MacroGenics, Inc.
Q2 2017 Earnings Call Transcript

Published: 3 Aug 2017

[Operator:]

Good afternoon. We will begin the MacroGenics’ 2017 Second 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 second 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 Web site at www.macrogenics.com. You can also listen to this conference call via webcast on our Web site; 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 like to welcome everyone participating via conference call and webcast today. Thank you for joining us. The second quarter of 2017 was another productive one for MacroGenics. The Phase 1 study of flotetuzumab, one of our bispecific DART molecules in advancing and we will present updated interim results from that trial in an oral presentation at the European Society for Medical Oncology Annual Congress or ESMO, in September. Our investigational new drug application for MGD013, a member of our PD-1 franchise which targets PD-1 and LAG-3, was cleared by the FDA and we expect to enroll the first patient immediately. Finally, margetuximab, our Phase 3 anti-HER2 antibody remains on track for completing an interim futility analysis later this year. I will provide more detail on our other highlights across our pipeline after Jim has reviewed the financial results for the 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 R&D expenses of $34.5 million for the quarter ended June 30, 2017 compared to $33.3 million for the quarter ended June 30, 2016. This modest increase was primarily due to the initiation of a Phase 1 clinical trial of MGA012 in late 2016 and continued enrollment in our various clinical trials. This increases were partially offset by a decrease duvortuxizumab manufacturing costs which are reimbursed by our collaborator Janssen. We had G&A expenses of $8.4 million for the quarter ended June 30, 2017 compared to $7.2 million for the quarter ended June 30, 2015. This increase was primarily due to increased professional fees, including consulting expenses, and increased employee compensation and benefit expense to support our overall growth. On the revenue side, we recorded total revenues consisting primarily of revenues from collaborative agreements of $1.7 million for the quarter ended June 30, 2017 compared to $80.7 million for the quarter ended June 30, 2016. This decrease was driven by $75 million upfront payment under the Janssen MGDO15 agreement and a $2 million milestone payment from Pfizer, both of which were recognized in the second quarter of 2016. Revenue from collaborative agreements includes the recognition of deferred revenue from payments received in previous period as well as payments received during the period. For the quarter ended June 30, 2017, we had a net loss of $40.6 million compared to a net income of $40.5 million for the quarter ended June 30, 2016. Our cash, cash equivalents and marketable securities as of June 30, 2017 totaled $243.7 million. This balance include approximately $33 million in net proceeds from the sale of equity securities and 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 combined with anticipated revenue under our current strategic collaborations can fund our operations into 2019. Now I'll hand the call back to Scott.

[Scott Koenig:]

Thank you, Jim. Including MGD013 MacroGenics ended the second quarter with 10 proprietary programs in clinical development. I will now dive into several of our programs and provide some milestone highlights from our productive quarter. As I mentioned in the introduction, MacroGenics will present data on flotetuzumab. The CD123 x CD3 DART molecule currently in Phase 1 development for acute myeloid leukemia or myelodysplastic syndrome in an oral presentation on September 10 at the European Society for Medical Oncology Annual Congress or ESMO, being held in Madrid, Spain. The title of our abstract selected by ESMO, is interim results from a Phase 1 first in human study of flotetuzumab a CD123 x CD3 bispecific DART molecule in AML and MDS. Further, we will submit updated flotetuzumab clinical data for presentation at an additional scientific conference later this year. In the Phase 1 study of flotetuzumab, we and our partner Servier, continue recruiting patients with AML or MDS in the United States and Europe, have established a recommended dose and schedule and have initiated the expansion cohorts for the study. I expect to be able to provide an update with regard to this program including future development plans later this year. Turning to our B7-H3 franchise, let me first address our most advanced candidate enoblituzumab, which is an Fc-optimized monoclonal antibody that targets B7-H3. We are completing follow-up of bladder and prostate cancer patients in the monotherapy study of enoblituzumab. We are also actively enrolling patients in the combination study of enoblituzumab with an anti-PD-1 in four different tumor types and we expect to enroll approximately two-thirds of the -- approximately 100 patients by the end of this year and plan to report clinical data thereafter. The second clinical candidate in the B7-H3 franchise portfolio is MGD009. The B7-H3 by CD3 DART molecule, that is being evaluated in a Phase 1 study in patients across several different solid tumor types. We are dosing MGD009 on every two-week basis and are exploring alternative [indiscernible] dosing and scheduled strategies, leveraging what we learned in our other T cell redirected DART studies. We expect to establish the dosage schedule for MGD009 administration as well as initiate dose expansion cohorts across six different tumor types later this year. The third and final candidate in our B7-H3 franchise is MGC018. An anti-B7-H3 antibody drug conjugate that has shown permanent in vivo anti-tumor activity in animal models. We are currently completing the recovery period of the [indiscernible] portion of the GLP toxicology study, and as acceptable we would expect to submit an IND and initiate a Phase 1 study of MGC018 next year. As we’ve stated, we believe that our B7-H3 product candidates represent the industry leading franchise of programs targeting this member of the B7 family of immune regulatory molecules. The body of scientific literature is supporting the targeting of B7-H3 continue to grow and we plan to explore the full potential of this antigens broad expression across multiple solid tumor types. It is worth noting that MacroGenics fully owns this franchise. Turning back to our DART molecule, MacroGenics is leading development of the MGD007. GPA33 by CD3 DART molecule has being evaluated in the Phase 1 trial for patients with primary metastatic colorectal cancers. As we've indicated before, we were observing on target side effects that were limited to the GI tract. As a result, we created dosing strategies in and support of care regimen to mitigate these effects. We've expanded dosing of patients on a once every three week basis and they had added other dosing cohorts, for which we expect to complete enrollment later this year. We anticipate being in a good position to determine future development plans for this molecule later this year, and intent to present clinical data at a scientific -- 2018. I will now turn to MGD0013 and the other programs that make up our PD-1 immunoncology franchise which we believe will enable a broad set of combination opportunities across our own portfolio of molecules and provide further differentiation from existing PD-1 based treatment options. To our knowledge, MGD013 is the first bispecific cohort and checkpoint blocker in the industry to enter the clinic. MGD013 is a first of our next generation PD-1 based bispecific molecules, with a potential for enhanced antitumor activity and 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 both solid tumors and hematologic malignancies. We’ve initiated the first site for this Phase 1 trial and anticipate the commencement of enrollment imminently. We continue to enroll patients in the dose escalation segment of our Phase 1 clinical study of MGA012, a proprietary anti-PD-1 monoclonal antibody. To date, the antibody has been well-tolerated up to 10 mg per kg. We expect to define a target dosing schedule very soon and have submitted an abstract for presentation of monotherapy dose escalation data in a conference later this fall. You may recall that we showed very compelling preclinical data combining MGA012 with MGD009 last December at our R&D day. In model systems, we show that inhibiting PD-1 through MGA012 greatly add into the activity of MGD009. We believe that MGA012 will be the basis for potential combination therapy with several of our molecules in our pipeline, including our redirected T cell DART molecules namely flotetuzumab, MGD007 and MGD009. We intend to begin the first combination study with MGA012 with one of these DART molecule by year end 2017, pending successful regulatory interactions with others to follow. We remain on track to submit an IND for MGD014, our HIV x CD3 DART molecule in the coming months. MGD014 will represent our first infectious disease based application of our DART [ph] platform. You will recall that NIH and IAD funds this program. Let me now conclude the comments on margetuximab or Fc-optimized monoclonal antibody that targets the human epidermal growth factor receptor two or HER2 two. This continues to be further advanced clinical program as we are actively enrolling patients in a pivotal Phase 3 study of metastatic HER2 positive breast cancer. In the study called SOPHIA, we are evaluating the efficacy of margetuximab plus chemotherapy as compared to trastuzumab plus chemotherapy, following progression they have with previous therapy. The cell remains on track to complete enrollment of approximately 530 patients across trial size, in North America, Europe, and Asia by late 2018 with PFF data reading out in 2019. Our assumption is that if positive, we will follow the BLA based on this PFF data. And while enrollment continues for 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 of margetuximab and pembrolizumab will allow patients all of whom have limited treatment options to utilize the immune mediated killing properties without chemotherapy treatments. The study will enroll a total of 30 patients in the U.S and 30 in Asia, including Korea, Taiwan, and Singapore. We expect to complete enrollment of these patients by the end of this year with presentation of clinical data thereafter. In summary, our clinical programs continue to advance and we expect to accomplish several milestones in the months to come. We remain in a strong financial position to support the continued advancement of these programs and look forward to continuing to update you on the Company and science as they progress. This concludes my prepared comments. And we'd now be glad to address any questions that callers may have. Operator?

[Operator:]

Yes, sir. [Operator Instructions] Our first question comes from line of Christopher Marai of Nomura. Your line is open.

[Christopher Marai:]

Hi, good afternoon. Congrats on the quarter and thanks for taking my questions. I guess, I wanted to touch basically on some of the data that we might be seeing at ESMO here for the CD123 x CD3. I know it was an interim look, and so I was wondering if you could perhaps elaborate a little bit on the type of data that we might be seeing for that program? And I had one other follow-up. Thank you.

[Scott Koenig:]

Thanks very much, Christopher. As you know, we can't preview the data at this point until the presentation occurs in Madrid. But as I noted here in this presentation today, what we had been trying to achieve since our last R&D day was the filing of dose for this molecule. As we’ve pointed out at R&D day, we had designed a supporter therapy and a increasing dose regimen that will be both tolerable and hopefully giving the best efficacy for the molecule. As I stated today, we believe we achieved that dose and therefore we will be presenting some of the data of patients that have already been treated over the past six, seven months and obviously we will be updating on that data since the last ASH abstract. As I noted also today, we resubmitted another abstract for future meeting to continue to be able to update this data.

[Christopher Marai:]

Okay, great. So it sounds like you got the dose, would it be safe to conclude that in the next plan here is a pivotal study and then when you look at an MDS versus AML, maybe could you help walk us through how you think about that?

[Scott Koenig:]

Great question. So I’ve pointed out today, we are in the expansion phase of the study. And so we intend to wait on a significant number of patients over the pursuing months with an analysis of the data, we should then be able to decide the avenues we will have to pursue for further development of this drug and hopefully towards registration studies. Obviously, we need to engage the regulatory agencies for best advice on this. But we feel like we're in a very good position now given that we have a good profile both of a safety and as you see from the biological activity of this molecule at ESMO. And with regard to specific indication, as I noted before, we are looking at the relapse refractory population of the patients with AML, that’s obviously a starting point for the development, but obviously we are looking to expand the utility of this molecule in other AML populations and also potentially MDS patients.

[Christopher Marai:]

Great. Excellent. And then just maybe one MGD007. Obviously the CEA [ph] targeted bispecific out there has generated a lot of buzz just around data, particularly in combination with PD-1. I was wondering if you can comment on the gpA33 target relative to CEA? Perhaps how you see that evolving and the path forward there would that be also next set for a combo of PD-1? And that’s my last question. Thank you.

[Scott Koenig:]

Yes. So thank you very much for the question on MGD007. As I pointed out today and as we indicated at our R&D day last December, the biggest challenge for this molecule was establishing the tolerability because of on target effects in the GI tract. We were observing, particularly on initial infusions on the first and second infusion, patients will be developing some [indiscernible] vomiting and diarrhea which we then resorted to making changes in the support of care to make the treatment more tolerable or even exploring as I again noted that last December [indiscernible] December was that we were going to look at different dosing regimens with this new support of care. So currently we’ve treated a number of patients on a every three-week basis and that we are exploring dosing of patients on a weekly and a soon-to-be twice-weekly basis. Once we've established the profile of this drug which we expect to occur later this year, we will then design the next steps for this -- use of this drug which as I pointed out earlier today could include the combination with our MGA012 molecule or anti-PD-1 molecule. So as I look back at the profile of the data that was presented at ESMO by Roche on their Cd3 x CDA and anti-PD-1 combination, I think the data that we presented last December compares quite favorably, and we hope to actually get additional data to better define what the next steps is, steps are for advancing this program.

[Operator:]

Thank you. Our next question comes from the line of Michael Schmidt of Leerink Partners. Your question please.

[Jonathan Chang:]

Hi. This is Jonathan Chang stepping in for Michael. Thanks for taking my questions. First, are you still planning to provide an update on the enoblituzumab Phase 1 monotherapy this year? And any color on when we might see data from the combination studies?

[Scott Koenig:]

Jonathan, thanks for the question. As I pointed out earlier today, we are very excited about the prospects of our B7-H3 programs and certainly the enoblituzumab studies are furthest along. We will see if there is a proper forum for presenting the monotherapy data in prostate, but as I pointed out we are putting a lot of effort now on looking the combination studies with anti-PD-1. We think that this has the best prospects for getting the most impact in patient population. As I see things unfolding over the next few months, as I pointed out we are on target for dosing somewhere between 60 and 70 patients with that combination of enoblituzumab and anti-PD-1. If the opportunity arises to present the data later this year in the right forum, we will do so assuming that we have enough data cumulated on treatment with that combination. If it's too early, it will probably occur sometime early next year.

[Jonathan Chang:]

Great. Thanks. And then, lastly, just how are you thinking about prioritizing which internal combinations to evaluate with MGA012?

[Scott Koenig:]

So, from that at this point as I pointed out, we’ve already have preclinical data on the combinations of MGA012 and our B7-H3 by CD3 molecule MGD009. That data that we presented again last December, we’ve additional studies confirming that data and we also have studies looking at MGA0012 with other molecules in our portfolio. As I pointed out today, we are looking at the possibilities of combining this with flotetuzumab as well as MGD007, the gpA33 x CD3 molecule. The timing of these will -- is really a resource dependent decision, so we are making all efforts as I pointed out to have at least one of these combinations started by the end of the year and the likely additional ones soon thereafter.

[Jonathan Chang:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Reni Benjamin of Raymond James. Your line is open.

[Reni Benjamin:]

Hey, thanks, Scott for taking the questions and congratulations on the progress. Maybe just a couple of questions, starting off with margetuximab. Obviously as we get closer to the interim analysis of the futility analysis, as you imagine there are more and more questions and I know you haven't had much to say regarding that analysis, but I just wanted to know if there's been any sort of an update in terms of what could trigger the futility or any of the numbers involved?

[Scott Koenig:]

So thanks for the question, Reni. At this point, we are on track as I’ve noted earlier that we should be able to conduct this analysis, have the DSMB [ph] review the data and give us the feedback, but we're not providing any detail with regard to [indiscernible] analysis is being conducted.

[Reni Benjamin:]

Okay, fair enough. And just switching gears, you mentioned certain supportive protocols that are being evaluated. Can you give us any color as to what kind of protocols you’re evaluating? Are they vastly different than kind of what we’re seeing in the space in terms of handling CRS with flotetuzumab and may be related to that have you done any work or is there any interest in doing any work to look at biomarker data to identify those patients who may have the potential to have [indiscernible]?

[Scott Koenig:]

That’s obviously an excellent question. And so, a lot of this we need to sort of think about for the general principal of CRS and CD3 redirected mechanism. And in that thing we have as we will update for instance with flotetuzumab at the ESMO meeting is the experience we have at improving the CRS profile of those patients. And these have included a very early opportunities to once the patient shows early signs of CRS to begin a intervention with [indiscernible] at that point to abort any severe responses and I would say this has been quite successful at quickly turning those patients around. The second point is that we made a strong effort in looking at what I will call lead dosing, and this has been very successful for MGD006 and we’re applying this principle now for MGD009 and may apply to others as well. And again here we think that that the exposure at lower doses somehow creates sort of tolerance like state with regard to the size [indiscernible]. It doesn’t completely remove the side effects, but it attenuates that sufficiently as the patients can continue one therapy and continue completing dosing them through the various regimens. So I would say those are probably the most important with these general principle of CRS. With regard to specific target related interventions, as you know for MGD007 we -- because of the GI side effects on target effects on the normal track there, in most of these cases we are targeting tumor growth that’s outside of the GI. tract, and therefore by giving oral budesonide an early intervention with low-dose steroids and [indiscernible] again we’ve been able to mitigate some of the side effect profile in those subjects and reduce the requirement for systemic steroids.

[Reni Benjamin:]

Got it. With the IND for MGD013 being cleared, can you just talk a little bit about the clinical trial design and how that’s going to progress?

[Scott Koenig:]

Yes, I mean -- so we have -- this is sort of a standard Phase 1 dose escalation study with dosing established with discussions with the FDA. We are looking at a very wide array of patients of solid tumor types, and we expect again this shouldn’t be that much different than the design of the trial we did for MGA012 anti-PD-1 antibody. There are probably a couple of extra doses that we incorporated in this, given that this is the first combination checkpoint bispecific compared to the anti-PD-1 alone.

[Reni Benjamin:]

Got it. And then just one final one for me. As we're seeing in the landscape certain combinations of IO molecules not necessarily conveying a survival benefit. How do you guys mitigate this potential risk, especially in the case of bispecifics as well as combining bispecifics?

[Scott Koenig:]

I think that's an excellent question and obviously we are trying to learn as everybody out is from the clinical data that unfolds. We are looking for evidence of biomarker activity that may give us insights. Obviously, many of these molecules have very unique mechanisms of action looking at the expression patterns, in particular, sub populations and the coordinate expression of these molecules. One of the things that we are very excited about for instance for MGD013 is that we're seeing that the DART configuration engaging both PD-1 and LAG-3 gives us a signaling activity through the cross linking of those molecules that further enhances T -cell compared to two separate antibodies there. And so I think getting a better sense of the expression patterns over time other therapies of these patients may have and making sure this fit in line, may give guidance on which way to further develop these molecules.

[Reni Benjamin:]

Great. Thanks for taking the questions and congrats again.

[Scott Koenig:]

Thank you.

[Operator:]

Thank you. Our next question comes from Yigal Nochomovitz from Citigroup. Your line is open.

[Yigal Nochomovitz:]

Hi, guys. Thanks for taking the questions. Can you comment at all on the CD3 CD19 with Janssen? Obviously, we haven't had an update on that in a long time. We understand from looking at clinical trials with their monotherapy study is recruiting, but the one with [indiscernible] it's unclear where that one stands? Thanks.

[Scott Koenig:]

So thank you, Yigal. And as I recall, I think you’re asking that question last time as well and frankly as I’ve told you at that point its responsibility of Janssen to update and we're precluded to making any comments. What I had said as you recall was is that they were not going to open-up the combination study until they establish a dose -- in the dose escalation study with the CD3 x C19. So that’s all I can say at this point.

[Yigal Nochomovitz:]

Okay. Got it. And then sort of a more conceptual question with regard to how you are proceeding with dose escalation in terms of, I guess, modeling of the target dose. I guess this was prior for 07, 09 and maybe 012 [technical difficulty] of the target obviously, presumably the [indiscernible] some idea of the number of findings at on the target cells, volume of distribution for the antibody and maybe some knowledge of the rate of internalization. So putting all those things together, how much work have you done to sort of have a sense of what your target dose looks like across some of these escalation. So you have an idea where you’re headed?

[Scott Koenig:]

That sounds like a great question in a sense that I would love to -- put those particular figures into the computer punch button and the answer comes out in terms of the dosing schedule. What realistically happens is that we, first of all, take as much data from the primate studies that we've done in terms of dosing regimen and obviously look for specifically the density in the Cyno [ph] monkeys for the target compared to what we’re seeing in humans. And obviously for each tumor type we're seeing and there is a lot of interpatient differences in density of given antigen. So what we’re looking at right now is, number one is, taking the data first and foremost of the half-life and understanding for the -- particularly for the FC bearing molecules, should we be giving these things every two weeks, every three weeks, every one week. As I pointed out to you before on MGD007, we started out Q3 weekly basis. We are looking now to Q1 or twice a week basis with lower doses. So a lot of this is a little bit [technical difficulty] depending on the particular target that we are doing was unfortunate on that. Starting doses in a lot of times, particularly with the most biologically active molecules, because of regulatory concerns across the whole class of molecules. This is not peculiar to Macrogenics, is that most of these drugs have to start at label dosing or close to label dosing. So this gives the assurance that -- for probably several large difference in terms of where one would see toxicity. And so that's the reality of dealing with the objective data and the regulatory issues that we confront.

[Yigal Nochomovitz:]

Okay. Thank you very much.

[Operator:]

Thank you. Our next question comes from Peter Lawson of Suntrust Robinson. Your line is open.

[Unidentified Analyst:]

Filling in for Peter Lawson. Thanks for taking the question. When we are thinking about MGD009 timing, will you be releasing the dose escalation date or will you be waiting to have some expansion data on that, and when would you expect those?

[Scott Koenig:]

So thanks for the question. So as I pointed out, we are still in the dose finding range to give -- be a little bit more granular about it. As we pointed out at our R&D day last year, we were dosing patients at 10 mg per kg on a Q2 weekly basis and we come to see antitumor effects in a number of those patients. At that point, we also began to see some of those cytokine release associated with that effect. And so what we’ve decided to do is look at different dosing regimens where we are now -- we treated a number of patients at 10 mgs per kg Q2 weekly. We are now also applying the lessons that we described before on having lead end dosing and we are dosing those patients now, so that we can achieve even higher doses than 10 mg per kg. We are extracting out the data from these patients with regard to occupancy of the various cell. We are looking at various biopsy specimens. And so what I believe will happen is that over the course of the next few months, we should be able to define the dose. Once we define the dose, what we will do is move into expansion cohorts in six different tumor types, which would be approximately 100 patients in total that we will start dosing. But we will not wait for the completion of that data to entertain the notion of combining this with our anti-PD-1 molecule. So you could expect parallel tracking of those two trials for this molecule. With regard to the timing and the reporting of the data, it's too early right now in saying when we will do this. Again likely to have the dose later this year likely to present the initial data from that initial dose escalation. But then as we expand into the various protocols we will provide further update next year.

[Unidentified Analyst:]

Okay. Thank you. And then, so with MGD013, is the plan to move that into combinations kind of immediately after the safety study or are going to see that go further as a monotherapy?

[Scott Koenig:]

Well, I mean, MGD013 is a combo. It's already a single molecule that has PD-1 and LAG-3. So we are looking at the utility of this in various tumor populations, including those that are PD-1 [indiscernible] experienced as well as naïve. But there is obviously prospects of combining this with other checkpoints in other assay molecules as well. So we see that this has a -- has the ability to be a [indiscernible] to itself because of the specific nature and combined checkpoint properties of the molecule.

[Unidentified Analyst:]

Okay. Thank you. And then last question is, when you think about your CTLA-4 and PD-1 combination are bispecific DARTs and Tridents? Are there any learnings from the MYSTIC trial or how does that affect how you’re thinking about those potential therapies?

[Scott Koenig:]

So that’s an excellent question. Obviously, the MYSTIC data is new to us and everyone and we are looking at the prospects there. I think that there has been from our preclinical studies very attractive results in our primate studies. We are now engaged in conducting a toxicology study with one of these molecules and looking forward to that. But let me point out that the MYSTIC study was -- would a anti-PD-1 and an anti-CTLA-4 trastuzumab which may by itself not be as good as flotetuzumab. So I don’t think we can necessarily generalize on the combination of those two molecules. As we've pointed out already the PD-1 component of our molecule in this combination is the same one that we have for MGA012 and the [indiscernible] characteristics of this molecule based on our affinity, another biological activity seems slightly better than that of the approved molecules out there. So we think we’ve an opportunity by combining these -- in this particular format that we may have opportunities that the MYSTIC study ultimately didn't produce.

[Unidentified Analyst:]

Okay. Thank you.

[Operator:]

Thank you. Our next question comes from David Lebowitz of Morgan Stanley. Your line is open.

[David Lebowitz:]

Thanks for taking the question. I had a question on MGD010. I was just curious as to what your thoughts on the molecule going forward and which indications you might look at?

[Scott Koenig:]

Thanks, David. We didn’t comment on that today because there has been no further progress as you know we presented the data at UR [ph] in June, showing very exciting data in normal volunteer study, single dose escalation, where we showed significant anti-B-cell activity functionally, but no depletion of these cells in the subjects and the ability to inhibit antigen specific response with co-administration. We’re still thinking about how to progress this concept clinically and we are in discussions with partners who are -- who have strong interest in autoimmune diseases, we are also looking at some very select opportunities that we might pursue ourselves with a academic groups. But given the used portfolio we have in oncology now, it will be a burden for our organization to advance into a significant development plan in autoimmune disease as well as oncology. So we are trying to find out what the best way for further development of anti-CD32B x CD79B bispecific.

[David Lebowitz:]

Sure. Thanks for that. Also what was the status of the MGD014? We haven't heard about that in a while.

[Scott Koenig:]

So I didn’t make a quick comment in today's call and we're on target for starting a Phase 1 study with the first in the envelope of anti-CD3. As you recall, we have a funding from the NIH to support two different molecules, if they [indiscernible] the option period, which should occur likely very, very soon. So with regard to the initial start of the study we would expect to [indiscernible] IND very soon. So we will be updating everybody in the next couple of months.

[David Lebowitz:]

Thanks for taking the questions.

[Operator:]

Thank you. Our next question comes from Dane Leone of BTIG. Your line is open.

[Dane Leone:]

Hi. Thanks for taking the questions here. I guess, if you could start maybe at a high-level, lot of the discussion, and a lot of the detailed discussion today is focused on finding in some of the T cell redirected bispecifics you’re working on. Can you kind of without rehashing the discussion here just to give us more of a picture of what you see in the pipeline right now, I believe margetuximab aside, but what you see in the pipeline right now in terms of actual response or efficacy? So maybe specifically to flotetuzumab you are finding a dose, recommended dose level that you're moving forward with, can you without spoiling data just comment in terms of whether you’re seeing corollary responses to that or is that something that's going to need to be proven out in the next step here? Essentially we’re just trying to understand the actual -- where you see therapeutic windows open right now across your pipeline?

[Scott Koenig:]

Yes. So I love to being able to disclose everything at this point. I think the disclosure will be flotetuzumab at ESMO, you will get the first sense of where we are both in terms of safety and biological activity. So you have to wait a couple weeks into September. And as I said, the fact that we are expanding these into a much larger population, should indicate that we have certain encouragement to do this to get a bigger data set. So that coupled, we’ve already presented in terms of antitumor activity with solid tumors, I think that the prospects for our DART platform are very good. I think a lot of this comes down to which target to go after and the dosing regimen, and the support of care, all of this -- it has to be worked into this and [indiscernible] something I say every time, some of these will turn out to be successful, some wont, but I am very encouraged that the platform is performing as I expected.

[Dane Leone:]

I guess, specifically maybe following up on that to the enoblituzumab combination studies, how into design of those studies are -- how are you going to benchmark the individual activity between enoblituzumab and the corollary PD-1 or CTLA-4 response?

[Scott Koenig:]

Well, that again just to prove for those who will remember, enoblituzumab is not the bispecific DART molecule that we were just talking about. This is the Fc-enhanced molecule. It engages obviously macrophages in T cells for a killing effect. It also seems to be a secondary ability to sensitize T cell to expand them in these populations. We are clearly looking at individuals that are both PD-1 and PDL-1 and CTLA-4 experienced and unexperienced, we’ve created as you know a significant data set against for as many different tumor types as monotherapy. And so what we think we will be able to do is be able to tease out populations that may have an experience, but with a combination now might have an effect. With those who are unexperienced for the other checkpoint, the combination based on our monotherapy data and data that’s on the literature what is the magnitude of that effect to make that decision on a tumor by tumor type.

[Dane Leone:]

Yes, the reason I asked that was just some difficulty we had this year with some of the [indiscernible] combinations and other combinations were it has been very unclear what the individual factors in the combination. What it -- did you -- this is a easy one, did you - I just couldn’t hear you, did you say there is a increase or decrease in manufacturing cost for duvortuxizumab?

[Scott Koenig:]

There was -- I think there was offset …

[Jim Karrels:]

Compared to last year.

[Scott Koenig:]

Compared to last year.

[Jim Karrels:]

With a decrease.

[Scott Koenig:]

Decrease compared to last year.

[Dane Leone:]

There is a decrease in manufacturing cost for duvortuxizumab?

[Scott Koenig:]

Yes.

[Dane Leone:]

So that’s [multiple speakers] or that just the actual amount of volume of drug being produced?

[Scott Koenig:]

That’s a gross number and what we do reimburse for anyways. So with the gross number in R&D, but the revenue line reflects the reimbursement from our partner Janssen.

[Dane Leone:]

Okay. So it's just an accounting thing, I guess?

[Scott Koenig:]

Yes.

[Jim Karrels:]

Yes.

[Dane Leone:]

Okay. Got it. All right. Thank you.

[Operator:]

Thank you. Our next question comes from Stephen Wiley of Stifel. Your line is open.

[Unidentified Analyst:]

Hi. This is [indiscernible] in for Stephen Wiley. Thanks for taking our questions. So I just have one sort of high-level question. You mentioned that the dose establishing efforts for the Phase 1 009 and 007 trials will happen in combination or in parallel with the combination -- with the proposed combination trials with 012. So does this mean that you anticipate the synergistic potential of the combination to remain intact across the range of doses? And then is allergy something that you are concerned about?

[Scott Koenig:]

So we will have to see once again the clinic in that regard, what -- the expectation is based on the data to date looking at the various DART molecule using a CD3 redirected mechanism is that there is up regulation of PD-1. We have evidence in vitro and in vivo animal models that we can achieve synergy there. Is it possible that continued dosing can lead to a more allergic state that is not -- that will respond to an anti-PD-1? Well, certainly obviously other checkpoint inhibitors could be up regulator, they could become refractory, but we will have to see I think that given that mechanistically we are not just looking at tumor -- CD3 cell that are tumor specific at the site of the tumor, we're able to pull in CD3 positive cells from the entire body here to be able to target here. So most of these cell are naïve to activation signals. So I think that there is plenty of T cells that can enter the fray here.

[Unidentified Analyst:]

Okay. So we just have to wait and see as to …?

[Scott Koenig:]

Yes, I mean, ultimately we have enough encouragement from the preclinical data that this make -- it makes a sensible rationale to pursue clinically.

[Unidentified Analyst:]

Thank you. Thank you very much and congratulations on the progress.

[Scott Koenig:]

Thank you.

[Operator:]

Thank you. Our next question comes from David Nierengarten of Wedbush Securities. Your question please.

[David Nierengarten:]

I’m sorry, I actually I thought I withdrew my question. They’ve all been asked. Thanks.

[Operator:]

Thank you. [Operator Instructions] There appear to be no further questions in queue at this time. I’d like to turn the call back over to management for any closing remarks.

[Scott Koenig:]

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

[Operator:]

Ladies and gentlemen, that does conclude your program. You may disconnect your lines at this time. Have a wonderful day.