MacroGenics Inc (MGNX) 2022 Q1 法說會逐字稿

We will begin the MacroGenics 2022 First Quarter Corporate Progress and Financial Results Conference Call in just a moment. (Operator Instructions) At this point, I'll turn the call over to Chris James, Vice President of Investor Relations and Corporate Communications of MacroGenics.

Thank you, Operator. Good afternoon, and welcome to MacroGenics' conference call to discuss our first quarter 2022 financial and operational results.

For anyone who has not had the chance to review these results, we issued a press release this afternoon outlining today's announcements, which is available under the Investors tab on our website, at macrogenics.com. You may 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 is completed.

I'd 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.

Thank you, Chris. I'd like to welcome everyone participating via conference call and webcast today. This afternoon, I will provide key updates from our clinical programs. But before I do so, let me first turn the call to Jim Karrels, our Chief Financial Officer, who will review our financial results.

Thank you, Scott. This afternoon, MacroGenics reported financial results for the quarter ended March 31, 2022, which highlight our financial position as well as our recent progress.

As described in our release this afternoon, MacroGenics total revenue, consisting primarily of revenue from collaborative agreements, was $11.1 million for the quarter ended March 31, 2022, compared to total revenue of $16.9 million for the quarter ended March 31, 2021. Revenue for the quarter ended March 31, 2022, included $3.6 million net sales of MARGENZA.

Our research and development expenses were $61.4 million for the quarter ended March 31, 2022, compared to $53.1 million for the quarter ended March 31, 2021. The increase was primarily related to development, manufacturing and clinical trial costs related to MGC018; development of discovery projects in preclinical molecules; and increased clinical expenses related to lorigerlimab. These increases were partially offset by decreased development, manufacturing and clinical trial costs related to flotetuzumab, which development has been discontinued; decreased margetuximab manufacturing costs related to the Zai Lab agreement; and decreased retifanlimab manufacturing costs for Incyte.

Selling, general and administrative expenses were $16.3 million for the quarter ended March 31, 2022, compared to $15 million for the quarter ended March 31, 2021. The increase was primarily related to MARGENZA selling costs as well as stock-based compensation and consulting expenses.

Our net loss was $66.4 million for the quarter ended March 31, 2022, compared to a net loss of $51.3 million for the quarter ended March 31, 2021.

And our cash, cash equivalents and marketable securities balance as of March 31, 2022, was $184 million compared to $243.6 million as of December 31, 2021.

And in terms of our cash runway, we anticipate that our cash, cash equivalents and marketable securities as of March 31, 2022, in addition to anticipated and potential collaboration payments, should enable us to fund operations through 2023. This cash runway guidance does not reflect anticipated expenditures related to the full Phase II/III development of MGC018 in prostate cancer, anticipated to begin by year-end 2022, or further expansion of other studies currently ongoing. However, the company believes that it can reasonably obtain funding for the planned Phase II portion of the MGC018 study through a combination of existing financial resources, a variety of external funding or potential revenue sources and project prioritization.

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

Thank you, Jim. I am delighted by the progress made during the first quarter. I'm especially pleased with the outcome of our recent meeting with the U.S. Food and Drug Administration regarding the advancement of MGC018, our B7-H3 directed antibody drug conjugate in patients with metastatic castration-resistant prostate cancer. Our Phase II/III clinical plan for MGC018 underscores our productive dialogue with the FDA and feedback received on key elements of the program, and we are advancing toward the initiation of the Phase II/III study by year-end.

Another exciting development was the initiation of a Phase I dose escalation study of MGC018 in combination with lorigerlimab, our bispecific DART molecule targeting PD-1 and CTLA-4 in advanced solid tumors.

I am also happy to announce that FDA has cleared the IND for MGD024, our next-generation CD123 x CD3 DART molecule. We look forward to initiating a Phase I study of MGD024 in CD123-positive hematologic malignancies in mid-2022.

In addition to these programs, we and our partners continue to progress our other clinical and preclinical candidates and expect to provide further updates over the course of this year.

With that backdrop, let me use this time to walk you through updates on our portfolio of investigation of clinical molecules, starting with our molecules targeting B7-H3, a member of the B7 family of molecules involved in immune regulation. As a reminder, we are developing 2 molecules that target B7-H3 through complementary mechanisms of action that take advantage of this antigen's broad expression across multiple solid tumor types.

MGC018 is our investigational antibody drug conjugate designed to deliver a DNA alkylating duocarmycin cytotoxic payload to tumors expressing B7-H3. We recently finalized our plans to conduct a registration path Phase II/III study of MGC018 in mCRPC. Based on our analysis of dose expansion study data to date, we plan to modify the dose and administration of MGC018 in the upcoming registrational study, including a reduced dose and increased interval between doses, which we believe will help to achieve the maximum therapeutic effect and reduce potential side effects.

The Phase II/III study will enroll patients with mCRPC who have had prior exposure to a taxane and at least 1 androgen receptor-axis-targeted, or ARAT, agent, such as abiraterone, enzalutamide or apalutamide, and a PARP inhibitor, if appropriate.

During the Phase II portion of the study, approximately 150 patients will be randomized 1:1:1 to receive either 2 mg per kg or 2.7 mg per kg of MGC018 every 4 weeks in the experimental group or physician's choice of an ARAT agent not previously received in the control group.

Following completion of the Phase II portion of the study, the analysis of the data will be performed to further inform the Phase III portion, in which we plan to randomize additional patients 1:1 to receive either MGC018 at the recommended dose or an ARAT agent for the control group. In recognition of the current cost of capital environment, inclusion of an end-of-Phase II interim analysis to evaluate the 2 MGC018 dose levels will allow us to further assess safety, tolerability of futility and select the best dose before proceeding to the Phase III portion of the study.

Finally, for the Phase II/III study we will utilize radiographic progression-free survival as the primary endpoint and objective response rate and overall survival as secondary key endpoints. This study design was discussed during a constructive meeting with the FDA in March. We expect to begin enrollment in the fourth quarter of 2022.

Let me provide a few more details about how we arrived at the modified dose and dosing interval for the planned Phase II/III study. To determine these lower doses and longer dosing interval, we performed modeling and simulation of patient pharmacokinetic and safety data from the Phase I/II study to evaluate the relationship between MGC018 exposure and dose modification, including dose reductions and dose delays, and key indices of tolerability.

The doses of 2 versus 2.7 mg per kg every 4 weeks, we plan to evaluate in the Phase II portion of the study, compared with a starting dose of 3 mg per kg every 3 weeks, with any subsequent reductions evaluated in the Phase I dose expansion study. We expect the slightly lower doses will decrease adverse events and potentially improve efficacy by allowing patients to stay on therapy longer.

Regarding our ongoing Phase I/II dose expansion study of MGC018, we are encouraged by initial clinical activity observed in patients with melanoma and plan to recruit 20 additional melanoma patients, evaluating a dose of 2.7 mg per kg administered every 4 weeks. Again, this dose compares to the starting dose of 3 mg per kg administered every 3 weeks, with any subsequent reductions during dose expansion.

As for the other tumor types enrolled in the expansion study, we are evaluating possible next steps for treating additional patients with non-small cell lung cancer and continue to enroll patients in the squamous cell carcinoma of the head and neck expansion cohort. We do not plan to proceed with advancing the study in patients with triple-negative breast cancer at this time.

We intend to provide an update on clinical data from Phase I/II dose expansion cohorts in the second half of 2022 as the data further matures.

In addition, we recently dosed the first patient in the dose escalation study of MGC018 in combination with lorigerlimab, our PD-1 x CTLA-4 bispecific, in patients with advanced solid tumors, including renal cell carcinoma, pancreatic cancer, ovarian cancer, hepatocellular carcinoma, mCRPC and melanoma. The scientific rationale for undertaking this trial is supported by our preclinical data, which suggests the antitumor activity with MGC018 may be enhanced by a combination therapy with an anti-PD-1 agent without meaningful incremental toxicity.

Lastly, in April, we presented a poster titled, Targeting B7-H3 in Prostate Cancer: Preclinical Proof-of-Concept with MGC018, an Investigational Anti-B7-H3 Antibody-Drug Conjugate, at the American Association for Cancer Research Annual Meeting. MGC018 demonstrated antitumor effects on prostate cancer cell lines and enhanced activity in some lines when combined with PARP or androgen receptor inhibitors in the preclinical study. We believe these data lend further support for advancing MGC018 in patients with prostate cancer, and we look forward to potentially evaluating MGC018 in combination with these agents in future studies.

Another of our investigational molecules exploiting the overexpression of B7-H3 in solid tumors is enoblituzumab, an Fc-engineered antibody created using our Fc Optimization platform. We are recruiting patients in a Phase II study of enoblituzumab in front-line patients with squamous cell carcinoma of the head and neck, in which PD-L1-positive patients received combination therapy with retifanlimab, an anti-PD-1 antibody, and PD-L1-negative patients received combination therapy with tebotelimab, our PD-1 x LAG-3 DART molecule. We expect to complete enrollment of the PD-L1-positive patient cohort during the first half of this year and provide an update on this cohort during the second half of the year.

In April, the results from a Phase I study of the combination of enoblituzumab and pembrolizumab in advanced B7-H3 expressing solid tumors were published in the Journal for ImmunoTherapy of Cancer. These data were initially presented at the Society for Immunotherapy of Cancer's 2018 Annual Meeting.

As previously reported, objective responses occurred in 6 of 18 evaluable patients, or 33.3%, with squamous cell carcinoma of the head and neck who were checkpoint-naive and had previously progressed after receiving first-line platinum-based chemotherapy. Of note, in patients with squamous cell carcinoma of the head and neck, the updated data show a median overall survival of 17.4 months, with a 95% confidence interval of 9.2 to not reached. This compared favorably to the objective response rate of 13% to 16% and median OS of 7.5 months seen with single-agent use of anti-PD-1 agents previously reported in squamous cell carcinoma of the head and neck patients who had progressed after platinum-based chemotherapy.

We believe the recently published data from our combination of enoblituzumab and pembrolizumab, while from a small study, are encouraging given the historical efficacy with anti-PD-1 agents. The results demonstrated that therapy combining B7-H3 and PD-1 inhibition is feasible, potentially with minimal additive toxicity beyond what would expect with anti-PD-1 monotherapy.

Next, let me update you on lorigerlimab, our investigational bispecific tetravalent DART molecule designed to enable blockade of PD-1 and CTLA-4. As mentioned, we recently initiated a clinical study of MGC018 and lorigerlimab in patients with advanced solid tumors. We are also evaluating lorigerlimab in a Phase I/II dose expansion study in patients with microsatellite-stable colorectal cancer, mCRPC, melanoma and checkpoint-naive non-small cell lung cancer at a dose of 6 mg per kg. We expect to provide an update from this ongoing study in the second half of 2022.

Next up, I'll discuss our efforts to advance treatment of patients with CD123-positive hematologic malignancies. MGD024 is our next-generation bispecific CD123 x CD3 DART molecule that incorporates a CD3 component designed to minimize cytokine release syndrome while maintaining antitumor cytolytic activity and permitting intermittent dosing through a longer half-life.

In April, our IND for MGD024 was cleared by the FDA for evaluation in patients with hematologic malignancies. We expect to begin enrollment of a Phase I study of MGD024 in patients with CD123-positive neoplasms, including acute myeloid leukemia, in midyear.

Next, I will provide an update of our product candidates being developed by our collaboration partners for which we retain certain economic rights. Teplizumab is an anti-CD3 monoclonal antibody that was acquired from us by Provention Bio under an asset purchase agreement in 2018, for which we are entitled to receive future milestone payments and royalties on net sales. Provention is developing teplizumab for the treatment of Type 1 diabetes.

In July 2021, the FDA issued a complete response letter for teplizumab's BLA for the delay of clinical Type 1 diabetes in at-risk individuals. In March, Provention announced that the FDA accepted the Biologics License Application for teplizumab for the delay of clinical Type 1 diabetes in at-risk individuals. The FDA assigned a PDUFA date of August 17, 2022.

Our second investigational ADC, IMGC936, which targets ADAM9, a cell surface protein overexpressed in several solid tumor types, is being advanced under a co-development agreement with ImmunoGen. Under our 50/50 collaboration, ImmunoGen is leading clinical development and has indicated that they will anticipate disclosing initial data from the Phase I study in multiple solid tumors in 2022.

I am pleased to announce that a manuscript describing the preclinical evaluation of IMGC936 was recently accepted for publication in Molecular Cancer Therapeutics. A copy of the manuscript will soon be available online.

Last, I will provide an update on margetuximab. As a reminder, margetuximab was launched as MARGENZA in the U.S., in March 2021, in coordination with our commercial partner, EVERSANA. MARGENZA is approved in combination with chemotherapy for the treatment of adult patients with metastatic HER2-positive breast cancer who have received 2 or more prior anti-HER2 regimens, at least 1 of which was for metastatic disease. We continue to believe patients may benefit from MARGENZA as another option to treat metastatic breast cancer.

As reported, net sales were $3.6 million from MARGENZA in the first quarter. Given the high level of competition in the HER2-positive breast cancer market, including multiple new approvals, we continue to have modest expectations form MARGENZA sales.

In conclusion, we anticipate that 2022 will be an important year for MacroGenics. We remain steadfast in our commitment to becoming a leader in the field of immuno-oncology and are excited about the potential to deliver novel therapies to cancer patients.

We would now be happy to open the call for questions. Operator?

(Operator Instructions) Our first question comes from Jonathan Chang with SVB Securities.

First question, on the MGC018 Phase II/III prostate cancer study. You've guided to starting the study by year-end. How should we be thinking about timelines for the study beyond study initiation? And how do those timelines fit with your cash runway guidance?

Jonathan, thanks very much for the question. Obviously, we're still in the operational startup phase of this, working with identification of sites and finding the organizations that will help us with that study. So it's really too early to project how quickly the 150 patients in the Phase II portion of the study will be enrolled. Obviously, once that study starts, we're willing to provide further guidance. But again, right now, our target is to get the study started by the end of the year.

With regard to the cash situation, as Jim commented on earlier, we believe with the cash available and anticipated other cash that may be coming in potentially, we should be able to have enough cash taking us through 2023 and to be able to support the Phase II study of that program.

Got it. And just a second question, on the Phase III portion of the study. How should we be thinking about the size of the Phase III portion? And could patients treated in the Phase II portion of the study count towards the Phase III?

I'll answer the second part first. Yes, there's a potential that patients that are participating in the Phase II. This was designed as a seamless design. But at this point, we prefer not to identify the exact number of patients in the Phase III. We've obviously modeled this out. But again, I'd like to take this through the Phase II before we give a little bit more specificity on how many patients we would anticipate in the Phase III portion.

Got it. And just one last question from me. What do you guys see as the radiographic PFS benchmark for an androgen receptor-axis-targeted therapy in the Phase III patient population?

Well, again, given that right now the treatment paradigms are continuing to evolve, we have obviously a new agent on the market, there is obviously switches in front-line therapy and depending on where the study is being conducted in U.S. and Europe in terms of the initial agent being given in the castration-resistant population, it's hard for us to give the specifics with regard to the control population. We obviously have modeled this with data to date and the various studies out there. But right now, we're not giving specific guidance in terms of the control population responsiveness versus the experimental. Obviously, we're looking certainly for several months' improvement over control.

Our next question comes from Kaveri Pohlman with BTIG.

My first question is for MGDO24. How much of the flotetuzumab data derisks the 024 program? Because 024 has an Fc domain. So it's going to have a very different PK/PD profile. Do you think you have to start over? Or you can get quickly to a dose that's active and safe enough?

Thanks, Kaveri, for the question. We are starting this out as a new study. Obviously, we have a lot of experience on flotetuzumab. But as you point out, with the intermittent dosing here, which was obviously incorporated, we think is a major attribute for the design of the MGD024 molecule. We will be starting at low doses. Our hope is that these cohorts will be small and can move up quickly. But again, until we start the study, we won't know how long it will take to move through the various dose levels in the dose escalation study. So too early to say.

That's fair. And for enoblituzumab and tebotelimab, do you plan to screen or test patients for LAG-3 expression? I believe the BMS data showed superior survival in LAG-3 expressors, although it is approved for both types of populations.

Good question. And the way the study was initially designed, we did not require screening for LAG-3 expression. Obviously, what we were trying to address here, particularly in the combination using tebo, is in the PD-L1-negative population we believe that the Fc incorporation in enoblituzumab by binding through NK cells and other cells can drive upregulation of gamma-interferon and upregulation of multiple checkpoints, including LAG-3.

We will be looking retrospectively at the patients in that study to understand the baseline and post-treatment expression levels of PD-L1 and LAG-3 in those patients and, obviously, look at how it correlates with response rates. So not required prospectively, but more as a guide in terms of the populations that most benefit by treatment.

Our next question comes from Etzer Darout with BMO Capital Markets.

I have a couple on MGC018 updates in the second half of this year. I guess, first, could we see updated prostate cancer data that includes PFS in the second half? And I guess as far as sort of the dose and interval modifications noted in the Phase II/III, could we see some clinical data on that particular or sort of those dose modifications in prostate or in melanoma cohorts being sort of reported in the second half of this year?

So Etzer, with regard to the modifications of dose, that has not been initiated in the expansion cohorts that we have treated to date. And that was obviously part of the objective of this Phase II design.

As you know and as we've stated earlier today, we have modeled this out looking at the pharmacokinetics, looking at the side effect profile and the responses, and we think we've come up with 2 potential doses with the modified intervals that would end up giving a higher efficacy potentially as well as a much reduced, mitigated side effect profile. But until we test that prospectively, we'll not know the answer. And that's part of the reason to understand looking at those 2 doses which one will perform the best, and then ultimately take that forward into the Phase III portion of the study.

With regard to the specific updates on prostate in 018, we have not made any specific decisions with regard to this program, either on prostate or on the specific expansion cohorts. We will provide some updates. But right now, we have not submitted an abstract specifically for the updated prostate. Given that patients are still being dosed, we obviously would like to see that study completed before reporting out the final results.

Our next question comes from Peter Lawson, with Barclays.

Great. Just on the Phase II interim for the B7-H3, when could we potentially see that?

Are we talking about the study that we just described in the Phase II/III, the III portion.

Yes.

As I said earlier to an earlier question, we want to get the study started. Again, we're targeting for the start at the end of the year. So until things are operational, it will be just too early to project when we'd see that data. Clearly, we'll be working very diligently to enroll the 150 patients to get that answer. But at this point, it's just too early to estimate.

Gotcha. And then why the 2 potential, why the 2 doses for MGC018?

Well, I think that's a very good question. As I said, we selected these doses based on the actual data we had on hand from the patients.

Why test 2 doses? Well, obviously, the FDA is providing guidance all the time, and it's really good development practice to really define a dose to assure the maximum therapeutic index rather than just proceeding with a maximum tolerated dose. They were very -- our interactions with them were very positive. And in our discussions, they certainly encouraged us to look at the 2 doses, going forward.

So at this point, I think this is the most prudent thing to do to ultimately get the most appropriate dose for treating these patients.

Our next question comes from Stephen Willey with Stifel.

Maybe just a follow-up on the Phase II/III study design. Does the eligibility criteria allow for taxane use in the castration-sensitive setting? And is there a limit to the number of taxane regimens that are allowed?

There is a limit, on the second, on the number of taxanes. So it's one taxane and most likely will be docetaxel. With regard to its use in the castration-sensitive, I actually don't know the answer, Steve, and we'll have to follow up with you on that question.

Okay. And I guess in the discussion with FDA, was there any, in terms of trial design, was there any discussion just around, I guess, the card results and, I guess, some of the clinical awareness now that sequencing these novel hormonals behind each other don't necessarily achieve a maximum amount of clinical benefit? And I know in just having some physician conversations with regards to other development programs, there's been a little bit of a pushback on this notion of sequencing these agents in patients in later lines of therapy. So just wondering if, I guess, even outside of your FDA discussions, you've had any kind of clinical or KOL conversations to inform the selection of a control arm here.

Steve, we had both extensive discussions with investigators, and we've also had a very good discussion with the FDA. And what I would say is there is no one easy solution, given where the state of treatment is right now. As you know, there are different things one could select and there was no perfect answer to that question. And actually, the FDA, in fact, commented to that point. And so they again discussed with us. Obviously, in any of these studies, it's always up to the investigator unless it's a huge safety concern, and that was not raised. And obviously, we've incorporated the design to deal with safety issues in the future.

But the fact of the matter there is something we will obviously continue to examine as we go through the Phase II portion of the study and see where the state of treatment is at that time. But the FDA definitely agreed that this selection for the control population was one that was certainly adequate to move forward.

Our next question comes from Jonathan Miller with Evercore ISI.

One more maybe on the 018 dosing. Obviously, it's less intense. So I understand the better expected tax profile. But the PR and your prepared remarks seem to suggest that it's getting close to the practical realized dose in Phase I, after you account for dose reductions and delays that those patients were getting. So I guess, how would you characterize or how much lower is exposure at the new dose versus where patients ended up at later cycles in the Phase I at the 3 mg a kg Q3 dose?

And then secondly, maybe switching gears a little bit, on the runway guidance, presumably that includes the admirable job that you've done so far streamlining the pipeline. But you also suggest that there might be additional prioritization or optimization to come. So beyond 018, which assets remain a focus for accelerating development versus maybe sitting on the back burner a little while, while you try and get through the lead program Phase II?

A lot of questions there. So let me sort of start with the -- address the first part, which was the dose. As you saw that we made modifications, that is bounded both between 2 and 2.7, with obviously a slightly increased dosing interval. What I would say is that given the size of the number of patients we had to evaluate, the dose that we approximated was sort of right in the middle there. So the question is, is it a little bit more or a little bit less, the ideal one? That's why we ultimately selected these 2 doses to go forward. So I think, hopefully, with the appropriate guidance to the Data Safety Monitoring Committee, we will be able to select the best dose to move forward in the Phase III arm of the study.

With regard to the runway guidance, we obviously are continuing looking at the portfolio and pruning things which we don't think will have the highest prospects for the greatest success. It's very clear that we have held off on accelerating the tebo program beyond the combination study in the head and neck at this point, but we certainly are spending a lot of effort in the background determining what the best trial design is for both a solid tumor and potentially for lymphoma.

But again, we will not engage in the development of that until we have certainly enough capital to support the MGC018 study and some other programs that you'll hear about later in this year that we have high hopes for.

So you'll continue to hear more, Jonathan, on how we will prioritize our programs going forward, where we think we will have the greatest chance for success.

Our next question comes from Yigal Nochomovitz with Citigroup.

On the interim analysis for the Phase II for MGC018, what have you said about what will trigger that interim? Is this a typical situation, just a certain number of radiographic PFS events? And if you could share what that is?

We haven't given the specifics with regard with those things forward. There is a futility component to this analysis, which will be guided via the Data Safety Monitoring Committee. But at this time, we're not in a position to specify the go/no-go decisions with regard to that.

Okay. And then on MGDO24, I'm just curious if you could help put this molecule in perspective with some of the other competitors out there that have the same construct. To cite one example, there's another one from Aptevo, APVO436, also targeting CD123. Just wondering if you could help elaborate on how your molecule is different.

Well, we have actually constructed an Aptevo-mimicked version. It has some nice properties about it, but certainly from our preclinical analysis of our molecule, of MGDO24, we certainly think that this can be a superior molecule.

I should point out, as I stated earlier, not only do we see this being developed in late-line refractory populations, but given very robust activity we've seen in preclinical models, combining these with other approved active agents that are used for AML, number one, and then our plans, which are much broader beyond AML, to using this in other hematologic malignancies once we have established a dose, I think this could be really a standalone CD123 in its class. Especially given the way it's designed, if we see the markedly reduced cytokine release profile, that will certainly add greater value to this molecule compared to what has been at least discussed publicly on the Aptevo molecule in terms of cytokine release.

Our next question comes from David Dai with SMBC.

So one question on the MGC018 program, the Phase II/III design. Could you just comment on the receptor occupancy at the lower doses? Especially based on the PK/PD modeling, could you share whether you will be able to occupy a similar amount of receptors at lower doses? I know this might be a little bit tough to perform because the molecules are internalized, but any color would be helpful.

David, I don't -- I can't really answer that question. I think you alluded to the problem here is that because this is an ADC molecule, you actually don't need a full receptor occupancy to get the biological activity. What you need is an antibody directed to an epitope on the receptor that will incorporate that molecule, in this case will go through the lysosomal pathway and get the cleavage of the toxin, which then travels to the nucleus and promotes alkylation of DNA. And so really, you don't need full saturation at these sub-saturating levels.

Given that the doses we have intending to move forward in the Phase II/III are not that different than what we have already described in Phase I and given the broad activity we've seen and, furthermore, in our dose escalation study, even seeing activity at lower doses, I think we have sufficient drug in the circulation to do what we wanted it to do and, again, hopefully mitigate some of the side effects by this dose reduction.

That's really helpful, Scott. So just another question on 018. From your Phase I study, the safety profile looked pretty clean, where we didn't see any colitis and we saw some lower levels of Grade 3 diarrhea and rash. So to reduce the levels to 2 and 2.7 mg per kg, could you just share with us what kind of adverse event you're trying to mitigate at the lower dose level?

Excellent question. We modeled this on the major side effect profiles. And the one that we saw that was not as big an issue with the investigators themselves but more with the patients was hand-foot syndrome, where we saw a very low Grade 3 side effect profile. But the fact is we had higher levels of Grade 2, which causes pain in patients. And so our goal here is both to decrease, in this instance, the hand-foot syndrome incidents but also the grade, hopefully driving them to more of Grade 1 type side effects for hand-foot, and hopefully, obviously, for other side effects that are most prominent, most notably some of the hematologic side effects, which include neutropenia. In that case, we can treat the neutropenia by giving GCSF, and the fact is, to date, we're not seeing a major clinical problem with the neutropenia, meaning we are not seeing any febrile neutropenia or any notable increased infection rates as a result. So oncologists have good ways to treat the neutropenia and also thrombocytopenia, both by holding doses and giving stimulating agents. So that is the intent of the dose modification.

Our next question comes from Charles Zhu with Guggenheim Securities.

Just one quick one on enoblituzumab. So it sounds like you'll have that combination update in PD-L1-positive head and neck cancer later this year. So we have a pretty good idea of what the single-agent PD-1 benchmarks look like. But just given your data coming up as well as given some of the language and guidance around cash runway, I guess, what are you looking for out of this program in terms of go/no-go decisions? And what would give you confidence really for pursuing this in some sort of a more potentially registrational development path?

Excellent question, Zhu. The fact is, as we pointed out today, the historical data in later-line, even though the cohort was small, we were seeing overall response rates in the 30%. And as we report on today, a very much more prolonged overall survival in the population, certainly about doubling from the historical data.

So again, in a chemo-free regimen in this front-line head and neck study, if we're achieving a 25% to 30% response rate and we're in that range in a chemo-free regimen, I think we have both the ability to develop this further as a potential chemo-free regimen or, in fact, pursue other possibilities of combining with chemo, going forward.

So we look forward to having some maturation of the data later this year to be able to update.

(Operator Instructions) Our next question comes from Silvan Tuerkcan with JMP Securities.

My first question is a little bit more on the 018, I guess, spacing out of going from 3 weeks to 4 weeks dosing. What evidence do you have from the PK/PD profile that you'll have a shot at maintaining the efficacy you've seen before, apart from the AUC? And have there been any patients in the ongoing, I guess, dose expansion arms that have received doses phased out further, maybe due to the dose reductions or by giving freedom to the investigators to space them out? And then I have a follow-up.

Silvan, yes, exactly. That's what we did in our retrospective analysis of the patients on the 3 mg Q3 weekly. All the patients started out at that dose, but a large percent of those patients were either having dose reductions or doses were held either for side -- mostly for side effects before they were resuming. So there were a number of patients that actually were held for 4 weeks or even longer, up to 6 weeks in some of these patients. And so we were able to model that and compare the responsiveness of those patients with these longer intervals and side effects and their response rates, and that's how we were able to simulate and come to the doses and the dosing intervals that we've ultimately decided on. So yes, we did have patients that, in fact, were not treated on a Q3 weekly basis, but less frequently.

Great. And just a quick question then on lorigerlimab. Here -- actually, sorry, tebotelimab. Here, I think your partner in China, Zai Lab, discontinued development. I think you disclosed that on the 4Q call. And you said that they may have future plans. What are those -- do you have any update on their future plans and how they may align with your future plans following the update that we'll get in the second half?

I think that, again, I think they are looking towards us in terms of next opportunities. As I've alluded to before, we're looking at the potential of a solid tumor indication and potentially in a lymphoma setting to explore the use of tebotelimab. And depending on what we decide, they will potentially have an opportunity to participate in those studies, but nothing has been formalized as yet.

I have a follow-up with Stephen Willey with Stifel.

So lorigerlimab, I believe, is currently being evaluated on a Q3W schedule, and just wondering if there's going to be any attempt to harmonize dosing when you start combining this with MGC018 on a Q4W schedule.

Steve, yes, in fact, there will be an amendment to provide lorigerlimab on a Q4 weekly regimen to coincide with the dosing of MGC018.

And I have a follow-up with Yigal Nochomovitz with Citigroup.

Scott, just one more on 018 and the Phase I/II expansion. I think you noted encouraging activity in melanoma. And given that you're seeking to add patients to non-small cell, that also appears to be generating an interesting signal. I'm not sure if you can elaborate at this point in time in terms of any more quantification of those trends.

I think our plan is to provide some guidance again on some of these expansion cohorts later this year. So stay tuned for that. But again, as I'd noted before, first, obviously, on the melanoma, we'd like to see on this 2.7 Q4 response rates in melanoma in a similar population and how those additional 20 patients will respond, both in terms of safety and efficacy.

With regard to lung, we need to do a little more work in terms of given the heterogeneity of the lung population, both in terms of histologies as well as the expression pattern of B7-H3 among the different tumor types, which specific lung population we want to further explore. So we're doing a little bit more homework on that before we decide the move forward for expansion in the lung population.

And our next follow-up comes from Silvan Tuerkcan with JMP Securities.

Just one last follow-up here. Now that you're enrolling patients at 2.7 milligrams in melanoma and potentially also non-small cell lung cancer and any other expansion cohorts, is there any way that in that scenario having those patients already in that Phase I/II or Phase II dose expansion that you could skip the Phase II/III of a pivotal trial and just go into Phase III following that or convert the dose expansion into a pivotal trial by enrolling more patients?

So let me be quite clear. We have not started dosing at 2.7 in the melanoma nor, obviously, in the lung population. We are likely, given the ease of adding additional patients, to be able to start that before or approximately at the same time as the Phase II/III prostate. But we will not use that data because it will be just too early and too delayed to get sufficient enough data to guide the prostate. The prostate will be an independent. And actually, more importantly, it's having it as a controlled study to understand the response rate as well as the safety profile compared to the control population in a sizable number of patients. So no, we will not use the data in those other tumor types to guide us for the prostate study.

Thank you. And I'm currently showing no further questions in the queue at this time. I'd like to hand the conference back to Dr. Koenig for any closing comments.

Thank you, Operator, and thank you all for participating in our earnings call today. We look forward to providing further updates on so many of our programs later this year. We hope you have a great afternoon and evening.

Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Everyone, have a wonderful day.