MacroGenics Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 9, 2023

There are 9 speakers on the call.

Operator

Afternoon. We will begin the MacroGenics 2023 First 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 Carroll, Vice President, Chief Financial Officer of MacroGenics. Please go ahead.

Speaker 1

Thank you, operator. Good afternoon and welcome to MacroGenics' conference call to discuss our Q1 2023 financial and operational results. For anyone who has not had the chance to review these results, we issued a press release this afternoon outlining today's announcements, which is available under the Investors tab on our website atmacrogenics.com. You may also listen to this conference call via webcast on our website, where it will be archived 30 days beginning approximately 2 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.

Speaker 1

Actual results may differ materially from those indicated by these and 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 the 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 Doctor. Scott Koenig, President and CEO of MacroGenics.

Speaker 2

Thank you, Jim. I'd like to welcome everyone participating via conference call and webcast today. This afternoon, I will provide key updates on our clinical programs. But before I do so, let me first turn the call back to Jim, who will review our financial results.

Speaker 1

Thank you, Scott. This afternoon, MacroGenics reported financial results for the quarter ended March 31, 2023, which highlight our financial position. As described in the release this afternoon, MacroGenics' total revenue consisting primarily of revenue from collaborative agreements was $24,500,000 for the quarter ended March 31, 2023 compared to total revenue of $11,100,000 for the quarter ended March 31, 2022. Revenue for the quarter ended March 31, 2023 included recognition of the $15,000,000 milestone received from Incyte for the U. S.

Speaker 1

FDA approval of Zynas, dollars 3,600,000 in contract manufacturing revenue and Marjensa net sales of $3,500,000 compared to $3,600,000 for the quarter ended March 31, 2022. Our research and development expenses were $45,900,000 for the quarter ended March 31, 2023 compared to $61,400,000 for the quarter ended March 31, 2022. The decrease was primarily related to decreased vopramitimabduocarmizine, development costs and decreased costs related to our discontinued studies. These decreases were partially offset by increased expenses related to discovery projects and preclinical molecules and increased clinical expenses related to loradirlimab. Our selling, general and administrative expenses were $13,500,000 the quarter ended March 31, 2023, compared to $16,300,000 for the quarter ended March 31, 2022.

Speaker 1

The decrease was primarily related to decreased legal and consulting expenses. Our net loss was $38,000,000 for the quarter ended March 31, 2023, compared to a net loss of $66,400,000 for the quarter ended March 31, 2022. Our cash, cash equivalents and marketable securities balance as of March 31, 2023 was $241,700,000 compared to $154,300,000 as of December 31, 2022. Our cash balance as of March 31, 2023 included the $100,000,000 upfront payment received from a wholly owned subsidiary of DRI Healthcare Trust for the sale of our single digit royalty on global net sales of tZYLD. Our March 31, 2023 cash balance did not include a $30,000,000 payment subsequently received from Sanofi related to the November FDA approval milestone for TZIL.

Speaker 1

Finally, in terms of our cash runway, we anticipate that our cash, cash equivalents and marketable securities balance of $241,700,000 as of March 31, 2023, plus projected and anticipated future payments from partners and product revenues should provide us with a cash runway through 2025. Our anticipated funding requirements reflect expected expenditures related to the Phase 2 Tamarac clinical trial, the Phase 2 portion of lorodirlimab in metastatic castration resistant prostate cancer, as well as our other clinical and preclinical studies currently ongoing. And now, I'll turn the call back to Scott.

Speaker 2

Thank you, Jim. The U. S. FDA recently approved Incyte's Zynus or retofanlimab for the treatment of adults with metastatic recurrent locally advanced Merkel cell carcinoma. This approval represents the 3rd U.

Speaker 2

S. Marketing clearance of product originating from our pipeline of proprietary or partnered product candidates with Margenza and tZeal being the 1st and second respectively. We are delighted that the approval of Zynas provides an additional option for treating patients with Merkel cell carcinoma, a rare and aggressive type of skin cancer. In addition to royalty payments for Zynas and TZYLD, We remain eligible to receive more than $1,000,000,000 in milestone payments related to the continued advancement and successful commercialization of these 2 approved products. Over the past 9 months, These and other programs have allowed us to generate $270,000,000 in non dilutive capital, extending our cash runway fully through 2025.

Speaker 2

Of course, we continue to believe our proprietary pipeline of product candidates has great promise, and I will walk you through our key programs now. Vobermidumabduacomizine or vovra duo is our ADC designed to deliver a DNA alkylating duochomycin cytotoxic payload to tumors expressing B7 H3. D7 H3 is a member of the D7 family of molecules involved in immune regulation. VobraduO was designed to take advantage of this antigen's broad expression across multiple solid tumor types. As we reported on our last earnings call in March, we had initiated the Phase 2 portion of the Tamarac study of VOBRADUO in patients with metastatic castration resistant prostate cancer in late 2022 and modified the study protocol more recently based on the changing treatment landscape for patients with metastatic castration resistant prostate cancer.

Speaker 2

Regulatory approval of a modified study protocol, primarily reflecting removal of a control arm, has been obtained in the U. S. And all countries targeted for study enrollment in the EU. We continue to anticipate commencement of enrollment under the revised protocol beginning this quarter and expect to provide a clinical update in 2024. As a reminder, the Tamarac study is designed to evaluate VOBR Duo in 100 patients across 2 experimental arms.

Speaker 2

2 mgs per kg or 2.7 mgs per kg every 4 weeks. Next, let me update you on lorodirlimab, our bispecific tetravalent PD-onexCTLA-four DART molecule. Please recall that we designed lorodelimab to have preferential blockade on dual PD-one CTLA-four expressing cells such as tumor infiltrating lymphocytes, which are most abundant in the tumor microenvironment. At the ASCO General Urinary Cancer Symposium in February, we presented encouraging preliminary clinical results from a single arm dose expansion study of loradrolumab in patients with advanced solid tumors in a poster session. Based on the strength of the nCRPC data presented, we plan to commence enrollment of a randomized Phase 2 study of lorogerlimab in combination with docetaxel versus docetaxel in second line chemotherapy naive mCRPC patients in the second half of this year.

Speaker 2

A total of 150 patients are planned to be randomized 2:one. The current study design includes a primary study endpoint of radiographic progression free In addition, we continue to enroll patients in the Phase 1 dose escalation combination study of obraduo with loradirlimab in patients with advanced solid tumors, including renal cell carcinoma, pancreatic cancer, of ovarian cancer, hepatocellular carcinoma, mCRPC and melanoma. Next up, MGD-twenty four is our next generation bispecific CD123xCD3 for the DART molecule that incorporates a CD3 component designed to minimize cytokine release syndrome while maintaining antitumorcytolytic activity and permitting intermittent dosing through a longer half life. Our Phase 1 dose escalation study of MGD-twenty four is ongoing in patients with CD123 positive relapsed or refractory hematologic malignancies, including acute myeloid leukemia and myelodysplastic syndromes. Recall that Gilead has the option to license MGD-twenty four at predefined decision points during the Phase 1 study.

Speaker 2

Finally, enoblituzumab is an Fc optimized monoclonal antibody that targets B7H3. In April, results from an investigator sponsored Phase 2 study conducted at the Johns Hopkins Kimball at the National Institutes of Cancer Center was published in Nature Medicine. In the reported study, 32 men with high risk or very high risk for prostate cancers who were scheduled for prostate cancer surgery were treated with 6 weekly infusions of enoblituzumab prior to surgery and were followed for an average of 30 months thereafter. The sponsors reported that 21 patients or 66% at an undetectable prostate specific antigen PSA level 12 months following surgery, suggesting to the authors that there was no sign of residual disease. Additionally, the investigators reported that the drug was well tolerated overall.

Speaker 2

No patients had any surgical delays or medical complications during or after the operation. Let me next provide an update of our product candidates being developed by our collaboration partners for which we retain certain economic rights. As we previously announced, we received a $100,000,000 upfront payment in March from DRI for the sale of our single digit royalty on global net sales of tZield, while we retain the right to receive a 50% share of the royalty on global net sales above a certain annual threshold. As a result of Sanofi's acquisition of both at Prevention Bio and DRI's royalty interest in tZield in April. Our economic interests are unchanged, and we are eligible to receive from Sanofi a total of up to $430,000,000 in milestone payments, including $105,000,000 upon the achievement of certain regulatory approval milestones, $225,000,000 upon achievement of certain sales milestones and $100,000,000 in potential payments from Sanofi Assumed from DRI.

Speaker 2

Also as previously announced in March, the FDA approved Zynas, for humanized monoclonal antibody targeting PD-one. We had initially developed this molecule and licensed it to Incyte in October 2017 pursuant to an exclusive global collaboration and license agreement. Incyte continues to conduct global registration studies of rifamilumab across multiple indications, including lung, on anal and endometrial cancer. Under our amended agreement with Incyte, we received a $50,000,000 milestone payment from Incyte based on the approval of Zynest in Merkel cell carcinoma during the Q1 of 2023 and are eligible to receive up to $320,000,000 in potential remaining development and regulatory milestones and up to $330,000,000 in potential commercial milestones. We are also eligible to receive tiered royalties of 15% to 24% from Incyte on any global net sales of the product.

Speaker 2

Finally, we will manufacture through a portion of Incyte's global commercial supply of retafamlimab. To conclude, we believe we have shown that we have the technical development and clinical expertise and now the necessary financial resources to support execution on our plan of developing and delivering Life Changing Medicines to Cancer Patients in 2023 and Beyond. We would now be happy to open the call for questions.

Operator

And wait for your name to be announced. Our First question comes from the line of Jonathan Chang with SVB Securities. Your line is open. Please go ahead.

Speaker 3

Hi, guys. Thanks for taking my questions. First question on cash position. How are you guys thinking about your cash position now following the non dilutive deals you've completed over the past 9 months? At this point, do you feel you have enough to execute on your plans until the next value inflection point?

Speaker 3

And are you still actively seeking opportunities to continue bolstering your balance sheet.

Speaker 2

Nice to hear from you, Jonathan. And so we're very pleased obviously with our cash position. And as stated on the call, this will take us through 2025 into early 2026. And yes, this has all the opportunities to execute on the plan that we have outlined and the programs that we discussed today and potentially looking at additional opportunities, especially in prostate cancer and beyond in solid tumors. Of course, as you know, we have been always very active in business development activities and have continues ongoing discussions, both in terms of our preclinical and clinical pipelines.

Speaker 2

And we anticipate in the future that further revenues could be accrued via successful execution of those business deals.

Speaker 3

Got it. Thank you. And second question, should we expecting Clinical data from the Vobra Duo plus lorodilumab combo study this year? And if so, could you help set expectations ahead of that update?

Speaker 2

So as I had mentioned on earlier calls, we've been moving forward with identifying the proper dosing for individual components in that combination, and obviously open up the study to 6 different tumor indications to participate in the study. We have not yet settled on the specific dose to move forward in expansion studies and would anticipate once that is achieved, we would move forward in 1 or 2 expansion studies of particular indications, which I expect would probably include prostate and one and possibly another. At this point, given where we are at this year, it is less likely that we will have data by the end of this year and more likely in the 1st part of 2024.

Speaker 3

Understood. Thanks for taking my questions.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Charles Zhu with Guggenheim. Your line is open. Please go ahead.

Speaker 4

Hi, this is Edward on for Charles Zhu. Thanks for taking our questions. Maybe just a question on the loragilumab, docetaxel So combo trial that you're looking towards, what sort of efficacy signal would you anticipate from the docetaxel control arm and What sort of efficacy signal in the combo arm would give you confidence in the combination going forward? And that's both with respect to the control arm, but also with respect to the broader competitive landscape in the chemo naive setting? Thank you.

Speaker 2

So thanks for the questions, Edward. So, if you look at the historical data of this docetaxel control arms in patients who have progressed on ARAD agents. RPFS has been consistent across the board with KEYNOTE-nine twenty one, preside Phase 3b and TRITON3 of 8.3 months and median overall survival of 19% and 18.9% respectively in 9.21% and Triton 3%. So obviously, we would like to exceed those, certainly meet them, but certainly exceed them with the current study. And obviously, longer is better in this case.

Speaker 4

And then maybe just as a follow-up thanks for that. Maybe just

Speaker 5

as a follow-up, so what are your How

Speaker 4

are you seeing the sort of the competitive landscape shaping up in the chemo naive setting again with you know PSMA 4, we know it hit that SIGs. So just kind of how you're thinking about it there and how you see the combo fitting in? Thank you.

Speaker 2

Well, I mean, clearly, the historical data on data on checkpoint in, 1st of all, in prostate in general or prostate certainly in that line of setting has been dismal. If you look at all the studies that had been conducted with Pembrolizumab, including KEYLINK010, KEYNOTE-nine twenty one-nine ninety one and 641. They did not meet the expected outcomes even though those are in different lines of therapy and different combinations. And as you know from the recent data on CheckMate 650, with a combination of nivolumab and ipilimumab, The responses at nivolabab3ipi1 were not good with 9 of 0.3% overall response rate in the PSA50 of 13.8%. So we think that we have an unusual molecule now as a specific to introduce a checkpoint molecule on top of standard therapy that could really change across

Operator

Thank you. And we'll move on to our next question. And our next question comes from the line of Yigal Nochomovitz with Citi. Your line is open. Please go ahead.

Speaker 5

Hi, Jim. This is Ashok Mubarek on for Yigal. Thanks for taking my questions. Maybe just asking another one on lorogerlimab. I think in the past you alluded to The idea of lowering the lorogrelimab dose as a way to better manage AEs, but still have full target engagement.

Speaker 5

I guess within that context, how are you thinking about dosing for the docetaxel cohort combo cohort you're planning on starting up very shortly. Are there any specific comments you can make on the lorogilumab dose in that combo?

Speaker 2

Yes. Thank you very much for the question. And As you've noted before noted, we have a very robust data set from our dose escalation and expansion studies where in our dose escalation, we went up to 10 mgs per kg without dose limiting toxicity, designed the study on expansion at 6 mgkg on a q3 weekly basis in over 127 patients, which we presented recently at the ASCO GU meeting. As we have pointed out previously, we get full occupancy of the PD-one receptor at 1 mg per kg or higher and as historically shown in the dose escalation study of lorogerolumab, objective response is at 3 mgs per kg and also at 6 mgs per kg. And we were seeing biomarker data of expansion about CD4s and CD8s at 1 mg per kg or higher as well as the induction of ICOS in CD4 positive sales in the similar ranges.

Speaker 2

So we have a very wide window of opportunity to adjust treatment doses based on either combinations of drugs that made and on additional toxicities. So back to your initial question, we are starting at 6 mgkg on a Q3 weekly basis, had the opportunity to make adjustments. And we're also looking at potential future studies where we would study more than the 6 mgkg dose in prostate cancer or potentially the other tumors as well to get the best safety and efficacy profile for the drug.

Speaker 5

Got it. And if I could ask one more on VOBRADUO. I guess, we're still waiting for the Tamarac data before you make any ultimate Arnd, do you have any updated thoughts on how you're thinking about VOBERDUO as a monotherapy within prostate cancer? I I think maybe once we have clarity on the treatment paradigm, maybe within the coming years, do you have you are you is there a possibility You would reconsider a pivotal trial with just the monotherapy?

Speaker 2

Absolutely. I mean, I think the current plan right now was just taking the realization of the time to enrollment, where we made the amendments to the protocol of Tamarac to remove the control group. The idea of this study right now is to execute as quickly as possible. So we were able to decide both on the safety and the activity, what is the appropriate dose, either the 2 mgkgq4 or the 2.7x per KPI Q4. At that point, we would go into a our plan would be if we achieve the goals that we set for that study to go into a single arm study moving forward in Phase 3.

Speaker 2

And clearly, obviously, we're exploring the opportunity of combining it with other active agents given as was discussed earlier, the combination with lorogeromab, but we're also looking at other combinations potentially in the future.

Speaker 5

Got it. Very helpful. Thanks very much.

Operator

Thank you. And one moment. The next question comes from the line of Carveri Pullman with BTIG. Your line is open. Please go ahead.

Speaker 6

Good evening. Thanks for the update and congrats on the approval of Zynas. For the Phase 2 trial with docetaxel for lorazolumab, can you provide any additional color on your development strategy? Can you maybe go for a registration enabling trial if, let's say, the interim analysis looks positive given the big size of this study?

Speaker 2

Yes, that's an excellent question. And obviously, this is designed as a controlled study 2:one. But given that this is only 150 patients, We do not expect that this study alone would be sufficient to meet the regulatory requirements for an approval and would then base the successful study to expand that into a full Phase 3 study. Obviously, great Overarching data trumps all, but right now we don't intend that this study would serve as a trial for approval.

Speaker 6

Got it. That's helpful. And my second question is also on lorazolumab. So based on KEYNOTE-one hundred and ninety nine and CheckMate 650 trial results, it seems like PD-one CTLA-four combination is more within PD-one alone. Any thoughts on going into MSI high CRPC of prostate cancer as monotherapy.

Speaker 6

Is it commercially attractive? And similarly, does the combination of PARP inhibitors make sense because CheckMate 650 trials showed better efficacy in HRD positive patients?

Speaker 2

Excellent questions. So answering your question, obviously responding and I I agree with you based on the 199 study and the 650 study and the data that we have shown at ASCO GU in terms of a 26% objective response rate and over 90% PSA50 and all responding patients had actually greater than PSA90 responses that we're in a very good position with this molecule to move it forward. With regard to MSI High, we have not set up a trial. That's something we could consider. We certainly are looking at additional combinations and given that the treatment regimens for prostate cancer are evolving with the use of PARP inhibitors even in early line therapy without DNA repair defects, We would consider additional combination size of the future, but have nothing right now that would incorporate this in our current studies.

Speaker 6

That's helpful. And maybe a last one on the ADC. Since we're waiting for the updated data, Do you plan to show any mature data from the Phase 1 trial? I believe from the last readout in 2021, The sample size was decent for the patients who remained on treatment.

Speaker 2

Yes. As we've noted on previous We've had objective response rates in all the tumor types that we looked at and had historically considered actually studying additional patients after prostate cancer and melanoma, but because at that time we did not have the cash runway to justify moving forward with that. We stopped that planned study. What I have said in previous calls is that we will provide data at times when we start or plan to initiate studies in additional indications and not until then.

Speaker 6

Got it. That's helpful. Thanks for taking my questions.

Speaker 2

I would also like let me just also add a comment from the earlier call that when I was discussing The treatment in the lorogerlimab study that I was talking about a single agent, not a single arm study. So just to make sure that people were not confused by my statement.

Operator

Thank you. And one moment for our next question. Our next question comes from the line of Stephen with Stifel. Your line

Speaker 6

is open. Please go ahead.

Speaker 7

Yes, good afternoon. Thanks for taking the questions. So I know you've done a couple of licensing deals here just to gain access to some novel linker payload technology. And I guess Just wondering how that preclinical work is progressing, whether you're specifically focused on topo-one derivatives, which is, I guess kind of seem to be where the entire landscape is tilting right now. And whether the added balance sheet strength now allows you to accelerate some of those development efforts going forward?

Speaker 2

Great question, Steve. And as you know, we've been very high on the opportunities that have been afforded us by these additional licensing deals with Synafix, originally having access to 3 linker toxin combinations for specific targets that we expanded for 4 additional targets, so 7 in all. The preclinical development is going exceptionally well. As we pointed out on an earlier call, we intend to file an IND in the Q4 this this year. We're the first of these new agents.

Speaker 2

And at this point, it's or forward on the next one. And again, without giving precision here, we're trying to target for late 2024 for the second one as we're building additional molecules going forward. You should be assured that many of these molecules will include a topoisomerase linker toxin opportunity.

Speaker 5

Great. Thanks for taking the question.

Operator

Thank you. Our next question comes from the line of Shay Fimi with Barclays. Your line is open. Please go ahead.

Speaker 8

Hi. This is Shayne on for Peter Lawson. Thanks so much for taking our question. Maybe first just quickly on the verbiduo and lorgerumab combo, Sounds like you're still finding the right go forward dose here and maybe data is not till 2024. But could you give a little more color on what's built into there?

Speaker 8

Is that the through room to go dose escalate higher or is this more about finding the right balance from a safety perspective? Thank you.

Speaker 2

Excellent question, Shay. And as noted before, we want to have the both combinations that give the safety and activity that we think that can be achieved in both an additive or potential synergistic way. And so we could envision that these could be both in terms of like, let's say, loradirumab, which we started at 6 mgs per kg. We didn't expect to go higher on loradirlimab. So the opportunity was to keep that or going lower.

Speaker 2

And the same story with Vover. As you know, we're exploring 22.7 in the current study And given the potential here for synergy here on activity, there is also an opportunity that you may be able to even lower the doses from the historical use of this drug at 3 mgs per kg. And as you know, we started initially at 1 mg per kg in the first cohort going forward. So where we end up at this point, we don't know and until we have that precision, we won't go forward into the expansion studies.

Speaker 8

That's helpful. And just a last quick question, considering the removal of the control arm for VoverDuo and prostate, I guess how are you thinking now about your registrational strategy moving forward?

Speaker 2

As you know, this is a changing landscape where we Right now with Plavicta coming on board recently, we want to see how far that use of that drug is and in various lines of therapy we want to see other combinations that was brought up earlier on this call about the use of PARP inhibitors. So what we are right now on a look at the landscape when we've completed and selected the doses for Vover going forward and we'll see what the appropriate control. One can envision a specific control or one of several that investigators get to choose from, but we're right not ready yet to make that decision.

Speaker 8

Great. Thank you so much.

Operator

Thank you. I would like to turn the conference back over to Jim Carrels for any further or closing remarks.

Speaker 2

Thank you, operator. This is Scott Koenig. I want to thank everybody who participated in this call today. We appreciate and look forward to updating you on our future studies on the next call.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

Remove Ads
Powered by Quartr
Earnings Conference Call
MacroGenics Q1 2023
00:00 / 00:00
Remove Ads