MacroGenics Inc. Q1 2023 Earnings Call
Good afternoon, we will begin the Macrogenics 2023 first quarter corporate progress and financial results Conference call in just a moment all participants are in a listen only mode.
At the moment and we will conduct a question and answer session at the conclusion of the call at this point I will turn the call over to Jim Carol <unk>, Vice President Chief Financial Officer of Macrogenics. Please go ahead.
Thank you operator, good afternoon, and welcome to Macrogenics conference call to discuss our first quarter 2023 financial and operational results.
For anyone who has not had the chance to review the results. We issued a press release. This afternoon outlining todays announcements, which is available under the investors tab on our website at Macrogenics Dot 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 todays 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 90 95.
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.
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, President and CEO of Macrogenics.
Thank you Jim I'd like to welcome everyone participating via conference call and webcast today.
Good afternoon, I will provide key updates on our clinical programs, but before I do so let me first turn the call back to Jim who will review our financial results. Thank.
Thank you Scott This afternoon Macrogenics reported financial results for the quarter ended March 31, 2023, which highlight our financial position.
Described in our release this afternoon Macrogenics total revenue consisting primarily of revenue from collaborative agreements was $24 5 million for the quarter ended March 31, 2023, compared to total revenue of $11 1 million for the quarter ended March 31, 2022 revenue for the quarter ended March 31, 2023 included recognition of the.
$15 million milestone receipts from insight for the U S. FDA approval of <unk> $3 6 million in contract manufacturing revenue and margin. The net sales of $3 5 million compared to $3 6 million for the quarter ended March 31 2022.
Our research and development expenses were $45 9 million for the quarter ended March 31, 2023, compared to $61 4 million for the quarter ended March 31 2020 to the.
The decrease was primarily related to decreased <unk> development costs and decreased costs related to our discontinued studies.
These decreases were partially offset by increased expenses related to discovery projects in preclinical molecules and increased clinical expenses related to large ela map.
Our selling general and administrative expenses were $13 5 million for the quarter ended March 31, 2023, compared to $16 3 million for the quarter ended March 31 2022.
The decrease was primarily related to decreased legal and consulting expenses.
Our net loss was $38 million for the quarter ended March 31, 2023, compared to a net loss of $66 4 million for the quarter ended March 31 2022.
Our cash cash equivalents in marketable securities balance as of March 31, 2023 was $241 $7 million compared to $154 3 million as of December 31, 2022, our.
Our cash balance as of March 31, 2023 included a $100 million upfront payment received from our wholly owned subsidiary of DRA Health Care Trust for the sale of our single digit royalties on global net sales of <unk>.
Our March 31, 2023 cash balance did not include a $30 million payment subsequently received from Sanofi related to the November FDA approval milestone for Tcl.
Finally in terms of our cash runway, we anticipate that our cash cash equivalents in marketable securities balance of $241 7 million as of March 31, 2023, plus projected and anticipated future payments from partners and product revenues should provide us with a cash runway through 2025.
Our anticipated funding requirements reflect expected expenditures related to the phase II <unk> clinical trial, the phase II portion of larger <unk> and metastatic metastatic castration resistant prostate cancer as well as our other clinical and preclinical study is currently ongoing.
Now I will turn the call back to Scott.
Thank you Jim the U S. FDA recently approved insights design as <unk> for the treatment of adults with metastatic recurrent locally advanced Merkel cell carcinoma.
This approval represents the third U S marketing clearance of our products originating from our pipeline of proprietary and partnered product candidates with Mark gender and Ts yield in the first and second respectively.
We are delighted that the approval of our designers provides an additional option for treating patients with merkel cell carcinoma, a rare and aggressive type of skin cancer.
In addition to royalty payments payments for designers and Ts yield we remain eligible to receive more than $1 billion in milestone payments related to the continued advancement and successful commercialization of these two approved products.
Over the past nine months these and other programs have allowed us to generate $270 million in non dilutive capital extending our cash runway fully through 2025.
Of course, we continue to believe our proprietary pipeline of product candidates has great promise.
Walk you through our key programs now.
Fiber minimum Abdul Karmazin of overdue is our ADC designed to deliver a DNA alkylating <unk> cytotoxic payload to tumors expressing b 783.
<unk> III is a member of the <unk> family of molecules involved in immune regulation.
Barbara duo was designed to take advantage of this antigens broad expression across multiple solid tumor types.
As we reported on our last earnings call in March we had initiated the phase II portion of the Tamarac study of <unk> in patients with metastatic castration resistant prostate cancer in late 2022 and modified the study prior to call more recently based on the changing treatment landscape.
Patients with metastatic castration resistant prostate cancer.
Regulatory approval of a modified study protocol, primarily reflecting removal of a control arm has been obtained in the U S and all countries targeted first study enrollment in the EU.
We continue to anticipate commencement of enrollment under the revised protocol beginning this quarter and expect to provide a clinical update in 2024.
As a reminder, the tamarac study is designed to evaluate vulgar duo and 100 patients across two experimental arms.
<unk> got $2 seven mix per kg every four weeks.
Next let me update you on Lora Geralyn map, our Bispecific tetravalent PD, one by <unk> Dart molecule.
Please recall that we designed large allomap to have preferential blockade on dual PD, one <unk> four expressing cells such as tumor infiltrating lymphocytes, which are most abundant in the tumor micro environment.
At the <unk> General urinary cancers symposium in February we presented encouraging preliminary clinical results from our single arm dose expansion study of Lora geralyn that in patients with advanced solid tumors in a poster session.
Based on the strength of the yen CRP C data presented we plan to commence enrollment of our randomized phase II study of large allomap in combination with Docetaxel versus Docetaxel in second line chemotherapy naive and CRP C patients in the second half of this year.
A total of 150 patients are planned to be randomized two to one.
The current study design includes the primary study endpoint the radiographic progression free survival.
In addition, we continue to enroll patients in the phase one dose escalation combination study of overdue with Laura Gerald <unk> in patients with advanced solid tumors, including renal cell carcinoma, pancreatic cancer ovarian cancer panel cellular carcinoma emcee RPC.
A melanoma.
Next up <unk> 24 is our next generation bi specific CD 123 by <unk> Dart molecule that incorporates a CD three component designed to minimize cytokines released syndrome, while maintaining antitumor cytotoxic activity and permitting intermittent dosing two.
A longer half life.
Our phase one dose escalation study of <unk> 24 is ongoing in patients with <unk>.
<unk> 123 positive relapsed or refractory hematologic malignancies, including acute myeloid leukemia and Myelodysplastic syndromes.
Recall that Gilead has the option to license <unk> 24 at predefined decision points during the phase one study.
Finally, <unk> is an FC optimized monoclonal antibody that targets <unk> 783.
In April results from an investigator sponsored phase II study conducted at the Johns Hopkins Kimmel sets cancer Center was published in nature Medicine.
And the reported study 32 men with high risk or very high risk prostate cancers, who were scheduled for prostate cancer surgery are treated with six weekly infusions of <unk> prior to surgery and were followed for an average of 30 months thereafter.
The sponsors reported that 21 patients or 66%.
Undetectable prostate specific antigen PSA level 12 months following surgery, suggesting to the authors that there was no sign of residual disease.
Additionally, the investigators reported that the drug was well tolerated overall.
Patients had any surgical delays or medical complications during or after the operation.
Let me next provide an update of our product candidates being developed by our collaboration partners for which we retain certain economic rights.
As we previously announced we received a $100 million upfront payment in March from <unk> for the sale of our single digit royalty on global net sales of Ts yield while we retain the right to receive a 50% share of the royalty on global net sales above a certain annual.
<unk> threshold.
As a result of <unk> acquisition of both prevention <unk> royalty interest in <unk> in April .
Our economic interest are unchanged and we are eligible to receive from Sanofi, a total of up to $430 million in milestone payments.
<unk> $105 million upon the achievement of certain regulatory regulatory approval milestones.
$225 million upon the achievement of certain sales milestones and $100 million in potential payments from Sanofi assumed from Cri.
Also as previously announced in March the FDA approved <unk>, a humanized monoclonal antibody targeting PD one.
We are initially developed this molecule and license it to insight in October 2017, pursuant to an exclusive global collaboration and license agreement.
Inside continues to conduct global registration studies of <unk> allomap across multiple indications, including lung anal and endometrial cancer.
Under our amended agreement with insight, we received a $15 million milestone payment from insight based on the approval of <unk> in Merkel cell carcinoma. During the first quarter of 2023 and are eligible to receive up to $320 million potential remaining development and regulatory milestones.
And up to $330 million in potential commercial milestones.
We are also eligible to receive tiered royalties of 15% to 24% from insight on any global net sales of the product.
Finally, we will manufacture a portion of insights global commercial supply of <unk>.
To conclude we believe we have shown that we have the technical development and clinical expertise and now the necessary financial resources to support execution on our plan of developing and delivering life changing medicines to cancer patients in 2023 and beyond.
We would now be happy to open the call for questions.
Operator.
Thank you. Thank you I would like to ask a question at this time. Please press star one on your telephone and wait for your name to be announced can withdraw. Your question. Please press star one again, please standby, while we can file our Q&A roster.
Our first question comes from the line of Jonathan Chang with SBB Securities. Your line is open. Please go ahead.
Hi, guys. Thanks for taking my questions first question on cash position.
How are you guys thinking about your cash position now following the non dilator DLC completed over the past nine months at this point do you feel you have enough to execute on your plans until the next value inflection point.
Are you still actively seeking opportunities to continue bolstering your balance sheet.
Sure.
Nice to hear from you Jonathan So we were very pleased obviously with our cash position and as stated on the call. This will take us through 2025 and early into early 2026.
And yes. This has.
All the opportunities to execute on the plan that we've outlined and the programs that we discussed today and potentially looking at additional opportunities, especially in prostate cancer and beyond in solid tumors of course as you know we have been always very active in business development activities and have continued.
With ongoing discussions both in terms of our preclinical and clinical pipelines and we anticipate.
In the future that further revenues.
Could be accrued.
Successful execution of those business deal.
Got it. Thank you and second question should we expecting clinical data from the vault, Brett duo plus larger loan that combo study this year.
If so could you help set expectations ahead of that update.
So as I have mentioned on earlier calls we have been moving forward with identifying the proper dosing for individuals.
Individual components in that combination.
And obviously open up the study to six different tumor indications to participate in this study we have not yet settled on the specific dose to move forward in the expansion studies and would anticipate once that is achieved we would move forward in one or two expansion studies of particular.
<unk>, which I expect would probably include a prostate and one and possibly.
At this point, given where we are at this year.
It is less likely that we will have data by the end of this year and more likely in the first part of 2024.
Understood. Thanks for taking my questions.
Okay.
Thank you one moment for our next question.
Our next question comes from the line of Charles <unk> with Guggenheim. Your line is open. Please go ahead.
Hi, This is Edward on for Charles.
Thanks for taking my questions, maybe just a question on the Lora Jill Ahmad Docetaxel combo trial that you're you're looking towards.
What sort of efficacy signal would you anticipate from the Docetaxel control arm and what sort of efficacy signal in the combo arm would give you confidence that the combination going forward and that's both with respect to the control arm, but also with respect to the broader competitive landscape in a chemo naive setting. Thank you.
So thanks for the questions Edward So if you look at the historical data of <unk> Docetaxel control arms.
In patients who have progressed on on a rat agents.
Our PFS.
<unk> has been consistent across the board with keynote <unk> 'twenty one.
Preside.
<unk> three <unk> and train three of eight three months.
And median overall survival of 19, and $18 nine respectively and $9 21 in train III. So obviously, we would like to exceed those.
Certainly meet them, but certainly exceed them with the current study and obviously longer is better in this case.
And then maybe just as a follow up thanks for that maybe just as a follow up. So what are you. How are you seeing that sort of the competitive landscape shaping up in a chemo naive setting again with <unk>.
We estimate four we know it hits that Chegg, so just kind of how youre thinking about it they're in and how you see the combo fitting in thank you.
Well I mean, clearly the historical data on chat.
Checkpoint in.
First of all in prostate in general or prostate certainly in that lineup setting.
Has been.
Been dismal.
Look at all the studies that have been conducted.
With <unk>, including key link of 10.
921, 991% and $6 41.
<unk> did not meet.
The expected outcomes, even though those are in different lines of therapy and different combinations and as you know from the recent data on checkmate 650.
With a combination of <unk> and <unk>.
The responses at.
<unk> three it would be one.
Sure.
We're not good with 93.
3% overall response rate and the PSA 50 of 13, 8%. So we think that we have an unusual a molecule now as a bi specific to <unk>.
<unk> introduced a checkpoint molecule on top of the standard therapy that could really change the course of this disease.
Okay.
<unk>.
Okay.
<unk>.
Thank you and we'll move on to our next question.
And our next question comes from the line of.
<unk> with Citi. Your line is open. Please go ahead.
Hi, Tim This is Oscar Mubarak on for Yigal. Thanks for taking my questions, maybe just asking another one on Lora girl about I think in the past you've alluded to the idea of lowering lower gorilla math dose as a way to better manage aes, but still have full target engagement and I guess within that context.
Are you thinking about dosing for the Docetaxel cohort combo cohort Youre planning on starting to Berry.
Are there any specific comments you can make on the on slower growing up dose and that combo.
Yes. Thank you very much for the question and as you've noted before noted.
We have a very robust dataset from our dose escalation and expansion studies, where in our dose escalation. We went up to 10 mix per gig without dose limiting toxicity desire.
Design the study on expansion at six mix per kg on a Q3 weekly basis.
In.
Over 127 patients, which we presented recently at the <unk> meeting.
As we have pointed out previously we get full occupancy of the PD one receptor at Onemain CAGR higher and have historically shown in a dose escalation study of Lora Gerald <unk> Mab.
Objective responses at three mix per kg and also at six Meg per kg.
And we were seeing biomarker data.
Of expansion at about <unk> <unk>.
At one particular higher as well as.
The induction of Iqos and CD four.
Positive cells in similar ranges. So we have a very wide window of opportunity too.
Treatment doses base.
Based on either combinations of drugs that may add on additional toxicities. So back to your initial question. We are starting at six mixed per case on a Q3 weekly basis.
Has the opportunity to make it.
Adjustments and we're also looking at potential future studies, where we would study more than the six Meg per kg dose.
Prostate cancer and potentially other tumors as well to get the best safety and efficacy profile for the drug.
Got it and if I could ask one more on the overdue.
I guess.
I guess, we're still waiting for the Tamarac data before you ultimately make any ultimate decisions, but.
Or do you have any updated thoughts on how youre thinking about overdue as a monotherapy within prostate cancer I think maybe once we have clarity on the on the treatment paradigm maybe.
Maybe within the coming years do you have you have you are you.
Is there a is there a possibility you would reconsider a pivotal trial with just the monotherapy.
Oh, absolutely I mean, I think the current plan right now.
Was just taking the realization of the time to enrollment.
We made the amendments to the protocol of tamarac to remove the control group.
Idea of this study right now is to execute as quickly as possible. So we were able to decide both on the safety and the activity.
What is the appropriate dose either the two make for Q4 are the $2 seven mix per kg.
Q4 at that point, we would go into a our plan would be if we achieve.
The goals that we set for that study to go into a single arm study.
Moving forward in phase III, and clearly obviously, we're exploring the opportunity of combining it with other active agents given as was discussed earlier the combination with larger map, but we're also looking at.
Other combinations potentially in the future.
Got it very helpful. Thanks very much.
Thank you and one moment.
The next question.
Comes from the line of Carberry Pullman with <unk>. Your line is open. Please go ahead.
Good evening, thanks for the update and congrats on the approval of China.
But for the phase two trial with Docetaxel for Lora John map can.
Can you provide any additional color on your development strategy can.
Can you maybe.
<unk> registration enabling trial.
Let's say the interim analysis it looks positive given the big five of the study.
Yes, that's an excellent question and obviously this is designed as a controlled study two to one but.
It's been off pump inhibitors makes sense, because checkmate 650 smile shield better efficacy in H R D positive patients.
Excellent questions. So answering your question, obviously, responding and I I.
Agree with you based on the 199 study in the <unk> study the and the data that we have shown him at S. Koji you in terms of a 26% objective response rate and over 90 per cent PSA 50, and all the all responding patients had actually.
<unk> M. P. S. A 90 responses that we're in a very good position with this molecule to move it move it forward with regard to M. S. I, Hi, <unk>, we have not set up a trial that's something we could consider we certainly are looking at additional combinations and given that the treatment.
Regimens for prostate cancer, a revolving with the use of PARP inhibitors, even an early lines therapy without D. N. A repair defects, we would consider additional combination size of the future, but I have nothing right now that would incorporate this in our current studies.
That's helpful and made the last one on the ADC <unk> <unk> it will be waiting for the updated data do you plan to show any mature data from the fees one file I believe from the last read out in 2021, the sample size was decent for the patients who remained on.
Treatment.
Yeah, we've noticed the previous calls we've had a dress with response rates and all the tumor types that we looked at and had historically considered actually studying additional patience after prostate cancer and melanoma.
At that time, we did not have the cash runway to justify moving forward with that we we stopped that plan study what I have said in previous calls is that we will provide data at times, when we start or plan to.
Initiate studies, an additional indications and not until then.
Got it that's helpful. Thanks for taking my questions.
I'd also like let me just also add a comment from the earlier call that when I was discussing the treatment in the <unk>. The Oh, Lord <unk> studies that I was talking about a single agents not uhm a single arm studying so just to make sure that people.
Or I'm not confused by my statement.
Thank you and one moment for our next question.
Our next question comes from the line of Steven Lilly with Stifel. Your line is open. Please go ahead.
Yeah. Good afternoon. Thanks for taking my questions. So I know you've done a couple of licensing deals here just to gain access to some novel liquor payload technology and I guess.
Just wondering how 'bout preclinical work is progressing whether you're specifically focused on cocoa, one derivatives, which is I guess kind of seemingly where the entire landscape stoping right now.
And whether the added balance sheets strike now allows you to accelerate some of those development efforts going forward.
Great question, Steven as you know we've been very high on the opportunities that have been afforded us by these additional licensing deals with sin ethics, originally I'm, having access to three link or toxin combinations for specific targets that we expanded before.
<unk> targets O seven and all the preclinical development is going exceptionally well as we pointed out on an earlier call. We intend to file an I N Z in the fourth quarter of this year with the first of these new agents and at this point.
All of all forward on the next one and you know again without getting precision here, we're trying to target for like the 24 for the second one as with building additional molecules going forward you should be assured that many of these molecules will include a <unk>.
<unk> Uhm linker toxin the opportunity.
[noise] alright, thanks for taking questions.
Thank you and I can if you have a question at this time. Please press star one one on your Touchtone telephone one moment for our next question.
Our next question comes from the line <unk> with Barclays. Your line is open. Please go ahead.
Hi, This is <unk> for Peter loss and thanks, So much for taking my question, maybe first just quickly on the <unk> and large area map combo sounds like you're still finding the right got four dose here and maybe that is not so tiny 24, but could you give a little more color on what's built into theirs.
<unk> to go with that does escalate higher or is this more about finding the right balance from a safety perspective.
Excellent question Shay and then N as noted before we want to have the <unk>.
Both combinations that gives the safety and activity.
That we think that can be achieved in both ended up a war potential synergistic way and so we could envision that these could be both in terms of like let's say Lord Journal Mab, which we start at six <unk>. We didn't expect to go higher on Laura gentleman that uhm, so the opportunity to keep that are going low.
Lower and the same story with vulgar as you know, we're exploring two and 2.7 in the current study and given the potential here for synergy here on activity. There is also an opportunity that you may be able to eat the lower the doses from the historical you.
Use of this drug at three mixed per keg and as you know we started initially at one make per kick in the first cohort going forward. So where we ended up at this point, we don't know and until we have that precision we won't go forward into the expansion studies.
That sounds fine just the last quick question, considering the removal of the control arm felt pretty low and prostate I guess, how are you thinking now about tear registrational strategy looking for it.
You know as you know this is a changing landscape, where we said right now with <unk> coming on board recently, we wanted to see how far that use of that drug is in various lines of therapy. We wanted to see other combinations. It was brought up earlier on this on this call.
All about the use of PARP inhibitors. So while we are right now.
Oh look at the landscape when we've completed and selected the doses for vulgar going forward and we'll see what the appropriate control one can envision a specific control our our one of several that investigators gets to choose from but we're right not ready yet to make that decision.
Alright, thank you so much.
Thank you I would like to turn the conference back over to Jim Carroll's for any further or closing remarks.
Thank you I'm afraid this is Scott tanning I Wanna, Thank everybody who participated in this call today. We appreciate it and look forward to updating you on our future studies on the next call.
This concludes today's conference call. Thank you for participating you may now disconnect.
Mmm.
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