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

Good morning everybody, Thank you so much for joining the Credit Suisse 30th Annual Healthcare Conference. This is John Hoffman from ECM team speaking, pleasure to have you all here today. I'm joined this morning by Scott Koenig, CEO of MacroGenics regarding the corporate update. Scott, I'd like to turn the floor over to you.

Thank you very much, John. Thank you for the opportunity to present at the Credit Suisse conference. I'll be making forward-looking statements during my presentation so please refer to our SEC filings to understand the risks investing in MacroGenics. 2021 was the year of significant advancement for MacroGenics, we launched MARGENZA our first in-house develop proprietory product with our partner EVERSANA in March. We advanced our B7-H3 portfolio and continue to demonstrate the value of our technology platforms which include our bispecific DART technology, our Fc Optimization platform and our ADC-based antibody molecules. Out of 9 molecules in clinical development we retain major market rights for 8 of them. Importantly our cash position allow to advance our objectives to 2023. This slide lists our deep pipeline of a new-based products and product candidates. MARGENZA is being advanced commercially and clinically in patients with breast cancer and margetuximab is also being tested in frontline metastatic gastric cancer setting by our partner Zai Lab. In AML, flotetuzumab our CD3 x CD123 DART molecule is enrolling AML patients with refractory disease in our registration-directed study and we recently announced the IND filing for MGD024, our CD123 x CD3 DART molecule using our next generation technology to mitigate cytokine release and allow intermittent dosing due to the incorporation of an Fc domain. Retifanlimab, our anti-PD-1 molecule licensed to Incyte is being pursued in multiple registration-directed monotherapy studies as well as combination studies. enoblituzumab, our SCCHN molecule with the same Fc modifications as MARGENZA targets B7-H3, a checkpoint ligand and is enrolling patients with head and neck cancer in a frontline study in combination with our checkpoint molecules. Tebotelimab, our PD-1 x LAG-3 DART is being examined in patients with solid tumors and non-Hodgkin's lymphoma and is being pursued with Zai Lab in different indications. MGD019 is our second combo checkpoint DART molecule as being tested in expansion cohorts of patients with MS stable colorectal cancer, squamous cell carcinoma lung, castration-resistant prostate cancer and melanoma. MGC018, also targeting B7-H3 is an ADC candidate in expansion studies in patients with castration-resistant prostate cancer, triple-negative breast cancer, lung cancer, melanoma and head and neck cancer. The ninth molecule IMGC0936 (sic) [ IMGC936 ] is in a 50-50 partnership with ImmunoGen is in an ADC molecule targeting the metallo cardianase ADAM9 in a Phase I dose escalation study in multiple tumors. Now let's examine a few of these in more detail. Let's start with MGC018, having provided a recent update at ESMO on the clinical program. MGC018 is an ADC molecule targeting B7-H3, which utilizes a cleavable linker toxin payload called duocarmycin. MGC018 binds to B7-H3, which is overexpressed in both dividing and non-dividing cells in the tumor microenvironment, delivering the payload, which alkylates DNA and promotes cell death B7-H3 is found on actively dividing tumor cells, endothelium within the vascular tumors on cancer stem cells as well as on T regulatory cells that promote immune suppression. There is a slide demonstrating high penetration of B7-H3 expression on both common and infrequent tumor types with expression observed in 75% to 100% of over 1,500 tumor samples examined. Only highlighted on the 5 expansion cohorts that are currently being pursued in our study. At ESMO, we provided activity updates at the recently completed expansion cohorts of patients with castration-resistant prostate cancer and non-small cell lung cancer. This slide provides the characteristics of patients enrolled. Patients with prostate cancer have a median of 3 previous lines of therapy and median age scores of our tumor archival specimens of 223. Non-small Cell Lung Cancer patients enrolled at a median of 2 previous lines of therapy, 71% of which included in anti-PD-1 checkpoint molecule. Their median archival specimen a scores with 139. Consistent with the historical results of the MGC018 activity in patients PSA levels as reported at ASCO. As of the August 16 cutoff date, 54% of the 39 evaluable patients achieved a PSA50 reduction compared to their baseline values. These included both patients with RECIST evaluable, metastatic lesions in the viscera and lymph nodes as well as patients with largely bony disease. Individual H score values are also noted in this figure, and while most individuals demonstrated high levels of B7-H3 on their tumors, there are a few patients with H scores below 100 and also are responding to MGC018 treatment. Similarly encouraging is the spider plot of these patients with sustained PSA50 reduction lasting 4, 5 and even 6 months during this follow-up period with 62% still on treatment as of August 16. Furthermore, anti-tumor response is extended beyond PSA50 reduction with 416 patients who had RECIST valuable scans as of the cutoff day with fifth greater than 30% reductions in the sum of their measurable tumor volumes and either confirmed or unconfirmed BRs as of their second scans. In addition to the clinical effects shown in the metastatic colorectal cancer -- I'm sorry, prostate cancer and previously in 3 patients with melanoma in the dose escalation study, we show that the majority of patients with Non-small Cell Lung Cancer of measurable tumor reductions in 16 evaluable patients as of August 16. And 5 of these individuals had greater than 30% reductions as of their first or second scans. These included diverse histology types, which included patients with adenocarcinoma, squamous cell carcinoma and large cell lung cancer. Updates on the safety profile demonstrated significant improvement in tolerability with only 7% requiring treatment or discontinuation as of the August 16 cutoff date. Both the introduction of dose reductions and dose interruptions along with medical and management, improve the drug's tolerability, and further improvements are expected in future studies. This is also reflected in this list of adverse events with the most frequently noted as fatigue and the highest percentage of Grade 3 or greater responses attributed to neutropenia at 22%. All other Grade 3 side effects were found in single-digit percentages. We will continue to refine the dosing and medical management of these patients as we integrate the results of our pharmacokinetic analysis of patients participating in the current 5 monotherapy expansion cohorts along with planning next steps for an MGC018 in future monotherapy and combination trials. Enoblituzumab, our second B7-H3 directed molecule has been designed to incorporate the exact same Fc modifications contained in margetuximab to enhance ADCC activity as well as contributing to an increased adaptive immune response. We have conducted Phase I studies with enoblituzumab both as monotherapy and in combination with anti-PD-1. With respect to the combo trial, we observed a proof-of-concept in both metastatic head and neck cancer and non-small cell lung cancer with observed overall response rates in the mid-30s significantly above what would be expected in these populations treated with an anti-PD-1 molecule alone. Also, at the recent ESMO meeting, investigators from Johns Hopkins provided updates at an IST in which patients with newly diagnosed prostate cancer with least than 7 or greater grade tumors were treated with Enoblituzumab in a neoadjuvant setting with results showing induction of significant T cell responses within the tumor specimens of many patients and subsequent reduction of PSA levels. Given these observations, we are enrolling patients in a frontline study of squamous cell carcinoma of the head and neck, where patients will be treated with Enoblituzumab with retifanlimab if they are PD-L1 positive and with tebotelimab, our PD-1 x LAG-3 DART molecule, if they are PD-L1 negative. Patients will be assessed for ORR as the primary objective and the study is expected to enroll for the remainder of the year and into 2022. Also, I-Mab, our partner in China, announced the start of a combination study of Enoblituzumab with pembrolizumab in selected solid tumors. MARGENZA is an Fc-engineered antibody molecule that antegonizes the HER2 receptor and has been approved by the FDA to be used in combination with chemotherapy for the treatment of patients with metastatic HER2-positive breast cancer after they have received 2 or more prior anti-HER2 therapies, at least 1 of which was in the metastatic setting. This approval was based on the only head-to-head study -- Phase III study using HERCEPTIN plus chemotherapy as a control treatment where PSA benefit was observed in metastatic breast cancer patients treated with MARGENZA-plus chemotherapy compared to HERCEPTIN plus chemo. In September, we announced final overall survival analysis from the Phase III SOPHIA study, which did not demonstrate a statistically significant advantage from MARGENZA plus chemotherapy over trastuzumab plus chemotherapy in patients with HER2-positive metastatic breast cancer. We plan to present these results at the San Antonio Breast Cancer Symposium in December. In addition to the results from the intent-to-treat population, a prespecified non-alpha allocating analysis of CD16A genotyping in the trial showed a numerical OS advantage in favor of margetuximab in F homozygous patients and the numerical OS advantage of favorite tras in V homozygous patients. This slide outlines the safety information on the label with warning similar to HERCEPTIN. Treatment of patients in the metastatic breast cancer setting have changed rapidly in the past year with 4 recently approved therapies plus older treatment options and others on the horizon. Our label indication allows treatment for patients as early as the second line setting, but we expect to use the product in patients with approximately 7,000 in third line or greater -- or later. This is a rapidly changing landscape for treatment with the recent results at ESMO showing superior activity of in HER2 compared to KADCYLA In second-line metastatic setting, and this will likely change the order in which these molecules are used in early aligned settings, still preserving the use of MARGENZA in later-line patients. We launched MARGENZA in mid-March through a risk-sharing 5-year co-commercialization agreement with EVERSANA, who provides access to a broad spectrum of commercial services in the U.S. We book sales and control decision-making, we had all development and manufacturing activities and maintain the flexibility to enter into future licensing agreements. Guidance regarding future sales will likely occur after about a year's experience commercializing MARGENZA. We recently announced the approval by the FDA of our manufacturing facility in Rockville to produce MARGENZA drug subsets. At the recent ESMO meeting, initial data from Cohort A of a registration-intent trial called MAHOGANY and frontline metastatic gastric cancer was presented. And although the number of confirmed responses exceeded the prespecified futility boundary for the trial, we have decided to discontinue enrollment in Cohort A based on a number of factors, including the prioritization of other product candidates given the competition in this indication, an accelerated approval of combination therapy with pembrolizumab. Our partner in Greater China, Zai Lab continues to enroll in this Cohort B shown here on this slide, where margetuximab in combination with chemotherapy and the checkpoint inhibitors, either retifanlimab or tebotelimab are being evaluated. Turning to our efforts to bring products to market to help both patients with AML we now have 2 investigational bispecific CD123 x CD3 DART molecules. Both are designed to engage CD3 on T cells and CD123, which is upregulated on leukemic blasts and leukemic stem cells in AML and promote killing of leukemic cells by T cells in the absence of MHC restriction. Our current study with flotetuzumab is targeted to a large segment of the AML population representing those patients with primary induction failure or early relapsed disease, a single-arm registration study is enrolling currently. Data presented in December at ASH last year in a population targeted for registration demonstrated that flotetuzumab can achieve mid-20s CR/CRh rate in an intent-to-treat analysis, and over 30% in the primary induction failure population. This compares quite favorably with historical rates of 7% to 12%. More than half of these patients were able to proceed to stem cell transplants with an intent to cure not possible previously because of their inability to achieve complete responses. Enrollment is expected to continue through 2022. Also, we recently announced the submission of an IND application to the FDA for MGDO24, our next-generation molecule is designed to minimize cytokine release while maintaining anticytolytic activity along with incorporating an Fc domain to prolong circulating half light and permit intermittent dosing. Enrollment is expected to begin in the first quarter of '22. Retifanlimab, our anti-PD-1 antibody licensed insight has been advancing nicely in multiple registration-directed studies including ones for anal cancer, merkel cell cancer, MSI-high endometrial cancer and lung cancer as well as in combination studies with novel agents. So far, MacroGenics has achieved approximately $70 million in milestones from this partnership and significant future clinical, regulatory and commercial milestones and royalties would be due to MacroGenics with continued success in this program. I would like to remind you that we are manufacturing retifanlimab for insight for the ongoing studies and will provide some of the commercial supply if approved. Tebotelimab, our tetravalent bispecific DART molecule provides blockade of PD-1 x LAG-3, 2 markers of exhaustion on T cells. Preclinical data in the literature demonstrates editable or synergistic anti-tumor activity in model systems using monoclonal antibodies in combination targeted to these 2 checkpoint molecules. Our own preclinical data demonstrated increased T-cell activating properties by our DART molecule in vitro compared to a combination of individual antibodies to these same receptors. We have conducted a large Phase I dose escalation study of tebotelimab in late-stage patients and did not reach a maximum tolerated dose were treated as high as 1,200 milligrams every 2 weeks. Favorable receptor occupancy and pharmacokinetics were demonstrated at doses between 400 and 1,200 milligrams with a safety profile consistent with those observed with anti-PD-1 agents. And anti-tumor activity was observed in a broad range of tumors, including triple-negative breast, ovarian cancer and lung cancer as illustrated here. Furthermore, we observed encouraging data reported at ASH in late-stage refractory patients with DLBCL with objective responses of over 50% in evaluable patients including those with post CAR-T treatment, 2 of which are in long-term remission following treatment with tebotelimab and subsequent stem cell transplants. We are planning the next stages for future clinical trials with tebotelimab, which we hope to discuss in the near future. The second combination checkpoint DART molecule, MGD019, also tetravalent in structure is directed to PD-1 and CTLA-4. This molecule was designed to achieve all the T-cell activating attributes of Ipi/Nivo combinations but without the antitoxicities normally observed when dose is greater than 1 mg per kg of Ipi are used in patients. Preclinical studies of MGD019 in monkeys demonstrated T cell activation comparable or better to that observed in reported preclinical studies with Ipi/Nivo with a dramatically improved safety profile that enabled dosing of MGD019 at 100 mg per kg in monkeys without dose-limiting toxicities. A Phase I study in late-stage cancer patients demonstrated to be tumor-agnostic showed safety and tolerability up to 10 mg per kg every 3 weeks, not reaching a maximum tolerated dose. Objective responses were seen at 3 mg per kg in patients with castration-resistant prostate cancer and the stable colorectal cancer, a metastatic thymoma in a patient with serous carcinoma in the fallopian tube. The clinically responsive patients included those with extremely low expression of PD-L1 as shown here on the right. Consistent with the salutary effects of this molecule is the observation that MGD019 promotes both CD4 and CD8 T cell proliferation as well as upregulation of ICOS expression on CD4 T cells, which is associated with the blockade of CTLA-4. This occurs in a dose-dependent manner and tracks with the clinical responses observed. As a result of these findings, expansion cohorts are in progress for patients with MS stable colorectal cancer, squamous cell carcinoma the lung, castration-resistant prostate cancer and melanoma with enrollment expected to be completed in the first half of '22. Finally, we ended the third quarter with about $299 million in cash and cash equivalents. As noted previously, current cash and some collaboration payments should provide runway through 2023. We hope to take advantage of additional partnering opportunities in the future like we have done in the past as a way to bring non-dilutive capital to extend our runway and increase our balance sheet. Finally, we have achieved most of the previously anticipated clinical milestones listed on this slide for 2021. Future updates will include the completion of the enrollment of the expansion cohorts for MGC018 and description of next steps, especially regarding the potential efforts in metastatic prostate cancer following our recent discussions with key opinion leaders. Continued enrollment of flotetuzumab in the registration-directed study and the start of the MGD024 study in 2022, completion of the enrollment of 4 expansion cohorts for MGD019 and determination of next clinical studies for tebotelimab, along with follow-up by insight for retifanlimab. And with this, I complete the presentation and look forward to speaking to you in the near future.

Scott, thanks so much for the time today. Really appreciate you having at the conference. Look forward to speaking soon. Take care.

Thank you so much, John.