MacroGenics, Inc.
Q1 2017 Earnings Call Transcript

Published: 4 May 2017

[Operator:]

Good afternoon. We will begin the MacroGenics’ 2017 First Quarter 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'll 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 financial and operational results. For anyone who has not had the chance to review our results, we issued a press release this afternoon outlining today’s announcements, which is available under the Investors tab on our website at 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. Now, I would like to turn the call over to Dr. Scott Koenig, MacroGenics’ President and Chief Executive Officer.

[Scott Koenig:]

Thank you, Jim. I like to welcome everyone participating via conference call and webcast today. Thank you for joining us. The first quarter of 2017 was one of continued clinical and preclinical advancement for MacroGenics. Our continued commitment to building a broad pipeline was showcase through eight posters featuring MacroGenics developed program at the 2017 American Association for Cancer Research Annual Meeting. And we fulfilled our annual goal of filing one IND for a new molecular entity per year through the submission recently made for MGD013, a member of our PD-1 franchise that targets PD-1 and LAG-3. Once that Phase 1 study is up and running, it will be the 10th MacroGenics' program of clinical development. I'll provide an overview of MacroGenics' progress on these programs after Jim's review the financial results for quarter. I'll now turn the call back over to Jim.

[Jim Karrels:]

Thank you, Scott. This afternoon we reported financial results generally in line with expectations. As described in our release, MacroGenics had research and development expenses of $32.8 million for the quarter ended March 31, 2017, compared to $27.3 million for the quarter ended March 31, 2016. This increase was due primarily to the initiation of Phase 1 clinical trial of MGA012, continued enrollment in the margetuximab SOPHIA study and increased activity in the company's other preclinical and clinical programs. These increases were partially offset by decreased manufacturing cost for duvortuxizumab which are reimbursed by our collaborator Janssen. We had general and administrative expenses of $7.5million for the quarter ended March 31, 2017, compared to $6.1 million for the quarter ended March 31, 2016. This increase was primarily due to increased staff recruiting costs and stock-based non cash compensation expense. On the revenue side, we recorded total revenue consisting primarily of revenues from collaborative agreements of $2.1 million for the quarter ended March 31, 2017, compared to $2.8 million for the quarter ended March 31, 2016. Revenue from collaborative agreements includes the recognition of deferred revenue from payment received in previous period as well as payments received during the period. For the quarter ended March 31, 2017, we had a net loss of $37.7 million compared to a net loss of $30.4 for the quarter ended March 31, 2016. Cash, cash equivalents and marketable securities as of March 31, 2017 totaled $248.1 million, which does not include additional $23.7 million in proceeds before any expenses that we received through registered direct offering we closed within institutional healthcare investor yesterday. $248.1 million balance as of March 31, 2017, compares with $285 million as of December 31, 2016. Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities, including the net proceeds from the recently completed registered direct offering, combined with anticipated revenue under our current strategic collaborations can fund our operations through 2018. And now I'll hand the call back to Scott.

[Scott Koenig:]

Thank you, Jim. As I mentioned earlier, we've recently submitted an IND for MGD013, the first of our next generation PD-1 based bispecific molecules with the potential for enhanced anti-tumor activity. Assuming clearance of the MGD013 IND we will obtain proprietary and collaborate led programs in clinical development. Eight focused on immunoncology and two focused on order immuno and infectious disease. This is two more product candidate in a clinical than this time last year. Six of these molecules are created through our DART platform which we believe is the industry's most versatile bispecific antibody technology. Each of MacroGenics 10 product candidates were derived from our proprietary antibody engineering platform. We remain committed to maximizing the productivity of this platform as we continue to develop an advanced and robust and diverse pipeline. Let me now update you on our current pipeline and provide further details into the data presented AACR. Margetuximab is our Fc-optimized monoclonal antibody that targets the human epidermal growth factor receptor 2, or HER2. We are actively enrolling patients in the pivotal Phase 3 SOPHIA study for patients with metastatic HER2 positive breast cancer. In SOPHIA, we are evaluating the efficacy of margetuximab plus chemotherapy as compared to trastuzumab plus chemotherapy following progression after previous therapy. This study will enroll approximately 530 patients across trial sites in North America, Europe and Asia and remains on track for enrollment completion by late 2018. We are also continuing to enroll and treat patients in our Phase 2 study of margetuximab in combination with pembrolizumab, an anti-PD-1 therapy for patients with advanced HER2-positive gastric cancer. The proposed combination regimen will allow patients all whom have limited treatment options to avoid chemotherapy while utilizing the immune-mediated pembrolizumab killing properties of both margetuximab and pembrolizumab. We plan to enroll a total of 30 patients in the US and 30 in Asia including Korea, Taiwan and Singapore by the end of 2017. MacroGenics is pursuing multiple B7-H3 directive programs and giving us the leading franchise of product candidate that target this member of the B7 family of immune regulatory molecule. MacroGenics fully owns this franchise which includes multiple programs that target B7-H3 through complimentary mechanism of action and takes advantage of this target's broad expression across many solid tumor types with little expression on normal tissues. The most advanced B7-H3 candidates we have in development are an enoblituzumab which is an Fcoptimized monoclonal antibody that targets B7-H3. Recruitment in multiple Phase 1 study of enoblituzumab is ongoing. These studies include a monotherapy study expanded last year to include additional bladder and prostate cancer cohorts and a combination study with an anti-PD-1 monoclonal antibody. The second clinical candidate in the B7-H3 franchise portfolio is MGD009, a B7-H3 by CD3 targeted DART molecule. MGD009 is being evaluated in a Phase study in patients across several defined solid tumor types. We expect to establish the dosage schedule for MGD009 administration as well as initiate dose expansion cohort in multiple tumor type this year. The third molecule our B7-H3 franchise is MGC018, an anti-B7-H3 antibody drug conjugate. We are conducting IND enabling activities to support an IND application for this anti-B7-H3 ADC in 2018. The Company's poster on MGC018 at the recent AACR meeting showed that this molecule had potent in vivo anti tumor activity in animal models. These results support further development to evaluate the potential of MGC018 as an ADC therapeutic for the treatment of the B7-H3 expressing solid tumors. Additional DART molecule in Phase 1 clinical development include flotetuzumab, a CD123 x CD3 DART molecule is being developed to treat patients AML or MDS. An MGD007, gpA33 x CD3 DART molecule is being developed to treat patients with primary and metastatic colorectal cancers. Both are currently being studied in Phase 1 trial and are currently recruiting patients. We expect to establish a recommended doses schedule for flotetuzumab as well as initiate dose expansion cohorts for this program in 2017. With regard to MGD007, we are dosing patients in one microgram for kg every three weeks and we will explore more frequent dosing intervals. I expect it to be able to provide an update with regard to both programs including future development plans later this year. MGD010 is a DART molecule designed to simultaneously target the B-cell surface proteins CD32B and CD79B and it is a first DART molecule developed for the treatment of autoimmune disorders. We expect to present updated clinical pharmacodynamic activity results from the completed Phase 1 study of MGD010 in June. The final program I will discuss today make up our PD-1 directed immunoncology franchise. We are advancing several PD-1-directed programs, which will enable both a broad set of combination opportunities across our own portfolio of molecule and provide further differentiation from existing PD-1-based treatment options. MGA012, our proprietary anti-PD-1 monoclonal antibody is enrolling patients in the dose escalation segment of our Phase 1 clinical study and we expect to define a target dose and schedule in the coming months. With anti-PD-1 therapy becoming a mainstay of cancer treatment across multiple tumor types, MacroGenics believes MGA012 will be the basis for potential combination therapy with several of the molecules in our pipeline including LB directed T cell DART molecule. MGD013 is intended to provide co-blockade of two immune checkpoint molecules expressed on T cells, PD-1 and LAG-3, for the potential treatment of a range of malignancies. I am not aware of any other combined check point by specific molecules in the clinic today. Assuming clearance of our MGD013 IND, I would expect this to be the first. Among the eight posters, we and our collaborators had at AACR was one show preclinical bispecific DART and trispecific TRIDENT molecules that bind to and inhibit ligand interaction with PD-1 and CTLA-4, resulting in enhanced T-cell activation. Combinatorial blockade of PD-1 and CTLA-4 has shown improved anti-tumor activity in the clinic. By targeting these clinically validated checkpoint molecules simultaneously, MacroGenics' DART and TRIDENT proteins hold the promise of enhanced anti-tumor activity. Other posters that AACR covered are B7-H3 ADC program, our ADAM9ADC program in collaboration with ImmunoGen and multiple DART molecule including two posters regarding duvortuxizumab also known as MGD011 which is a CD19xCD3 DART molecule being developed by Janssen. Collectively these preclinical data's presentation demonstrates that depth of our pipeline as well as the quality of our science. As Jim alluded to during the financial update, the progress we've made this year was accomplished while maintaining a strong balance sheet and overall financial position. We look forward to continue advancement of our programs and see continuing to update you as the company and our science progresses. This concludes my prepared comments. And we now are glad to address to any questions that callers may have. Operator?

[Operator:]

[Operator Instructions] The first question comes from Michael Smith with Leerink. Your line is now open.

[Michael Schmidt:]

Hey, Scott. Thanks for taking my questions. What if any data should investors expect from your clinical stage bispecific program this year?

[Scott Koenig:]

Michael thanks very much for the question. We are very happy that our programs are proceeding nicely. As I pointed out for flotetuzumab, the MGD006 molecule targeting CD123xCD3, we continue on the leading dosing schedule with very good support of care and this strategy is working quite nicely since our recent update at our R&D in December. We are continuing to dose escalate and anticipate that with continued enrollment we should achieve a dosing that we think is preferable be able to understand the side effect profile as well as clinical benefit in population at the targeted dose. We expect that to be reported at a scientific meeting either one or more before the end of the year. With regard to MGD007, our gpA33xCD33 molecule which is you know targeting metastatic and primary colorectal cancer. We've indicated that we are continuing to dose patients at 1 microgram per kg every three week. We are anticipating to enroll up to 20 patients at that dose. And we've recently submitted an amendment to the protocol that is being reviewed and we anticipate patients getting enrolled on a more frequent dosing basis again at the 1 microgram per kg dosing. The expectation is that we will have enough data by the end of the year enrolling those very dosing regimen so that either late this year or early next year we should be able to provide update on the MGD007 molecule. In addition, we have expectations on our PD-1 molecule MGA012; we are right now at the10 mg per kg Q2 weekly and Q4 weekly dosing, recruiting patients at that dose. Assuming no one expected toxicity which to date the program is gone quite favorably. We expect the completion of dose escalation sometime probably by early third quarter. At that point, we will be in an excellent position to begin to advance that program forward in combination with one or more of our other molecules likely by the end of the year. And we are also potentially exploring the use of that molecule as a single agent in particular specific indication. Furthermore, on enoblituzumab, as I have noted enrolling some additional patients in the monotherapy study particularly patients with prostate cancer and bladder cancer. We've completed the recruitment of patients in the prostate of the monotherapy studies. We still have additional patients that we need to recruit on the bladder cancer side. But again by the end of the year we should have that part of the study complete and we'll find hopefully a good form to be able to present and update on the monotherapy data. I've also pointed out in the combination studies with both anti-PD-1 and CTLA-4; those are progressing nicely with the anti- PD-1 combination with an enoblituzumab advancing a little faster than CTLA-4 targeted molecule. The expectation as I had alluded to earlier this year is that approximately a 100 patients will going to be enrolled in the arms of the PD-1 combined with enoblituzumab in patients with head and neck cancer, lung cancer, melanoma and bladder cancer. And what we are guiding people is that we expect probably about two thirds of those patients to be enrolled by the end of the year. That will then obviously continue into 2018. As I have said before that if the data progresses faster than that and we have opportunities to present completed data on any given cohort, we would be happy to do so. So I think those are the key takeaway. The only other molecule that we should have some additional data on is MGD009 the B7-H3 by CD3 as I pointed out earlier, we are defining the dose, we expect probably in sometime in the third quarter to have those defined. And then we are going to flip over into six different tumor types as monotherapy. And but that doesn't preclude us from even starting combination studies with anti-PD-1 for any of these molecule by late this year.

[Michael Schmidt:]

Great. Thanks for that detailed answer. Follow up on the enoblituzumab PD-1 and combination study. Are you selecting patients based on B7-H3 antigen expression level or other if they are both post op biomarket analysis plan of those data?

[Scott Koenig:]

And a very good question. So on to date we have been selecting patients based on the entry criteria on -- we are trying to create diagnostic for that in parallel with a vendor and we had been selecting patients based on a screening criteria of two plus three plus mg criteria. We actually will make probably modifications of that entry requirement given that it does take time to get that data back and we've gotten feedback from investigators that recruitment could be even faster if we don't require that upfront and we found that virtually all the patient who would be B7-H3 positive so rather put that as an impediment for enrollment we are allowing patients on those particular tumor type to enroll and then retrospectively will analyze for the expression level of B7-H3. This is very consistent with what originally when we started that trial that the FDA had asked us that at some time also testing a subset of patients that did not have B7-H3 expression so this may allow us to get some exposure of the drug to those individuals as well.

[Operator:]

Thank you. The next question comes from Steven Willy with Stifel. Your line is now open.

[Stephen Willey:]

Hi, good afternoon. Thanks for taking the question. Scott, have you said whether or not MGA012 has had the ADCC engineered out of the molecule? And I guess ask the question I know there has been some speculation regarding the Zeneca PD-1 that some of the infusion reaction that they are seeing may be a byproduct of the ADCC activity? Just wanted if you can provide some commentary.

[Scott Koenig:]

Yes. So the antibody is an RGG-4 I believe and therefore it will not have intrinsic ADCC activity by itself. We didn't -- as I recall we didn't engineer out any bonding to SCRs like we do with many of our DART molecule as you know. So I think it's a wild type G4 that's in clinical development.

[Stephen Willey:]

Okay. And just on the AACR posters, one of the AACR posters about you are comparing the PD-1 CTLA-4 bispecific in both TRIDENT and DART formats. Have you made a decision as to which one of those maybe moving forward and maybe provide a little bit of rationale for the TRIDENT format and which I think you are looking at monovalent CTLA-4 binding.

[Scott Koenig:]

Yes. Now thanks very much for that question. We are very excited about both construct and the preliminary data has been extremely promising. We are-- we had been developing these things in parallel. So just to give you a little bit of granular detail on that. The PD-1 specificity first of all in both is same one that's an MGA012, so we have direct parallel there. And as we've reported before the binding properties of the PD-1 are quite favorable with high affinity and those longer off rate and probably longer half life of that molecule compared to several of our marketed products in that regard. The CTLA-4 specificity also has very favorable binding characteristics that's compared to able about -- we typically make a copy of the reported sequences of the both marketed as well as the experimental specificity so that we can have a comparison to the gold standard there. Now when we created the bispecific that has -- which is the DART molecule, it's a tetravalent bispecific so it has two binding domains for PD-1 and two binding domain for CTLA-4. And so if you are looking at the targeting of particular populations, it will be certainly a large number of cells that will up regulate PD-1 and CTLA-4. As you know, these molecules express temporarily at different parts of the activation process of T cells. So what will happen is that for any cell that co expresses PD-1 and CTLA-4 that tetravalent bispecific will bind to both. The same thing is that if -- for cells that only express PD-1, the tetravalent bispecific will bind as efficiently as a wild type PD-1 there. So you'll get all the anti-PD-1 effects of the molecule if expresses both molecules and one molecule. It also -- will also hit a target that only express CTLA-4. So you basically cover all populations with that tetravalent bispecific. Now turning to the TRIDENT, the TRIDENT is designed so you have two copies of the PD-1 and one copy of the CTLA-4. So only in the case when the cells co expresses PD-1 CTLA-4 will then molecule efficiently bind to that population. In cases where you only have CTLA-4 expression it won't bind very well to that population, it will fall off very quickly and will not impede the signal. What we are looking at is both biological and solitary effects but also our concern is that we want to be managing certain toxicities there and so by not binding in a TRIDENT version this molecule and not binding to CTLA-4, we may obviate some of the side effect profiles. Right now I would say that the lead molecule is the tetravalent bispecific just because of timing. It's little ahead on that. But we will continue to develop the other one in parallel and we'll make some decisions later this year on which one we will move into the clinic first.

[Stephen Willey:]

Okay, that's helpful. And then have you also explored the balance equation via the DART and TRIDENT scaffold with the PD-l LAG-3 combo?

[Scott Koenig:]

Oh yes. We did that. So that's an excellent question as well. In fact, the specific version that is moved that just move into the clinic, the PD-1 by LAG-3, the tetravalent bispecific. We had actually constructed a monovalent bispecific versions molecule and the tetravalent bispecific which became the clinical candidate. What we found is that you have dramatically improved biological activity of the tetravalent bispecific. And we have noted in previous presentations and also at the AACR meeting, the DART molecule and that configuration induce better T cell restoration activity than two separate antibodies to that molecule. And you only see that when you have the tetravalent bispecific. When we use the monovalent bispecific version and molecule, you would have blockade effect to certain degree but you didn't get that added benefit that we reported. And what we've found is that molecule is very effective at cross linking PD-1 and LAG-3 and in addition to the ability of advantages of that molecule, you may be also inducing certain advantages signaling properties by that closed linking downstream that is giving the enhanced immune restoration function.

[Operator:]

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

[Boris Peaker:]

Great. Thank you for taking my questions. So my first one is on margetuximab. Just curious do you test all the incoming patients for the FCgamaR3A mutation? And is it also known what fraction do you anticipate to be heterozygous or 0

[Scott Koenig:]

Boris thanks for the question. We have been showing by work that we've done and also reported in a literature. The both low affinity S variant FFO homozygous variant of CD16 and heterozygous variant of the FV represent approximately 80% of the population. There are some minor differences among different ethnic group. We are not prospectively screening those patients for those mutation but we are actually accumulating on that data retrospectively for our analysis. Given that it's such predominate type and given that we had seen in our Phase 1 study particularly in breast cancer patients, I think frankly every breast cancer patient that was randomly enrolled into the study turned out to be either heterozygous or homozygous for the low affinity [LEO]. We found -- we felt that we would in a favorable position to naturally recruit the majority of the patients with that low binding version of the molecule. But we will be monitoring it going forward.

[Boris Peaker:]

Great. And may on enoblituzumab, since it has the same modification, is it safe to assume that you'll also just be monitoring and not including a screening criteria? Or is there anyway to incorporate any kind of learnings from margetuximab into enoblituzumab future studies?

[Scott Koenig:]

That's a good question. We haven't done that in the Phase 1 study to date that I know. I don't think that data has been captured. The rationale on novel margetuximab was based on published data that suggested that that population would be preferentially benefit in particular by enhancing the binding to CD16 but it's a good point that we might have additional learnings on responding population based on and looking at that. So thanks for the suggestion.

[Boris Peaker:]

Okay. Great. And my last question maybe you've answered it to some extent is on flotetuzumab, CD123 kind of a long name hard to say so I'll just CD123, CD3 bispecific, so do you think we'll have some data at ASH? I mean you said later in the year. I just want to kind of try to pin it down to medical meeting.

[Scott Koenig:]

So you are not going to break my way but we haven't submitted the abstract yet on these things. But ASH is among the meetings that would be good candidates for presentation of data. So sometime later this year ASH is one of the candidate.

[Operator:]

Thank you. The next question comes from Yigal Nochomovitz with Citigroup. Your line is now open.

[Yigal Nochomovitz:]

Hi, Scott. And thanks for taking the question. We are looking on clean trial and it seems that there are some very recent changes as recently as the 24th of April on the duvortuxizumab for the C19 CD3 with respect to changes and dose possibly changes in dosing schedule. Can you comment at all on that? And just broadly where this program stands in terms of effort to recruit and potential for data? Thank you.

[Scott Koenig:]

Thanks, Yigal. As you know, we are precluded to making any statements about the study apart from Janssen. And we haven't had any discussion. We are aware of some of these changes that they implemented in the protocol in terms of dosing. In fact, they are continuing to do dose escalation of the molecule and they have actually guided us where they are going in terms of the dosing and dosing internal on this. It was all favorable from -- they have plans from what we glean from that conversation that dosing is going to continue in all three cell malignancies probably through the latter part of the year. What they had indicated to us, their one step is established, the proper dose for the drug as you recall they had anticipated doing a second study in combination within [Brumaca] and I think that's all -- those plans are still in place. So that all I know as of now.

[Yigal Nochomovitz:]

Okay. Thanks. So you can't really comment on data timing for that program?

[Scott Koenig:]

Not really. It's -- again I know they are recruiting patients but it's -- I really have no guidance in terms of the rate of enrollment for that study.

[Yigal Nochomovitz:]

Okay. And I just had a question on MGC018 and the B7-H3, what was the thought process in choosing this linker, the DUBA linker with Synthon with and are there other linkers that you are considering with Synthon that you could use for future ADC to develop. Thanks.

[Scott Koenig:]

Yes. So thanks for that question. We had as you recall had spent I would say a good part of over two to three years, actually since probably since the time of our IPO doing valuation on many different toxins and toxin conjugate and linkers. And so these were included company that are in the ADC space that are public company as well as private companies with new technologies. We saw a very favorable profile with the duocarmycin toxin, the collaboration with Synthon with this particular linker toxin technology and in the context of our B7-H3 program has performed very nicely. As you know, we had a poster at AACR highlight that data. So we are continuing with that. I know of no other activity specifically for other toxin conjugate linker toxin with Synthon as you know we had two posters with ImmunoGen on looking at toxin conjugate with that on nine molecules. We have collaboration with them using again different molecules both from the maytansinoid series and other new next generation molecule that ImmunoGen is developing targeting DNA and again that collaboration is going well. And I could say we also have other work going on in the area. But with regard to your original question, nothing specific about other linker toxin from Synthon is ongoing that I know of at MacroGenics.

[Operator:]

Thank you. The next question comes from David Nierengarten with Wedbush. Your line is now open.

[David Nierengarten:]

He, thanks for taking the question. Further quick question on potential competitor or another molecule in space that's rushes CD3CA molecule. I am just wondering what - when they present data to ASCO what -- is there any re-through we could have on the GPA33 CD3 DART that you are developing? Thanks.

[Scott Koenig:]

David, thank you very much for the question. As many of you know, I think Roche recently highlighted on a call last week some data that they are planning to present at ASCO, discussing their CD3 by CDA bispecific which has I think two copies of targeting CDA and one copy targeting CD3 plus their anti-PD-01. With the presumption that they are discussing that because of data is likely to be quite favorable, we are very excited about the prospects and as you heard today and I pointed out in our long-term strategy is taking advantage of our whole PD-01 franchise, PD-1 alone, PD-1 LAG 3, you heard about PD-1 CTLA-4, how these will combine with our own molecules which include redirected T cell DART molecule as well as the FC engineered antibodies. So if they have favorable result there that certainly bodes well for the strategy that we are going to be taking and we will be an excellent position given the advancement of -- and particularly as you mentioned the MGD007, GPA33 for colorectal cancer. So combining that molecule with our anti-PD-1, but I should also -- if you just want to talk about colorectal cancer, I should remind folks that B7-H3 is highly express on a large population of colorectal cancer. So there is an opportunity to take advantage for MGD009 in the context of colorectal cancer as well as others as well. So we are very -- we are looking forward to hearing that data and we hope it's positive.

[Operator:]

Thank you. The next question comes from Reni Benjamin with Raymond James. Your line is now open.

[Reni Benjamin:]

Hi, Scott. Thanks for taking the questions. I guess one of the first one having to do with the SOPHIA study. Can you now we are in May, provide us with any more granularity as to when the futility analysis may happen and just remind us in this case what the hurdle for futility might be and if the study can be stopped for efficacy?

[Scott Koenig:]

Thanks very much, Van. So we have not disclosed publicly specifics about the targeting for the futility. And I'll not to do so today. I will say though we are consistent in terms of the number of events we are looking at that we expect that data to be ready by the end of the year. And potentially could be stopped for efficacy, it's not just a safety look.

[Reni Benjamin:]

Got it. And then just switching gears, you mentioned the next generation of P1 based programs. And should we be thinking about more combinations for example with TIM3, OX40, does it kind of just keep running again or do you have it further well selected and can you do the exact same thing with let say PD-01 in those same combinations and where does ADAM9 fit in with this entire mix?

[Scott Koenig:]

Okay. I'll start with the last question. We are focused on the use of ADAM9 as specifically for the ADC, no specific plans for bispecific although that-- ADAM-9 is an interesting target it goes beyond today's question. But right now we don't have any bispecific targeting ADAM9. With regard to all the other members of the checkpoint family that you mentioned plus probably about another five or six more, we have a lot of combination in our back pocket here. Obviously, this is going to be guided by the preclinical data, whether it's come out in the clinical arena and the advantages of having a bispecific or trispecific with particular combination. So remember two years ago we set out a very clear strategy that we were going to acquire and develop variable domains from many of the checkpoints and the checkpoint login and look at combinations together. So some of the molecules you've described we have in our back pocket.

[Reni Benjamin:]

Got it. Okay. And then just maybe switching gears to the task profiles of some of the molecules that are now under clinical evaluation. Can you -- and I know that you have been experimenting with different doses and different dosing schedules but maybe based on kind of what's happening in the self therapy industry, are you taking and can you provide us any additional color as to how you might be able to moderate some of the toxicities that you might be seeing and any changes that are going right now in the clinical trials.

[Scott Koenig:]

Yes. So thanks for that question, Van. If you recall at our R&D day, John Wigginton, our Chief Medical Officer provided some insights on how we were managing the cytokine release associated particularly with MGD006 for the trastuzumab and some on target toxicities in the GI track associated with MGD007 and as I commented on earlier today, I thik that strategy is bearing nice fruit for us as we advance on both those molecule into further testing. First of all, I should say outright that the magnitude of the cytokine release that we are observing does not come close to what has been reported for CAR T type infusion. The large part of these events can be managed in an outpatient setting. At times the patients are kept for observation overnight. We are into -- while we have instituted is treatment that are very modest from a dosing of steroids and in particular interventions with anti cytokine such as [toci] for anti- I06, very early when we see first sign to that. And that seems to have been enabled us to manage toxicity profile quite nicely. I should also note that typically seeing these events in the first infusion and second infusion, sometimes also into the third but usually it's an earlier event and is a natural modulation of this further on. So with the other strategy that with exploit is the lead in dosing regimen, we've done this for MGD006 particular we are looking at employing this for some of the solid tumors as well. And we think that this strategy is also will be very helpful at mitigating some of the cytokine of effects.

[Operator:]

Thank you. The next question comes from David Lebowitz with Morgan Stanley. Your line is now open.

[David Lebowitz:]

And you had mention earlier modified the protocol for MGD007, could you just quickly run us through what sort of changes were made?

[Scott Koenig:]

Yes. Thanks David. Just to reiterate we are dosing patients at 1 microgram per kg on Q3 weekly basis and we extended out the number of patients that we anticipate to dose that regimen and as I indicated earlier, we are targeting up to 20 patients at that dose. In addition, we submitted a protocol revision that we can give to drug more frequently at that same dose or lower dose so that they get shorter term exposures to smaller fraction of the drug. And that was submitted recently. We expect to hear from IRB and don't expect any push back on that. But we'll hear very shortly and expect to expand additional patients in those cohorts as well.

[Operator:]

Thank you. The next question comes from Debjit Chattopadhya with Janney Capital. Your line is no open.

[Earl:]

Hi, Scott. This is [Earl] in for Dagjit. Couple of questions. So in the MGD007 program, what is the distribution of that MSI positive versus negative patients? And beyond the initial PR and MSI negative patient. Has there been any other anecdotal PR?

[Scott Koenig:]

So I am not going to comment response rate at this time. We will be able to again update this later this year. The first patient as we have reported was a confirm PR and was on drug for substantial time. But I am not going to comment further on new patients. I am sorry the second part of that was --

[Earl:]

Beyond the initial PR and has there been any other anecdotal PRs?

[Scott Koenig:]

No. Beyond that question I am not going to respond to that. Was there another part to the question?

[Earl:]

The distribution.

[Scott Koenig:]

The distribution, I am sorry. I didn't know what you said. We are monitoring that. We are not prospectively looking at that. The particular patient was that has a PR was a MSI stable, was not an MSI high. But we are monitoring those patients but we are not particularly selecting that population to treat at this point and we are obviously report out data for the MSI when we have it.

[Earl:]

And for the CD123 targeted bispecific in AML, have you now turned out to CRS been an initial patient? And a follow up is what is the level of physician enthusiasm to drive recruitment in the relapse refractory population?

[Scott Koenig:]

I am sorry. Can you repeat it out second question? I heard the first. I didn't hear what you said. Repeat the second.

[Earl:]

The level of physician enthusiasm to drive recruitment in the relapse refractory population.

[Scott Koenig:]

Oh okay. So the answer for the CRS part is we have a leading dose that we describe and then patients are then treated for a week and either given continuous infusion over a month or put on a four day or three day off schedule. And as I was alluding to before that strategy is really paid off for us very well as a very manageable CRS at much lower grade than were observed earlier when we were giving higher initial dosing. So I'd say that the response from clinicians is extremely favorable both in the US and Europe that are participating in the trial for relapse refractory and I could say there is also been encouragement from a number of investigators for us to expand the use of this drug in other CD123 bearing tumor populations as well.

[Operator:]

Thank you. The next question comes from Dane Leone with BTIG. Your line is now open.

[Dane Leone:]

Hi, thank you. So the first one for me is, how do you see I guess going back to MGC018, how do you see that program evolving and is there timeline that you may think could be accelerated versus some of the other B7-H3 programs. The reason I ask is, could you -- some of the other part of the B7-H3 program, you do have some tangible real world data from peer companies that have been using B7-H3 targeted ADC. Do you seem to be getting pretty good results with manageable toxicities profiles?

[Scott Koenig:]

Dane, thanks very much for the question. Obviously, we are enthusiastic about the program. I don't want to get ahead of ourselves with regard to specific timeline given that we are just starting out formal toxicology study of the molecule. So once we get through that and as you know we have been looking at repeat dosing. If that all looks favorable we are on target sometime next year to start the clinical study. The opportunities are great one for us given that there is so many different tumor types and as you saw from the preclinical data with a single dose of the drug. We basically cured tumors in different model systems. And so we are going to have obviously judiciously give the drug and a very safe dose. We are going to have work our way up. We can't be too rapid on this because you are dealing with a very, very prone toxin that binds to both dividing and non dividing cell. So we'll see how things come through in terms of the preclinical development and the initial dosing and then we'll be able to give guidance if we get to that point probably in the latter part of 2018.

[Dane Leone:]

Okay. And then a follow-up maybe on MGD013. The question that we've gone back a lot, and as you stated you will be the first, expected to maybe the first with IND clearance and making into the clinic. The question we get back a lot is on the [sogayametry] when you have this bispecific targeting, in this case PD-1 and LAG-3 with some concerns coming back that it may actually be hard to effectively dose both of those targets, and you may actually be need to put quite a bit of antibody into the patient. I'd just be curious for your thoughts of how you think of that, I guess more systemic modeling versus obviously the preclinical data which you're not going to encounter those types of issues?

[Scott Koenig:]

Yes. So I am actually surprised that you think that there is going to be some large income with regard to dosing. As you know, for PD-1 targeted molecule, they tend to have a fairly long both and pharmacokinetic and pharmacodynamic profile. And particular as I pointed out earlier, the PD-1 component of this molecule is quite favorable to the approved drug and in fact we are looking at the possibility giving our all 12 possibly less frequently than the currently marketed product. So we have to see what the PK as I don't have it at this point in terms of occupancy on given cell. I should also say and we iterate that I said earlier that the LAG-3 component of this molecule was quite favorable to the 25F7 copy that we made of the Bristol molecule that's not in clinical development. As you know, Bristol presented some data at SITC was for anecdotal cases of giving their anti-LAG-3 or anti-LAG-3 in combination with Nivo and showed some very nice clinical responses in two different tumor types. And I see on the abstracts for ASCO that they are going to present the poster of in melanoma patients of that combination. So we actually think that given the point I made earlier that having a tetravalent bispecific should lead to a better ability and we are seeing better functional activity. I have to say I'll be the first one surprised if that we are going to have troubles with regard to dosing this molecule but we'll wait and see, we'll see how the data turns out.

[Dane Leone:]

Okay and then maybe one final one for me, just from a macro question of people looking at the stock, you guys did do you I guess registered direct offering recently in maybe announced another share offering today, as you think about how you guys are messaging versus the value -- the value creation that's being built within the MacroGenics platform, you're up kind of around the 30 level, 30 plus level hang into the R&D Day last year that came in quite a bit down to kind of the low 20s here, maybe you could just kind of give us some direct messaging of what you're thinking -- and anything about the context of doing raising cash down at these levels versus waiting for some of the clinical catalysts in the back half of this year?

[Jim Karrels:]

Yes. Thanks Dane. This is Jim. Just to be clear, we actually announced the closing in our earlier comments we announced the closing of the registered direct to offering with an individual healthcare industry, institutional healthcare investor. Today, we actually -- so just take a step back, we patch up with years we've really done our best to bring and not dilute capital. We remain very active on the business development front. And we think it prudent to maintain a two year cash runway. So last November we filed a shop registration stay with -- we cover the potential issuance of securities as we continue to build out our business. So we announced last week that we had entered in to a registered drug placement with a particular group and so that brought in $23.7 million that closed yesterday. So today we added to our financial toolkit our flexibility to offer up to $75 million via what's called an ATM or at the market offering our common stock. And we believe that an ATM would provide with cost effacement financial flexibility especially on uncertain markets. And we think it's a very prudent to have in place. We've not made a decision yet as to whether we'll use that or what levels but we think it's smart to have that in place. You'll have to see sort of where the stock goes.

[Scott Koenig:]

You heard about all the programs we were asked obviously earlier in the question period about preclinical program and we just want to be in the best financial position and from our advantage point as you know historically we try to maintain two or more years cash and we believe that given the breadth and depth of our program that our stock is trading low. But ultimately time will find out but we have to keep our runway appropriate.

[Operator:]

Thank you. The next question comes from Peter Lawson with Suntrust Robinson. Your line is now open.

[Peter Lawson:]

Scott, just thinking about 013, when we could see data for them?

[Scott Koenig:]

Peter, as you know, I love to see as fast as we can but first we got to get the FDA to say we can start with the trial. We are -- the clinical team is doing a great job in getting the trial sites so lined up to start the study. Obviously, it has to go through the IRB review at a particular site but we are very excited about the prospects of this molecule and just given that here we are in early May and it's going to be a couple of months before startup. And then we have to do our prudent dose escalation. I think we'll be able to better comment at that this in 2018. My clinical folks will be very unhappy with me if I gave you any specific guidance about timing of clinical result.

[Peter Lawson:]

Got you. And then just beyond 010, what programs going to yield the next clinical data for you this year?

[Scott Koenig:]

So we will provide an update as we stated today in June for 010 but after that as I pointed out second half of the year will be for flotetuzumab 006, 007 and then some potential data on the dose escalation for 012 as well as a novel trastuzumab from monotherapy and potentially combination studies.

[Peter Lawson:]

Got you. And then just Jim just following up on kind of questions about cash and cash burn. How should we think about spending for the rest of the year and which you think the cash runway takes you to now?

[Jim Karrels:]

Yes. Peter, on the call we referenced that with this additional $23.7 million gross proceeds into the company, we can now comfortably say that our cash runway takes us all the way through 2018 and into very early 2019. We are not providing any guidance with respect to operating expenses. I mean I can tell you we do anticipate that our burn will become greater and greater as we move into later stages of development. And as we move more and more programs into the clinic. I'll also share with you that despite the fact that we have a very active BD effort, we model that very conservatively and we don't like to over estimate the probability of or the likelihood of completing BD deals because you never really know. So we've taken a very conservative stands on that. And that's why enough to say we can say that it's $248 million at the end of Q1 plus another $23 million-ish, give or take of the registered direct batch is closed yesterday, takes us all the way through 2018.

[Operator:]

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

[Scott Koenig:]

I'd like to thank everyone again for joining us. And we look forward to updating you on each of these programs that we discussed today as we continue to make progress throughout the year. Have a great rest of the day.