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

All right, good morning, everyone. My pleasure to kick things off this morning. My name is Eric Risser. I'm the Chief Operating Officer at MacroGenics, and I'm joined by my colleague, Jim Karrels, our Chief Financial Officer. Moving to the next slide here. I'm just going to quickly note that I'll be making some forward-looking statements today. Please refer to our SEC filings for additional details on risk factors that will impact our business. So for those of you that don't know MacroGenics, I'm going to quickly provide some overview of the company then I'm going to dive into a little bit more detail on 5 of our specific programs. So MacroGenics is a developer of next-generation antibody therapeutics. We're committed to discovering, developing and delivering to patients what can be life-changing medicines for various cancer indications. We have a promising pipeline that comprises 4 clinical stage programs, and these 4 programs actually span 3 distinct mechanisms of action. We incorporate external drug linker chemistries that we've licensed to support our ADC pipeline. We also have a homegrown platform for delivering bispecific and trispecific molecules, that's referred to as our DART and TRIDENT platforms. And these have actually been applied in a couple of different modalities, including T-cell engagers, but also enable co-blockade of different immune checkpoint molecules. One thing that I'd like to reference is that we're not just a technology boutique, we are really committed to developing innovative medicines and take them all the way through the development process so we can translate these early research insights. It's a very robust product candidates, they navigate all the complexities of regulatory CMC issues to get actually drugs on the market. We have had 3 assets that originated in our early development efforts that are now on the market in the U.S. MARGENZA for late-line HER2-positive breast cancer, TZIELD for type 1 diabetes and ZYNYZ, which is an anti-PD-1 antibody that was actually approved last month in frontline anal cancer. These 3 assets are being commercialized by third-party pharma partners and specialty pharma companies, but we still maintain a residual economic interest in all 3 of these assets. We're very well resourced to execute against our plan with a cash runway that now extends through the first half of 2027. That includes the $154 million in cash and cash equivalents that we had as of March 31, also includes anticipated and projected milestones from projected partners, additional savings from some ongoing cost reduction initiatives. And notably, this morning, we announced the transaction with Sagard Healthcare Partners that brought in an additional $70 million that transaction is highlighted on this slide. So ZYNYZ is an asset that was originally approved in Merkel cell carcinoma in 2023. But as I mentioned last month, it also garnered approvals in frontline anal cancer. The asset was originally licensed to Incyte in October 2017. You can see we have had meaningful economics realized through that partnership. And through the Sagard transaction, we now recognize an additional $70 million of consideration that we've already received [Technical Difficulty] will be paying royalties to Sagard on future global net sales of the asset. You can see the royalty rates are tiered, 15% to 24%. And once Sagard realizes a 2x multiple on their investments, so $140 million. Any residual royalties would revert back to MacroGenics. So in terms of our pipeline, we have a host of proprietary programs where we retain global commercial rights includes lorigerlimab, the PD-1 CTLA-4 bispecific molecule, we're very excited about this molecule. We're actually developing it in 2 different indications, both prostate cancer in combination with docetaxel as well as in ovarian cancer and various clear cell gynecologic cancers. We have 3 ADC programs behind that. These employ the Synaffix’ platform. This is a Dutch company that was acquired by Lonza. We were an early adopter of the platform and actually got broad access to support multiple development programs, including the 3 that are listed here. 026 is a potential best-in-class molecule targeting B7-H3, and again leverages TOPO1-based payload and their site-specific linker technology. B7-H3 is a very exciting target. Even the recent ASCO presentation, a number of companies have highlighted its broad potential across many different solid tumors. 028 and 030, these are both potentially first-in-class molecules. 028 is in Phase I dose escalation. And again, it targets ADAM9, which is also expressed across a number of solid tumors, including several GI cancers as well as lung cancer. O30 is an undisclosed target. We're looking to take this to IND in 2026, and we'll have additional disclosures as we get closer to that event. A number of partnered programs, including the 3 commercial assets I mentioned, and we also have a T-cell engager molecule called MGD024, which is subject to an exclusive option agreement with Gilead, which was [Technical Difficulty] in October of '22. And again, about a year after that partnership was announced, Gilead expanded the relationship with MacroGenics and added a second bispecific molecule, which is listed here on the bottom. Again, a bispecific that is being developed for multiple solid tumor indications. So to drill into a little bit more detail, I'll start with lorigerlimab program. This is our bispecific immune checkpoint. It has a 2x2 configuration where they for -- PD-1 to binding moieties for PD-1, two binding moieties for CTLA-4. Really excited about the potential, this probably could be almost a pipeline within a product where it has very broad utility across many different indications. We've already started exploring utility and prostate cancer, the ovarian cancer study that we've recently initiated. We have some ISTs that are also initiated, including one in cervical cancer. This can be an age that potentially could be used both as a monotherapy but also the backbone therapy to support combination opportunities. Some of the early clinical results that we presented at ASCO GU in 2023 was the monotherapy experience in castrate-resistant prostate cancer. We saw a very provocative signal in this study both encouraging safety profile that meaningfully differentiates from what Ipi/Nivo combinations have shown in the past and also saw a very provocative efficacy with a confirmed ORR of 26% and PSA50 reductions in about 29% of the patients. The LORIKEET study, which is the name of our randomized Phase II study in prostate cancer fully enrolled late last year, and I'll talk a little bit more about the design of that study. We did have -- through the independent data monitoring committee, a recommendation continue to proceed based on an early futility analysis in February of '25, and we expect to provide a clinical update on this program in the latter part of this year. We also recently initiated the LINNET study, which is the name of our monotherapy study in ovarian cancer as well as clear cell gynecologic malignancies. So the early Phase I experience I alluded to that we presented at ASCO GU, was highlighted here. We had 42 patients that were treated, these were typically a late-line population. Actually, 50% of the patients fell into -- what was either fourth or fifth line therapy. The vast majority of these patients had prior exposure to both docetaxel as well as AR inhibitor. And you can see they had extensive tumor burden with 95% of the patients actually having bone metastasis. On the right, you can see in the swimmers plot that we had very good durability with some patients having continuous treatment over 2 years. So that's really remarkable, especially when you consider the early experience with Ipi/Nivo in the CheckMate 650 study. In that case, [ Ipi ] was only delivered for 2 or 3 cycles. And even with that short duration, they saw a profound toxicity with both grade 5 events with colitis and pneumonitis. Again, we haven't seen any Grade 5 events and notably only 1 or 2 episodes of Grade 3 colitis in our entire safety population which is over 120 patients. So very good that we can see continuous blockade of both PD-1 and CTLA-4 and in some cases, that extending for over 2 years. The efficacy profile is shown here with the left panel showing those patients with measurable disease, so about 35 patients where you saw a confirmed ORR of 26%. On the right panel, you see those patients with PSA reductions. So here we profiled the full cohort of 42 patients. And what we saw also interestingly was that all the patients with an objective response had a deep PSA declines of over 90% reduction. Next slide is just reiterating some of the safety. And this is, again, in the broader population that includes both prostate cancer but also some other solid tumors. Overall typical kind of a profile that you see with immune checkpoints. There are some immune-mediated events, but the most frequent AEs were more of these constitutional symptoms, fatigue, rash, pruritus, and as I mentioned earlier, things like colitis, which tends to be a hallmark of anti-CTLA-4 therapy, we really saw very low incidents there with only 1 or 2 Grade 3 events reported in this Phase I population. What we also had done in this study, we incorporated a number of pharmacodynamic markers again, to underscore the utility and the activity of this agent. We saw very good blockade of PD-1 at our recommended Phase II dose, which is 6 mgs per kg on an every 3-week regimen. We also saw good evidence of Ki-67 activation, which is a marker for T-cell proliferation. And we also saw ICOS upregulation, which is a marker for CTLA-4 blockade. So we're very excited to see that the mechanism here is really driven by this combinatorial approach and the fact that we can actually localize the activity to these double-positive TILs, and again, avoid some of that systemic toxicity, which is again reflected here with the very encouraging safety profile. So the 2 trials I alluded to earlier are shown here in a little bit additional detail. So LORIKEET this was a randomized study with 150 patients, it's a 2:1 randomization schema where we're delivering lorigerlimab in combination with docetaxel, which is a standard of care, especially in patients that have already progressed on a prior ARAT therapy. And then the control arm here is docetaxel monotherapy. Study fully enrolled late last year, and the primary endpoint is radiographic progression-free survival. So it is a time to event end point, and we're continuing to accrue those events and hope to provide an update on the status of this study later this year. The second study that I alluded to is the LINNET study. This study actually has 2 arms, one focused on high-grade serous ovarian carcinoma. That includes up to 40 patients, and we'll be administering lorigerlimab as a monotherapy. The second arm is focused in clear cell gynecologic cancer, and that's -- we're exploring a subset of about 20 patients. That's a rare form of gyn cancer, and it actually is typically much more aggressive form of disease with worse prognosis for patients, and it's also a disease that typically is less susceptible to platinum-based chemo and potentially more susceptible to immune therapy. So we're very excited to see if we can see an early and provocative signal in that population that could potentially support an accelerated approval path. So switching gears, I'll talk a little bit about the ADC portfolio. Again, the 3 molecules that I'll describe are all leveraging the Synaffix’ drug linker technology. The first asset is MGC026, and that's directly against B7-H3, as I alluded to earlier, a lot of excitement around this target. There are a number of groups that are also developing ADCs. And actually, to date, there's been clinical validation established by some of these competing or programs across 6 or 7 indications, including small cell lung cancer, non-small cell lung cancer, prostate cancer, sarcoma, esophageal, nasopharyngeal cancer and actually the list has continued to grow, we see this market as one where there won't be a winner take all, but there probably will be multiple groups that can establish a beachhead just given the expansive nature of the indications that over express B7-H3. We are -- we do think there are some differentiating features with our drug linker approach that we licensed, including the GlycoConnect linker that enables you to bind to the native glycan, by doing that, you essentially have no Fc gamma receptor binding. And one thing that has been noted in the literature and there was a study published back in 2020 in Cancer Science, which looked at Trastuzumab Deruxtecan and noted that some of the lung toxicities that were observed were associated with non-targeted uptake in the alveolar macrophages, and that was mediated by Fc-gamma receptor binding. And again, in this case, because you bind that native glycan to really aggregate any binding to the Fc receptors. We also incorporate this Hydraspace linker that enables us to bind to more hydrophobic payloads, which would include exatecan. And then the payload itself, as I mentioned, is exatecan which does have some salient points of differentiation when compared with deruxtecan, which is the payload that is incorporated in the Daiichi Sankyo molecule. First, it's more potent. So we've seen in some of the in vitro models, 2 to 5 fold higher potency. It's less susceptible to [indiscernible] mechanisms as well as multidrug resistance, and also has superior cell permeability that potentially affords better by standard killing. This molecule is in the Phase I dose escalation. We'll be kicking off several expansion cohorts in selected solid tumor indications, latter part of this year. This slide just highlights again some of the comparative advantages that I noted. So exatecan relative to SN-38, which is the payload employed by Trodelvy and then deruxtecan, which is, again, the workhorse payload that is used in many of the Daiichi Sankyo molecules against a number of different targets, including B7-H3, and as I noted, better potency, the linker which binds to the native glycans and the benefits of potentially avoiding multidrug resistance. There's been a number of preclinical studies showing the [Technical Difficulty] of [ SYNtecan ] relative to deruxtecan. And what's shown here on the bottom is some data generated by Synaffix that was presented at World ADC in 2023, which shows that we can outperform with the SYNtecan epay load trastuzumab deruxtecan molecule, even one that has a higher DAR. So in this case, it was a DAR8 molecule employing the deruxtecan payload versus a DAR4 molecule with exatecan. This is some of our own data. So some in vivo models, both a lung model shown on the top panel and a melanoma model. Both of these are relatively high expressor cell lines for B7-H3. And you can see with a single dose in a very good control over tumor growth and reduction, and again, kind of dose proportional increase in control. What we've also done is actually profiled some of the other antibodies, including the Daiichi Sankyo antibody have shown that our binder has better internalization properties versus some of these other molecules. So we're very excited about both the antibody, the linker and the payload. And ultimately, obviously, we're hoping that we'll be able to see encouraging activity in the clinic as we move into the expansion cohorts. The second molecule I'll highlight is called MGC028. So this is a molecule that targets ADAM9, A Disintegrin and Metalloprotease 9. This is a type 1 transmembrane protein, and there's been a lot of literature suggesting that dysregulation of ADAM9 is associated with tumor progression and metastasis. It's also been shown that there's over expression of this target across a number of solid tumors, and there is association of over expression with both severity of the disease as well as overall outcomes. Same overall drug linker that I just highlighted for 026, again, a DAR4 construct with the same linker, the same Hydraspace polar spacer and the same exatecan payload. This is a molecule that actually follows on the heels of a first-generation molecule that was called IMGC936, also was taken into the clinic. We did see some early evidence of activity in patients but there were some dose-limiting toxicities related to ocular tox, which we attributed to the platform, that first-generation molecule was based on a [ metanzine-based ] payload. And then again, that's a well-known class toxicity, we haven't seen any ocular events in any of our preclinical models. And again, that was a toxicity that was, in fact, predictable based on the early [ cyno data ] with our first-generation molecule. So we're very encouraged by this overall molecule. It's in Phase I, we just initiated earlier this year, progressing very nicely. We have a number of very committed investigators in this study, and they're starting to move through those early dose escalation cohorts. Here, I profile some of the, again, salient features of the target, including some IHC data. On the left panel and you can see across a number of GI cancers, including pancreatic cancer, gastric, colorectal cancer, very nice expression profile. And then also in adeno non-small cell lung cancer, very nice expression profile. We've done actually some comparative testing as well, looking at ADAM9 versus other targets. They are, for instance, over expressed in GI cancers and see a really encouraging profile here with very uniform staining, less heterogeneity versus some of the other targets that we've looked at and actually very broad expression profile. So one example would be a target like CLDN18.2, which is also being pursued in a number of GI cancers. And we think in some of the comparative analysis, ADAM9 actually stacks up very favorably. That's also been shown in some of the PDX work on the right-hand panel across a number of tumor types, colorectal cancer, panc, lung, you can see very good control over the tumor with 2 doses administered 10 mg per kg. What's also interesting in some of these PDX models, we have seen patients where they have not been responsive to prior [indiscernible] therapy, but do show very profound response in these animal models when treated with MGC028. Next up is our MGC030 molecule, so again this one, we've not disclosed the target also based on the Synaffix platform, an exatecan-based molecule, and we're making nice progress completing some of the IND-enabling studies and hope to submit an IND in 2026 as we get closer to that, we'll provide additional disclosure around this program. So again, switching gears, I'll talk about a third modality, and this is really the T-cell engager, and we've had a number of molecules that we've [Technical Difficulty] this is a CD3-based bispecific with monovalent engagement of CD3, monovalent engagement of CD123, which is broadly expressed in leukemic stem cells. We actually had an earlier generation molecule which did not have an Fc domain. So the advantage of this molecule is it does have an Fc domain, which enables intermittent dosing scheme of every week or every 2 weeks. And we've also detune the CD3 binder here actually changed the whole kinetics of the binding of that CD3 arm that also mitigate some of the cytokine release potential that we saw with some of our earlier first-generation molecules. So this molecule is an option [indiscernible] agreement with Gilead that we entered into in late 2022. It's going through dose escalation, and again, given the potency of this class of molecule, we did employ naval dosing, so starting at very low doses and then slowly graduate in terms of higher doses. So that's ongoing, and disclosure here is, again, subject to Gilead making a decision around this molecule. They have an exclusive opt-in right, which they can exercise at some predefined time points during the course of the Phase I study. So a lot going on at MacroGenics. And as I mentioned, we'll have a number of inflection points and data updates over the course of the next year or 2. Lorigerlimab, will have our clinical update latter part of this year and then 026, 028 both progressing nicely in their Phase I studies and we'll be continuing to advance additional molecules, including 030, which will be our next IND. So our research team continues to be a very prolific group with -- on average, every 12 to 18 months, they've advanced 1 new IND. And then we'll have additional updates around some of our partner programs, including the 2 commercial assets that are highlighted here. So ZYNYZ, really excited about the fact that they garnered additional approvals in frontline anal cancer. That was actually some data that they highlighted ESMO last year at the Presidential Symposium as potentially practice-changing data, and then TZIELD which is a program that's now partnered with Sanofi. Sanofi has guided that the latter half of this year, there'll be multiple regulatory decisions related to additional indications, potentially moving into the early onset type 1 diabetes population and potentially approvals in other geographies outside the U.S. And as I mentioned at the beginning, we're very well positioned with a cash runway that now extends through the first half of 2027, that includes the $154 million that was disclosed as of March 31. Additional anticipated projected payments from some of the existing partners, some additional cost savings from some ongoing cost reduction initiatives, and then the Sagard deal that was just announced this year. What I'll also note, which is, again, a real tribute to our company is the ability to continue to finance the business through non-dilutive sources of capital. And actually, over the last 3 years, we've raised over $550 million from various partnerships and milestones that we recognized. So really tremendous effort from the organization. And what I'll also say is this is actually the tenth consecutive year that we've announced the transaction, at least 1 transaction in some cases, more than 1 transaction that's brought in additional non-dilutive capital. So extraordinary consistent effort and track record there, and you can see that in terms of the revenue that has been generated and the ability to kind of manage the burn and continue to extend the cash runway. So with that, thank you for your attention, and we look forward to providing additional updates on the company over the course of this year. Thank you so much.