MacroGenics, Inc. (NASDAQ:MGNX) Q4 2023 Earnings Call Transcript

MacroGenics, Inc. (NASDAQ:MGNX) Q4 2023 Earnings Call Transcript March 7, 2024

MacroGenics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon. We will begin the MacroGenics 2023 Fourth Quarter Corporate Progress and Financial Results Conference Call in just a moment. [Operator Instructions] At this point, I will turn the call over to Jim Karrels, Senior Vice President, Chief Financial Officer of MacroGenics.

Jim Karrels: Thank you, operator. Good afternoon, and welcome to MacroGenics' conference call to discuss our fourth quarter 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. This release is available under the Investors tab on our website at macrogenics.com. You may also listen to this conference call via webcast on our website, where it will be archived for 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.

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 the future, we specifically disclaim any obligation to do so, even if reviews change, except to the extent required by applicable law. And now I'd like to turn the call over to Dr. Scott Koenig, President and Chief Executive Officer of MacroGenics.

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

Jim Karrels: Thank you, Scott. This afternoon, MacroGenics reported financial results for the year ended December 31, 2023, which highlight our financial position. As described in the release this afternoon, MacroGenics total revenue was $58.7 million for the year ended December 31, 2023, compared to total revenue of $151.9 million for the year ended December 31, 2022. Revenue for the year ended December 31, 2023, included $29 million in revenue from collaborative and other agreements, MARGENZA net sales of $17.9 million and $9.8 million in contract manufacturing revenue. Our research and development expenses were $166.6 million for the year ended December 31, 2023, compared to $207 million for the year ended December 31, 2022.

This decrease was primarily due to decreased manufacturing-related costs for vobra duo, decreased development and clinical trial costs related to margetuximab, and decreased costs related to discontinued studies, partially offset by increased expenses related to MGC026 and MGC028 development. Scott will tell you about these 2 ADC product candidates in a few minutes. Our selling, general and administrative expenses were $52.2 million for the year ended December 31, 2023, compared to $58.9 million for the year ended December 31, 2022. The decrease was primarily related to decreased selling costs for MARGENZA. During the year ended December 31, 2023, MacroGenics received $100 million proceeds from the sale of our single-digit royalty interest on global net sales of TZIELD to DRI Healthcare Acquisitions LP.

In addition, we received a $50 million milestone payment from Sanofi related to the achievement of a primary endpoint in a TZIELD clinical study. Under GAAP guidelines and pursuant to Financial Accounting Standards Board’s Accounting Standards Codification or ASC 470, this combined $150 million was included in Other Income as a “Gain on royalty monetization arrangement” in 2023. Our net loss was $9.1 million for the year ended December 31, 2023, compared to a net loss of $119.8 million for the year ended December 31, 2022. Our cash, cash equivalents and marketable securities balance as of December 31, 2023, was $229.8 million compared to $154.3 million as of December 31, 2022. Finally, in terms of our cash runway. Consistent with our prior guidance, we anticipate that our cash, cash equivalents and marketable securities balance of $229.8 million as of December 31, 2023, in addition to projected and anticipated future payments from partners and product revenues should extend our cash runway into 2026.

Our anticipated funding requirements reflect expected expenditures related to the Phase 2 TAMARACK clinical trial, the Phase 2 LORIKEET study of lorigerlimab mCRPC, as well as our other ongoing clinical and preclinical studies. And now I'll turn the call back to Scott.

Scott Koenig: Thank you, Jim. We continue to believe our proprietary pipeline of product candidates has great promise, and we'll walk you through each of our key programs, including newly disclosed molecules momentarily, as well as tell you about our plans for upcoming clinical programs. But before I do that and building on what Jim said, I'll quickly remind you that since mid-2022, through our business development efforts as well as milestone achievement, we have received $335 million of non-dilutive capital. This includes $215 million from Provention, DRI, Sanofi in connection with TZIELD, $75 million from Gilead and $45 million from Incyte in connection with ZYNYZ. Okay, on to our pipeline. Vobramitamab duocarmazine or vobra duo is our ADC designed to deliver DNA-alkylating duocarmycin cytotoxic payload to tumors expressing B7-H3.

B7-H3 is a member of the B7 family of molecules involved in immune regulation. Vobra duo was designed to take advantage of this antigen’s broad expression across multiple solid tumor types. As you know, we believe that this has the attributes of an ideal cancer target. We began enrolling the TAMARACK Phase 2 study of vobra duo under a modified study protocol during the second quarter of 2023 and completed enrollment of this study in November months ahead of the schedule. In fact, 177 patients received vobra duo in the study, exceeding the study design goal of 100 participants. As a reminder, TAMARACK is being conducted in patients with metastatic castration-resistant prostate cancer, or mCRPC, who have previously treated with one prior antigen receptor access targeted therapy.

Participants may have received up to one prior taxing containing regimen but no other chemotherapy agents. This study is being conducted to evaluate vobra duo in patients across two experimental arms of either 2 mgs/per kg or 2.7 mgs/per kg every 4 weeks. In January, the TAMARACK Independent Data Safety Monitoring Committee recommended continuing the study based on a protocol-specified interim analysis. Also, in early February, we submitted an abstract to ASCO that included safety data from the January data cutoff. We anticipate providing an expanded more mature clinical update, including initial efficacy data in the second quarter of 2024 at this meeting. In addition, we anticipate providing updated clinical data, including radiographic progression-free survival, or rPFS, the study's primary endpoint at a conference during the second half of 2024.

We plan to expand the tumor types being evaluated in the TAMARACK trial and will enroll additional patients with non-small cell lung cancer, small cell lung cancer, melanoma, squamous cell carcinoma of the head and neck and anal cancer. We expect to initiate dosing in these additional cohorts in mid-2024. Next, I'll update you on Lorigerlimab, our bispecific, tetravalent PD-1 by CTLA-4 DART molecule. We designed lorigerlimab to have preferential blockade on dual PD-1 CTLA-4 expressing cells, such as tumor infiltrating lymphocytes or TILs, which are most abundant in the tumor microenvironment. We are enrolling the LORIKEET study of randomized Phase 2 clinical trial of lorigerlimab in combination with docetaxel versus docetaxel alone in second-line, chemotherapy-naive mCRPC patients.

A total of 150 patients are planned to be treated in the 2:1 randomized study. The current study design includes a primary study endpoint of rPFS. We anticipate providing a trial update in the second half of this year. In addition, we continue to enroll patients in the Phase 1/2 dose escalation study of vobra duo in combination with lorigerlimab in patients with advanced solid tumors. We anticipate commencing a dose expansion study of this combination in mCRPC and another indication in 2024. Next up, MGD024 is our next-generation, bispecific CD123 by CD3 DART molecule that incorporates CD3 component designed to minimize cytokine-release syndrome, while maintaining anti-tumor cytolytic activity, and permitting intermittent dosing through a longer half-life.

Our Phase 1 dose escalation study of MGD024 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 MGD024 at predefined decision points during the Phase 1 study. Next, I'm very excited to tell you about our growing ADC portfolio, which now includes an additional product candidate in the clinic. As I've mentioned on prior calls, we have been developing preclinical ADC molecules utilizing linker payload technologies we licensed from Synaffix. The first of these is MGC026, a clinical ADC incorporating a B7-H3-targeting antibody and a novel topoisomerase 1 inhibitor based linker payload SYNtecan E. This cleavable linker payload is based on exatecan, a clinically validated and potent cancer SCCHN [ph] that readily combines with Synaffix hydrospace technology.

We believe Synaffix's approach potentially provides advantages vis-a-vis other topoisomerase 1 inhibitor-based ADCs. In fact, exatecan appears to be more potent and less susceptible to multidrug-resistance mechanisms than other type 1 inhibitors, such as SN-38 and deruxitecan. Additionally, site-specific conjugation of SYNtecan to the normally glycosylated amino acid in the FC domain abolishes FC gamma receptor and manhouse receptor binding, which contribute to nontargeted uptake of ADCs in our alveolar macrophages and reported to be associated with lung toxicity and therefore, may provide a safety benefit for patients. The variable domain of the molecule targeting B7-H3 is the same sequence contained in vobra duo. We recently initiated a Phase I dose escalation study of MGC026..

We view MGC026 as a complementary approach to vober duo for targeting B7-H3. More specifically, we believe that having distinct mechanisms of action, vober duo and MGC 026 may address different cancers, tumor stages or be used in combination with alternate agents or potentially with one another to enhance their clinical utility. We remain confident in the potential of targeting the B7-H3 pathway viewing our Topo 1 inhibitor strategy as an additional valuable tool in our therapeutic repertoire. We plan to present preclinical data for MGC O26 at the upcoming American Association for Cancer Research or AACR Annual Meeting next month. Here's is a preview of what you'll see. In preclinical studies, MGC026 exhibited a favorable profile with potent in vivo activity to our B7-H3 expressing tumor xenografts representing a range of cancer indications.

MGC0026 was tolerated in cinemalogous monkeys, a relevant toxicology model at exposure levels exceeding those required for antitumor activity. We look forward to showing you the data at next month. In addition, we are readying a second topoisomerase 1 inhibitor based ADC, MGC028 for which we currently expect to submit an IND later this year. MGC028 is a preclinical ADC incorporating an ADAM9 targeting antibody and the second of our ADC molecules incorporating Synaffix's novel linker payload. ADAM9 or disintegrin and metalloprotease domain 9 is a member of the ADAM family of multifunctional Type 1 transmembrane proteins that play a role in tumor genesis and cancer progression and is overexpressed in multiple cancers, making it an attractive target for cancer treatment.

MGC028 is the second ADAM9 target ADC that we have pursued. So first was IMGC936, a molecule with a maytansinoid payload that was advanced under a co-development arrangement with ImmunoGen, Inc. now part of AbbVie. Under the 50-50 collaboration, ImmunoGen led clinical development of IMGC936, neither MacroGenics nor AbbVie intent to further pursue development of IMGC936 as the molecule did not receive our preestablished clinical safety and efficacy benchmarks. We plan to present preclinical MGC028 data at the upcoming AACR annual meeting in April. As a preview, MGC028 exhibited specific dose-dependent in vivo antitumor activity toward ADAM9 positive CDx and PDX models, including in gastric, lung, pancreatic, colorectal and head and neck cancers.

MGC028 was well tolerated in a repeat dose nonhuman primate toxicology study up to 55 milligrams per kg, the highest dose level tested. Of note, ocular toxicities that are typically seen with maytansinoid payloads and which we observed in our IMGC936 cinemologous [ph] toxicology study were not observed in the MGC028 pilot toxicology study. We plan to present more preclinical data on this asset at AACR. We currently anticipate submitting an investigational new drug or IND application for MGC028 by the end of 2024. In addition, beyond MGC026 and MGC028, we are exploring additional molecules for potential future IND submission. Stay tuned. Finally, enoblituzumab is an Fc-optimized monoclonal antibody that targets B7-H3. Our academic collaborators have initiated an investigator-sponsored randomized translationally intense Phase II investigator-sponsored study of enoblituzumab in up to 219 men with prostate cancer.

The HEAT study will evaluate the activity of neoadjuvant enoblituzumab, given prior to radical prostatectomy in men with high-risk localized prostate cancer. Eligible patients will undergo a pretreatment prostate biopsy and conventional imaging, both CT and bone scan, as well as PSMA PET and optional prostate MRI as per institutional preferences. To conclude, we believe we have the technical development and clinical expertise as well as financial resources to support our vision of developing and delivering life-changing medicines to cancer patients. We would now be happy to open the call for questions. Operator?

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