MacroGenics, Inc. (MGNX) Earnings Call Transcript & Summary

Hi there. There we go. Welcome, everybody, to the second day of the Crédit Suisse Global Virtual Healthcare Conference. We're looking forward to hopefully having everyone in person next year, but for now, Zoom will have to suffice. With me in the afternoon sessions today, we have MacroGenics. And from MacroGenics, it's my pleasure to introduce Scott Koenig, President and CEO. Scott, take it away.

Thank you so much, Evan. I appreciate the invitation today. Let me get moving here. We're having problems advancing the slides. Just let me see what's going on here. There we go. [Technical Difficulty]

There we go.

Sorry. I don't know. It's [indiscernible] differently. So...

Next year, in person, we won't have to worry about it.

Thank you very much.

All right. Take it away, Scott.

Thank you very much. And of course, I'll be making forward-looking statements today. So please refer to our SEC filings to understand the risks associated with investment in MacroGenics. It's a very exciting time to be at MacroGenics, especially for the next few months. 38 days to our PDUFA date for our lead molecule. We have multiple programs in registration-directed studies. And the rest of our clinical pipeline is advancing to defining various registration pathways. We're building our company on 3 platforms: Our Fc-engineering technology; our DART bispecific molecules, which are being designed for different applications; and then more recently, through various in-licensing and partnerships, we're using ADC technology to advance a new dimension to our programs. We're using our molecules, both individually and in combination, and in particular, to promote the complementary activity of immune-mediated mechanisms that enhance tumor killing. So this is our clinical pipeline represented by 8 clinical assets that are in Phase I to Phase III development. As noted here on the right-hand side, we own major market rights for 7 of 8 molecules and have very significant partnerships with several of these. Leading off is margetuximab, our Fc-engineered molecule, where we're coming up on the PDUFA date for treatment of late-stage breast cancer. We're also pursuing development of this molecule for the treatment of frontline gastric cancer in combination with 2 of our checkpoint molecules, retifanlimab and tebotelimab. The second molecule, flotetuzumab, was the first DART molecule that we advanced into the clinic. It targets the IL-3 alpha chain, CD23 and CD3 molecule, recruiting T cells to kill both the tumor stem cells as well as dividing leukemic stem cells. We're focusing on our registration study right now in refractory AML. The third molecule here, retifanlimab, was a molecule that we developed to PD-1 to a unique specificity to the currently approved PD-1 molecules. We licensed this several years ago to Incyte and is being developed as monotherapy in a number of different indications as well as in combination with molecules that both Incyte and MacroGenics are developing as well as Zai Lab to which China rights were given to this molecule. Enoblituzumab is a first of 2 B7-H3 targeted molecules. This is an Fc-engineered molecule, which has the exact same 5 immunoacids exchanged in the Fc domain as margetuximab, which allows binding to the activating Fc receptor and reduced binding to the inhibitory receptor. B7-H3 is widely expressed on most solid tumors. And we're currently, right now, setting up a study in frontline head and neck cancer, which we'll initiate in the beginning of 2021, where we will treat PD-L1-positive patients with retifanlimab and PD-L1-negative patients with the bispecific DART molecule, tebotelimab, targeting PD-1 and LAG-3. With regard to tebotelimab, this is a molecule that we have completed recently a Phase I study presented at ASCO. I'll present some of that data later today. And we're looking at the opportunity here quite broadly, both as monotherapy and in combination against a wide range of solid tumors. The second combination checkpoint molecule, MGD019, targets PD-1 and CTLA-4. This was designed to have all the attributes of an Ipi/Nivo combination, but a markedly preferred side effect profile based on the design of this molecule. And again, here, we're looking at the opportunity to treat both as monotherapy and in combination with other molecules in our portfolio against varying solid tumors. MGC018 is a very exciting molecule, where we recently presented data at ASCO in patients with prostate and other cancers. This targets, again, B7-H3. I'll provide some updates on this molecule very shortly. We are now in expansion studies in metastatic castration-resistant prostate cancer, triple-negative breast cancer and non-small cell lung cancer. Most recently, IMGC0936 (sic) [ IMGC936 ] was added to our portfolio. We have a 50-50 relationship with Immunogen. This targets a highly overexpressed metalloproteinase proteinase called ADAM9 on multiple different solid tumor types. And this week, it was announced that the first patient in the dose escalation study was treated with IMGC0936 (sic) [ IMGC936 ]. So let me focus in on several of these molecules a little more in depth. First, starting out with margetuximab for the treatment of HER2-positive metastatic breast cancer. As you know, patients treated with HER2-positive tumors typically progress through multiple lines of therapy. So there are additional needs for improved therapies. We were the first company to do a head-to-head trial against trastuzumab or HERCEPTIN in combination with chemotherapy and showed superiority with regard to progression-free survival improvement. The advantage of this molecule is that it can be combined with -- among 4 different chemotherapies, which were tested in the clinical trial called SOPHIA. We demonstrated that this molecule had a side effect profile quite similar to that of trastuzumab. And in addition, in an exploratory analysis of patients with a particular genetic form of CD16, one of the activating Fc receptors, we showed a favorable response pattern in 85% of the population of that our F carriers in patients with breast cancer. As we await word from the FDA on December 18 with regard to the potential to approve this molecule, we are exploring different avenues for commercialization of this molecule, if approved, including various contractual relationships as well as conventional biopharmaceutical companies. As I have said previously, we will not build an internal sales force at this time, but we will explore these different avenues for optimal commercialization. And if approved, we should have drug available in the beginning of 2021 for patients. Second indication that we're pursuing is in gastric cancer. Our rationale here was built on a earlier study that we conducted in second-line metastatic gastric cancer, where we showed, in combination with pembrolizumab, particularly in patients and were IHC 3+ positive PD-L1-positive, a favorable response profile, whereas compared to standard of care in the second-line therapy of ramucirumab and paclitaxel or even against the frontline standard of care, which is trastuzumab and chemotherapy, that patients who had progressed on the TOGA regimen of trastuzumab and chemotherapy had a more favorable overall survival of over 20 months with a much better safety profile as illustrated here. With these results, we designed a study for intent of registration. This was designed as 2 different distinct modules where in Module A, we are looking at that same subpopulation of IHC 3+ positive, PDL-1-positive patients. We're currently enrolling patients right now in this frontline setting being treated with margetuximab and retifanlimab, chemo-free. We expect to enroll up to 40 patients, either by the end of December or early in 2021. And at that point, we -- based on the overall response rate in tolerability, we'll make a decision to progress this study further, enroll additional patients. And with the feedback from the FDA, if we meet acceptable safety and response criteria, we have the potential for an accelerated approval in the subpopulation of patients. In addition, we are looking at treating patients with conventional HER2 expression in the frontline metastatic setting. The study being conducted in collaboration with Zai Lab was recently initiated in China. And we're here looking at the combination of margetuximab with chemotherapy and 1 of our 2 checkpoint molecules, either retifanlimab or tebotelimab. Now turning our attention to the DART molecule, flotetuzumab. And again, this is a CD123xCD3 molecule with the idea that we are eliminating both leukemic stem cells and the leukemic cells, sparing normal hematopoietic stem cells. The concept behind this is that T cell, irrespective of their genetically defined specificity, can kill the tumor cells in an HLA unrestricted manner. This summer, we've gotten the support to conduct a registration study, which we've begun enrollment on. As we previously indicated, we're defining the specific population as a primary induction failure or early relapse population. Patients have begun to enroll in this study, and this will be conducted worldwide. We recently had abstracts released for the 2020 ASH meetings. This was the data that we presented at the last ASH meeting, where we demonstrated with the targeted CR/CRh rate in the registration study in the intent-to-treat population of approximately 27%. As noted in the recent abstracts that we released, we will be presenting data on 38 patients at the upcoming ASH 2020 meeting. These will include 15 patients, demonstrated here, that have the specific entry criteria for the registration study, plus at least an additional new 23 patients that have been enrolled since the last ASH meeting. And as you saw on the recent ASH abstract that was released, we're achieving the response rate in this intent-to-treat population that are as good or, in fact, slightly better than defined here at the last meeting. So obviously, very encouraging data and compared to historical data, dramatically improved in this particular salvage population. Now turning our attention to MGC018, our first antibody drug conjugate molecule. We're using a linker toxin technology that we in-licensed from a company called Synthon, now called Byondis. It's called duocarmycin. The advantage of this molecule is that B7-H3 is highly overexpressed on most solid tumors, both on the dividing tumor cells, but in addition, on the weekly dividing cells lining the vasculature of tumors. And as a result, because it hits both dividing and nondividing cells, we can hit various portions of the tumor microenvironment to get therapeutic benefit. We're currently conducting an expansion of a Phase I/II study in multiple tumor types, which include metastatic castration-resistant prostate cancer, triple-negative breast cancer and non-small cell lung cancer. In a dose escalation study that was conducted and presented at ASCO, at doses of 2 mgs and 3 mgs per kg, we began to see tumor regression as illustrated here, although did not achieve RECIST criteria positivity, but had very significant responses in patients with prostate and non-small cell lung cancer. This is illustrated here on this next slide where of the 7 patients with castration-resistant prostate cancer, 5 of them had a dramatic reduction in PSA levels with over 50% reduction in 5 of these 7 patients. And these are very late line patients, as illustrated here on the left, with 6 out of the 7 patients in the study have already been treated with chemotherapy consisting of docetaxel and 6 of the 7 patients treated with both AR inhibitors, enzalutamide and abiraterone, and as noted here, additional other experimental lines of therapy. Based on very favorable pharmacokinetics and acceptable safety profile, we decided to expand into additional patients with metastatic castration-resistant prostate cancer at a 3 mg per kg level. We are screening patients right now and expect to have patients enrolled in the next weeks. Our intended goal is to enroll the 40 patients within the first half of 2021 and be able to update that data at that time. Simultaneously, we are also enrolling patients with lung cancer and triple-negative breast cancer. And that was based on data that we observed in this study, where of all the patients in the dose escalation study, there were 2 patients with non-small cell lung cancer. Both patients had tumor regression, one at 0.5 mg per kg. This patient was treated at 2 mgs per kg. And you see here, as sixth-line therapy, a 24% reduction or stable disease in the very significant plural located lesion. In addition, in previous studies, we have demonstrated with our other B7-H3-directed target, enoblituzumab, in combination with pembro in patients with late-line therapy, we saw a very favorable response in non-small cell lung cancer with about a 35% response rate in that population. Given the higher expression of B7-H3, both in non-small cell lung cancer and triple-negative breast cancer as well as other tumors, we are very excited about pursuing these lines of therapy and hope to provide update in the first half of 2021. Now turning our attention to retifanlimab, our anti-PD-1 molecule. As I noted, this is being developed as monotherapy by Incyte, looking at various indications, including anal cancer, Merkel cell, MS-high endometrial cancer and their recently announced combination study with chemotherapy in frontline non-small cell lung cancer. As I've noted before, we are looking at this as a combination in -- with margetuximab in our gastric cancer study. As presented at the ESMO meeting, very favorable responses we're seeing in Merkel cell cancer as compared to those other anti-PD-1 molecules that have been used to treat this indication. There was also comparable or favorable data in patients to other PD-1s in anal cell cancer. And as recently announced, Incyte is pursuing and will initiate very shortly a combination study in -- with chemotherapy in anal cell cancer as well. We expect Incyte will provide further updates either later this year or early next year. Regarding the progress of these programs. Now turning our attention to tebotelimab, our -- the first PD-1 x LAG-3 bispecific molecule in the clinic with very favorable clinical data in our initial dose escalation study. We expanded the study into 9 different tumor types, both checkpoint naive and checkpoint experience and also initiated studies in combination with other molecules, most notably with margetuximab and expect in the future, combinations with enoblituzumab based on the mechanisms of action. Upcoming data presentation, I'll show you some of the data being presented this week at SITC. And at ASH recently released abstract, we will provide updates in our monotherapy cohort of patients with DLBCL. As we have previously shown at ASCO, we saw a single-agent activity in patients with triple-negative breast cancer, ovarian cancer, non-small cell lung cancer, including patients that had previously been treated with anti-PD-1 therapy. Most notably, for those patients who had responded to therapy based on PRs, we saw a very strong association, both by IHC analysis as well as transcript profiling conducted by NanoString, our partner in this study, where we showed high LAG-3 expression was associated with better responsiveness to therapy. In addition, NanoString identified a gamma interferon gene signature that was also highly associated with responsiveness to tebotelimab. As a result, we are conducting a much more comprehensive study of all the patients in this -- or most of the patients in the ongoing study to be able to establish biomarkers that would best predict responsiveness to tebotelimab. And if successful and hope to have that data very soon, we would then define a next phase of development as monotherapy in a number of tumor types based on these various biomarkers. In addition, we wanted to find opportunities to upregulate and improve the responsiveness in tumors that had low expression of LAG-3. And what we had demonstrated previously at ASCO that the Fc-engineering technology, which is incorporated in margetuximab, as illustrated here, because of its ability to both upregulate and activate the innate and specific immune response shows an increase of expression of various checkpoint molecules, which include LAG-3 and the ligand PD-L1, and when combined together with tebotelimab, leads to better killing of tumors in vitro. So based on this observation, we moved into a study in combination of margetuximab of tebotelimab in late-stage HER2-positive tumors. And this is the updated data presented from ASCO and now being presented at SITC, showing, again, a very favorable overall response rate of objective responses and overall responses that compares quite favorably to benchmark statistics, where previously shown in a PANACEA study conducted in breast cancer by Merck a couple of years ago that patients who have very low PD-L1 expression had no responsiveness in this population. And as illustrated here on the figure, the majority of the patients that are shown to be responsive here have no detectable PD-L1 or very low levels of PD-L1. So based on this, we did a further analysis, again, looking at responsiveness based on various biomarkers. And despite the fact that we had very few numbers of patients, 19 patients, for the evaluation in this initial study, we showed a very strong correlation or association with the level of LAG-3 expressions, shown here in the middle panel, particularly that the change in target lesions, the reduction in tumor size correlates very nicely with LAG-3 expression within our value of 0.63. We will continue to build on this data as we are now -- have expanded the study, looking to treat up to 30 patients with breast cancer in late-line setting, 30 patients with gastric cancer and 30 patients in a combination study with a basket study of other HER2-positive tumors, and we will provide updates in 2021. Now turning our attention to our second combination checkpoint molecule, MGD019. This contains 2 well-validated checkpoint targets, PD-1 and CTLA-4. The idea around this -- design of this molecule, which is, as you see, is a tetravalent bispecific molecule and designed with an IgG4 backbone, was to achieve the T cell activation that is observed with Ipi/Nivo combinations being able to dose even at higher doses because we have a better safety profile, which we had demonstrated preclinically in various monkey studies, where we were able to dose as high as 100 mgs per kg without the associated toxicity observed with Ipi/Nivo combinations. At the recent ESMO meeting, we showed the results of our dose escalation study, where we achieved our targeted top dose of 10 mgs per kg without the dose-limiting toxicities or maximum tolerated doses. As observed here, we saw responses in both checkpoint experience and checkpoint naive populations, including tumors that are not traditionally known to respond to checkpoint-targeted molecules, including a complete response in a patient with metastatic castration-resistant prostate cancer, a partial response in an MS stable colorectal cancer patient and then an unconfirmed response in a Fallopian tube tumor as well. Based on this data as well as some of the pharmacokinetic and receptor occupancy data, where we showed very favorable pharmacokinetics with a half-life estimated at about 12 days, excellent receptor occupancy at doses of 1 mg per kg or greater and PD-1 blockade at similar doses. We also demonstrated at that similar dose range, dramatic T cell proliferation, both in CD4 and CD8 cells as well as an upregulation of ICOS, which is known to occur on CD4 cells with blockade of CTLA-4. Based on the safety data, the responsiveness and the excellent biomarker data, we have now moved forward at 6 mgs per kg and expansion cohorts of MS stable colorectal cancer and we'll soon to enroll patients with non-small cell lung cancer, and those patients are being dosed as we speak. So anticipated milestones upcoming, again, PDUFA date in 38 days. As I noted on our recent earnings call, the original overall survival events at 385, which we expected at the end of this year, is now delayed because these patients are living longer. And based on our predictions at this time, we expect that event to occur in the second half of 2021. And of course, as I noted before, we expect to provide updates on Module A after completing enrollment of 40 patients. We'll provide some updates on flotetuzumab at the upcoming ASH meeting as well as continued enrollment in the up-to-200-patient registrational study of a single-arm study in these late-line refractory patients. MGC018 continues, as I described, of enrolling in the prostate -- castration-resistant prostate cancer, triple-negative breast, non-small cell lung cancer patients. There should be updates from Incyte on the retifanlimab progress. And then for tebotelimab, we'll provide updates at ASH on the DLBCL cohort. And then provide our next plan once we have analysis of the various biomarkers for selection of a design for a monotherapy study going forward. And then finally, on MGD019, continue enrollment in MS stable colorectal cancer in non-small cell lung cancer. And then finally, financially, as we noted on our earnings call, at the end of the third quarter, we had $281 million in cash. As we have previously indicated, this cash will take us into 2023 through cash on hand and potential collaboration and anticipated milestone payments as well as expectations of future nondilutive capital coming in through various future collaborations. And as you see here, since 2013, we've been very successful bringing in over $550 million in nondilutive capital. And with that, I'll turn this back over to Evan for any questions he may have or the audience may have.

Scott, thank you for the presentation. And if anyone has any questions you'd like me to ask, just shoot me a quick e-mail [email protected]. So I want to spend a little time with on margetuximab. Not so much -- we know the PDUFA date is coming in breast cancer. And I think on your earnings call, you had alluded to potentially being more involved in the commercialization or having more plans with that. Can you expand on kind of what your updated thoughts are there? And how you could see margetuximab potentially -- and how your plans for margetuximab may have changed because of the data we saw with the PD-1/LAG-3 tebotelimab where we had data at, what was it, ASCO and now updated at SITC. There's a lot of questions there on marge.

Yes. So Evan, thanks very much for those questions. And in reality, the plans with regard to our commercialization strategy have not really changed. We always saw ourselves in a minor -- modest role launching this first product with providing some MSL support, some additional marketing support. Obviously, in the background, we're preparing for the launch for whatever partner we ultimately decide to engage that the opportunity to provide drug to patients early in 2021. Assuming approval at the end of this year occurs, the drug would be available. And obviously, meeting the -- all the requirements for government interaction and getting all the appropriate licensings, 3PL, et cetera. So until we decide on which avenue we'll take, the degree of involvement and -- may be somewhat different, but it will be in the background initially for bringing it forward in breast cancer indication. Obviously, our major focus is how do we expand the opportunity here in -- not only in breast cancer but in other indications. Obviously, I've outlined that with regard to gastric cancer and the potential for late line and other HER2-positive tumors. And in addition, we're supporting ISTs. There's an ongoing IST that just got initiated in neoadjuvant setting, comparing marge with HERCEPTIN plus PERJETA in that neoadjuvant study, particularly looking at the F allele population and seeing if there is an advantage of using marge instead of HERCEPTIN there. So we'll provide additional updates going forward as some of this newer clinical data evolves.

Okay. No, that's quite helpful. And then on tebotelimab, I'm still learning to pronounce that one, and you said the molecular numbers. You are going to have some updated DLBCL data at ASH. Can you expand as to what we can expect? I know the abstracts were released last week. But talk a little bit maybe about how you can use a PD-1 x LAG 3 bispecific in a liquid tumor like this, given your efficacy in solid tumors.

Yes. So if you saw in the abstract, we have treated 17 patients to date. We only had scans at the time of abstract submission for 11. If I recall correctly, I think there was 4 of 11 that had objective responses, including a CR and some PRs. There will be additional patients since that abstract was submitted that have gone through their scanning, so there will be more patients that are included in that analysis. What you'll see is some very interesting, again, biomarker data associated with responsiveness. As you probably are aware, LAG-3 is upregulated on Non-Hodgkin's lymphoma. And in the illustration which we showed at ASCO of the patient who was treated with a single dose of tebotelimab and had a complete remission by a single dose, that patient then went on to getting a transplant and is still, obviously, disease-free now more than a year. It was quite notable that particular patient had very, very high levels of LAG-3 expression. So I think that back to the point I was making before on the prospects of irrespective of tumors, whether you're looking at monotherapy, combination therapy, and it may also apply to liquid tumors as solid tumors, LAG-3 expression levels are important in determining who is going to respond. And there probably will be additional biomarkers that will also help guide on providing the drug to the patients that are most likely to benefit.

And then on MGD019, I know we had some interesting data. I believe the last data update was at ESMO, correct? You see nice responses in -- at that 3 milligrams per kilogram dose. Can you just provide some of the rationale as to why you've decided -- what dose you're moving forward with in the dose expansion phase? And why you're looking at colorectal and lung tumor types versus some of the other tumor types where you had some interesting efficacy as well?

Excellent question. So as you -- as I was trying to point out today that -- and as you point out, we saw a response at 3 mgs per kg. So we established that this as objective responses. The biomarker data, which included blockade of PD-1, the activation of T cells and induction of proliferation of CD4 to CD8, the upregulation of ICOS on CD4-positive cells, all occurred between 1 mg and 10 mgs per kg. And looking at -- again, at the safety profile, the maximum biomarker effects, we've sort of said 6 mgs per kg sounds right. Whether we ultimately make some final adjustments in the future that, obviously, can occur, but 6 mgs seem like a very reasonable dose because you get all the pharmacokinetic benefit on half-life as well as obviously the biomarker data there. With regard to the specific selection, as you know, historically, MS stable colorectal cancer has been a very difficult tumor to treat and there are very few options for those patients. So the fact that not only do we see an objective response in this study, we also saw another patient within a stable colorectal have tumor reduction in size. So given that historically, Ipi/Nivo has not shown effects in that population to what I -- I mean, I went back to look at that, I think they had of a study that Bristol conduct, I think they had one partial response in every -- no other responses in a large data set. So based on that, if we can see a significant response rate in this population, as monotherapy, that would be tremendous, and then we can obviously build on a combination. The idea of going after the lung population is that there's such a significant data set of Ipi/Nivo. And people often like to have what is the comparative responses of -- here of a single MGD019 compared to Ipi/Nivo. So that was there. But that's not where we're going to stop. Obviously, the responsiveness in the prostate patient, the ability to combine this with other agents, such as enoblituzumab, using orthogonal mechanisms of -- a way of directing tumors. So we have -- and we know historically, enoblituzumab has induced responses in prostate patients and other GU tumors. So we do see the opportunity of combining MGD019 with other molecules in our portfolio.

Excellent. And with that, we are out of time, but it's always a pleasure to chat and catch up with you, Scott. We appreciate it. I'm looking forward to the poster at the virtual SITC. And hopefully, we can see each other in person very soon.

Thank you very much, Evan.

Thanks, Jim. Thanks, Scott. We appreciate it. Have a great one, everyone.

You too.