types that are known to respond to checkpoint inhibitors.

We are currently enrolling patients in additional dose escalation cohorts with no dose-limiting toxicities observed.

Of the 13 evaluable patients treated at doses of 3 milligrams per kilogram or greater, we have observed 4 patients across different tumor types with 3 confirmed and 1 unconfirmed objective response.

We are encouraged by these admittedly very early data and plan to submit results from the dose escalation for presentation at scientific conferences later this year.

Finally, let me discuss enoblituzumab, our investigational Fc-engineered anti-B7-H3 monoclonal antibody.

In consideration of the current global and domestic COVID-19 pandemic, the planned Phase II study initiation of enoblituzumab, in combination with checkpoint blockade, as chemotherapy-free treatment of patients with advanced head and neck cancer will be delayed.

We expect to provide an update on the timing for initiating the study in the second half of 2020.

The delay to the study does not reflect the lack of enthusiasm for this molecule.

As you can see, despite the current global crisis, we continue to expect 2020 to be a data- and catalyst-rich year for MacroGenics.

We would now be happy to address any questions that callers may have.

Operator?

(Operator Instructions) And our first question comes from the line of Christopher Marai with Nomura.

Scott, quite extensive.

I guess, maybe just to begin with MGC018.

You highlight that -- highlighted that the heme and the skin tox was as expected and manageable.

Could you just elaborate, is that a tox caused by the B7-H3 engagement?

Or is that separate from your payload on the [ATCE]?

Thank you very much, Jackson (sic) [Christopher], for the question.

Obviously, the details will be presented at the poster session at ASCO.

The expectations with regard to the hematological was related to the toxin.

And the skin observations were either due to the toxin or due to the targeting of B7-H3.

Right now it's unclear.

But as I noted, they are manageable toxicities.

Okay.

Great.

And then with respect to SOPHIA's final book, it sounds like that's going to hit before a PDUFA decision.

How should we think about sort of that?

FDA has expressed to you -- or our understanding is that they've expressed to you that an OS result is not necessary in your view.

How should we think about the potential for outcomes on the SOPHIA, its final result with respect to any approval decision?

Jackson (sic) [Christopher], thanks for the question.

Right now, we're continuing to monitor the number of events of death.

As I'd indicated, this is still anticipated in the second half of this year.

It's very hard to predict with precision of when this will occur.

My expectation, it will be later in this year, and obviously, there has to be some data cleaning.

So it may be very close even to the PDUFA date when that data would be ready to present.

So at this point, our plan is to take the second interim analysis for OS and use that as the basis, which is obviously been already provided to the FDA in the BLA filing for evaluation.

If any changes occur, we will obviously update everyone at that appropriate time.

Great.

And then just sticking with margetuximab, the MAHOGANY progress looks really exciting with your observed responses in 3 of 4 evaluable patients.

I was just wondering if you can comment what level of -- what number of durability we expect to see in terms of these responses.

How durable are they?

How much time have you observed them for?

And how much will be available at ASCO?

And then, two, I think previously you had discussed that this could be potentially registrational worthy, the Module A, with the response rate as an endpoint in this patient population.

So just maybe if you could remind us of your plans with respect to that and maybe what the hurdle might be in terms of, I suppose, adding more patients to the expansion part of that Module A.

So that's a couple of questions.

So with regard to the length of duration of response, it's still -- these patients are still on treatment.

So it's still too early to predict even on these fewer -- few patients, what the target PFS or OS would be.

Just to give you a little context, the median PFS for first-line therapy for the TOGA regimen is 6.7 months and the OS was 13.1 months.

So our hope is that this will far exceed that with regard to PFS and OS.

With regard to overall response rate, which is the targeted endpoint for the single-arm study, just again, to recall, TOGA was 47%.

Our hope is that this will be north of 50% and use that as a basis for decision.

As we pointed out previously, we have said that we should have a sufficient number of data from the initial patients to make a decision whether we are achieving the targeted range that would then encourage us to finish out completement of enrollment.

And we will plan to update everyone later this year, assuming if we continue to enroll at the rate we have been doing at this point.

Okay, great.

Congratulations.

Yes.

Thank you very much.

And sorry, I thought -- the volume is very low.

Is it you, Chris?

It's me, yes.

Sorry, you couldn't tell, the questions were easier.

Anyway.

Sorry.

Thank you so much.

And our next question comes from Debjit Chattopadhyay with H.C. Wainwright.

A lot of data dropped here so I probably have missed a few.

So based on the activity with MGD013, do you expect to develop a companion diagnostic?

Or the trend that you alluded to regarding correlation of responses with LAG-3 expression is mostly a trend and you don't have anything concrete yet, and because the PD-1 x LAG-3, you're getting a pretty holistic kind of response?

Rather than me commenting on that, I wanted to say wait for the ASCO presentation.

There may be merit of developing a diagnostic associated with this to select patients that would most benefit from this.

But again, wait for the ASCO presentation to hear the details.

Okay.

Then just a clarification here.

And for the upcoming data with MGD013, so you mentioned responses in multiple different tumor types in the post PD-1 setting.

So are these patients primary refractory patients or patients who progressed after an initial response?

We had cohorts of approximately 16 in some of these expansion groups.

And so there is mixed histories on these patients, and I can't specify off the top of my head for the particular populations.

We will show at the meeting where they fall, but we can follow up with you afterwards.

Great.

And just one quick follow-up on 018.

Did you reach the recommended Phase II dose and the 50% PSA reductions in 5 out of 7 with bone regression?

Is this after the RP2D?

Or is the dose escalation still ongoing?

This was -- the dose escalation is still ongoing.

These were actually at lower doses.

And on previous calls, I had indicated we were very encouraged by the data we're seeing even in this lower-doses range.

So we've actually moved the dose up.

We're right now enrolling patients at what we believe would be the top dose to establish a maximum tolerated dose.

Whether we achieve that with as high as dose, we do not intend to go higher, and we will select based on the response rate in pharmacokinetics and obviously the safety profile of the preferred dose going forward.

But the fact that we're seeing such a high response rate across multiple doses is obviously very exciting for us.

And our next question comes from David Lebowitz with Morgan Stanley.

When you meet with the...

David, David, we can't hear you.

Can you talk closer to the phone?

When you meet later with the FDA on flotetuzumab, what are the range of possible outcomes you think on the registrational path forward?

If I heard your question, you were very soft on our end, is what is the outcome of -- our expected outcome with the meeting with the FDA later this month.

As I had previously indicated, we had met with the FDA last September to discuss the design of a registration study in the refractory population.

They agreed that this was a population that was very suitable and addressable and necessary given the current state of affairs for this population.

Obviously, we can't predict what an outcome of any meeting with the FDA is, but we're very highly encouraged based on the last meeting we have with them with some of the open questions.

We were going to provide them, which we have already done, some additional data on new patients that have been enrolled as the targeted doses, both with regard to safety and response rate.

And as I have previously indicated, they were very interested in the historical data of patients with so-called refractory disease and their response rate as reported in the published literature over the last 30 years, and we've provided them with all that data.

So our goal right now is mainly to come up with some final design on this trial and some certain understanding of what a targeted successful outcome would be for this study.

So right now we're very optimistic, but until we have that meeting, we can't give you any more clarity about the outcomes.

That makes sense.

And I might have missed this when you mentioned on the call, but on the Phase I/II combination with formerly named MGA012 that was halted, what was the primary reason was that halted?

Is this COVID-19 related?

Or was it...

Yes.

So what happens is, is that enrollment slowed down because this was an ex U.S. study in 3 countries, including Spain, which basically all sites shut down, Australia sites were shutting down, and Israel sites were shutting down.

And basically with very poor enrollment and incurring very significant costs just maintaining a CRO, we said it doesn't make sense to continue paying these huge fees.

And so we said, let the COVID-19 pandemic slow down, and we will resume the study in the U.S.

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

This is Samantha on for Yigal.

On SOPHIA for the potential ODAC meeting for margetuximab, what questions do you believe you need to be prepared to answer clearly in order to generate a successful outcome?

I'm sure that, as you're expecting the ODAC meeting, you are actively preparing for that ahead of time.

Just curious, like, what your thoughts there.

Yes.

I think probably the biggest questions that are looming, which has been publicly aired in many different settings, is the value clinically of the molecule in the intent-to-treat population.

With regard to the PFS data that we presented, as you know, we saw a hazard ratio in the intent-to-treat population of a reduction of 24% compared to the control population, but a very short actual value in terms of months with regard to the improvement in that margetuximab-treated population.

I think the second question is related to the F allele population, of which, as you know, was a targeted exploratory population that was predefined, but did not allocate any alpha in the analysis.

And given that, which we have shown quite clearly, most of the therapeutic benefit is related to that F allele population, which represents 85% of the overall population.

How the FDA views that population and further inquiries there.

I think those are probably the 2 major questions looming.

Great.

That's very helpful.

And then you mentioned in your prepared remarks that you were going to open an expansion cohort for MGD013 and margetuximab.

I'm wondering if you can give a bit more context of the study you quoted as comps for herceptin combined with PD-1 therapies.

Is it a 0% response rate for PD-L1 negative?

What line of therapy was that study conducted in?

And in the data that you're going to be presenting for MGD013 and margetuximab, I think you said 40% responders.

How many of those are PD-L1 negative?

I'm just trying to get a clearer picture of how those 2 studies compare.

I think it will be premature for me to state this at this call.

So please attend or listen to the meeting at ASCO.

We will have clarity about all those aspects with regard to line of therapy, specific tumors, the PD-L1 expression pattern.

But it would be inappropriate for me to comment on this now before the ASCO presentation.

Okay.

Got it.

Understood.

And we'll certainly be tuning into that.

I guess just one more question for me, maybe a bit of a bigger picture question.

We're going to see, obviously, a meaningful dataset for MGD013 at ASCO.

And you're still in dose escalation for MGD019, but we should get initial data for them in the second half.

Given that these are both assets that are bispecifics with a PD-1 arm, I guess, I'm just wondering how you're thinking that both of these assets are going to finish the treatment landscape together.

Are there certain tumor types or even potentially drug combinations where you think each of these assets may be better suited?

I think what you will see, which relates to both molecules, is the value of this bispecific in enhancing responses in populations with regard to both PD-1, PD-L1 expression and prior treatment with anti-PD-1, PD-L1 therapies.

What we envisioned for both these molecules is that they will be easily combinable with other assets.

We showed you the illustration today of marge plus 13.

As you know, we are the ongoing gastric study as well planned for marge plus 13.

But one of the big goals for the 19 study was to achieve the synergy that one sees for combining an anti-PD-1 with anti-CTLA-4 without getting the toxicity that has been previously observed with ipi/nivo combinations.

Just to correct a statement, we have completed the dose escalation part of 19.

We will share that with you later this year, as I said, at a follow-up conference.

But what I have indicated previously, we are far above the dose that the typical ipi/nivo combination.

As you know, ipi has been used, historically, mostly in the clinic, originally at 3 mgs per kg, and currently -- in current studies at 1 mg per kg, and we're far above that dose.

And as indicated here, with a toxicity profile that is quite favorable with regard to the observations with respect to typical anti-PD-1 treatment-associated effects.

Just to give you a historical refreshment.

When we did the monkey study with MGD019, we went up to doses of 100 mgs per kg without associated significant toxicities.

And remember, at much lower doses, ipi/nivo cause those animals to die with very severe diarrhea and dehydration.

So the enhanced ability to activate T cells without the associated toxicity is one of the things that will, I think, be important for the value of this asset.

And our next question comes from Peter Lawson.

This is Mitchell on for Peter.

The first one is going into the December PDUFA, can you give us an update on how you're preparing for the potential launch for margetuximab?

So as we have -- Mitch, as we have previously mentioned earlier in the year, we have done our marketing assessments.

One of the things, obviously, when monitoring is the launches of other drugs that have been recently approved in third and late-line therapies.

So we are doing our homework, both on the marketing side and other aspects of the drug.

We have engagement, obviously, before COVID-19 with our MSLs in the community to educate them with regard to Fc-engineering and the value potentially of the immune-mediated effects that are associated with a molecule like margetuximab.

Our plan, as I said previously, is to open up discussions, again, with additional partners who can be in a position to help commercialize this molecule.

And then just one more.

Just wanted to get your thoughts on how you're thinking about the release of data in kind of a social distancing world.

Is this -- do you think about waiting for year-end conferences for better reception from the medical community?

Or is that something you're going to talk to?

So again, as you saw today, we were very transparent with trying to provide as much data, recognizing that there's been much -- there are a lot of challenges that are occurring currently and we expect will continue throughout the year for access.

So our goal is to be as open with the ongoing studies as we can.

We're not planning to give patient-by-patient updates, but we will provide as much data as we can in sizable numbers so that you can be aware.

One of the things that we're very excited about, as I have said previously, all 7 out of our clinical molecules are active.

And right now, our goal, in the course of this year or next year, is to have multiple registration studies ongoing and to build on the prospects of these molecules to get them to patients as quickly as possible.

And our next question comes from Jon Miller.

And congrats on all of the progress.

I guess after the AACR presentation on flotetuzumab and the T53 (sic) [TP53] genotyping observations you made there, are you still focused on the refractory population?

Or is there a space for a genotype-defined population?

Is it better?

Can you get a larger population by going for TP53 mutant patients as opposed to simply refractory population?

Great question, Jon.

As was pointed out, TP53 is about 10% overall in the population.

As I pointed out today, there's a subset of refractory patients.

These are probably the most refractory.

And given that we saw in our study so far, as reported, about a 40% response rate in this particular population, we're very excited that even in the most refractory population, we're seeing a good response.

So our goal is to actually treat the entire refractory population, which we think at the minimum is at least 30% and could be as much as 50% of the overall AML population.

So that, in fact, we will not select based on genotype going into the study.

Absolutely.

Understood.

I guess another follow-up then.

For your cash runway, which now reaches into '22, could you provide any more color on what had to get prioritized out in order to extend the runway that far?

Sure, Jon.

Go ahead.

So I think we tried to give you a lot of detail here about, obviously, specific programs here.

And I think that the ability to decide at various trigger points went to advance a program.

One of the points we have made previously and as part of our analysis, historically, we would typically look at 4, 5 or 6 different tumor types for a given indication.

As I pointed out today, for instance, for MGC018, we've got to focus in initially on the prostate population, with then the ability to expand further.

So again, by narrowing down many of our programs to 1 or 2 indications, we were able to actually project considerable savings going forward.

That's, in part, the way we were getting to 2022, but there are other things that contributed to that analysis.

That makes perfect sense.

And I guess one more last one then.

I noticed that unlike many of your peers, and perhaps admirably, you have been pretty -- you've neglected to do any work on COVID yourself.

You left that to others.

What's been driving your decision-making there?

And do you think that your technology could be useful in the ongoing pandemic?

That was a very difficult decision for us.

Obviously, we have expertise.

Historically, if you go back into the history of the company, we had worked on many different infectious disease.

As you know, we have an ongoing HIV trial with our DART bispecific.

So it would have been quite easy for us to jump into the development side of things.

But given we had such a broad cancer-focused program, we didn't want to remove all the infrastructure and, obviously, the cost that we've now allocated to the subclinical and multiple preclinical programs to then move it into the COVID-19 initiative, particularly for treat -- for development of antibodies or bispecific molecules, particularly given that we saw that there was an immediate response from very large pharmaceutical companies who had a lot more assets than we did.

However, we have reached out to academic investigators who we worked with in the past and indicated to them, if they have very unusual molecules that could actually contribute, because of our infrastructure with regard to development and manufacturing, we could provide some help down the road.

But right now we're prioritizing moving forward with our cancer molecules.

And our next question comes from the line of Stephen Willey with Stifel.

I guess, Scott, maybe just kind of given some of the enthusiasm embedded within your commentary around marge and MGD013, just curious if that at all makes you rethink the design of Module B. I guess, specifically, just given that you're looking at the Incyte PD-1 there and the bispecific and, obviously, you're, I guess, favorably levered from an economic perspective to the bispecific here.

So just curious as to what your thoughts there are.

And can you also maybe just talk a little bit about LAG-3 expression within gastric cancer?

Yes.

So with regard to the design of Module B, remember the complexity of MAHOGANY, the single-arm study was intended -- a single-arm study intended for a subpopulation for accelerated approval.

And with our agreement with the FDA, part of the design of the Module B was going to be confirmatory to have a -- the 012, which is retifanlimab, which is called retifanlimab now, as a second study even though it was designed -- or with chemotherapy, for confirmation.

So right now, the plan is to continue with the Module B enrollment.

As we've said, Zai is moving forward for enrolling in China later this year.

We will then follow up with that.

As we get more experience with combinations of 13, remember, as I said, we just have a little over a dozen patients with a combination which caused multiple different tumor types.

And again, wait for ASCO to see the specifics there.

I think there is an opportunity both to execute on the MAHOGANY study and do a very focused, well-designed study of MGD013 with marge in broader number of indications.

So right now, we're still in the discussion phase on how we would move forward.

And obviously, we'd like to see additional data.

Clearly, we want to see how long these responses last, but the initial data is very encouraging to us.

And is there anything you can say about LAG-3 expression on gastric cancer?

Yes.

I mean, it's not the highest, but there is a significant -- I don't recall the exact numbers.

I think our data was higher in the subset of specimens we looked at compared to what's been out in the literature.

But it was significantly over 50% of the population.

Okay.

That's helpful.

And then just lastly, you just talked a little bit about some of the prioritization that's been taken here in an effort to extend cash runway.

Can you maybe just speak a little bit to the assumptions regarding the underlying collaborative payments that are embedded within the runway guidance?

I guess, specifically as to whether or not that includes some kind of regulatory payment from inside as a result of an MGA012 approval.

Yes.

So we can't give you the granularity of the timing of payments and the type of payments.

And obviously, we've imposed a, what I think is a very conservative valuation of expectations with regard to that.

Just to give you, again, context to refresh your memory, just the regulatory and approval milestones amount of $405 million.

That's obviously across several indications in different territories.

But given where I know the programs are, as I pointed out today, that the anal study is fully enrolled.

There are, as I said, 5 registration-enabling studies ongoing.

We think that we expect some significant milestones coming from that, that's part of our calculation.

But that's not by itself the decider on how we got to 2022.

Steve, this is Jim.

Keep in mind also that our agreement with Prevention Bio enables us to achieve a $60 million milestone upon the potential BLA approval of teplizumab.

Now in our -- and by the way, that molecule has breakthrough designation status.

And they expect to complete the submission of the BLA sometime this year, I think, in the fourth quarter of this year.

Now we take that $60 million, and we haircut that.

And I think you find that we haircut that fairly significantly just to reflect some risk.

So we try to do this very conservatively.

And we're constantly updating the possibilities assigned to the various milestones across the portfolio just to get a real-time sense of where the numbers might be.

And our next question comes from the line of Etzer Darout with Guggenheim.

Great.

Just a couple.

I guess my first question is, so in the expansion cohort of -- for 019, patients on prior therapy with combinations of PD-1, CTLA-4, it looks like they're being excluded.

I guess, based on the data that you're seeing, do you see this as more positioned for PD-1 naive or PD-1 sort of refractory population?

And I guess -- and second question, any read on whether or not you started to see some additivity for flotetuzumab and PD-1 at the 300 milligrams per kg dose on the study that was sort of stopped?

Yes.

So with regard to whether we're targeting the naive or refractory population, the patients that were included in the study included both.

So I think that, in fact, MGD019 could be addressable for both populations.

Obviously, we need a lot more experience in larger numbers because all we have right now is a limited dataset without any significant -- without expansion, in particular, tumor types.

But again, we'll provide more data later this year on this molecule.

But at this point, we think both populations could be serviced by this as a monotherapy bispecific or in combination with other drugs to enhance immune reactivity.

With regard to the combination of flotetuzumab plus retifanlimab, we just had too few patients that were enrolled in this study to come to any conclusion.

When you see enhanced responses in a single or 2 patients, it's hard to interpret.

So just too early to say.

I would say, though, that our analysis, historically, with regard to the up-regulation of PD-L1 in patients treated with a single cycle of flotetuzumab has been quite consistent.

I also should note that the study by Sergio Rutella, given that the immune environment favors that of treatment with flotetuzumab, which includes activation of checkpoint molecules, it seems quite natural that some combination of this would benefit certainly a subset of patients.

So we will continue to explore that combination in the future, as I noted.

And our next question comes from the line of Jonathan Chang.

This is John Barrett on for Jonathan.

My first question is, you mentioned that you have not reached a maximum tolerated dose for MGD013 yet.

How did you choose the dose that you're treating with?

And what confidence do you have that it is the correct dose given the high dosing -- the high levels of dose that you're able to achieve?

So thanks for that question.

We, obviously, as for many checkpoint molecules, often you don't reach a maximum tolerated dose.

So what we look for is pharmacokinetics, occupancy of various receptors, and we pick the dose based on that.

And obviously have integrated the safety profile as well.

So what I can say is, as pointed out earlier, this is a well-behaving molecule.

It has very nice pharmacokinetics and, again, a good safety profile comparable to that of anti-PD-1 treatments.

So that's how we're picking the dose.

Got it.

And for MGC018, you mentioned the interest in moving forward in prostate cancer.

Could you just remind us the expression levels of B7-H3 in prostate cancer?

And any potential strategy to select or biomarker expression in that patient population?

As you know, as we pointed out previously, B7-H3 is highly expressed on most solid tumors.

And in particular, prostate, almost all prostate assessments of primary tumors as well as metastatic tumors have very high levels of B7-H3.

So we do not expect the need, particularly for prostate cancer, to actually require any diagnostic.

Obviously, we will analyze that mostly retrospectively once patients are in the study can see if there is any gradation based on relative levels of expression, but we don't expect that to be an impediment.

As you know, we have had a collaboration on another B7-H3 molecule, enoblituzumab, as a neoadjuvant treatment in a IST study with Johns Hopkins, who have previously shown that giving an enoblituzumab in patients with prior prostate cancer before they have resection of their prostate had a very nice localization of enoblituzumab in the tumor.

And this was also associated with an increase of inflammatory cells in a tumor, which is typically very cold.

So we can believe that both molecules may have opportunities to be used in various settings for prostate and other tumor types.

Great.

And one more, if you don't mind.

Of course, the data for the overall survival of margetuximab is still coming in, but do you have an expectation of what setting you might like to present the final overall survival data, be it at a conference or a press release?

Well, obviously, this is an important event for the company.

So we will certainly press release when the data is available.

But certainly, we will present the final data at a conference.

It all depends on when the data comes in.

It probably would be too early for San Antonio Breast.

It's possible, but more likely some scientific conference next year.

And our next question comes from Tom Shrader.

Back to the ODAC panel.

So do you expect the driving force there is the small subset of patients that have seem to have done worse?

And also -- and I apologize if this was asked.

If you, in fact, get the hint that you're going to get approved for a subset, does that change your launch timing?

With regard to the second, no, that doesn't change anything in that regard.

As we have indicated before, we think that having at least a research-based diagnostic for selecting patients based on their CD16 allele would be valuable for selecting patients that may be best helped by the drug.

I wouldn't actually characterize this as the driving subset being worse, which is the 15% of the VV population.

As we pointed out this numerous times, we think that the worst response in that population may be a combination of differences.

One is that it was a very small subset.

So just from the randomization, patients were not selected based on the CD16 allele.

And so as we have pointed out and was pointed out by Hope Rugo at the San Antonio Breast Meeting, many of the characteristics for randomizations seem to favor the trastuzumab VV population compared to the margetuximab population.

And that's just the randomization that goes with a very small population.

So at this point, given that there's no statistical significance of that, while there was clearly a numerical trend that tras was working better in the VV population, we hope that the study gets approved on intent-to-treat.

But if the FDA does agree and ODAC agrees to limit us to the F allele, we would not be unhappy, and we will be prepared to provide the support via a research diagnostic at time of that launch, which would not be delayed.

Okay.

Great.

And then quickly on the 018 prostate cohort, are you going to try to get patients before chemo?

Because I assume that's kind of where you would like an ADC to be slotted?

Or will you have to treat later-line patients in this next cohort?

Well, as you know, Tom, the beauty such a molecule as we're describing, post taxanes and post the androgen blockers, there's very little after those.

And as a result, we actually think to start with a very late-line population, which these patients were, in fact, that population, most of these patients have extensive bone disease.

In fact, all the patients have bone disease, that this might be a very good first indication.

But clearly, there could be opportunities to go earlier line.

And as I pointed out on an earlier question, there also is an opportunity, as we pointed out, in treating in neoadjuvant settings various B7-H3 target of the agents, which could be enoblituzumab, it could be 018, and it could be other things that we'll talk about in the future.

And our next question comes from the line of Evan Seigerman.

So just on MGD019, I know you kind of provided some really preliminary data on some responses.

Can you give us any color as to any thoughts on duration of those responses?

And also what type of tumors are in the mix?

And how advanced are these patients?

I know you don't want to provide all the data, but any more color on that data would be super helpful.

So rather than characterize detail here, let me say that the 4 responders we alluded to were 4 different tumor types.

These were all very late-stage patients.

Very interesting responses in -- including tumor types you would not expect, not your traditional populations of renal cancer or patients with melanoma.

These were distinct population.

Again, numbers are small, but if this bears fruit, this is a very exciting opportunity for this drug.

Okay.

And then do you plan to dose beyond the 3 milligrams per kilogram?

I know you said or greater, but are we going to get -- how high do you think you'll go with that?

Again, not to -- we pointed out that we gave the results of 3 milligrams or higher.

We got to our top dose already, which is quite considerably higher.

Right now, based on the pharmacokinetics, and again, occupancy and things that we're discussing and obviously looking at the safety profile in the larger data set, the -- clearly, the dose will be higher than 3 mgs per kg, but we haven't made a decision yet what the final dose is full.

We should have that by the time we have a public presentation later this year.

Okay.

And then just can you remind us, aside from head and neck, any other tumor types that can be targeted with an anti-B7-H3 like enoblituzumab?

So again, as I pointed out, B7-H3 is highly expressed in most solid tumors.

If you remember the data we presented at SITC, we highlighted not only the head and neck patients, we were very excited about the prospects of combining an anti-PD-1 within enoblituzumab in patients with lung cancer who are PD-L1 negative.

So again, the prospects of such a molecule here could be pursued in other tumor types like lung cancer and others, again, which we will point to going forward.

And our -- the next question comes from the line of Boris Peaker.

This is [Cynthia] on for Boris.

Just a quick one for me.

Regarding margetuximab, are there any updates around Zai Lab's registrational study in Greater China, especially in light of COVID-19 with written enrollment?

And then can you remind us whether the study's also looking at the 158F allele subset population?

So the answer is that they've gotten a regulatory review, and they are initiating studies in the various countries that they have rights to.

At this point, given what we understand the circumstances are in China, things are open, and this should not be any deterrent to enrolling in the study.

So as we pointed out, this will occur during the course of this year, but we don't have any details with regard to specificity of specific patients yet.

And we have a follow-up question from the line of Debjit Chattopadhyay.

So with regards to LAG-3 expression, I don't know if you have the answer to this or not, but have you noticed any difference between patients who are primarily refractory versus patients who have initially responded?

Does LAG-3 expression increase over time, obviously, if it's an escape pathway for PD-1?

Yes, Debjit, it's too early to say that.

Again, rather than me giving any more details, listen to the ASCO presentation.

I think you'll get a lot of new information at that call.

But certainly, we will have to follow up on dissecting this based on the historical treatment profiles of these patients.

But you'll see, certainly, as I pointed out, the relative expression levels of LAG-3 being associated, I can't say is predictive, but associated with higher expression.

Thank you, and I'm not showing any further questions at this time.

I'd just like to thank everyone again for joining us this afternoon and to let you all know that we look forward to continuing to advance our programs in the coming year and providing updates on our progress.

Have a nice evening.

Ladies and gentlemen, this concludes today's conference call, you may now disconnect.

Everyone, have a good day.