MacroGenics, Inc.
Q1 2018 Earnings Call Transcript

Published: 8 May 2018

[Operator:]

Good afternoon. We will begin the MacroGenics 2018 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 time, 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 first quarter 2018 financial 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 www.macrogenics.com. 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 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 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 first quarter of 2018 we made significant progress on several fronts and I am happy to provide an update that is focused on our most advanced candidates 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 and year.

[Jim Karrels:]

Thanks Scott. This afternoon we reported financial results for the first quarter, which highlight our strong financial position and as described in our release, MacroGenics had research and development expenses of $45.7 million for the quarter ended March 31, 2018 compared to $32.8 million for the quarter ended March 31, 2017. This increase was primarily due to the continued enrollment in our two margins clinical studies namely the SOPHIA Phase III trial for metastatic breast cancer and our combination trial with an anti-PD-1 in gastric cancer as well as the INCMGA0012 immunotherapy clinical trial and you'll note that this is inside new definition for what we call MGA012. We had general and administrative expenses of $9.2 million for the quarter ended March 31, 2018 compared to $7.5 million for the quarter ended March 31, 2017. This increase was primarily due to consulting and other costs incurred related to the implementation of our new Enterprise Resource Planning or ERP system. We recorded total revenue consisting primarily of revenue from collaborative agreements of $4.7 million for the three months ended March 31, 2018 compared to $2.1 million for the three months ended March 31, 2017. Revenues from collaborative agreements includes the recognition of deferred revenue from payments received in previous periods as well as payments received during the year. For the quarter ended March 31, 2018 we had a net loss of $49.5 million compared to a net loss of $37.7 million for the three months ended March 31, 2017. Our cash, cash equivalents and marketable securities as of March 31 2018 were $260.1 million, which compared to $305.1 million as of December 31, 2017. In April of this year after the close of our first quarter, we completed a public offering of our common stock for net proceeds of $103 million. This strengthened our financial position and as a result, our pro forma cash, cash equivalents and marketable securities were $363.1 million at March 31, 2018, which includes the net proceeds from our recent offering. Based on our current operating plan, we believe that our pro forma cash, which again included the net proceeds from our recent offering, our cash, cash equivalents, marketable securities combined with collaboration payments we anticipate receiving should enable us to fund our operations into mid 2020 assuming our programs and collaborations advance as currently contemplated. And now I'll hand the call back to Scott.

[Scott Koenig:]

Thank you, Jim. As I mentioned in the opening MacroGenics has made considerable progress across multiple fronts recently. I will elude in my comments this afternoon to selected programs which represent the most significant value creation opportunities throughout in 2018. Let me begin with a review of our most advanced program margetuximab, our novel immune optimizing HER2 antibody, which has Fc domain engineered to enhance engagement and activation of the innate immune system. Our pivotal SOPHIA study is evaluating the efficacy of margetuximab plus chemotherapy compared to trastuzumab plus chemotherapy, in approximately 530 relapse/ refractory HER2-positive metastatic breast cancer patients. In January we announced the completion of a preplanned interim futility analysis with the recommendation of an independent data safety monitoring committee to continue SOPHIA as planned with our modification. This analysis is based on a pre-specified assessment of progression free survival as determined by independent central review and did not allow for early stopping due to efficacy. We also announced that the US FDA had granted fast track designation for the investigation of margetuximab for treatment of patients with metastatic or locally advanced HER2-positive breast cancer who have previously been treated with anti-HER2 targeted therapy. Enrollment of the SOPHIA study is going very well and we remain on track to complete enrollment by the end of 2018 with anticipated disclosure of topline progression free survival data expected in the first half of 2019. In January of 2018, MacroGenics presented interim clinical data from our Phase II study of margetuximab plus the anti-PD-1 agent pembrolizumab in patients with gastric and gastroesophageal junction cancer at the ASCO GI conference. These results included encouraging tolerability, and durable anti-tumor activity in a sub population of 25 gastric cancer patients. Based on these results, we are expanding the margetuximab gastric study by enrolling 25 additional gastric cancer patients and we'll continue to evaluate biomarkers to determine the patients who will most likely benefit from margetuximab plus anti-PD therapy. We will present updated clinical and biomarket data for this study at the 2018 ASCO Annual Meeting next month. In summary, we are encouraged by our progress in margetuximab both in the SOPHIA breast cancer trail and in our Phase 2 gastric cancer study. We believe that our approach of optimizing the Fc domain to enhance engagement and activation of the immune system using our novel anti-HER2 antibody has great potential for the treatment of patients in the two indications and we look forward to presenting additional data on the gastric study in the near future. Our next program is flotetuzumab and our DART molecule that recognizes both CD123 and CD3, which is being developed as the monotherapy for the treatment of acute myeloid leukemia, or AML. During the call, I will provide a clinical update on patients from our ongoing dose expansion study of flotetuzumab in patients with AML and MDS at last year's ASH Meeting in December. Flotetuzumab demonstrated acceptable tolerability as well as the evidence of anti-leukemic activity. We have now fully enrolled the 24-patient AML dose expansion cohort and decided this time to stop enrollment of MDS patients to focus on further development of flotetuzumab in AML. We anticipate presenting updated clinical data and defining a potential registration path during the second half of 2018. Servier is our partner on flotetuzumab and has development and commercialization rights outside of North America, Japan and Korea and India. At the ASH meeting, we also presented data supporting the rationale for using checkpoint blockade as an approach to potentially enhance the anti-leukemic activity of flotetuzumab. Based on those results, we intend to initiate a combination study in the third quarter of 2018 of flotetuzumab and INCMGA0012. Moving on to our PD-1 directed Immuno-Oncology Franchise, as I just noted in December we closed a global collaboration licensing deal with Incyte for INCMGA0012. We transferred the INCMGA0012 US IND to Incyte during the first quarter of this year. While Incyte has exclusive worldwide rights for the development and commercialization of INCMGA0012 MacroGenics retains the right to develop our pipeline assets in combination with its anti-PD one antibody. The trial in combination with flotetuzumab I just mentioned, is an example of this strategy. We also recently began a study of INCMGA0012 with MGD009 B7-H3 by CD3 DART molecule. INCMGA0012 will remain a core strategic asset and will be the basis for potential combination therapy with other molecules in our pipeline, including MGD007 as well as margetuximab and enoblituzumab. In addition to INCMGA0012 we have two our programs in development within our PD-1 directed Immuno-Oncology Franchise. We are developing MGD013, an Fc-bearing DART molecule, to provide co-blockade of PD-1 and LAG-3, two immune checkpoint molecules expressed on T- cells for the potential treatment of a range of solid tumors and hematological malignancies. We believe that MGD013 was the first bio-specific checkpoint molecule in the industry to enter the clinic. MGD013 is currently being evaluated in a Phase 1 dose escalation study and we expect to establish the dose and schedule for MGD013 administration in the second half of 2018 at which point we will initiate dose expansion cohorts. We anticipate presenting Phase 1 clinical data in 2019. MGDO19 is designed to provide co-blockade of two immune checkpoint molecules expressed on T-cells namely PD-1 and CTLA-4. We are completing IND enabling studies and anticipates submitting the IND application for MGDO19 in the second half of the year and initiating the study in the first half of 2019. I will be quickly providing an update on our B7-H3 franchise another opportunity for potential value creation in 2018. Our most advanced candidate, enoblituzumab, is an Fc-optimized monoclonal antibody that targets B7-H3. We have completed enrolled in our ongoing study of enoblituzumab in combination with an anti-PD1 mab in patients with bladder cancer, non-small cell cancer, cancer of the head and neck and melanoma. We intend to present clinical data in the second half of this year, and provide guidance on future developments of enoblituzumab. The second clinical candidate in our B7-H3 franchise is MGD009, a DART molecule targeting B7-H3 and CD3, which is being evaluated in a Phase I study across multiple solid tumor types. Consistent with what we have previously stated, we expect to establish the dose and schedule for MGD009 administration as well as initiate monotherapy dose expansion cohorts in the second half of 2018. In addition we initiated a combination study of MGD009 and INCMGA0012 during the first quarter. 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 are completing IND-enabling activities to support submission of an IND application for MGC018 and initiation of Phase 1 study in the second half of 2018. We have two additional DART molecules in the Phase 1 clinical development MGD007 and MGD014. We have completed our monotherapy study of MGD007 a DART molecule that recognizes GPA33 and CD3 and we anticipate commencing a combination study with INCMGA0012 in the second half of 2018. MGD014 is our first DART molecule designed to target an infectious agent. MGD014 recognizes the envelope protein of HIV-infected cells and the T cells CD3 component to redirect the immune system's T cells to kill HIV-infected cells. The company expects to commence the phase 1 study during the second quarter of 2018. Finally I would like to provide a brief corporate update. We have completed construction of the GMP manufacturing site in our Rockville, Maryland headquarters and expect to commence production runs in this facility in the third quarter of 2018. This is our important step to support larger scale clinical and commercial manufacturing. We have a ribbon cutting ceremony at the facility next week. Our technology platform in protein engineering expertise have allowed us to continually generate promising product candidates and enter into several strategic collaborations with global pharmaceutical and biotechnology companies. Our recent agreements with Insight and Roche are great examples and have provided us with meaningful upfront payments and the potential to receive future payments based on milestones and royalties. MacroGenics continues to advance our clinical and preclinical programs and I look forward to sharing additional clinical data with you at ASCO and at other conferences later this year. This concludes my prepared remarks and now we will be glad to address any questions that callers may have. Operator?

[Operator:]

Thank you, Sir. [Operator Instructions] And our first question will come from the line of Stephen Willey with Stifel. Your line is now open.

[Stephen Willey:]

Yeah. Good afternoon, guys. Thanks for taking the questions. Maybe just wondering Scott, if you could provide just a little bit of more commentary around perhaps the decision to stop enrollment into the MDS cohort for flotetuzumab and then just with respect to the comments you made regarding potential registrational path being outlined at some point in the second half of the year, is it possible that this could be a program by which we see two separate registrational tracks occurring simultaneously and I say that obviously because we have the MGA012 combination that's going to be initiating here shortly as well.

[Scott Koenig:]

Steve, thanks for the question. With regards to the MDS cohort, as I have noted, on our previous calls AML components of the study was enrolling very quickly while the MDS was enrolling slowly and it's just the nature of the patients and we decided that given the slow pace of the enrollment with that and the prioritization of things in the program behooved us to just stay focused on the AML for the time being and then come back and look at MDS patients later on. We obviously want to analyze the ongoing study. Patients are still being treated and evaluated and we will have plans for engagement of the regulatory agencies on what the appropriate next steps are for developing this drug. This could include expansion into additional patients in AML looking at particular subsets of patients with relapse refractory diseases and so the analysis is continuing. But the expectation is given program is that we'll meet with the regulatory agencies over the next of couple and be able to define a path forward later this year and obviously without any feedback at this time I can speculate on specific registration pathway. With regard to your question with regard to two separate tracks, clearly that analysis will confirm the efficacy and safety we see as single agent in the combination together. As I pointed out, we plan to initiate the combination study with our anti-PD-1 the MGA012 and in likely in the third quarter of this year, so I don’t have any data yet. Given the strong signal that we saw with regard to regulation of PD-1 on the AML glass post a single course of flotetuzumab I would expect that, that combination strategy will make sense, but I am not excluding the possibility that registration can come as you alluded to two separate tracks one in which we population with flotetuzumab alone and a separate pathway down looking at patients with baseline up regulation of PD-1 on AML and those that will further regulate them after a course of flotetuzumab. So again I think as more data comes in over the next couple of months and we have these regulatory interactions, we will be able to better define the ways going forward.

[Stephen Willey:]

Got it. That's helpful. Thank you. And then just a quick question on the ADC018, just kind of curious as to what some of your initial manufacturing work I know that you're going to be presumably running this out of the new GMP facility, but just kind of curious as to what you would expect the homogeneity of the finished product to look? I know some of these ADCs can be fairly heterogeneous specifically with respect to the drug antibody ratio. So just curious as to what kind of consistency that you can achieve there from a manufactures perspective, thanks.

[Scott Koenig:]

Yes, so thank you very much for that question. We're very excited about this first new ADC molecule to the clinic. Just a little bit on the granular detail. The particular epitope that this B7-H3 molecule recognizes is different than is incorporated in our other two B7-H3 directed targets. So in theory, this molecules could be combined with potentially other B7-H3 targeted molecules number one. With regard to your specific question, the average DAR on the molecule was 2.7. It is looking at the pretty homogeneous molecule, we are manufacturing the antibody here, but through the collaboration with Synthon, they are doing the conjugation and then ship that to us and to our contractors for the ultimate filling of these products, but we've been very pleaded with at least the runs we've seen to date with regards to the consistency of the molecule.

[Stephen Willey:]

Great. Thanks for taking the questions.

[Operator:]

Thank you. And our next question will come from the line of Debjit Chattopadhyay with H.C. Wainwright. Your line is now open.

[Debjit Chattopadhyay:]

Hey good afternoon, guys. Can you hear me?

[Scott Koenig:]

Yes Debjit.

[Debjit Chattopadhyay:]

Hey, thanks for taking the questions. So just wondering in terms of given the failure that we've seen with the I-O, does that change your thought process on the LAG-3 PD-1 combo and in terms of positioning the LAG-3 PD-1 combo, I know it's early days, but which line of therapy does it make the most sense to go after?

[Scott Koenig:]

Thanks Debjit for the question. Obviously the unfortunate response is to the PD-1 combo had no impact at all on our strategy, scientific rationale and our prospects for the combined PD-1 LAG-3 molecule. I think that it's just the -- first of all the body of data pre-clinically says that, that combination should work exceptionally well particularly restoring cells, T-cell that are refractory to signaling to the PD-1 pathway and we are continuing to generate larger massive data in terms of the co-expression patterns of PD-1 and LAG-3 on very large numbers of different solid tumor types. As you know, a lot of different companies are pursuing this combination pathway is as two separate agents. Today we are the only ones I know that are pursuing a single combined molecule and as we've shown previously this combination in our model systems and in vitro using in ourselves, suggests a added or synergistic effect as a DART molecule compared to two separate antibodies to the individual molecules. So we are right now in the middle of dose escalation. We expect that to be completed sometime in the second half of this year and we are all guns going forward on at least six different tumor types that may be expanded to seven or eight and as you know the data that we know from other programs, the most notable one, the Bristol-Myers program has to date indicated positive results in the P1 experience populations in missed our melanoma and as you know they have expanded their clinical study to over a 1,000 patients. So I think that there is a general interest in the industry. There is nothing out there that we know based on our own experience or experience that suggests that this combination won't do well together.

[Debjit Chattopadhyay:]

Just to stay on that topic, so where does it make the most sense? Patients who have relapse, so let me rephrase that, so patients who come in and have very high PD-1 expression levels respond to checkpoint in addition and then relapse. Is that the patients you're looking at or you are looking at patients with very low levels of PD-1 expression to begin with, specifically say non-small cell?

[Scott Koenig:]

So I will say that our goal right now is to yet experience in both the PD-1 experience, the anti PD-1 and anti PD-1 experience population, those that have either responded and continue to respond so they progress or those who have denied that treatment, I think that there is an opportunity to restore responsiveness to those patients that have progressed on anti PD-1 and PD-1 therapy that regulate last three in that population, those patients we believe with a significant portion of those patients will respond. In addition from the get go, even in those patients that have not been anti PD-1 or anti PD-1 experience, we think that the sizable number of those patients that could even respond better to this combination from the get go, but we will be analyzing those in the course of our expansion studies that I have eluded to before that then we'll make decisions on which ones to prioritize based on those results.

[Debjit Chattopadhyay:]

Good. And then on MGD007, you indicated completion of monotherapy studies. So any thoughts on the dose that you or can you MGD007 or monotherapy MTD when they combine with an anti PD-1?

[Scott Koenig:]

Yes. So as I noted today, we recently completed the dosing and the dose finding for MGD007 as monotherapy. As I pointed out numerous times in the past year and half, our biggest challenge was on target toxicity that we were observing and so we had to sign our pathway where we knew that we were getting occupancy of the receptor on the tumors and mitigating the side effect profiles, which were mostly nausea, vomiting and diarrhea particularly in the first several doses of drugs. We've hit our targeted dosing schedule and to support regimen that warrants going forward with this program. I will say that as a monotherapy, the activity with respect to response rate would not indicate that we should continue that alone as a drug, although there are opportunities that patients could be stabilized on this therapy as monotherapy we think that the best prospect for this drug is to combine this with our anti-PD-1 strategy. Consistent with what we had talked about before with flotetuzumab we have seen that this molecule will regulate PDL-1 expression and PD-1 T-cell and so as a result we think this combination has the best prospects of going forward. We are starting that combination study this quarter. It is starting at a lower dose of the molecule obviously again looking at number one most important is safety in these patients, but hope to quickly be able to move out to the targeted doses of both molecules at the maximum effective dose. So again, this wills start this quarter and hopefully this will bear out the hope we have for this drug.

[Debjit Chattopadhyay:]

And one more if I may, I actually haven’t started the PD-1 CTLA-4 combo as yet but in terms of the [indiscernible] factor, the go, no go decision, how soon do you think you want to get to that in terms of because obviously, you know where the hurdle is from a safety perspective. Is that your kind of gate going forward if you don’t think you get to safer, cleaner safety profile than that combo, there is no real commercial value pushing this forward?

[Scott Koenig:]

Well, no I actually don’t quite agree with that, but let me sort of set the stage of how I perceive the use and value of this drug. We are very encouraged by the preclinical data of this molecule targeting the PD1 specificity that we have incorporated same specificity as our MGA012 molecule and as you know from the get go, the characteristics of this PD specificity, we're somewhat better in terms of half-life, in terms of ability to PDL-1 and PDL-2 bonding. And with regard to the CLTA-4 specificity we've also seen the enhanced activity with regard to the interaction between P71 and CLTA-4 and the effects of the specificity we have incorporated in our biospecific DART molecule. Taking this forward, into primary toxicology studies in cynomolgus monkeys, we were extremely encouraged by the biological activity that was observed, number one is KI-67 which is reflection of the value cells in the T-cell population were significantly increase similar to what is seen with reported data for nivo and YERVOY. In addition, the side effect so far what we observed in these monkey studies, we found the doses extremely high doses in combination with scant amount of side effect profile as exhibited as diarrhea and this was dramatically different than what have been observed for example in the toxicology studies that Bristol had published for YERVOY and nivolumab. So from the get-go, we think that this has better characteristics as a single molecule. Getting back to your original question, if the animal data doesn’t predict a good safety profile in humans, obviously, all bets are off. But if we're seeing either equivalent safety or what I'm hoping to be better safety with that efficacy that could potentially be as good or better than that, the ipi-nivo combination, then we're up in the races. Obviously it's better to have a single agent as a DART molecule to be available for patents and clearly I think that well Bristol has done a good job as possible looking at the number of different tumors that are responding to this combination, I don’t think that this landscape has been fully explored and so we think that the opportunity for us to develop this drug in pathway that BMS has not perceived, I think can put us in a very good position. So I am very excited about the prospects of this molecules getting us this IND filed late in this year. Hope to start very early next year in the dosing the patients and we'll see where it takes us.

[Operator:]

Thank you. And our next question will come from the line of Yigal Nochomovitz with Citi. Your line is now open.

[Unidentified Analyst:]

Hi, this is Samantha on for Yigal. Thanks for taking the question. For the gastric cancer data that you're planning to present at ASCO, are we going to see any new patients included in this update?

[Scott Koenig:]

Thanks for the question Samantha. Yes, you will see some new patients. As I pointed out, we are dosing additional 25 patients now in this cohort of IHC 3 plus HER2 positive gastric patients in the second line. Our plan is to present up to date data, which goes beyond whatever the abstract included at the time obviously that was submitted a long time ago. There will be a I think a very nice analysis of looking at subset populations based on different biomarkers and as I noted in my earlier remarks, I am very encouraged about this data and I think if we get the support from the additional 25 patient cohort, I think we have a very nice pathway forward for developing margetuximab with anti-PD-1.

[Unidentified Analyst:]

Great. Thanks. That's helpful. And one more for margetuximab trial in prostate cancer being run by JHU, we saw that it was switched from a Phase 1 to a Phase II and they doubled enrollment. Do these design changes in the trial suggest that it's going well and did the JHU investigators, are they seeing signs of efficacy? Can you elaborate on any details there?

[Scott Koenig:]

So it's too early to comment on this investigator sponsor trail JHU. Obviously we have seen some initial encouraging data in the population, but the size of the study was too small to make any specific conclusion. So we both agreed that we wanted to do some more data analysis and have a further dataset to evaluate. So that was the reason why essentially there was a doubling of the enrollment plan. So stay tuned for that. They are very encouraged by the initial results, but I think again the dataset is too small to come to any conclusion.

[Unidentified Analyst:]

Okay. Thanks for taking the question. Appreciate that.

[Operator:]

Thank you. And our next question will come from the line of Reni Benjamin with Raymond James. Your line is now open.

[Reni Benjamin:]

Great. Thanks guys. Thanks for taking the question. Maybe just based on the previous speaker's question, can we talk a little bit about the go, no go decision for March plus pembrolizumab. How are you thinking about that and the path forward? Do you think this is expanded to a randomized Phase 2? Do you want to just go right into a Phase 3 if it hits that go decision? And then can you remind us about the sub population and I guess what biomarkers we should be paying most attention to?

[Scott Koenig:]

Reni, all great question. You got to come to see our poster at ASCO and you'll see a lot of the insights there, but let me sort of give you my though process right now on what our thought process is right now. Again if you look at the compared data for approved drugs either Ramucirumab or Ramucirumab [indiscernible] in the second line therapy, obviously this is a little bit apples and oranges because this is a small Phase 1B type study to date and they obviously did randomized studies, but we have been exceptionally encouraged by the overall response rate where we're in the 30s in the HER2 positive gastric population and if you actually segregate them to a higher express, it's even higher. We're seeing PFS that beating, again, everything in second line. And as of the last dataset that we presented, we have reached the OS and again that is continuing to look very good and this is in the context as we know that patients on Ramucirumab plus taxane, a lot of those patients can't tolerate that combination and ultimately those patients are put on a lot of them on Ramucirumab alone with the overall response rate is only about 3%. So I am extremely encouraged by what we're seeing today and again as I pointed out, if the expansion data hold up, there is really no reason not to pursue this recent second line and one could even consider given the rate of responsiveness to think about first line studies with this combination in the future. With regard to the design of the model -- study whether it be expansion versus a randomized compared to the standard of care, as the conversation we'll have with the regulatory agencies, the expectation is there is once we have this data on this expanded 25 patients, we'll be talking very soon to the regulators. So again everything looks good as of this point.

[Reni Benjamin:]

Got it. And then just I know you can't comment more on the interim results for SOPHIA, but are there any more DSMB meeting schedule between now and kind of when the data is supposed to be available in 2019?

[Scott Koenig:]

Unless they are not seeing safety issue that came up the DSMB had to address, there is nothing, the data is going to read that and we're ready or excited about the prospects there. The study is enrolling very nicely knock on wood. We're expecting and hoping for successful SOPHIA study sometime in the first part of next year.

[Reni Benjamin:]

Got it. And then finally switching gears to flotetuzumab, obviously, we're going to see some monotherapy data, we have the combination with PD-1. Can you talk a little bit about what the flotetuzumab monotherapy strategy in terms of registration could be going forward?

[Scott Koenig:]

Yes, so again as I said before, we're taking a very good look at the response rates in the various population. As you know patients with relapse refractory are heterogeneous. They have differences in mutation, their tolerability different ages and so what we are looking for is the define either a global population or a specific population that we think will best benefit from this drug as the initial on-tray toward the registration study and again we'll be growing from the ongoing patients that we've just included in expansion and we're also talking about expanding the studies in various ways looking at particular population. So it will be our hope that if we can define a particular population and look at response rates, maybe a single ounce study for monotherapy might be acceptable to the regulators, but as I said, we have not discussed this with the regulatory agencies and until we get their feedback, we won’t know whether we need to go forward with a monotherapy dosing in a particular population of if this needs to be controlled studies.

[Reni Benjamin:]

Okay. Thanks for taking the question.

[Operator:]

Thank you. And our next question will come from the line of Jonathan Chang with Leerink Partners. Your line is now open?

[Jonathan Chang:]

Hi guys. Thanks for taking my question. First question, can you hope that investor expectations I have the Phase 1 in enoblituzumab plus KEYTRUDA combination data in solid tumors? How are you thinking about the benchmarks from moving forward in a particular indication?

[Scott Koenig:]

Jonathan, thanks for the question, as you know there is a large literature on looking at PD-1 combination data both with KEYTRUDA, with nivo and other PD-1 agents. We've taken oral data that's available out there to set out benchmarks for populations that are been exposed to these agents as monotherapy plus our own experience with enoblituzumab as a single agent, however the number of the patients for individual tumors aren’t particularly vast. So we set those internal benchmarks. We're not ready to make a decision yet because many of these patients are still on the combination therapy and that's why we've even though the study has been enrolled, we're continuing to dose patients and follow those patients and we're not ready yet to clear particular tumor types that meet our internal criteria. We expect that to happen in the second half of this year and expect to present that at one of the scientific meetings later this year. And of course as you know, at any given time, the landscape may change based on other individual, other company's experience with their combinations of molecules using PD-1 targeted therapy. So we expect though to be very definitive before the end of the year on go, no go decisions for any given tumor type for that combination.

[Jonathan Chang:]

Okay. Thanks and then second question, how should investors be thinking about MGA012 or and anti-PD-1 partner with Incyte post some of the changes they're making to their development strategies?

[Scott Koenig:]

Actually with regard to their at least reported development strategy and with our interactions with them since the epacadostat data has come out, it's been all encouraging that they are moving forward with their initial plans for combining the now INCMGA0012 with, I guess, up to eight molecules in their portfolio. They have not changed their request for the announced material they have asked us to make in our manufacturing facilities and we are going to be supplying the drug to them. So from what we know as of now, there has been no change to their strategy and as you know we've outlined our combination strategy going forward.

[Jonathan Chang:]

Great. Thank you very much.

[Operator:]

Thank you. And our next question will come from the line of Christopher Marai with Nomura. Your line is now open.

[Christopher Marai:]

Hi Scott. Thanks for fitting me in. just a quick one on 007, maybe help frame for us some of the results we should expect to see from single agent studies and then with respect to path forward any thoughts with respect to looking at subset for CRC patients maybe CMS patients, et cetera. Thank you.

[Scott Koenig:]

Yes, thanks Chris. I commented before as I said the results of our study are not greatly different than what have been previously reported by Roche with regard to the -- their CACD3 monotherapy studies. We saw some degree of responsiveness, low response rates. We saw some hint of extension of patients in terms of being on drug than what would be expected normally for this with the end stage CRC population. But with the results were not sufficient for us to continue developing this as a monotherapy drug and so right now our goal is to establish a safety of the combination with the young CMGA012 in combination following the dose and our goal here is as you know looking at populations based on very histological profiles. As you know that there are some outcomes and differences with regard to the degree of T-cell localization in the site, obviously different markets. We'll be monitoring this obviously genetic markets as well, but right now I can't give you any specific guidance with a particular sub population of patients than they will be most affected or benefit by the combination.

[Christopher Marai:]

Okay. Thank you.

[Operator:]

Thank you. And our next question will come from the line of Peter Lawson with SunTrust Robinson. Your line is now open.

[Peter Lawson:]

Thanks Scott. Any updates on your thoughts about how you commercialize margetuximab, what rights you hold on to?

[Scott Koenig:]

It's a great question Peter. We've been obviously spending a lot of time here in preparing going forward with this given that this is will be the first drug we plan to commercialize. It obviously take a lot of foresight in terms of what infrastructure we need to develop internally. One thing that you heard about today is the expansion and development of an ERP system to support the whole manufacturing and supply and distribution, which was very important for us. We are at this point looking for the ultimate participation in commercialization. In the U.S., we have outreach and discussions with various organizations that have interest particularly in regions that we don’t have the capability to commercialize in the near term particularly as we highlight some of the opportunities now beyond breast cancer, gastric cancer for example. You can imagine there are organizations that would be interested in Asia that likely the profile we've seen with this drug as well. So our plan right now is to work on the U.S. launch plans probably designed as some internal hires as well as some external support for sales and marketing and then look for additional partnerships for distribution outside the U.S.

[Peter Lawson:]

Got you. Thank you. And then just on the gastric cancer data at ASCO, so do you think we have 50 patients by then and what will we get in terms of response rates or PFS or OS numbers? I mean how should we think about what we will get and will you segregate that based upon the new patients and the old patients?

[Scott Koenig:]

Nice try Peter. I am not going to tell you the data. Realistically, we're not going to have all 50 patients from the additional 25. We'll have some additional patients from the expansion part of this study and obviously even the original 25 patients as you remember from the data we presented in January, a sizeable I think with half the patients in that population were still on the combination study. So you're going to see maturation of the original 25 patients. Some additional new patients that have been on study. You'll start seeing biomarker analysis of subsets of patients and I think you'll begin to start seeing a very consistent response rate that's predictable based on the biology that involved here. It's all coming together and making sense from a molecular standpoint.

[Peter Lawson:]

Got you. And then just on trastuzumab. How many patients do you think you'll have by the second half to help you look at different response rates and in different populations?

[Scott Koenig:]

Yeah remember that in December we had at the ASH meeting, we had eight of the expansion cohorts in we were targeting 25 patients with relapse refractory and we had eight patients reported on as of December and so as I had indicated, we have the rest of those patients now enrolled. Some continue on drug and analysis. So this expectation is that in the second half of this year we will allow that data to mature. We'll present that data and we may actually have some additional studies ongoing by that time that we present that data, still to be determined, but again as I pointed out based on cytogenetics, based on the age of the population, based on what relapse and refractory these breakdown into smaller and smaller numbers and we want to begin to become comfortable with identifying the best predictable population that's going to response to trastuzumab. We clearly have the signal here, the caution is can is we sort the patients that will most benefit from this and we'll make a decision over the next couple months.

[Operator:]

Thank you. And our next question will come from the line of Dane Leone with BTIG. Your line is now open.

[Dane Leone:]

Hi thanks for taking the questions guys and thanks for the update. I wanted to ask firstly on 009, I just want to ask what we should think about in terms of data from the monotherapy program for the remainder of the year and whether there will be an option so we would see any initial combination data later this year with the PD-1? And any commentary specifically on the treatment algorithm, whether you have a selected dose for 009 that's going with PD-1 or there will be dose adjustments for both therapeutics?

[Scott Koenig:]

Yeah Dane, thanks very much for the question. So with regard to the timing as you know abstract submissions volumes require a big lead time. We're still in the final stages of identifying the monotherapy dose. Just only be pretty granular about it, as we pointed out in the initial dataset that we presented when we got a 10 micrograms per kig, on a Q2 weekly basis, while we're starting to see any tumor responses, we'll also seeing cytokine release at that dose. And so we again step back like what we did with flotetuzumab to design both strategies for support care as well as lead in dosing strategies and so we've adapted particularly both of those 409 as monotherapy and patients have done very well. We started with a leading dose and on weekly basis we've now been able to up the dose getting close to what the targeted dose was. We're either at the dose or probably one dose away from completing that dose selection. So it's my expectation is that over the course of the next couple of months, we'll have the dose for the monotherapy and then as we pointed out, we're going into cohorts of six different tumor types, 16 patients each and we expect that to start sometime in the second half of this year. With regard to the combo data, as you know we started out with a lower dose of MGD009 and again a fixed dose of the MGA012. Our expectations are that we will up the dose of our 09 going forward. We want to make sure we're establishing that the combination don’t exacerbate the safety profile and so right now I don’t have anything to report on with regard to the combination. It is possible that some monotherapy data at a later or something later this year sure is possible, but it's more likely that this will be in the first part of 2019.

[Dane Leone:]

Thank you. And if I could follow it with kind of a more global question that we get a lot with investors and I guess I would bridge across flotetuzumab to 009 to 007. As we think about these programs and the conversation on this call, a lot of discussion is about these different algorhythms that we're going through to try and get optimal response while containing some of the toxicity associated with the T cell redirection and a lot of the direction seems to be going in the combination with PD-1. I just want to understand your thoughts again from a higher level here, is that your thinking now with some of the data in hand across these programs that using a PD-1 with these T cell redirected antibodies about specifics is going to allow you to contain dosing in a certain way that will allow you to kind of cap some of that CRS potentially neurotox allowed to bring forth kind of move it up on the utility curve I guess clinically a little bit.

[Scott Koenig:]

So let me you threw out a couple of this I think, so let me clarify a couple of things that I think will be a little bit of a misperception. We're not seeing the neurotox any of the toxicity I mean we have had patients with some CNS effects plus one had been observed in the DC 19 targeted therapies. We're not in general seeing that as a consequence of any of these drugs. So let me separate that out. Also the nature of the toxicity while I would say that all the CD3 redirected killing drugs will induce cytokine release to some degree, I think we have here upon a strategy both in terms of support care as well as lead and dosing strategies that have mitigated for a large part of these side effect profiles that made them both tolerable and allow us to get to higher dosing levels. So I think we have a strategy in hand. Obviously we have to fine tune it for each of these drugs for the ultimate maximum dose, but I think clearly getting doses in ranges that allow for occupancy activation and expansion of T cells and the induction of killing responses. Now there are some idiosyncratic toxicities one observes that's related to the target and that in fact the cytokine release wasn't a big issue of what we believe, at least from a systemic standpoint for MGD007, it was more on the on target on the GI track possibly due to local production of cytokine possibly due to signaling through the GPA33 molecule. So I think you will see the idiosyncratic side effect profiles based on particular targets. So with respect to what the rational for the PD-1, it's not just to give lower doses of the drug to a greater tolerance, if anything it's actually to allow for a good safety profile, but for making the activation process that induces the PD-1 and regulation on the tumor cells, and the PD-1 on the T Cells, which the ongoing therapeutic benefits for CD-3 redirected killing strategy. So our goal is that we can get clinical benefit from the individual agents, but we're looking at ways to maximizing this initially with PD-1 blockade, but as I pointed out before historically, it is just PD-1 blockade that along as we developed PD-1 lag three and PD-1 CTLA-4 and other combination DART molecules the ability of combining these other checkpoint blockade inhibitors as well as we pointed out before many of the checkpoint agonist that can be also used in combination with these molecules. So we have a pretty comprehensive strategy going forward. We obviously have to build the individual blocks to show the biology as working, but ultimately our goal here is to maximize the therapeutic benefit of immune based therapeutics.

[Dane Leone:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] And our next question will come from David Lebowitz with Morgan Stanley. Your line is now open.

[Vikram Purohit:]

Thanks, this is Vikram on for David. So just a quick one from us, so with regards to the Roche collaboration, I know that [indiscernible] I know that the release says that targets are currently undisclosed, but could you speak about the clinical areas that are being targeted? Any detail you could provide around that collaboration would be helpful.

[Scott Koenig:]

So thank you very much for the question. Well, we have not publicly disclosed the specific therapeutic areas I have seen in the public domain, Roche commenting the development of this combination therapeutic setting and this is very much in keeping where we have identified that we are focusing a lot of our strategy now on the cancer therapeutic and the value of having a very experienced partner as Roche in the auto immune space and their interest on the targets that we're both pursuing as excellent collaboration going forward. So and I would say that to date we've been very happy with how this program is going both in terms of our efforts on the research side as well as theirs and the partnership is going extremely well.

[Operator:]

Thank you. and I'm showing no further questions at this time. So now, it's my pleasure to hand the conference back over to Dr. Koenig for some closing comments and remark. Please proceeds sir.

[Scott Koenig:]

I would just like to thank everyone again for joining us and let you all know that we look forward to updating you on each of the programs that we discuss today as we continue to make progress. Have a nice day.

[Operator:]

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program and we may all disconnect. Everybody have a wonderful day.