MacroGenics' (MGNX) CEO Scott Koenig on Q3 2018 Results - Earnings Call Transcript

About: MacroGenics, Inc. (MGNX)
by: SA Transcripts

MacroGenics, Inc. (NASDAQ:MGNX) Q3 2018 Earnings Conference Call November 7, 2018 4:30 PM ET


Jim Karrels – Senior Vice President and Chief Financial Officer

Scott Koenig – President and Chief Executive Officer


Jonathan Chang – Leerink Partners

Peter Lawson – SunTrust Robinson Humphrey

Umer Raffat – Evercore

Debjit Chattopadhyay – H.C. Wainwright

Samantha Semenkow – Citi

Stephen Willey – Stifel

Boris Peaker – Cowen


Good afternoon. We will begin the MacroGenics 2018 Third Quarter Corporate Progress and Financial Results Conference Call in just a moment. All participants are in a listen-only mode at the moment, and we will conduct a question-and-answer session at the conclusion of the call.

At this point, I will turn the call over to Jim Karrels, Senior Vice President and Chief Financial Officer of MacroGenics.

Jim Karrels

Thank you, operator. Good afternoon, and welcome to MacroGenics' conference call to discuss our third quarter 2018 financial and operational results. For anyone who has not had the chance to review our results, we issued a press release this afternoon outlining today's announcements, which is available under the Investors tab on our website at

You can also listen to this conference call via webcast on our website, where it will be archived for 30 days beginning approximately two hours after the call is completed.

I would like to alert listeners that today's discussion will include statements about the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our annual, quarterly and current reports filed with the SEC.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in future, we specifically disclaim any obligation to do so even if our views change, except to the extent required by applicable law.

And now I'd like to turn the call over to Dr. Scott Koenig, MacroGenics' President and Chief Executive Officer.

Scott Koenig

Thank you, Jim. I'd like to welcome everyone participating via conference call and webcast today. Thank you for joining us. During the third quarter of 2018, we made significant progress on several fronts and I'm happy to provide an update that is focused on our most advanced product candidate and our financial position.

But before I do so, let me first turn the call back to Jim who will review our financial results for the quarter.

Jim Karrels

Thank you, Scott. This afternoon we reported financial results for the third quarter, which highlight our strong financial position as well as the considerable progress we've made over the past year and its most recent quarter.

As described in our release, MacroGenics had research and development expenses of $46.2 million for the quarter ended September 30, 2018, compared to $41 million for the quarter ended September 30, 2017. This increase was primarily due to the initiation of combination studies of MGA012, INCMGA0012 continued enrollment in multiple ongoing studies, increased development and manufacturing costs related to MGA012, which were partially reimbursed by our collaborator Incyte Corporation, and increased headcount to support our expanded manufacturing and development activities.

We had general and administrative expenses of $9.6 million for the quarter ended September 30, 2018, compared to $8.4 million for the quarter ended September 30, 2017. This increase was primarily due to increased patent-related expenses and consulting and other costs incurred related to the implementation of the Company’s new enterprise resource planning or ERP system

We have recorded total revenue, consisting primarily of revenue from collaborative agreements of $20.8 million for the three months ended September 30, 2018, compared to $1.7 million for the three months ended September 30, 2017. This increase was primarily due to revenue recognized under the Incyte MGA012 collaboration, including $10 million related to meeting certain clinical proof-of-concept criteria during the third quarter.

MacroGenics also recognized revenue of $6.1 million during the third quarter of 2018 for MGA012 manufacturing services provided to Incyte. I should note that an additional $5 million proof-of-concept milestone was achieved and is expected to be recognized during the fourth quarter.

Revenue from collaborative agreements include the recognition of deferred revenue from prepayments received in previous periods as well as payments received during the year. For the quarter ended September 30, 2018. We had a net loss of $34 million compared to a net loss of $47 million for the three months ended September 30 2017.

Our cash, cash equivalents and marketable securities as of September 30, 2018 we're $260.1 million, which compared to $305.1 million as of December 31, 2017. Based on our current operating plan, we believe that our cash, cash equivalence and marketable securities combined with collaboration payments we anticipate receiving should enable us to fund our operations in the mid-2020 assuming our programs and collaborations advanced as currently contemplated.

Following the outcome of the SOPHIA Phase 3 clinical study in the first quarter of 2019 assuming positive results, guidance subsequently will be provided to include plans for commercialization of Margetuximab.

And now I'll turn the call back to Scott.

Scott Koenig

Thank you, Jim. Today I will provide an overview of some of our leading programs which represent the most significant value creation opportunities beginning with Margetuximab, our novel immune optimized anti-HER2 antibody, which has an Fc domain engineered to enhance engagement and activation of the immune system.

In the third quarter we completed enrollment in our pivotal Phase 3 SOPHIA study, which is evaluating the efficacy of Margetuximab plus chemotherapy compared to trastuzumab plus chemotherapy and approximately 530 relapsed refractory HER2 positive metastatic breast cancer patients.

Based on the accrual of PFS events in this study today, we expect to announce top-line results in the first quarter of 2019. This is a significant accomplishment that underscores our ability to execute on a large international Phase 3 study with approximately 200 sites in a timely and efficient manner.

I would like to take a moment to thank the patients who participated in this study as well as the many clinical trial investigators and their staff and the MacroGenics clinical team who have worked tirelessly to support the SOPHIA trial to this point.

In addition to this important trial in metastatic breast cancer, we are also studying Margetuximab in combination with an anti-PD-1 agent in a Phase 1b/2 clinical trial in HER2 positive, gastroesophogeal adenocarcinoma patients. This chemotherapy free combination engages both the adaptive and innate immune system in a coordinated approach.

In October at the 2018 ESMO meeting, we presented updated results suggesting that this combination therapy has anti-tumor activity in patients with advanced gastric cancer. In the third quarter, we also completed enrollment of an additional 25, HER2 positive gastric cancer patients, and we expect to announce results from this cohort in the first quarter of 2019.

In summary, we have achieved a major milestone with Margetuximab in the SOPHIA breast cancer trial and are encouraged by our continuing progress in the Phase 1b/2 gastric cancer study. And look forward to announcing results from both trials in the first quarter of 2019.

Next, let me provide an update on our PD-1 based franchise, that built upon a common PD-1 specificity or variable region and which includes three product candidates that have oral advanced significantly over the past several months.

As Jim mentioned, MGA012, our anti-PD-1 antibody licensed to Incyte in the fourth quarter of 2017, met certain clinical proof-of-concept criteria triggering a total of $15 million in milestone achieved to-date. Incyte plans to present updated data from the cohort expansion portion of the Phase 1 study of MGA012 in a poster session at the upcoming SITC Annual Meeting in a few days.

Incyte has announced its intention to pursue monotherapy development of MGA012 in MSI-high endometrial cancer, Merkel cell carcinoma and anal cancer through registration-directed studies with initial data anticipated in 2020. In addition, across both Incyte and MacroGenics, multiple studies have been initiated which will feature various combination regimens with MGA012.

We are very pleased with the significant clinical advancement of MGA012 and are excited for its potential in treating solid tumor cancers. In addition to the MGA012 program, we have two bispecific DART molecule programs in development that each target PD-1.

MGD013 is a first-in-class DART molecule that provides co-blockade of two immune checkpoint molecules expressed on T cells, PD-1 and LAG-3, for the potential treatment of a range of solid tumors and hematological malignancies. We recently established the dose and schedule for MGD013 administration and has initiated dose expansion in up to nine different tumor types in a Phase 1 study.

In addition, a few weeks ago, we entered a relationship with NanoString to develop and evaluate tumor inflammation signatures and novel predicted gene expression signatures in order to explore potentially predictive biomarkers for MGD013 clinical applications.

MGD019, another DART molecule is designed to provide co-blockade of both PD-1 and CTLA-4, on T cells. We recently received IND clearance for this molecule from the FDA. We are preparing to initiate a Phase 1 clinical trial.

As you can see in our PD-1 franchise has advanced very rapidly this year with near-term cohort expansion data on MGA012 at SITC in a few days as well as data from registration-directed studies anticipated a few years out. The first of our two PD-1 DART molecule, MGD013 quickly completed dose escalation and is now being evaluated across several tumor types in dose expansion. And finally MGD019 is ready to start dose escalation. I couldn't be more excited about the progress we and Incyte have made.

Let me now shift to our B7-H3 franchise and our most advanced candidate, enoblituzumab, an Fc-optimized monoclonal antibody. Clinical data from a study of enoblituzumab in combination with pembrolizumab has been selected for oral presentation at the upcoming SITC meeting this coming weekend.

As you'll see in the presentation and related poster, the combination has demonstrated a manageable safety profile and show the anti-tumor activity in multiple cancers evaluated. As an update of the recently released SITC abstract, the combination of enoblituzumab and anti-PD-1 demonstrated antitumor activity in checkpoint inhibitor-naïve patients who had squamous cell carcinoma of the head and neck and in checkpoint inhibitor-naïve patients with non-small cell lung cancer with tumor PD-L1 expression of less than 1%.

In these two cohorts, objective responses occurred in six of 18 or 33% of response-evaluable head and neck patients and in five of 14 or 36% of response-evaluable non-small cell lung cancer patients. Additional details including higher response rates among patients with threshold B7-H3 expression levels will be provided in SITC.

Let me take a moment to highlight an important emerging theme. The leveraging of our Fc-optimized molecule with checkpoint blockade appears to coordinately engage both innate and adaptive immunity. The two major components of the immune response which has resulted in antitumor activity, we've seen this when combining margetuximab and anti-PD-1 in gastric cancer. And now we're very excited about seeing similar biological activity when combining an enoblituzumab and anti-PD-1 in multiple solid tumor types.

We looked forward to the presentation on Sunday. The second clinical candidate in our B7-H3 franchise is orlotamab, previously known as MGD009, a DART molecule targeting B7-H3 and CD3. Orlotamab is being evaluated in a Phase 1 monotherapy study in multiple tumor types. In addition, a combination study with MGA012 is ongoing.

The third candidate in our B7-H3 franchise is MGC018, an anti-B7-H3 antibody-drug conjugate that has shown potent antitumor activity in preclinical models. We have received FDA clearance to initiate a Phase 1 clinical trial both as monotherapy and in combination with MGA012 in patients with solid tumors.

Finally, flotetuzumab is a DART molecule that recognizes both CD123 and CD3 and is being developed for the treatment of acute myeloid leukemia or AML. We completed the AML dose expansion earlier this year and we'll have two oral presentations at the upcoming ASH meeting in December. One presentation focused on updated clinical data and the other on gene signature data as a potential biomarker for selecting patients with a high probability of response. In addition, we will have two flotetuzumab posters at ASH.

MacroGenics has previously presented data supporting the rationale for using checkpoint blockade as an approach to potentially enhance the anti-leukemic activity of flotetuzumab and plans to commence a combination study with MGA012. Our partner Servier has development and commercialization rights for flotetuzumab outside of North America, Japan, Korea, and India.

This has been another busy and productive quarter for MacroGenics with the completion of enrollment in our pivotal Phase 3 trial of margetuximab in breast cancer, as well as the clinical advancement of multiple product candidates across our pipeline. This progress means that the next 12 months as the potential to be transformative for MacroGenics, as important data readout including top line Phase 3 results in the first quarter could provide catalysts for future growth.

And we'd now be glad to address any questions that callers may have. Operator?

Question-and-Answer Session


[Operator Instructions] The first question comes from Jonathan Chang with Leerink Partners. Your line is now open.

Jonathan Chang

Hi guys. Thanks for taking my questions. First question, can you provide more color on the preparations for the potential U.S. commercial launch in margetuximab. And also how are you thinking about an ex-U.S. partnership?

Scott Koenig

Jonathan, thanks for the question. And obviously we're getting prepared for potential launch in the U.S. We have a team of focused in-house that has reached out to various KOLs with regarding the potential loss and have gotten input from them. We've obviously looked at the opportunity to both begin to build an internal marketing and sales team.

We anticipate this will be sort of a hybrid model where we will be hiring individuals in-house, as well as use outsourced contractors. And again, this has all been planned out with the readout of hopefully positive data in SOPHIA study. With regard to the ex-U.S. opportunities, we clearly have had engagement of various other organizations that have sales forces around the world. And we are looking at opportunities either developing regional partnerships or partnerships for ex-U.S. activity. Of course, many of these partners are waiting – potential partners, let's say, for the results of the clinical trial data. So that's where we are at this point.

Jonathan Chang

Thank you. That's helpful. Second question with SITC abstracts published, can you talk about how you’re thinking about benchmarks for the enoblituzumab plus KEYTRUDA combination?

Scott Koenig

Yes, thank you very much for that question. We're very excited about the data that we have partially revealed and that you'll here at the oral presentation on Sunday. And there will be also a poster with regard to the combination of enoblituzumab and pembrolizumab on Saturday. So if you look at this patient population for both the head and neck and lung cancer patients, we're talking about patients that have in large part, almost all have seen chemotherapy, except for a rare individual.

Actually all the patients with lung cancer have seen chemotherapy in first-line, rare patient seeing it in the adjutant setting. All the patients, but one in head and neck had seen chemotherapy in first-line. And so if you look at the previous results, let's start with the head and neck studies.

If we compare the response rates we've seen now in our study of 33%, the benchmarks are two pembrolizumab studies KEYNOTE-12 and KEYNOTE-40 with respective response rates in this population of 16% and 15%. And then the CheckMate-141 study with nivolumab and overall response rate of 13%.

So we're doing at least two times better in the head and neck population. The same theme is true for the lung cancer patients. The other comparison here would be a KEYNOTE-001 for pembrolizumab, where in the less than 1% PD-L1 positive population. They were seeing response rates of 8%. And then the comparators for nivolumab was CheckMate-17 and CheckMate-57, which respectively had a response rate again in the less than 1% of 17% and 9% respectively in squamous and nonsquamous respectively. So again, in all these cases, we're seeing at least twofold, better in terms of the response rate in this second-line population.

Jonathan Chang

Thanks. And maybe just one follow-up to that. How could the enoblituzumab data at SITC and potential next steps impact your thinking on your other early stage B7-H3 programs. Thank you.

Scott Koenig

I couldn't hear you. Can you speak up again and just repeat the question? I'm sorry, I can't hear you.

Jonathan Chang

How could the enoblituzumab data at SITC and potential next steps there impact your thinking on your other B7-H3 programs?

Scott Koenig

Well, thank you very much for that question. Clearly we are very encouraged by this data. I think it's a nice validation of the B7-H3 target and the activity of Fc engineered molecule in combination with a checkpoint to get enhanced responses. Again, as we pointed out earlier in this call, the ability of a priming, both the innate and then subsequently the adaptive immune system here compliments the data we have already presented as discussed earlier, margetuximab and anti-PD-1 in gastric cancer.

So when we think this mechanism is holding up in multiple tumor types with multiple molecules, we think that the mechanisms that will be engaged with the CD3 by B7-H3 orlotamab studies either alone as monotherapy, but in combination obviously can amplify T cell infiltration into the tumors.

I should also note that there will be a poster being presented by the Johns Hopkins Group who is conducting an IST study with enoblituzumab as neoadjuvant therapy in prostate cancer. And I would encourage you to look at that, a poster as well. Again, supporting the principle that enoblituzumab can enhance immune responses or certainly the attraction of T cells into tumors and maybe a very important vehicle for converting relatively cold tumors to warmer tumors.

And then finally, clearly we are very excited about the start of the MGC018 study with the ADC for B7-H3 where we believe that the mechanism of – essentially a chemotherapy can enhance antigen presentation in this setting, again, providing another mechanism for inducing better immune responses. So we see that these three different mechanisms of action targeting B7-H3 could potentially be used either individually or in combination with other molecules and we are looking forward to that data coming out over the course of the next year to year and a half.


The next question comes from Peter Lawson with SunTrust Robinson Humphrey. Your line is now open.

Peter Lawson

Thanks for taking my questions. Hey, Scott, just on flotetuzumab, any thoughts around pivotal trial will that could potentially look like in AML, whether it's in relapse disease or refractory disease. Any help around that would be great.

Scott Koenig

Thanks Peter for the question. Again, we've made very nice progress on flotetuzumab, as was pointed out earlier today, we will have two oral sessions. Adding onto the data that we've already presented at ESMO and ASH last year, there will be an additional 18 patients so the eight we already presented at ASH last year in patients with relapsed refractory AML.

As important though, is an oral presentation which will also be presented, which gives certain insights to biomarkers that we believe can guide us for targeting particular populations of AML patients, rather than speak about the data now, I'll let the presentation speak for itself at ASH. We are will also, as we reported today, are also encouraged by combination studies where we have seen in preclinical model systems enhanced activity of PD-1 on checkpoint blockade in combination with flotetuzumab.

And we believe that this could enhance the responsiveness of flotetuzumab alone in the late stage unresponsive patients. And we have also additional preclinical data that combinations with HMA and other agents can enhance response as well. So I think we'll give you an update at ASH and then we'll talk about the next steps are moving forward with this program.

Peter Lawson

Thank you. And then just around enoblituzumab…

Scott Koenig


Peter Lawson

Yes. Thank you. What's the go-forward approach there as regards indications go-forward combinations and potentially screening patients for B7-H3?

Scott Koenig

That's an excellent question, Peter. So number one is at the presentation again, I didn't want to discuss it today. I'll let the presentation speak for itself. But we can get further enrichment of responses so far and obviously a subset of these patients. If we look at a certain levels of B7-H3 expression, so their increased responses based on B7-H3 levels in the data we've analyzed so far. The next step is obvious. We want to obviously confirm some of these responses with a larger data set with a similar patient profiles. But given where this the state of treatment are right now for head and neck and lung cancer.

We see potential opportunities even moving earlier lines and obviously potentially exploring with chemotherapy, as well. I should also point out now that we're seeing such potent activity both in PD-L1 negative patients as well as in the head and neck patients. We see PD-L1 positive patients that were participating in the data – in the study that I just described.

We will be – we’re looking at this with different biomarkers as well. And as well as in other tumor types because we think that this maybe a very generalizable enhanced way of targeting tumors.

Peter Lawson

Great. Thanks for the update.


The next question comes from Umer Raffat with Evercore. Your line is now open.

Umer Raffat

Hi, thank you so much for taking my question. First Scott, Jim, I guess for both of you, but my question is what I'm trying to reconcile is your ongoing Phase 3 study on margetuximab obviously open-label and we should get the results in one queue. But I'm just trying to figure out if I should be or shouldn't be reading into how the press release talked about commercial preparation partnership. Do you have additional visibility or additional confidence over the last few months? Just trying to understand what prompted that disclosure. And I had another one.

Scott Koenig

Well, I think it would be – I did not know the results of the data needed to do other members of the team. This is a study that may be opened at the local level, but we as management have no idea what the outcome is in terms of the individual treatment regimens for patients.

I just think it is critical for a management team to be ready with the filing of a BLA. And we're obviously preparing for that with successful data as well as the next steps forward for the commercialization strategy as well as supporting all the manufacturing that goes ahead with this. If the data turns out to be a positive, we don't want to delay at all being able to provide a very effective treatment to patients. So shouldn't read anything more than that, that we're very diligent group and trying to do our work.

Umer Raffat

Makes sense. Makes sense. On CD123, Scott, I noticed a couple of things. One that just the order in which it was mentioned in the press release appears to have dropped. And also in the additional 16 patients in the expansion cohort, it sounds like the complete response rate was two out of 16 in this expansion versus two out of eight in the first eight. So what I'm really trying to get at is do we know if there were far more relapsed patients in those additional 16? I'm just trying to understand why the CR or CRi looked so different the two out of eight versus two out of 16 in the next batch that we just learned about at ASH.

Scott Koenig

Yes. So with regard to the order of presenting this, I've been asked this question before on other calls. And again, given that the data is going to be updated at ASH, this we think will be a more appropriate highlight at our fourth quarter earnings call given such advancements that we've now made with the PD-1 franchise, the B7-H3 franchise in March. We just spoke about it before, but it's not, it should not interpret this anything more than that, that we have a lot of things going on that we think are very good news for the company.

With regard to the number of patients that are relapsed or refractory. Stay tuned for the data. I think again, as I pointed out in response to Peter's question before. I think you're going to have some very nice insight onto the populations that may be most responsive to flotetuzumab therapy. And I think you'll get a lot more clarity then. So I'd rather not discuss the data at this point.

Umer Raffat

Okay, makes sense. And then just briefly, the PD-1, LAG-3, will you have truly PD-1 refractory patients in there. And/or would you be open to doing a bit more of a randomized type design where we can get to see whether PD-1 mono does versus your PD-1 LAG-3?

Scott Koenig

Excellent question. So obviously, we did not screen at a time and did not put any requirements for either refractory or naïve patients to PD-1 in the dose escalation part of this study because we wanted to obviously just first establish safety of them of those patients. We are going to retrospectively look at those patients and obviously will provide data on which patients were anti-PD-1 experienced, those who have elevated PD-L1s going forward.

As you know, the important is to establish the safety and the pharmacokinetics and the occupancy. I'm very happy to say that this molecule looks great. It is we have a very nicely established PK and occupancy profile. We've selected the dose to move forward with in this Phase 2 study. As I said, we will be moving into at least nine different tumor types.

I'm included in this population, will be those that are PD-1 naïve as well as anti-PD-1 and include those that are PD-L1 low as well as PD-L1 high. And clearly we will also analyze these patients for LAG-3 expression. If we pointed out today, we have a collaboration with NanoString to look at various markers that may be predictive in this population for responsiveness.

In addition, in parallel, we're doing work on IAC expression and so we'll have those coordinate activities for biomarker analysis to be able to be provided. By expectation given that the enthusiasm we've seen for this molecule, a patients are lining up to get into the trial, that this should recruit very nicely and hopefully in the latter part of next year should be able to provide a nice update of this data set.

Umer Raffat

Thank you very much.


The next question comes from Debjit Chattopadhyay with H.C. Wainwright. Your line is now open.

Debjit Chattopadhyay

Good afternoon, gentlemen, thank you for taking the question. I joined a bit later. I must have missed some of the comments here. But, on the SOPHIA, if you ready for the data presentation sometime in the first quarter of next year, have all the events happened, a crew kind of at this point, or how far away are you from all the events from happening and is that tracked in line with your good expectation?

Scott Koenig

Debjit, thanks for the questions. So clearly we have been tracking the PFS rate as well as OS rate in the population. It's tracking with our expectations and that's why we're able to indicate that we should have the top line PFS data in the first quarter to announce. So I things are on track.

Debjit Chattopadhyay

Have they happened already or they are – I mean, they should happen by the end of the year?

Scott Koenig

Looking at the rate of events that have happened over the last time, we have not achieved the full analysis of all the events happening. But we think we'll be imminent so that we should be prepared, obviously the data has to be cleaned and move forward. But we have not achieved the last 257th PFS event, for this yet with central review. But we expect in the time remaining over the next couple of months, we should have that data, have it cleaned and be ready to report in the first quarter.

Debjit Chattopadhyay

Thanks for the clarity. Then on the enoblituzumab, 33% objective response rate in the press release. I wasn't sure if one that's confirmed responses. And number two, are these I-O naïve patients, the PD-1 negative or the I-O naïve patients, how should I think about that because the PD-1 naïve, they may not have gotten an I-O in the first place, they just got chemo or something?

Scott Koenig

So all the patients in both the head and neck and lung patients we reported were confirmed responses, number one. Second, with regard to the population in the lung cancer patients, these were PD-1 naïve, and in anti-PD-1 naive in the head and neck, they included both anti-PD-1 naive and these are actually, they were both in the anti-PD-1 naive. In the head and neck patients they were both PD-L1 positive and negative in the lung cancer patients they were all less than 1% PD-L1 positive.

Debjit Chattopadhyay

So did, did they get a first line chemo or I mean are they second line patients in that case but PD-1 line.

Scott Koenig

So the clarity is that as I said before you came in I guess a little late to the call. With regard to all the patients with a head and neck, all the one patients have had chemotherapy that one patient that didn't have chemotherapy actually had an enoblituzumab as monotherapy.

In the non-small cell lung cancer patients, all the patients had chemotherapy almost all have had it in a first line or later line therapy. There were a couple of patients that had it as either adjuvant and neoadjuvant, but by and large almost all had it at least in the first line therapy.

Debjit Chattopadhyay

Great. And then from the gastric cancer next step perspective, are you guys going to wait on the SOPHIA to read out before committing to some sort of a randomized study in Gastric cancer or do you think you can do a large expansion single-arm kind of a study given especially the third line setting given what's happened with anti-PD-1s previously?

Scott Koenig

Great question. Obviously given all the things that are going on right now and as we pointed out earlier, we have 25 additional patients that have been enrolled in the gastric cancer study. We obviously want to confirm the signal that we were seeing from the initial patients as we continue to follow the original, gastric cancer patients. But we are preparing for additional studies going forward, in gastric cancer.

We're analyzing this both as potential second line as well as first line treatment regimens. We obviously haven't pulled the trigger on that. We want to see the additional data. And certainly we'd like to understand where SOPHIA is and the timing is, as we pointed out, we'll all be in the first quarter. So, everything is coming at the same time. So we should be able in the first quarter, be able to update you on specific plans on a gastric cancer further development as we also find out the breast cancer results.


The next question comes from Yigal Nochomovitz with Citi. Your line is now open.

Samantha Semenkow

Hi Guys. Thanks for taking the questions you have Samantha on for Yigal. A bit of – I wonder if you could perhaps outline your thoughts for some of the reasons that you're optimistic about SOPHIA working and also what do you think is the biggest risk to the study possibly not working.

Scott Koenig

Thank you Samantha and thanks for the question. We have been very encouraged by the mechanisms by which Margetuximab has been working. In addition to the early Phase 1 data that we provided, we have an and we'll update soon some additional work that we've been doing on Mechanisms of Action and also observations from the original patient data set.

So, first of all, from the latter, we had several of the patients who responded to Margetuximab as monotherapy that who had been on all previous anti-HER2 therapies that has maintained on my therapy three, four and five years doing exceptionally well as monotherapy. And we believe that fits quite nicely with immune based responses that had been described previously for, for anti-HER2 therapies, particularly with Herceptin and given the dramatic enhancement of Fc mediated activity, both in terms of antigen presentation and ADCC activity.

We think the magnitude of this response is going to be even greater. And also was supplemented by the fact that in preclinical studies we saw this effect in a HER2 negative tumor lines as well. We've also had data on the immune responses to make these patients who have now been treated from the Phase 1 study with Margetuximab alone, and that data will be presented next year at an upcoming scientific conference.

Again, supporting the notion that we're, these patients are generating an expanding, immune responses to the tumor in a very antigen specific manner. So that's the positive. Obviously we're doing the study in a controlled manner. This, I believe will be the first head-to-head comparison of a Fc modified antibody compared to a non-Fc modified antibody to the same epitope.

So, I think it's an important scientific study as well as importantly potentially medical study. Why won't it work? Well, obviously many things could explain that clearly we did not do a Phase 2 development of combination studies with chemotherapy and Margetuximab. So we don't have that baseline data set to enhance our confidence in response rate.

But we believe that based on other clinical trials that had been conducted in this population, we think we have the control population response rates correct. And we'll have the data very soon. So stay tuned.

Samantha Semenkow

Thanks. That was very thorough and clear and I was – switching gears a little bit to Flotetuzumab I just wondered if you could also just give your thoughts on whether you think you plan to develop single agent, Flotetuzumab for specific population or/and do you see the combination of Flotetuzumab in anti-PD-1 inhibitor is more attractive specifically for the relapse patients? Or do you think that that combination could work for the whole general population based on the preclinical data you've generated thus far?

Scott Koenig

So, thanks for the question Samantha. I think that we are very encouraged by a single agent activity with Flotetuzumab in relapse refractory as I pointed out to earlier, stay tuned for the update on biomarkers because I think we can have some greater clarity there. Having said that we never stand still in terms of trying to get the best treatment for patients. We think that if the data continues to advance in a positive fashion as monotherapy, and the marketing conditions and competition makes sense then we should definitely move that forward providing a therapy that can benefit patients.

Having said that, we are exploring other combinations together that could even give a better responsiveness and give better clarity on that. So, I think that the both strategies could be successful.

Samantha Semenkow

And when do you think we'll see the data for these additional combinations you just mentioned?

Scott Koenig

We haven't started the combination studies going forward. I pointed out at a meeting earlier this quarter that – and I think there'll be some additional data at the ASH meeting. We spent a lot of time trying to mitigate cytokine release in this population with the CD-3 redirected killing and have, as we pointed out at earlier meetings drop the grades of CRs side effect profiles with the strategies that we have implemented.

We have decided to continue to try to even further enhance or reduce the CRs and so we're doing some fine tuning to the initial first week of lead-in dosing strategy in the next set of patients that we will be treating. We'd like to get a small subset of those patients completed. And it's, in fact, we achieve what we hope then we will implement the combination study with the MGA012. So, this is likely to occur in the first part of 2019.

Samantha Semenkow

Thank you for taking the question.


[Operator Instructions] The next question comes from Stephen Willey with Stifel. Your line is now open.

Stephen Willey

Yeah. Good afternoon. Thanks for taking the questions. Just wanted to follow-up, I guess on a few prior questions. So, I guess on Flotetuzumab, the CRis you're seeing is, I guess in the 20% range, there were some competitive data that was announced also in conjunction with the ASH abstract release that's also kind of in and around that 20% range.

So, just kind of wondering if, you think that's, that number is kind of the best that you're going to get with, with a CD123, CD3 redirected bi-specific. And then also just wanted to confirm that you will be communicating kind of the next steps forward with respect to the single agent development program in conjunction with ASH.

Scott Koenig

Thanks Steve. So, with regard to the data we presented and the competitive rate and the 20% that you’ve cited, as I pointed out, I think that a higher percentages could be achieved with the proper selection of patients. And again, as I pointed out, take a look at the presentation about biomarker analysis, that at least gives us encouragement that we could potentially achieve a higher response rates in a subset of patients. With regard to the competitive data – while there is some number consistency that's being put out there, there are some subtle differences in populations that we've treated versus some of the competition, at least in one other presentation and from the abstracts, patients that were included in this other study but not in our study included patients that were post transplant and as you know, given an allotransplant and restoring an immune response may enhance rates in those patients.

Furthermore, obviously it could have an independent allogeneic response. So we have not treated those patients. We've in fact have talked about including those patients in the future studies, which could further enhance our response rate, but I can't comment on that because we don't have any data ourselves on that. So, with regard to your second question, we will provide next steps around the time of the ASH meeting.

Stephen Willey

Okay. Just a follow up as well on the gastric development program. It kind of sounds like there might be a little bit contingent upon SOPHIA results. But you did mention additional second line and possibly front line trials. Should we presume that any additional development work in the second line setting would be registrational with respect to capacity, and I guess if so, have you guys given any additional thought around swapping out Pembro for MGA012?

Scott Koenig

Yes. Thank you very much for that question. So yes, we clearly are looking at alternative, checkpoint molecules that we might use instead of Pembro. The analysis would be for what is the quickest way we can get a approval for a combination study going forward and that is a part of the equation, but that clearly is a part of the consideration that we're doing internally. So the answer is for the second line setting. Yes, we're looking at the potential for something other than Pembro, 012, as an obvious one.

Second, we're looking at pathways for a registration for second line, but as importantly given the data that we've shown on particular subpopulations of patients within gastric particularly the dramatic enriched responses we saw in the, HER2 positive PD-L1 positive population where we're seeing responses, at least in the small dataset of around 60%.

There may be ways of obviously developing a quickly for a certain subset of patients as we also begin to think about how does one execute on a first line therapy, where clearly chemotherapy is part of the approved regimen. And obviously physicians who are treating such patients feel that they like to see that quick reduction of tumor size with that chemo, given that the immune therapies tend to take longer to get those responses. I think, become the more standard norm now of trying, particularly in these earlier line therapies of combining chemo with immune based regimen.

So, these are all on the table and I think hopefully able to provide greater clarity at the time of the January data set for the additional 25 patients.

Stephen Willey

Okay. And then just lastly on the enoblituzumab, I know that there's been kind of this background to be with respect to whether or not B7-H3 is immunomodulatory in nature or just whether or not it's kind of more of an expression marker. And it was just kind of curious with respect to the Hopkins data that's going to be presented at SITC, do you think that somehow contributes to the notion that this may actually be immunomodulatory in nature? Just curious as to, I guess your thoughts around the increase in CDA infiltrate you're seeing and what that might mean from a mechanistic perspective. Thanks.

Scott Koenig

Yeah. So, as I mentioned to you before, Steve, I'm fairly agnostic with regard to whether this is mechanistically being mediated by a checkpoint blockade or the utility of this as a tumor antigen being targeted in a selective manner because of the high over expression on tumors versus a normal tissues. I can make a case for both happening here, clearly as I was pointing out before, I think we have compelling data both from a March plus anti-PD-1 and enoblituzumab plus PD-1 that we are also with increased tumor killing, we're also getting, a expansion of T-Cells.

And in some cases we have some evidence now with antigen specific T-Cells. So, I think both mechanisms could be supported scientifically by the data today. So at this the most important point is, is that having a exuberant immune response with good patient responses is our goal and let the mechanisms prevail which are working.


The next question comes from Boris Peaker with Cowen. Your line is now open.

Boris Peaker

My first question on enoblituzumab checkpoint inhibitor combo, if we look beyond the overall response rate. I'm just curious, are there other differences from just checkpoint inhibitor monotherapy in terms of either time to respond, the durability to response or perhaps the overall shape of the PFS curve, I mean any other way we could see the contribution of enoblituzumab to the checkpoint inhibitor itself?

Scott Koenig

Boris, thanks for the question. Stay tuned for the presentation you'll see the spaghetti plots of that and, we're very encouraged with the durability of these responses being seen. So, I'll let you take a look at the data and evaluate that obviously. We're going to continue to follow these patients and expand this study based on this initial promising data.

Boris Peaker

Great. I am asking a question B7-H3. You mentioned that you’re planning to develop an antibody drug conjugate. I'm just curious, can you come, can you comment about the internalization of B7-H3 itself as it's obviously important for an antibody drug conjugate activity?

Scott Koenig

A very good question. In the previous earnings calls, I've sort of, went into a little bit of details, which is the specific variable domain we've selected for enoblituzumab and orlotamab the CD3/B7-H3 is one specific variable domain to one specific epitope or the conjugate that we've selected MGC018 we actually selected a different antibody and this was selected because of what you were alluding to is that we have seen better uptake of that antibody conjugate complex into the cells.

And it turns out that the two epitopes are non-competitive. So, in theory one could use combinations of two separate B7-H3 agents without impairing the activity of one versus the other.

In preclinical data, we've seen terrific responses in xenograft models where we have seen in certain tumors a single dose of drug able to obliterate tumors. So, we're very excited about starting this study and we expect first patient in very shortly.

Boris Peaker

I'm sorry, but my question was about internalization, just the receptor itself, internalizing the bound antibody. Is there any data regarding that?

Scott Koenig

Well, again, that's what I'm saying. We did that testing and we have, so if you look at the B7-H3 specific antibodies and DART molecules we've picked for the two other molecules, they will have a residence time on the surface of the molecule, a small number will be taken up, but when we compare it to the specific antibody, we use for the antibody conjugate, it was much more efficient of being taken up into the tumor cell and obviously releasing toxins because it's a cleavable linker and then that binds to the DNA of the cells.

So, we have not published the data specifically with regard to the differences in the uptake and the turnover of the receptors, but the data was based on ones we've, established internally.

Boris Peaker

Great. Thank you for taking my questions.


This concludes the question-and-answer session. I'll now turn the call back to Dr. Koenig for closing remarks.

Scott Koenig

I just like to thank everyone again for joining us and let you all know that we look forward to continuing to advance our programs in the coming months and providing updates on our progress. Have a nice day.