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

So, good morning. Welcome to Barclays Global Healthcare Conference in Miami and raise your hand or e-mail me if you have questions. My name is Peter Lawson. I'm one of the mid-cap biotech analysts at Barclays and really delighted to host [indiscernible], President and CEO of MacroGenics.

So with that, I'm just -- I guess, love to start the questions on your B7-H3, and I guess, clinical trial for the Phase II, kind of how is that enrolling and when should we expect that to be enrolled?

Sure. Yes. First of all, Peter, thanks so much for the invitation today. And so many of you know, we've been pursuing multiple molecules towards B7-H3 with a lead molecule called vobramitamab duocarmazine, we sort of note this in short as vobra-duo. It was used to be called MGC018. This is an antibody to a particular epitope of B7-H3 with a cleavable linker called duocarmycin. When taken up into the cell, the linker gets cleaved and the toxin alkylates DNA promotes apoptosis gets released and kills local cells in the microenvironment, which are both the dividing tumor cells as well as the vasculature and TReg cells in that environment. The study TAMARACK, we have continued to initiate sites. In the U.S., it's still in early phase of the study, we have approval in 4 countries, and we'll be expanding the number of countries where we will be able to initiate sites. The plan is to enroll in this Phase II portion of the study, which is being testing 2 doses slightly lower than that was used in the expansion cohort at 2.7 mg per kg on a Q4 weekly basis and 2 mg per kg on a Q4 weekly basis. The plan is to hope to enroll a majority of those patients this year and obviously into '24, and we're targeting in the second half of '24 to be able to have some data available.

Okay. Thank you. And then maybe just as we think about the trial design, I know we've [indiscernible] and they've kind of talk through what would -- what they were to see additional asset, just your thoughts around why you use Androgen Receptor axis-targeted Agent versus [indiscernible]?

Yes. So again, when we first designed the study, as many of you know who have focused on prostate cancer, the landscape is continuously changing in terms of human paradigm, both for metastatic estrogens and prostate cancer as well as actually hormone sensitive arm of the study. It's -- we're really in a major shift this year or next year. Obviously, Pluvicto got approved last year. There's been obviously some difficult uptake because of a lack of enough drug obviously there. Obviously, some studies of adding carb inhibitors [indiscernible] that's not have been a repair issue. So what we have always said is that we would continue to evaluate what the appropriate standard of care would be at the time we complete the Phase II study and then pick the right control group at that time, which, again, as we say, is likely to be in the second half of next year. At the time, we had decided on taking an Androgen Receptor axis-targeting Agent as a control, there were multiple other studies using this as a control and has historically have been done. But as all advances in patient care proceed, you have to adjust appropriately for that. And so we will be looking towards next as taking the right control group when we move into a Phase III study.

Got you. So that's something you'd need FDA sign off on.

Well, we had already told the FDA in the design of the TAMARACK study that we would get -- go back to them after we had the Phase II data to tell them which dose we were moving forward with and what we would do with regard to the control population. But they -- again, they had listened to us about that. They didn't have any better suggestion about a control when we discuss the use of an [indiscernible] culture.

With that which, in any way, kind of delay the trial with it or?

No, it shouldn't. But again, we'll have to see where we are at that time.

Perfect. Thank you. And then what does success look like to you in that portion of the trial?

Well, then, we don't know how the landscape might change vis-a-vis fit come the end of next year. Are these patients going to be further beaten up because as you know, there is certainly some effects on the bone marrow compartment. If we have those patients who have seen Pluvicto versus those who don't. We'll have to make an assessment. But in terms of we would be looking clearly at a radiographic PFS improvement. Historically, the control have been somewhere around 4 months or greater. Clearly, for instance, the CARD study for [indiscernible], we were able to get to 8 months of PFS in those. So we would look at obviously that range for improvements with this drug at least.

I guess the most obvious competitor there is Daiichi's molecule, kind of what should we take from that data, what kind of feeds into your kind of how should we compare and contrast that data set -- those data sets.

So, I think you have to be encouraged. I mean, as you recall, when we've had conversations historically, we were the only company working on B7-H3 at the time people say, why are you working and nobody else is, and now that you have a party like Daiichi that has had very good data, they have indicated particularly moving forward in small cell lung cancer, some very nice data, a small subgroup. They've also had confirmed sometimes data in prostate cancer, although what we had observed and reported was that we were having PSA50 reductions, about half of patients as we're about 1/4 of the patients. So we were faring a little bit better with regard to PSA50. So we'll see -- what I see is a confirmation not only of Daiichi pursuing B7-H3 is now a whole host of other companies, preclinical or early Phase I study pursuing other technologies [indiscernible]. So I think people have come around to recognize what we had seen very early on the value of this, both in terms of its expression pattern and a very deep opportunity because [indiscernible].

How should we think about -- how that market breaks up with Daiichi? Is it kind of when it takes all or...

I definitely do not see that being a winner take all. Number one is that as point out is that, again, almost all solid tumors express that. And so the ability for multiple technologies working in different tumor types, different lines of therapy, different combinations, different linker toxins or offer opportunities for better patient care across the board. So I think this is one of those unusual situations that there can be multiple winners here going forward. In that vein, as you know, we are building other B7-H3 molecules with other technologies. And we have the FC-engineered enoblituzumab molecule doing some very good data that was presented last year by our academic colleagues at Hopkins in the use of enoblituzumab or FC-engineered B7-H3-targeted molecule, different epitopes than vobra-duo that showed in neoadjuvant setting a beautiful infiltration into the prostate of patients before they had their prostate taken out were treated with enoblituzumab. And in a number of these patients, their Gleason score had reduced at the time when the prostate was taken out. So we're actually in discussions with them on the plans for study going forward, Phase II study, a controlled study potentially using enoblituzumab in a neoadjuvant setting. So nothing definitive yet, but it's something we're in discussions with.

Got you. Thank you. And you're seeing -- will prostate be the first approval for you, how far behind Daiichi could you be.

Well, I think prostate is certainly what we're focused on as we had set out from a corporate standpoint, is we want to both manage the cash going forward and prioritize programs. And as many of you know, we have a very deep preclinical and clinical pipeline now. And so we had to make some choices both in terms of which molecules we would prioritize number one, and then which indications going forward. That takes nothing away for what we see as a very broad opportunity for the molecules we've already talked about going to other tumor indications, which we will intend to do when we have enough capital moving forward.

Got you. Thank you. Maybe, I guess, the next molecule, we kind of think about PD-1 CTLA-4, kind of what should we expect there for the combination with B7-H3.

So as you know -- sorry.

Sorry. Yes. Supposedly this year, we can update what should we expect to see?

So we are very excited about the opportunity here. As many of you know, we just recently presented data at ASCO GU on the activity of lower [indiscernible] PD-1 CTLA-4, which is constructed as a tetravalent bispecific 2 binding sites to PD-1, 2 binding sites to CTLA-4. This is put on a backbone of an IgG4. The idea here is that you would get high avidity of that molecule to co-expressing cells of PD-1 CTLA-4 maintain all the PD-1 blockade activity as well as CTLA-4, but avoid the destruction of CTLA-4 bearing cells alone that are a marker for TReg cells, which we felt was contributing to the particularly colitis that one sees in ipilimumab-nivo combinations that have been tested requiring ipi to be reduced to 1 mg per kg. The data was -- we believe was quite remarkable. What we showed at ASCO GU is let's say, a 50% reduction of approximately 29%. This is in a cohort of 42 patients of the 35 evaluable patients. We had 9 patients with confirmed PRs and all those patients 9 out of 9 at PSA 90s or greater. And all the patients who are still on therapy are on over a year now. So we have both longevity of response, a remark, I mean you just don't see a great correlation with PSA 90 and the objective response. And with a safety profile that we see as looking like a PD-1 blockade. So [indiscernible] we have an earnings call tomorrow. We'll provide updates which we promised by the end of this quarter of next study going forward of Phase II study of [indiscernible], we will outline what that study will look like tomorrow.

Any color on the [indiscernible] or...

There'll be a lot of information on the call. So I think it's worth listening [indiscernible].

Okay. Perfect. And then kind of -- as we think about data this year, is that something we're going to get on the earnings call of like how much data we're going to see...

What we've said is, is that we have an ongoing study of the 2 molecules I just described to you -- 2 of the 3 molecules I just described to you, which was the vobra-duo combination with [indiscernible], there's still a dose finding whether we see day later this year or next year is all to be determined, we still have to figure out what that combination of those looks like. With regard to the call, it will be a lot of opportunities that you see unfolding for the company over the course of the next year going forward?

Got you. And you mentioned local [indiscernible] with your comment -- just kind of what's an acceptable safety profile look like when you combine B7-H3 [indiscernible].

Well, clearly, what we've seen from the individual drugs alone, they don't seem to have much in terms of over toxicity. And so what we're looking for is a profile that is improved by that combination. Remember, mechanistically, because they're working by different arms of the immune system potentially there may be the opportunity for both lowering doses to get a [indiscernible] more synergistic effect but there's always a possibility of toxicity composing with that combination that we do not foresee, we'll have to see as we move forward with us.

Got you. Thank you. I guess before we get to the end, I definitely want to ask your exposure to STB and also regional banks and, I guess, nonbank lenders as well and kind of the [indiscernible] there...

Knock on wood, obviously, we're starting to see the issues unfolding with regard to STB as well as the smaller regional banks, but we have no exposure or we have no money with them, nor with other regional banks.

Got you. Thank you. And then just as we think about the financing deal you did as well how does that extend cash runway, so I guess you [indiscernible]?

So we are -- have been very successful bringing nondilutive capital to the company. We've highlighted that over the course since our IPO 9.5 years ago, we had or over $1 billion of non-dilutive capital into the company through various partnership deals and government contracts. Overall, just to refresh your memory, the second half of last year, we brought in $150 million of nondilutive capital. Last week, we talked about a deal with DRI to monetize royalty that we have had from the proven asset purchase of [indiscernible]. And we announced that we had $100 million of cash that will be in the bank, probably later today. And in addition, another $100 million on that deal for DRI with particular milestones to be achieved now that there was announcement yesterday of the purchase by Sanofi of prevention. We think that milestones that both in terms of DRI that I just described, the additional $100 million. There's also a topper on that where if a certain sales point is achieved above that, we will share in the residual royalties on additional sales there from the DRI side. But as you might remember from our deal with prevention, we had additional milestones, both clinical regulatory and commercial milestones, which together on just the prevention side is $335 million between the regulatory and commercial. So you take the $335 million, the $100 million, I just talked about potential in DRI, that's $435 million. And then there's a potential topper on that, as I described to you with regard to particular sales given that now Sanofi has just paid $2.9 billion for prevention, they clearly have great expectations on sales. I think a lot of these milestones could be achieved or all of these potential milestones no longer are a buck for us. The really potentially achievable milestones. If you just think about the preventive side, and the DRI side of our portfolio from a future cash basis somewhere $400 million or $500 million on the [indiscernible] I think [indiscernible].

Have you changed I guess, will you change...

We'll talk about that tomorrow. So what we have said as of -- at JPMorgan, we said our current cash position of what I just described with DRI who took us through a -- so we will obviously extend that on our call tomorrow.

And I guess, the potential change in cash guidance, will you think about accelerating rent as well?

I think that this will provide opportunities to expand some of the work we're doing. What you might not have noticed this morning, there was an announcement by [indiscernible]. Remember, last year, we did a deal with them with 3 slots for [indiscernible]. When I announced at JPMorgan was that of those 3 slots, we plan to have a money to keep for a new [indiscernible] this year and then actually next year, deal with the expansion of that collaboration, where we have now 4 new slots, 7 slots for ADC molecules coming from our preclinical portfolio. So we have been always is ambitious we would not have taken on this opportunity if we did not know where we want to go with this, both in terms of potential targets to pursue.

Would things like [indiscernible], would that be included in?

Well, so that is certainly a possibility on the table for us to pursue other linker toxins for [indiscernible].

Perfect. I'd like briefly to B7-H3 just with the data for Daiichi in small cell lung cancer, kind of how that -- is that something that would influence an expansion?

Obviously, that's an important indication, although a small indications when we did an evaluation of a H scores across all the tissues we looked at also was not 1 of the highest ones going forward. So we're very nice to see that they had a very good data in that regard. In our own studies, we only had 1 patient at a lower dose in [indiscernible] happens to say that, that patient did very well with also lung cancer patient I recall was on 2 mg per kilo typically based on those installation that patients had tumor reductions, did not really get an objective response, but actually had been on therapy for over 6 months, which for patients with small cell lung cancer is quite remarkable. So with regards to small cell lung cancer, we have an investigator who is interested in working with us on enrolling some of those patients right now, but we don't have any near-term plans to have a controlled study with that indication. But we have other tumor types that we have just [indiscernible].

[indiscernible] thank you so much.

[indiscernible].

Thank you.