MacroGenics, Inc.
Q1 2015 Earnings Call Transcript

Published: 7 May 2015

[Operator:]

Good afternoon. We’ll begin MacroGenics’ First Quarter Conference Call in just a moment. [Operator Instructions] At this point, I’ll turn the call over to Jim Karrels, Senior Vice President and Chief Financial Officer of MacroGenics. Sir, you may begin.

[James Karrels:]

Thank you, operator. Good afternoon and welcome to MacroGenics conference call to discuss our first quarter 2015 financial and operational results. For anyone who has not had a chance to review our results, we issued a press release this afternoon, outlining today’s announcement 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. It will be archived there for 30 days beginning approximately two hours after the call is completed. I would like to remind listeners that we will make forward-looking statements on today’s call. And therefore, I would like to also remind you 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. Now, I’d like to turn the call over to Dr. Scott Koenig, MacroGenics’ President and Chief Executive Officer.

[Scott Koenig:]

Thank you, Jim. And thanks to everyone who is joining via conference call and webcast. The activities in MacroGenics during the first quarter were highly productive and built upon the success that we achieved during 2014 and reported on during our last conference call. What I will highlight on the call today is the successful translation of MacroGenics antibody technology platform and protein engineering expertise into a mature pipeline of product candidates in clinical development as well as an advancing track record of business developments. In a few moments, I’ll review those recent accomplishments in more detail. Then we will open up the call for a question and answer session. First though, Jim will give a quick overview of our first quarter financial results.

[James Karrels:]

Thanks, Scott. This afternoon we reported financial results in line with our expectations briefly as we described in our release MacroGenics had research and development expenses of $21.5 million for the quarter ended March 31, 2015 compared to $14.6 million for the quarter ended March 31, 2014. This increase was expected as we continued to advance into later stage clinical trials and add product candidates to our growing pipeline. We had general and administrative expenses of $4.7 million for the quarter ended March 31, 2015, compared to $3.3 million for the quarter ended March 31, 2014. This increase is primarily due to higher stock based compensation expense and labor costs. We recorded total revenues consisting primarily of revenue from collaborative research of $71.3 million for the quarter ended March 31, 2015, compared to $14.7 million for the quarter ended March 31, 2014. The $71.3 million includes recognition of $62.3 million associated with the Janssen collaboration which closed during the quarter. In addition to the Janssen revenue, collaborative research revenue includes the recognition of deferred revenue from payments received in previous periods as well as payments received from other collaboration partners during the quarter. For the quarter ended March 31, 2015, we had a net income of $45.1 million, compared to a net loss of $3.1 million for the quarter ended March 31, 2014. Excluding the effects of the Janssen collaboration, MacroGenics would have posted a net loss of $17.2 million for the quarter ended March 31, 2015. Our cash and cash equivalents as of March 31, 2015 were $263.1 million. This figure includes the upfront payment and equity investment associated with the licensing deal with Janssen that closed in the first quarter. Based on the company’s cash balance incurred operating plan we are reiterating our expectation of current cash and cash equivalents combined with anticipated non equity funding under our various strategic collaborations should fund MacroGenics operations into 2018. And with that, I will hand the call back to Scott.

[Scott Koenig:]

Thanks, Jim. MacroGenics pipeline today is both deep and maturing and our robust portfolio of product candidates is derived from MacroGenics suite of proprietary protein engineering technologies and includes our Fc-optimization platform, which enhances the body’s immune system to mitigate the killing of cancer cells through antibody-dependent cellular cytotoxicity or ADCC. Our Dual Affinity Re-Targeting or DART platform which enables the targeting of multiple antigens or cells by using a single molecule with two or more antibody specificities and our proprietary cancer stem like cell technology which we use to identify cancer targets shared both by tumor-initiating cells and the differentiated cancer cells derived from them. We were excited to close the MGD011 dot deal with Janssen and have the IND cleared by the FDA enabling the near term initiation of the Phase 1 clinical study. In addition to MGD011, we remain on track to have five other oncology product candidates in the clinic by the end of 2015. Beyond the cancer candidates we also made progress in the first quarter when we began the phase I study for MGD010 our DART molecule being developed for auto immune disorders which I’ll discuss momentarily. First let me briefly remind you of the status of and significant upcoming milestones for our most advanced product candidate margetuximab. Margetuximab is a monoclonal antibody engineered using our Fc-optimization technology and directed to HER2, an antigen expressed in some forms of breast, gastroesophageal and other types of solid tumors. As we have recently detailed MacroGenics anticipates taking a major step forward in 2015 when we begin the pivotal Phase 3 SOPHIA study in the third quarter. The 530 subject SOPHIA study will evaluate margetuximab plus chemotherapy in third-line metastatic breast cancer patients with HER2 expression at the 3+ level by IHC or 2+ level by IHC with gene amplification subject to the impending completion of regulatory review. MacroGenics projects that it will take approximately three years to complete this study which we will include an interim futility analysis. We look forward to presenting additional Phase 1 margetuximab clinical data supporting this study and a positive dissuasion on May 30 at the ASCO Annual Meeting. We also plan to initiate a Phase 1/2 study with margetuximab in patients with gastroesophageal cancer in combination with another immunooncology therapeutic starting in the fourth quarter of 2015. Moving along in our oncology pipeline, MGA271 is a second Fc-optimized monoclonal antibody in our clinical portfolio. MGA271 is a potential first in class member of the extremely promising class of immunooncology candidates known as checkpoint inhibitors MGA271 targets B7-H3, a member of the B7 family of immune regulation molecules. I am pleased to announce today that MacroGenics has begun enrolling a study of MGA271 in combination with ipilimumab in patients with B7-H3 positive melanoma, lung, and head and neck cancers. In addition, we will be initiating a study of MGA271 in combination with an anti-PD-1 antibody also in patients with melanoma, non-small cell lung carcinoma and squamous cell carcinoma of the head and neck later this year. As we have previously indicated we plan to present MGA271 clinical data including data for the three previously defined dose-expansion cohorts of patients with melanoma, prostate cancer and a mixed group of tumor types in the second half of 2015. Turning our attention to the DART platform, we made significant progress in the first quarter. We achieved a substantial landmark when we initiated a Phase 1 study in normal, healthy volunteers with our third DART molecule MGD010. This molecule targets CD32B and CD79B, two B-cell surface proteins making the good candidate for the treatment of autoimmune disorders. As a reminder, MGD010 is being developed in partnership with Takeda which is an option to obtain worldwide license upon the completion of the Phase 1a we are now enrolling in healthy volunteers. MGD006 and MGD007 are both already in clinical studies. MGD006 targets CD123 and CD3 and is in the Phase 1 study for acute myeloid leukemia. MGD007 targets both the glycoprotein A33 and CD3 and is in a phase 1 study for patients with colorectal cancer. We continue to enrol patients in the dose escalation portion of both of these Phase 1 study. I’d also like to touch on MGD011 during this call because this was ofcourse the subject of a very important collaboration with Janssen announced in December 2014. This deal provided MacroGenics with $125 million of non-dilutive and equity capital further underscoring the leverage we achieved through our technology. MGD011 is in development for treating B-cell haematological malignancies based on its dual targeting of CD19 and CD3. MacroGenics submitted an IND application for MGD011 that was recently cleared by the U.S. FDA during the second quarter to allow initiation of clinical testing. As we recall Janssen will develop this product candidate, subject to our options to co-promote the product in the United States and Canada and to invest in later-stage development in exchange for a profit-share. Janssen is anticipated to commence clinical testing of MGD011 shortly. Finally, we continue as always to leverage our engineering technologies to fuel the growth of our portfolio of early stage candidate. This is illustrated with MGD009 which targets both CD3 and an undisclosed antigen expressed on a broad range of solid tumor types. MGD009 is on track to enter the clinic in late 2015. This would mark the fifth start to enter clinical trials and we firmly believe that this puts MacroGenics in the position of having to lead by specific or multi targeted anti body franchise. As a final example from our earlier stage programs we presented pre clinical data at the recent 2015 AACR Annual Meeting at Philadelphia on a DART molecule targeting DR5, a member of the tumor necrosis factor receptor of super family which is the protein over expressed in many kinds of tumors. In this poster titled DART molecules with enhanced DR5 agnostic activity for improved cancer cell cytotoxicity we show that incorporation of the anti DR5 molecular antibody specificities into multi talent DART molecules generated a new class of therapeutics that may overcome the limitations of existing DR5 based therapeutics. Importantly, DR5 is well recognized as a key pathway by which T Cells and/or NK cells mitigate cytotoxic activity against cancer cell. And targeting these apathetic [ph] pathway in various tumor types using our DR5 DART will strategically complement other assets in our rapidly expanding immunooncology portfolio. With that, I’ll wrap up my formal remarks and open up the call for question. Operator?

[Operator:]

Thank you, sir. [Operator Instructions] Your first question comes from Michael Schmidt from Leerink Partners. Your line is open, please go ahead.

[Michael Schmidt:]

Hey good afternoon and thanks for taking my question. Scott, a lot of several other companies in the immune oncology phase that are running combination studies with PD-1 antibody have done sort of collaboration agreements to access those assets. It sounds like you going forward alone here; can you talk about that strategy more specifically?

[Scott Koenig:]

Yes thank you very much Michael. Our thoughts were that particular indications that we discussed for 271 that we would be including three different tumor types and we know that at least for the melanoma patients that should be reimbursed. And so the expenses that we would end up for paying would be relevantly modest to be able to determine a active signal with the combination therapy. And from there we could then strategically decide how we would like to move forward going forward. I should like to remind everyone that in our preclinical setting we are taking advantage of our DART technology to look at combinations of various immune check point inhibitors and so we think that getting a initial understanding of which one or ones of these various immune checkpoint inhibitors might work well with our MGA271 molecule may give us some guidance on how we won’t want to move forward either with ones that are approved or maybe with our own proprietary immune check point DARTS.

[Michael Schmidt:]

Great, thanks and then I got a question on MGD010 I was just wondering if Takeda has made any indications as to which possible indications they might pursue in the autoimmune disease setting?

[Scott Koenig:]

You know we have not disclosed the setting but we had obviously lots of discussions of looking at very both large opportunities in the autoimmune space and things like obviously patients with lupus [Indiscernible] and we’ve also looked at specific more narrower targeted smaller indications given the broad mechanism of action here of treating essentially any T cell associated disease we think that we have a very wide range of things that could potentially be pursued and Takeda has indicated if they obviously opted in this program to look at multiple indications.

[Michael Schmidt:]

Okay, great thanks so much. And congrats on a good quarter.

[Scott Koenig:]

Thank you.

[Operator:]

Thank you. Our next question comes from Christopher Marai from Oppenheimer. Your line is open, please go ahead.

[Christopher Marai:]

Hi, good afternoon Scott, Jim. Thanks for taking the question. First on the DR271 data release, I was wondering you know just 50% both the monotherapy and [Indiscernible] therapy data at 50. And then with respect to monotherapy data roughly how many melanoma patients who fill prior check points do you anticipate to potentially report on and I have one follow up text ?

[Scott Koenig:]

Yeah thanks, Chris. So as you know we obviously completed the initial dose escalations and then in the first three cohorts of 15 patients each, we’ve now completed enrolment of the sort of combined basket of 15 patients. The 15 patients with melanoma, several of those are still on therapy and we’ve enrolled 14 out of the 15 in the group with prostate cancer and expect the last one to come in in the next week or so. And so we’ll have certainly all that data available. The recruitment on the five monotherapy cohorts that we started late last year are rolling very nicely and it includes as you recall one of those five is a second melanoma cohort of which all those patients have had to fail a previous checkpoint inhibitor. My expectation is that we will be able to present some of that this latter five of cohorts of which there will be some of those melanoma patients of the original melanoma patients. I can’t recall exactly how many, there were a couple that failed but some of these did not fail a previous checkpoint. So there will be sort of a combined and we’ll be able to present it at that time. I don’t think given the timing for the abstract submission that we’ll have sufficient number of patients enrolled in the combination therapy. We could be surprised but I’m not promising it at this point.

[Christopher Marai:]

Okay, thanks that’s really helpful. And then one on MGD007, you know that being one of the most advanced sort of solid tumor piece of targeting therapies out there I was wondering if you could comment on how that child’s progressing – in Maple [ph] I was wondering if you might have any takeaways regarding the potential therapeutic index there or any anecdotes you might have seen?

[Scott Koenig:]

Yes thanks very much Chris for that. We are very excited about the prospects of 007, what I can say is that we are dose escalating in this study in the patients with colorectal cancer. Patients are being randomized, they either receive drug once a week or once every three weeks. As anticipated we did see based on pre clinical data some on target effects in some of the patients which is in large part I think controlled by premedication in the earlier infusion doses. And so, when we look back like we have a nice pathway forward to continue dose escalation obviously we’ll see how far it goes, see if we achieve any DLC but by now things are moving along very nicely. I should also say that we’ve added on additional centers to participate in this study and enrolment is going quite nicely.

[Christopher Marai:]

Great, thanks for the color.

[Operator:]

Thank you. Our next question comes from Steve Byrne from Bank of America. Your line is open, please go ahead.

[Steve Byrne:]

Do you still have the view that 271 has immune modulatory mechanisms and if so what’s the logic behind combining it with the checkpoint inhibitors?

[Scott Koenig:]

Thanks very much for the question Steve. Right now, again based on preclinical data and data that’s in the literature there’s clear evidence that the B7-H3 molecule can inhibit T-cells function. As you know quite well we design this molecule to look at multiple mechanisms as action to exploit for this therapeutic by taking advantage of the fact the particular epitome [ph] that anybody is directed against has a very modest limited expression on normal tissues and so we can incorporate our Fc engineering technology to take advantage of the new median in killing of the cancer cell, the cancer stem cells as well as the tumor vasculature. Right now, we have no objective evidence mechanistically in the patients that there is an immune checkpoints components because that’s neither -- its just a fact that is very difficult to sort of sort out any clinical effects to describe to one mechanism versus another. We will in fact try to look for some of these biomarkers by looking at biopsy specimens on circulating levels of particular immune cells and particular markers to see if we can get semi-claim on the immune checkpoints nature, but today we don’t have that data in hand. Getting back to your second question of what combined the checkpoints? Well, frankly that I think we have the feel that going quite naturally. As you know, combination of anti-PD-1 and ipilimumab anti-CTLA4 has resulted in several particular tumor type in dramatic and enhance improvement in clinical outcome in these patients. But unfortunately, as you also note from many of these tumor types this is associated with the dramatic increase in side-effect profile which may limit approval in particular tumor type indications. We have the advantage here for MGA271 given its very good safety profile as a single agent therapy and also from the fact that we know that knock out of this particular receptor in preclinical miles has a very minimal autoimmune profile. The expectation here is that combining within ipilimumab anti-PD-1 may give us the beneficial effects, solitary effects of treating tumor with a much better safety profile. So, hopefully we’ll have some more that data later this year to see that hypothesis works out.

[Steve Byrne:]

And did I hear you correctly that the gastroesophageal study with margetuximab, would that is we’re going to start later this year would be combined with immunotherapy drug?

[Scott Koenig:]

You got it exactly right. Later this year we will combined it with an immune checkpoints inhibitor.

[Steve Byrne:]

Okay. And is that the logic behind that the ADCC mechanism could be enhanced with the checkpoint inhibitor, is that where you thinking?

[Scott Koenig:]

I think -- the thinking is along outline in beyond just a ADCC killing mechanism, we believe that they will be improved manage and presentation through this Fc immediate effect on the particular cell types that are involved which should led to also better sensitize T-Cell to the tumor as well as may be newly induced T-Cell specific responses maybe improved by the inclusion of a checkpoint. So it’s a nice hypothesis to that.

[Steve Byrne:]

Okay. Think gotten. Just oneDO11 obviously Johnson is interested in this molecule. There is no shortage of CD19 targeted drugs out there and development in the CAR to use are showing some pretty compelling data, where do you think this one could fit in that the treatment paradigm is it because it likely to be a less costly approach to those indications than express CD19?

[Scott Koenig:]

So thanks again to that question Steve. So, from our clinical data as you know we had highlighted is that the recent ASH meeting. Both the potency of the molecule with regard to the depletion of these cells in both non-preclinical model as well as in primates because of the course reactivity with CD3 and 19, that I would say is quite comparable to that what we’ve seen with the CAR T-Cells molecule. And so, for my vantage points the thought is that if we can achieve the same efficacy we now are able to bypass all the needs for engineering patient specific cell which is not only timely and costly but much more difficult to do on an individual patient level and so this would be sort of an off the shelf version that could have equivalent efficacy. On top of that given that you can have either synchronic reactions in these patients at any given time. The ability to stop infusions of this molecule I think could lead to a much better control on a safety side of the things. So overall I think certainly Janssen had the ability to partner with other alternative by specific programs or even with CAR T-Cell based therapy and we have decided that our molecule was the most promising to move forward. So hopefully that yields those results.

[Operator:]

Thank you. Our next question comes from Stephen Willey from Stifel. Your line is open. Please go ahead.

[Stephen Willey:]

Yes. Thanks for taking my questions and congrats in the quarter. With respect to the T-Cell one and checkpoint inhibitor combination studies, I’m just wondering if you guys are going to be agnostic to whether or not patients have prior immunotherapeutic regiments as you enroll these studies across into these tumor types?

[Scott Koenig:]

Steve, I have to say I don’t recall exactly what that protocol said, but I believe we are going to agnostic to that, but I’ll have to come back and check on that. My assumption is that most of the patients with melanoma will have probably seen it. Although, one could argue particular with Anti-PD-1 combination this may actually quickly enroll because you’re not only going to get the PD-1 which they would have normally gotten as a first line treatment or second line treatment. But now the addition of a active molecule potentially of 271 may actually attract patient. So I have to go back and take a look at the protocol. I don’t know exactly what was stated.

[Stephen Willey:]

Okay. And then maybe can you also just talk a little bit about the pace of those escalation in some of the CD3 directed DART programs, I think you’ve kind of previously said that this would be pretty measured initially and I’m just kind of wondering if that rate has escalated at all as you gain more experience in the clinic and I’m just kind of wondering if should be thinking about these being complete from a dose escalation perspective maybe sometime this year or 2016?

[Scott Koenig:]

Firstly, as many of these various immunotherapeutics, we still take a very measured approach and paramount of the safety of the patient, so we do not want to get ahead of ourselves. We’re looking at cohort by cohort and obviously we have oversight by data safety monitoring board. So the paramount does in all these trials. But having said that there is an increase pace, first of the MGD006 trial was originally a single site. We’ve now headed on several on the sites that all recruiting patients, so just from that we are increasing the speed of enrolment there, the same things goes for 007 and frankly on DART molecules we’ve expanded the number of those site to 271 as well. So I would just say that we expect enrolment to continue. We got very good experience on how to initially give this drug to the patient, as far as dose and give primates in these situation that help to keep the patient safe and continue allow and do dose escalating them.

[Stephen Willey:]

Okay. And then maybe just question for Jim, just wondering if the entirety of the J&J revenue has been recognized at this point, I guess just making sure that there is none that is still embedded within the deferred line items?

[James Karrels:]

Yes. Thanks Steve. The entirety of J&J revenue has been recognized at this point. It’s a $60 million upfront and the 12.3 premium on that stock.

[Stephen Willey:]

Okay. Thanks.

[Operator:]

Thank you. Our next question comes from David Nierengarten from Wedbush Securities. Your line is open. Please go ahead.

[David Nierengarten:]

Thanks for taking my question. I just had a couple of short ones. First off, when you talk about pre-medication, those pre-medication, pre-medication, is it kind of a typical Benadryl dose before infusions?

[Scott Koenig:]

So, it’s Benadryl -- and there is some more dose steroids being given in both the cases both the case 006 and 007

[David Nierengarten:]

Okay. So no trastuzumab or anything else more that has required.

[Scott Koenig:]

And we’re tending to be on the low side on steroid.

[David Nierengarten:]

Okay. Okay, great. And then a question on the just in terms of additional targets and your advantage versus you know say and you have a Genentech, the large pharmas of the world, when you think about generating new bi-specific antibody, is there anything other – any other advantage you think you have in terms of finding targets or bringing the new drugs on board and new candidates on board?

[Scott Koenig:]

Thanks to that question, David. So the answer is we do believe that. We think that the versatility of our platform like itself for us to actually address diseases in a number of ways. I think, I’ll highlight which stated in the call earlier today. Many of the DART molecules that we create to-date takes advantages of the redirected killing mechanism and we are obviously are using T-Cell and the CD3 but we are looking at other effective populations and other targets that we couldn’t in certain situation. But further more as you know we also have the 010 molecule showing that we can cross link and change in signalling properties of an activated T-Cell. We further more illustrated in our post session targeting DR5 that if you take a relatively modestly effective or even ineffective DR5 targeting molecule which doesn’t induce apotheosis of the cell and now you place it in a DART platform and make it a touch available [ph] molecule even without the requirement for Fc engagement, you get profound apotheosis of the targeted tumor cell and a magnitude of effect compared to say trial in these systems was 100 to 1000 fold more prudent, and in all cases when compared other three or five molecules in the clinic was more prudent compared to those as well. So this is another example of the way our DART platform can be exploit as you raise the point about other by specifics, most of them are sort of taking an immune graph of molecule dividing them in half and putting them back together. So there is always in those cases bi-specificity and mono [Indiscernible]. They don’t have this greater latitude of designing molecules for specific target. Just to finish off, the question is also as you recall we have a very large portfolio among total antibodies to a large number of target that we’ve already generated through our Cancer Stem Cell immunization as well as targeted immunizations to particular proteins then we continue to increase the number of these targets. So, we feel that we have a large inventory of opportunities here. In fact, our research group is working now on molecules for the 2017, 2018 and 2019 time frame and we always look at our other opportunities from the churn and other new discoveries. So I have to say, that we have a pretty robust discovery pipeline

[David Nierengarten:]

And then one last quick question. Have you seen or is there significant competition in terms of with the CAR T [ph] companies or programs in terms of clinical trials, site recruitment, investigate a recruitment to your 011 versus your 011 sites?

[Scott Koenig:]

First of all, Janssen will be conducting that study. I have send from the feedback from them is that they have cells lined up and given their strong presence in the lymphoma space, I think that they do not anticipate any problems in recruiting patients.

[David Nierengarten:]

Got you. Right, thanks.

[Operator:]

Thank you. Our next question comes from Debjit Chattopadhyay from Roth Capital Partners. Your line is open. Please go ahead.

[Debjit Chattopadhyay:]

Hey, good afternoon, guys. And thanks for the question. Just quick on 271, would you know of hence, the B7-H3 expression on human NK cells and the [Indiscernible] MGA271 for NK cells. The reason I ask is, you did some depletion of NK cells and cynomolgus monkeys right, so how does that translate from the primates to humans?

[Scott Koenig:]

So, I don’t recall depletion in primates, I do not recall that and in fact I do not know using a particular antibody to the particular which hope we’re recognizing that there is any recognition of NK cells. As we had published previously if you take monosites of dendritic cells and mature them you get up regulation of B7-H3, but we have not seen in staining cells from patients or normal volunteers, any staining of those population. I should do note that there was a recent publication from one group that described a small subset of T [Indiscernible] then might have a regulation of B7-H3 but with regard to normal circulating effective T-Cell, remember in T-Cell we have not seen on the T-Cell or incase of compartment expression of B7-H3.

[Debjit Chattopadhyay:]

And I mean it’s just they got to meet their bank benefits like both the regulator and an activator. Here in human how is it specifically selecting out any those two roles?

[Scott Koenig:]

So the question, I’m not quite clear with the question, could you repeat that Debjit.

[Debjit Chattopadhyay:]

Well, B7-H3 apparently is acting as both negative regulator and an activator of -- right. So in human cancer how is it specifically selecting out based on expression levels of B7-H3 and tumors?

[Scott Koenig:]

Yes. So right now again as I said earlier we don’t know openly the mechanism by which our 271 molecule is acting. With regard to your specific question of whether it participating in the activation or innovation of T-Cell as well as shown in the literature of the original study suggested that its important in some degree of T-Cell activation, but virtually all the other subsequent studies that were done in various other in vitro and vivo systems suggest that B7-H3 has an inhibitory or negative regulatory role on T-Cell. And so as you know in many of these in vitro systems these things can manipulated the churn or response one way or another. I think the most telling data recently in animal model system was the one where the crystal structure of the B7-H3 molecule themselves and they have identified the actual domain which is associated within addition of the response and shows when they swap that domain, they mostly in inhibitory properties of the molecule. So, from our vantage point we think in most settings B7-H3 has an inhibitory effect on the new system, but on top of that may has very important roles in terms of tumor cell migration, tumor metastasis and in fact they’ve involved as a regulatory factoring the growth of tumors through a statutory [ph] dependant pathway. So, its [Indiscernible] functional properties and ultimately we would like to sort of some of those mechanisms with time, but the goal right now is to understand therapeutically and clinically how the patient respond to our approach.

[Debjit Chattopadhyay:]

Thank you so much, Scott and really looking forward to the 271 there.

[Scott Koenig:]

Thank you very much, Debjit.

[Operator:]

Our next question comes from Michael Schmidt from Leerink Partners. Your line is open. Please go ahead.

[Michael Schmidt:]

Hey, thanks. I just wanted to follow up on your comment Scott regarding the possible on target side effects for MGD007, I assume that relates to cytokine release syndrome, is that correct?

[Scott Koenig:]

Actually not, Michael. The potential from cytokine as I pointed out previously on previous calls is that the molecule gpA33 has restricted expression to the gastrointestinal system. And so normally even the normal mucosa of the colon has expression of gpA33 and its only the tumor that as I’ve said before. But as you know in the normal physiology of the colon the outer surface of the colon gets shed on a daily basis. And while an expression on gpA33 on tumors is persistent it doesn’t turn over here. And in addition as you know in normal colonic mucosa there were very tight junctions. So the ability of any antibody to egress [ph] into the side of expression and into the [Indiscernible] is somewhat limited. Also you should recall that there was a study a number of years ago done by the Ludwig Group at Memorial Sloan-Kettering using a radial label anti gpA33 monoclonal antibody and they showed a very exquisite localization of the antibody to the tumor side. So our thought is that we believe that there is a therapeutic window in which we can treat these patients because what would normally happen is that anybody – that with buying to the sites would be [Indiscernible] the normal tissues but we remain associated with the tumor and allowed for the association with the CD3 positive T-cells within a tissue compartment. I should point out in the preclinical studies we found a very nice therapeutic window in which we didn’t see very much in monkeys but when we started moving the dose up in those patients we can initially identify monkeys that would develop diarrhoea with some effects on the normal mucosa and then in fact when given very very high doses we could actually get slumping [ph] of that mucosa. So that is from my advantage point is actually a very good sign that in a solid tissue we are getting localization of the CD3 positive T-cell exactly to the compartment which we want and not seeing toxicity in other tissue compartments. And so if we can identify the proper dosing schedule and as I said earlier that we are dosing these patients once a week and once every three weeks obviously giving the appropriate pre meds in the earlier dosing I think we can navigate a very nice way of achieving the efficacy we are hoping for.

[Michael Schmidt:]

Okay, thanks for clarifying.

[Operator:]

Thank you. I’m showing no further questions at this time. This concludes our question and answer session. I would like to hand the conference back over to Scott Koenig for closing comments.

[Scott Koenig:]

Thank you operator and thank you all for joining us today. As we’ve discussed on the call today MacroGenics has had a great start to 2015, but we have a great deal of more to accomplish, so we look forward to the remainder of the year and keeping you all up to date on our progress in these efforts. Thanks again and have a good day.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This concludes our program, you may all disconnect.