MacroGenics, Inc. ($MGNX)

All right. Thanks for joining, everyone. I'm Jordan Becker, SMID-Cap Biotech Associate at Barclays. And let's get started with our next session. So it's my great pleasure to have with me Eric Risser, President and Chief Executive Officer for MacroGenics. So Eric, there's been a lot of exciting news recently, but maybe we can start for people who aren't familiar with the story, just a brief overview of MacroGenics and kind of where you are today.

Sure. So thanks, Jordan. I appreciate the introduction. Excited to be here at your conference today. MacroGenics has been around for over 20 years, really focused on next-generation antibody therapeutics for the treatment of cancer. We have 3 core modalities that we leverage, which help drive our proprietary pipeline, includes our ADC portfolio, where we leverage third-party drug linker chemistries, primarily from Synaffix, which is now part of Lonza and integrate that with some of our really world-class antibody engineering capability to deliver what are either first-in-class or best-in-class molecules. We actually have 3 ADC programs in the current portfolio that we've disclosed. We also have capabilities around next-gen T cell engagers, have actually a very broad partnership with Gilead that now encompasses 3 separate molecules that are all T cell-related constructs led by a clinical program that we've disclosed targeting CD123 and CD3, and then 2 other undisclosed programs that are still in preclinical development, one based on a TRIDENT construct that's our proprietary trivalent format, and the other one is another DART program. And then the third modality is our dual checkpoint approach, led by our lorigerlimab program, which is a bispecific blocking both PD-1 and CTLA-4. So very broad portfolio. And as you alluded to, we have a pretty catalyst-rich year ahead of us and a lot of excitement within the company to really drive this portfolio forward.

Amazing. So let's kind of double-click on your ADC pipeline first, and then we'll get into lorigerlimab. So maybe on 026, that's your B7-H3 ADC. Maybe we can start -- you talked about your novel payload. We can start kind of talking about that and how it's differentiated from other payloads in the space?

Sure. Yes. So MGC026, this is our anti-B7-H3 ADC. We're an early pioneer generating therapeutics against this target. And if you think about the ADCs, this really is a system that comprises the antibody, the linker, the payload. We think we've optimized all 3 components with a very attractive B7-H3 binder, which has a very robust internalization. We've done comparative testing, for instance, against the Daiichi Sankyo specificity, see more efficient internalization with our antibody, also has very good differential expression profile given the epitope that we bind to, which limits the normal tissue liabilities. The linker, which is a proprietary construct licensed from Synaffix called the GlycoConnect system. This enables binding to the native glycan of the antibody. It's a site-specific approach, one of the very few ADCs against B7-H3 that leverages a site-specific linker, which enables much more uniform species of DAR4. And then the payload is an exatecan-based payload. So exatecan is about two to fivefold more potent than deruxtecan, which is the operative payload in the Daiichi Sankyo ADC, also has shown to have better bystander killing effect and is also less susceptible to multidrug resistance. So very potent payload. And this program is now progressing into dose expansion. We completed the dose escalation late last year, and we will have initial clinical results presented middle of this year.

Yes. And then I guess on the Phase I trial, is there anything more you'd like to say in terms of the trial design, kind of updates we should expect in mid-2026?

So this will be our first kind of showcase of the clinical data. The only thing that we've guided, and this was in our earnings release on Monday, is across our now 2 clinical programs, 026 and 028, we've not seen any evidence of ILD, which could be an important differentiator given that many of the other assets in this class have shown ILD, including the Daiichi program that had actually a partial clinical hold because of some fatal events associated with ILD. We attribute that potentially to the -- that linker by, again, binding to the native glycan. We aggregate any of the Fc gamma receptor binding. And we believe that, that can actually contribute to some of the nonspecific uptake of alveolar macrophages. And actually, that was work that Daiichi published in the context of their an HER2 program where they, again, attributed some of the ILD that they saw for in HER2 to that Fc gamma receptor binding. So no ILD observed so far of any grade for 026 and 028. We have seen also RECIST responses across both of these programs. So I think we're very well positioned with a target that also we believe is going to be a real disruptor, probably one of the most exciting targets in oncology over the last 5 years. One of the unique features, unlike many of the other ADCs that tend to be more lineage specific, so PSMA in prostate cancer, folate receptor in ovarian cancer, B7-H3 has utility across a number of solid tumors. And you're already seeing some promising early clinical data in small cell lung cancer, castrate-resistant prostate cancer, sarcoma, head and neck, ovarian, cervical, sarcoma. I mean the list is kind of going on and on. So it's a very intriguing target, and we think we have a very intriguing molecule. And even though there are a number of competitors, I think there's enough white space here that we're going to be able to have a meaningful presence in this category.

Very interesting. So you mentioned 2 things, and I want to click on both of those. So obviously, B7-H3 ADCs have shown activity in multiple tumor types. Can you give us a sense -- so are you rolling evenly across these tumor types in this basket trial? Or are you kind of just enrolling into [indiscernible]?

It's a dose escalation that would be a mix of different histologies. And then as we move into expansion cohort, which we've defined, we have 2 ongoing expansion cohorts in tumor-specific indications. Again, we've selected a dose now that we're enrolling those 2 expansion cohorts. We have not yet disclosed the specific tumor types that we're pursuing in those expansion cohorts.

And I mean, given the competition, are you kind of interested in going after already validated tumor types? Or are you interested in going in kind of your own way where there hasn't been.

We haven't guided specifically. But again, the notion is likely we're not going to be going into areas where others are already standing up advanced Phase III programs with small cell lung cancer. You have a number of groups already well into Phase III, in some cases, already running multiple trials, trying to get even to earlier line populations. So that's less likely. It's probably going to be less of that very crowded categories, but areas that are more still emerging.

And then I guess, lastly, on the B7-H3 space, you mentioned that there's a lot of competition, BioNTech, Merck. Can you kind of speak to how you're thinking about development within the space? If you're thinking about doing this alone or your kind of not there yet or how you're thinking about this?

At this point, we're obviously focused on execution on the program. Longer term, we've always been open to partnering. We've had a very prolific history in terms of consummating high-value corporate partnerships. In fact, every year for the last decade, we've done at least one, if not multiple corporate partnerships, and we have very good relationships within all the top 50 pharma companies. So partnering is definitely something we would consider, especially for a target that has such broad utility. We're not going to be in a position to stand up 6 Phase III studies of our own. So partnering definitely would make sense, although it's a question of timing and partner and what's the shape of that relationship going to look like.

Amazing. Okay. So now let's shift to 028. This is your ADAM9 ADC. Maybe we can talk about kind of the target specifically, the history of the target, your history with the target and then go for kind of like what is differentiated about 028.

Yes. So similar to B7-H3, where we were an early innovator with that target, ADAM9 was a target that we were one of the very first groups to mobilize an ADC development effort. We did have a first-generation molecule targeting ADAM9, which was previously part of a co-development alliance with ImmunoGen. In that context, we had identified the target, had a panel of antibodies. They had their drug linker chemistries. In that case, it was a emtansine-based construct, and we took that into the clinic, saw some early evidence of antitumor activity, although never got to the target therapeutic dose levels, primarily because of ocular toxicity that we observed in that early study. And that's a well-known payload-related toxicity, which we saw even in the preclinical setting, but thought we might be able to manage it in the clinic with some supportive care measures and thinking about things like fractionated dosing. Ultimately, that didn't yield the result. We discontinued the program, but we'll apply the learnings from that early effort to our second-gen molecule, which is an ADAM9 binder, one of the most efficient internalizers from all the antibodies that we've screened. And we're leveraging again the Synaffix platform. So it's that same system with a site-specific linker binding to the native glycan, potent exatecan warhead. And this started Phase I about a year after 026, but we'll have data presented second half of this year. So we're kind of closing the gap there. It's a target that's also started to capture the interest of other groups. We've seen at least 1 or 2 others that are now mobilizing early Phase I efforts. But at this point, we're first-in-class and very aggressively moving the program forward.

No, that's great for context. And in terms of the data that's coming up, you guided to second half 2026. Can you give us a sense of what we should expect? And given the history of the molecule, kind of what you're looking for in terms of safety and maybe any efficacy?

So that will be somewhat of a tumor-specific assessment in terms of efficacy thresholds that we'd be targeting. We know the target has a broad expression profile across a number of solid tumors, including a number of GI indications, things like colon cancer, gastric cancer, pancreatic cancer, lung, triple-negative breast and others. So we'll do that assessment on an indication-by-indication basis. Safety, obviously, is what I alluded to earlier, no ILD has been seen to date on 026 or 028. And again, we've been looking for a favorable safety profile, which is pretty consistent with what others have seen for the class, which is important because it does give you the ability to move into earlier line populations and also explore combinations if you have a very strong safety profile. So that's something we're going to be obviously keenly looking for, for both 026 and 028.

Okay. And no ocular safety side effects or anything?

Yes. That really is less of a concern with this molecule given that TOPO1, really that's less of a liability. And again, that was a predictable tox, which we've never seen any issues with ocular tox in the GLP tox work and now in the clinic, that's not really been an issue.

Okay. And so we've gone over 026. We've gone over 028, which I would say you've guided to data in 2026. And you ended kind of this year with around $190 million in cash. Can you kind of give us a sense of how you're prioritizing these programs and what you look for to kind of decide strategically how to move these programs forward?

Yes. And there's a third one in that lineup, 026, 028 and then the next emerging clinical program is 030 with an IND in Q3. Yes, we're well capitalized, and we've had a history of continuing to bring in nondilutive capital in the last 3.5 years alone, we've brought in over $600 million in non-dilutive capital. So the goal will be continue to extend that cash runway. And at this point, we have these programs fully financed to drive them to a PoC inflection point.

Incredible. And you mentioned 030, but let's talk more about that. You have an INDs in third quarter of 2026. So maybe I mean, give us as much as you can kind of an overview of how you're thinking about this third ADC program?

The third ADC, which we have not yet disclosed the target. It is currently positioned as a first-in-class TOPO1 ADC, also has very strong compelling preclinical data package based on the GLP tox, PDX animal modeling and is also a target that has expression across a number of solid tumors, including ones where we think there's still high unmet clinical need. So by design, we've not disclosed the target because we know that it is a very competitive arena, and we have a lot of eyes on us in terms of target selection, but we'll be progressing that one and are excited about the potential of that asset as well.

And can you give us any sense of when we will know the target or any updated information on that?

We'll probably hold off on that as long as we can. So -- probably at the point we get into the clinic, that's probably when we'll have obviously additional information on that program.

Amazing. And so now let's shift to lorigerlimab. Maybe you can give us kind of a history of the molecule and where it is today?

So lorigerlimab, this is our dual checkpoint molecule blocking both PD-1 and CTLA-4. We had actually dosed probably 300 patients plus to date across our monotherapy experience, our combination studies. We are excited about the profile of this molecule that enables, again, co-blockade of the 2 checkpoints. We are able to localize the effect to double-positive TILs, which also potentially helps with the overall safety profile. Based on the early Phase I data, we had patients that had continuous treatment for over 2 years. And in that early clinical experience actually only saw 1 or 2 colitis events, which is unheard of when you think about the ipilimumab plus nivo experience where ipi is typically only administered for 2 or 3 cycles. And even with that short course, there's pretty profound AEs. More recently, on our LINNET study, and this is our gynecologic cancer study that includes 2 populations. One is serious ovarian cancer. These are platinum-resistant ovarian cancer patients. Other cohort was clear cell gynecologic cancer. We've enrolled about 41 patients. We have seen some unanticipated AEs, specifically 4 patients that had grade 4 events. In one case, the patient actually died. It ultimately was classified as a grade 5 event. Those included 2 cases of thrombocytopenia, one case of myocarditis. These are, again, toxicities that you do typically see with checkpoints. And then the fourth case was a grade 4 neutropenia. It's a very complicated case, had concurrent septic shock. Ultimately, that patient was the one that died. So in an abundance of caution, looking at that data, confirming with the DMC, we decided to pause enrollment of the study. FDA subsequently concurred and put us on a partial clinical hold, meaning that we're not going to continue to enroll patients, but we will continue to dose those patients that are still on study. And right now, we're actively working with the FDA, trying to coordinate and address their questions and hope to resume enrollment as quickly as possible.

And so you guided to updates on that conversation around mid-2026?

Mid-'26, we'll have a holistic update on the program, which could include regulatory status. Obviously, we've talked a little bit about AEs and safety, have not talked about efficacy results to date. So obviously, risk benefit is something you always got to look at in tandem. And then obviously, some early thoughts on go-forward development strategy. So that will be part of our mid-'26 update.

And then one more on, lorigerlimab. Given the safety signals that you've seen, are you considering experimenting with maybe different dosing schedules, anything like that? Like how are you thinking about that moving forward?

That could definitely be -- I mean, right now, we're in the fact timing stage. Again, the concentration of these AEs in this specific study population was a little bit unanticipated. So trying to understand, is there something unique about this population. We know they were all platinum-experienced patients, which typically -- that's a fairly harsh regimen that depletes the bone marrow and potentially could drive some of these AEs. But we're looking at measures in terms of safety monitoring, how do we screen patients at baseline to make sure they're appropriate candidates for the study. You mentioned dosing that could be, again, one of the areas that we could look at. This study was dosed at 6 mgs per kg every 3 weeks. We know from our Phase I data that even with doses as low as 1 mg per kg, we actually had full P1 receptor occupancy. So there may be an opportunity to explore alternate dosing as well.

Okay. Amazing. And so now let's shift to your partnered programs. I guess, first, kind of high level, you mentioned that you're very well capitalized through these kind of important inflection points for your ADC pipeline. Maybe just briefly talk about the nondilutive capital you get from these partnerships and how that -- how you're using that to kind of finance the development of your own internal pipeline and how you think about prioritizing both of those?

Yes. So I mentioned we brought in lots of nondilutive capital. There still are quite a number of kind of latent milestone payments that could be paid to MacroGenics that encompasses the Gilead relationship, where across the 3 molecules I described, there's $1.6 billion of future potential milestones. Again, some of these are going to be more the bio bugs that might be more challenging, but some of these we think are going to be more likely near-term prospects. Incyte, we partnered with them several years back on our ZYNYZ program. That's now the approved PD-1 asset that they're commercializing globally. We've seen some very encouraging regulatory updates on that program, including an approval in Japan in December. And then just last week, they garnered an EU approval in frontline anal cancer. So that program continues to grow, and we have $540 million of potential milestones. There's also a royalty embedded in the ZYNYZ program. We monetized some of that last year with Sagard Health through a cap structure. So they paid us $70 million, have an opportunity to earn 2x that investment, but then all the residual royalties would revert back to MacroGenics. And those are, as described publicly, 15%-to-24%-tiered royalty rates. And then Sanofi has another MacroGenics originated asset called TZIELD, also an approved asset for type 1 diabetes, and they're pursuing global commercialization for that program. And we have $330 million of residual milestone payments that could get paid out there. That also has a royalty embedded in it, although we did monetize a component of that with DRI capital previously, but that also has a -- what I would call a soft cap mechanism that after they achieve a certain threshold of revenue, additional -- a portion of the additional royalties would revert back to MacroGenics. So that gives us great optionality in terms of securing additional capital. And then obviously, there's always the opportunity to consummate new BD partnerships.

Incredible. It's very impressive kind of the nondilutive capital that you can bring in to kind of finance everything else that's going on. Okay. So before we wrap up, this has been great. Thank you for coming. Is there anything you would like to leave us with?

I think 2026 was going to be an important year for the company. I stepped into the CEO role last August. The team has really rallied. There's a lot of excitement within the company in terms of these product candidates that we're developing, the promise to really create -- really transformative medicines for patients, and the team is really looking to deliver for shareholders in 2026.

Amazing. Well, thank you, Eric.

Thank you.