MGNX (2022 - Q1)

Good afternoon. We will begin the MacroGenics’ 2022 First Quarter Corporate Progress and Financial Results Conference Call in just a moment. All participants are in a listen-only mode at this 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 Chris James, Vice President of Investor Relations and Corporate Communications of MacroGenics. Chris Ja

Thank you, operator. Good afternoon and welcome to MacroGenics’ conference call to discuss our first quarter 2022 financial and operational results. For anyone who has not had the chance to review these results, we issued a press release this afternoon outlining today’s announcement, which is available under the Investors tab on our website at macrogenics.com. You may also listen to this conference call via webcast on our website, where it will be archived for 30 days beginning approximately 2 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 statement 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 would like to turn the call over to Dr. Scott Koenig, President and Chief Executive Officer of MacroGenics.

Thank you, Chris. I’d like to welcome everyone participating via conference call and webcast today. This afternoon, I will provide key updates from our clinical programs. But before I do so, let me first turn the call to Jim Karrels, our Chief Financial Officer, who will review our financial results.

This afternoon, MacroGenics reported financial results for the quarter ended March 31, 2022 which highlight our financial position as well as our recent progress. As described in our release this afternoon, MacroGenics total revenue consisting primarily of revenue from collaborative agreements, was $11.1 million for the quarter ended March 31, 2022 compared to total revenue of $16.9 million for the quarter ended March 31, 2021. Revenue for the quarter ended March 31, 2022 included $3.6 million net sales of MARGENZA. Our research and development expenses were $61.4 million for the quarter ended March 31, 2022 compared to $53.1 million for the quarter ended March 31, 2021. The increase was primarily related to development, manufacturing, and clinical trial costs related to MGC018, development of discovery projects in preclinical molecules and increased clinical expenses related to lorigerlimab. These increases were partially offset by decreased development, manufacturing and clinical trial costs related to flotetuzumab, which development has been discontinued. Decreased margetuximab manufacturing costs related to the Zai Lab agreement, and decreased retifanlimab manufacturing costs for Incyte. Selling, general and administrative expenses were $16.3 million for the quarter ended March 31, 2022 compared to $15 million for the quarter ended March 31, 2021. The increase was primarily related to MARGENZA selling costs as well as stock-based compensation and consulting expenses. Our net loss was $66.4 million for the quarter ended March 31, 2022 compared to a net loss of $51.3 million for the quarter ended March 31, 2021. And our cash, cash equivalents and marketable securities balance as of March 31, 2022 was $184 million compared to $243.6 million as of December 31, 2021. And in terms of our cash runway, we anticipate that our cash, cash equivalents and marketable securities as of March 31, 2022 in addition to anticipated and potential collaboration payments should enable us to fund operations through 2023. This cash runway guidance does not reflect anticipated expenditures related to the full Phase 2/3 development of MGC018 in prostate cancer anticipated to begin by year end 2022 or further expansion of other studies currently ongoing. However, the company believes that it can reasonably obtain funding for the planned Phase 2 portion of the MGC018 study through a combination of existing financial resources, a variety of external funding or potential revenue sources and project prioritization. And now, I will turn the call back to Scott.

Thank you, Jim. I am delighted by the progress made during the first quarter. I am especially pleased with the outcome of our recent meeting with the U.S. Food and Drug Administration regarding the advancements of MGC018, our B7-H3 directed antibody drug conjugate in patients with metastatic castration resistant prostate cancer. A Phase 2/3 clinical plan for MGC018 underscores our productive dialogue with the FDA and feedback received on key elements of the program and we are advancing toward the initiation of the Phase 2/3 study by year end. Another exciting development was the initiation of a Phase 1 dose escalation study of MGC018 in combination with lorigerlimab, our bispecific DART molecule targeting PD-1 and CTLA-4 in advanced solid tumors. I am also happy to announce that FDA has cleared the IND for MGD024, our next generation CD123 x CD3 DART molecule. We look forward to initiating a Phase 1 study of MGD024 and CD123 positive hematologic malignancies in mid-2022. In addition to these programs, we and our partners continued to progress our other clinical and preclinical candidates and expect to provide further updates over the course of this year. With that backdrop, let me use this time to walk you through updates on our portfolio of investigational clinical molecules starting with our molecules targeting B7-H3, a member of the B7 family of molecules involved in immune regulation. As a reminder, we are developing two molecules that target B7-H3 through complementary mechanisms of action that take advantage of this antigen’s broad expression across multiple solid tumor types. MGC018 is our investigational antibody drug conjugate designed to deliver a DNA-alkylating duocarmycin cytotoxic payload to tumors expressing B7-H3. We recently finalized our plans to conduct a registration path Phase 2/3 study of MGC018 in MCRPC. Based on our analysis of dose expansion study data to-date, we plan to modify the dose and administration of MGC018 in the upcoming registrational study, including a reduced dose and increased interval between doses, which we believe will help to achieve the maximum therapeutic effect and reduced potential side effects. The Phase 2/3 study will enroll patients with MCRPC who have had prior exposure to a taxane and at least one androgen receptor axis-targeted, or ARAT agent such as abiraterone, enzalutamide or apalutamide and a PARP inhibitor if appropriate. During the Phase 2 portion of his study, approximately 150 patients will be randomized 1 to 1 to 1 to receive either 2 mgs per kg or 2.7 mgs per kg of MGC018 every 4 weeks in the experimental groups or physicians’ choice of an ARAT agent not previously received in the control group. Following completion of the Phase 2 portion of the study, an analysis of the data will be performed to further inform the Phase 3 portion in which we plan to randomize additional patients one to one to receive either MGC018 at the recommended dose or an ARAT agent for the control group. In recognition of the current cost of capital environment, inclusion of an end of Phase 2 interim analysis to evaluate that two MGC018 dose levels will allow us to further assess safety, tolerability and futility and select the best dose before proceeding to the Phase 3 portion of the study. Finally, for the Phase 2/3 study, we will utilize radiographic progression-free survival as the primary endpoint, an objective response rate and overall survival as the secondary key endpoints. This study design was discussed during constructive meeting with the FDA in March. We expect to begin enrollment in the fourth quarter of 2022. Let me provide a few more details about how we arrived at the modified dose and dosing interval with a planned Phase 2/3 study. To determine these lower doses and longer dosing interval, we performed modeling and simulation of patient pharmacokinetic and safety data from the Phase 1/2 study to evaluate the relationship between MGC018 exposure and dose modification, including dose reductions and dose delays and key indices of tolerability. The doses of 2 versus 2.7 mgs per kg every 4 weeks, we plan to evaluate in the Phase 2 portion of the study, compare with a starting dose of 3 mgs per kg every 3 weeks with any subsequent reductions evaluated in the Phase 1 dose expansion study. We expect that slightly lower doses will decrease adverse events and potentially improve efficacy by allowing patients to stay on therapy longer. Regarding our ongoing Phase 1/2 dose expansion study of MGC018, we are encouraged by initial clinical activity observed in patients with melanoma and plan to recruit 20 additional melanoma patients evaluating a dose of 2.7 mgs per kg administered every 4 weeks. Again, this dose compares to the starting dose of 3 mgs per kg administered every 3 weeks with any subsequent reductions during dose expansion. As for the other tumor types enrolled in the expansion study, we are evaluating possible next steps for treating additional patients with non-small cell lung cancer and continue to enroll patients in the squamous cell carcinoma of the head and neck expansion cohort. We do not plan to proceed with advancing the study in patients with triple negative breast cancer at this time. We intend to provide an update on clinical data from Phase 1/2 dose expansion cohorts in the second half of 2022 as the data further matures. In addition, we recently dosed the first patient in the dose escalation study of MGC018 in combination with lorigerlimab, our PD-1 by CTLA-4 bispecific in patients with advanced solid tumors, including renal cell carcinoma, pancreatic cancer, ovarian cancer, hepatocellular carcinoma, MCRPC and melanoma. The scientific rationale for undertaking this trial is supported by our preclinical data, which suggests the anti-tumor activity with MGC018 maybe enhanced by combination therapy with an anti-PD1 agent without meaningful incremental toxicity. Lastly, in April, we presented a poster titled targeting B7-H3 in prostate cancer, preclinical proof-of-concept with MGC018, and investigational B7-H3 antibody drug conjugate at the American Association for Cancer Research Annual Meeting. MGC018 demonstrated anti-tumor effects on prostate cancer cell lines and enhanced activity in some lines when combined with PARP or androgen receptor inhibitors in a preclinical study. We believe these data led further support for advancing MGC018 in patients with prostate cancer and we look forward to potentially evaluating MGC018 in combination with these agents in future studies. Another of our investigational molecules exploiting the overexpression of B7-H3 in solid tumors is enoblituzumab, an FC-engineered antibody created using our FC optimization platform. We are recruiting patients in Phase 2 study of an enoblituzumab in frontline patients with squamous cell carcinoma of the head and neck in which PD-L1 positive patients receive combination therapy with retifanlimab, an anti-PD-1 antibody and PD-L1 negative patients receive combination therapy with tebotelimab, our PD-1 x LAG-3 DART molecule. We expect it to complete enrollment of the PD-L1 positive patient cohort during the first half of this year and provide an update on this cohort during the second half of the year. In April, the results from a Phase 1 study of the combination of enoblituzumab and pembrolizumab in advanced B7-H3 expressing solid tumors were published in the Journal for Immunotherapy of Cancer. These data were initially presented at the Society for Immunotherapy of Cancers 2018 Annual Meeting. As previously reported, objective responses occurred in 6 of 18 evaluable patients or 33.3%, with squamous cell carcinoma of the head and neck for Checkpoint 90 and have previously progressed after receiving first line platinum-based chemotherapy. Of note, in patients with squamous cell carcinoma of the head and neck, the updated data show a median overall survival of 17.4 months with a 95% confidence interval of 9.2 did not reached. This compared favorably to the objective response rate of 13% to 16% and median OS of 7.5 months seen with single agent use of anti-PD-1 agents previously reported in squamous cell carcinoma of the head and neck patients who had progressed after platinum-based chemotherapy. We believe the recently published data from our combination of an enoblituzumab and pembrolizumab, while from a small study are encouraging given the historical efficacy with anti-PD-1 agents. The results demonstrated that therapy combining B7-H3 and PD-1 inhibition is feasible potentially with minimal additive toxicity beyond what would expect with anti-PD-1 monotherapy. Next, let me update you on lorigerlimab, our investigational bispecific tetravalent DART molecule designed to enable blockade of PD-1 and CTLA-4. As mentioned, we have recently initiated a clinical study of MGC018 and lorigerlimab in patients with advanced solid tumors. We are also evaluating lorigerlimab in a Phase 1/2 dose expansion study in patients with microsatellite stable colorectal cancer, mCRPC, melanoma and checkpoint-naive non-small cell lung cancer in a dose of 6 mgs per kg. We expect to provide an update from this ongoing study in the second half of 2022. Next up, I will discuss our efforts to advance treatment of patients with CD123 positive hematologic malignancies. MGD024 is our next generation bispecific CD123/CD3 DART molecule that incorporates a CD3 component designed to minimize cytokine release syndrome, while maintaining anti-tumor cytolytic activity and permitting intermittent dosing through a longer half-life. In April, our IND for MGD024 was cleared by the FDA for evaluation in patients with hematologic malignancies. We expect to begin enrollment of the Phase 1 study of MGD024 in patients with CD123 positive neoplasms, including acute myeloid leukemia in midyear. Next, I will provide an update of our product candidates being developed by our collaboration partners for which we retained certain economic right. Teplizumab is an anti-CD3 monoclonal antibody that was acquired from us by Provention Bio under an asset purchase agreement in 2018, for which we are entitled to receive future milestone payments and royalties on net sales. Provention is developing to teplizumab for the treatment of Type 1 diabetes. In July 2021, the FDA issued a complete response letter for teplizumab’s BLA for the delay of clinical Type 1 diabetes in at-risk individuals. In March, Provention announced that the FDA accepted the Biologics License Application for teplizumab for the delay of clinical Type 1 diabetes in at-risk individuals. The FDA assigned a PDUFA date of August 17, 2022. Our second investigational ADC, IMGC936, which targets ADAM9, a cell surface protein overexpressed in several solid tumor types is being advanced under co-development agreement with ImmunoGen. Under our 50-50 collaboration, ImmunoGen is leading clinical development and has indicated that they will anticipate disclosing initial data from the Phase 1 study in multiple solid tumors in 2022. I am pleased to announce that a manuscript describing the preclinical evaluation of IMGC936 was recently accepted for publication in molecular cancer therapeutics. A copy of the manuscript will soon be available online. Last, I will provide an update on margetuximab. As a reminder, margetuximab was launched as MARGENZA in the U.S. in March 2021 in coordination with our commercial partner, EVERSANA. MARGENZA is approved in combination with chemotherapy for the treatment of adult patients with metastatic HER-2 positive breast cancer, who have received two or more prior anti-HER-2 regimens, at least one of which was for metastatic disease. We continue to believe patients may benefit from MARGENZA as another option to treat metastatic breast cancer. As reported, net sales were $3.6 million for MARGENZA in the first quarter. Given the high level of competition in the HER-2 positive breast cancer market, including multiple new approvals, we continue to have modest expectations for MARGENZA sales. In conclusion, we anticipate that 2022 will be an important year for MacroGenics. We remain steadfast in our commitment to becoming a leader in the field of immunooncology and are excited about the potential to deliver novel therapies to cancer patients. We will now be happy to open the call for questions. Operator?

Thank you. [Operator Instructions] Our first question comes from Jonathan Chang with SVB Securities. Your line is now open.

Hi, guys. Thanks for taking my questions. First question on the MGC018 Phase 2/3 prostate cancer study, you have guided to starting the study by year end? How should we be thinking about timelines for the study beyond study initiation and how do those timelines fit with your cash runway guidance?

Jonathan thanks very much for the question. Obviously, we are still in the operational startup phase of this working with identification of sites and finding the organizations that will help us with that study. So, it’s really too early to project how quickly the 150 patients in the Phase 2 portion of the study will be enrolled. Obviously, once that study starts, we are willing to provide further guidance. But again, right now, our target is to get the study started by the end of the year. With regard to the cash situation, as Jim commented on earlier, we believe with the cash available and I anticipated other cash that maybe coming in potentially, we should be able to have enough cash taking us through 2023 and to be able to us to support the Phase 2 study of that program.

Got it. Thank you. And just a second question on the Phase 3 portion of the study, how should we be thinking about the size of the Phase 3 portion and could patients treated in the Phase 2 portion of the study count towards the Phase 3?

I will answer the second part first. Yes, there is a potential of that patients that are participating in the Phase 2. This was designed as a seamless design. But at this point, we prefer not to identify the exact number of patients in the Phase 3. We have obviously modeled this out. But again, I’d like to take this through the Phase 2 before we give a little bit more specificity on how many patients we would anticipate in the Phase 3 portion.

Got it. And just one last question for me, what do you guys see as the radiographic PFS benchmark for an androgen receptor access targeted therapy and end of Phase 3 patient population?

Well, again, given that, right now the treatment paradigms are continuing to evolve, we have obviously a new agent on the market. There is obviously, switches in frontline therapy and depending on whether the study is being conducted in U.S. and Europe in terms of the initial agent being given in the castration-resistant population, it’s hard for us to give the specifics with regard to the control population. We obviously have modeled this with data to-date and the various studies out there but right now, we are not giving specific guidance in terms of the control population responsiveness versus the experimental. Obviously, we are looking certainly for several months improvements over control.

Got it. Thank you for taking the questions.

Thank you. Our next question comes from Kaveri Pohlman with BTIG. Your line is now open.

Good afternoon. Thanks for the updates and thanks for taking my questions. My first question is for MGD024, how much of the flotetuzumab data derisk the 024 program? Because 024 has an Fc domain, so it’s going to have a very different PK/PD profile. Do you think you have to start over or you can get quickly to a dose that’s active and safe enough?

Thanks Kaveri for the question. We are starting this out as a new study. Obviously, we have a lot of experience on flotetuzumab. But as you point out with the intermittent dosing here, which was obviously incorporated, we think is a major attribute for the designer of the MGD024 molecule. We will be starting at low doses. Our hope is that these cohorts will be small and can move up quickly. But again, until we start the study, we won’t know how long it will take to move through the various dose levels in the dose escalation study, so too early to say.

That’s fair. And for enoblituzumab and tebotelimab, do you plan to screen or test patients for LAG-3 expression? I believe the BMS data showed superior survival in LAG-3 expressers although it is approved for both sides of population?

Good question. And the way the study was initially designed, we did not require screening for LAG-3 expression. Obviously, what we were trying to address here, particularly in the combination using tebo is in the PD-L1 negative population, we believe that the Fc incorporation in enoblituzumab by binding to NK cells and other cells can drive upregulation of gamma interferon and upregulation of multiple checkpoints, including LAG-3. We will be looking retrospectively at the patients in that study to understand the baseline and post-treatment expression levels of PD-L1 and LAG-3 in those patients. And obviously look at how it correlates with the response rate, so not required prospectively, but more as a guide in terms of the populations that most benefit by treatment.

Thank you. Our next question comes from Etzer Darout with BMO Capital Markets. Your line is open.

Great. Thanks for taking the questions. I have a couple on MGC018 updates in the second half of this year. I guess first, could we see updated prostate cancer data that includes PFS in the second half? And I guess, as far as sort of the dose and interval modifications noted in the Phase 2/3, could we see some clinical data on that particular or sort of those modifications in prostate or in melanoma cohorts being sort of reported in the second half of this year? Thank you.

So, with regard to the modifications of dose that has not been initiated in the expansion cohorts that we have treated to-date and that was obviously part of the objective of this Phase 2 design. As you know and as we stated earlier today, we have modeled this out looking at the pharmacokinetics looking at the side effect profile and the responses and we think we have come up with two potential doses with the modified intervals that would end up giving a higher efficacy and potentially as well as a much reduced mitigated side effect profile. But until we test that prospectively, we will not know the answer. And that’s part of the reason to understand looking at those two doses, which one will perform the best and then ultimately take that forward into the Phase 3 portion of the study. With regard to the specific updates on prostate and 018, we have not made any specific decisions with regard to this program either on prostate or on the specific expansion cohorts. We will provide some updates, but right now, we have not submitted an abstract specifically for the update of prostate given that patients are still being dosed, we obviously would like to see that study completed before reporting out the final results.

Got it. Thank you. We will look forward to the disclosures in the second half. Thank you.

Thank you. Our next question comes from Peter Lawson with Barclays. Your line is now open.

Great, thank you so much. Just on the Phase 2 intro for the B7-H3, when could we potentially see that?

Are we talking about the study that we just described for Phase 2/3, the Q portion? As I said earlier – to an earlier question, we want to get the study started. Again, we are targeting for the start at the end of the year. So until things are operational, it’d be just too early to project when we see that data, but clearly, we will be working very diligently to enroll the 150 patients to get that answer. But at this point, it’s just too early to estimate.

Got it. Thank you. And then why the two potential what the two doses for MGC018?

Well, I think that’s a very good question. As I said, we selected these doses based on the actual data we had on hand from the patients. Why test two doses? Well, obviously, the FDA is providing guidance all the time. And it’s really good development practice to really define a dose to show the maximum therapeutic index rather than just proceeding with a maximum tolerated dose. They were very – our interactions with them were very positive. And in our discussion, they certainly encouraged us to look at the two doses going forward. So at this point, I think this is the most prudent thing to do to ultimately get the most appropriate dose for treating these patients.

Thank you. Our next question comes from Stephen Willey with Stifel. Your line is now open.

Yes, good afternoon. Thanks for taking the questions. Maybe just to follow-up on the Phase 2/3 study design, does the eligibility criteria allow for taxane use in the castration sensitive setting and is there a limit to the number of taxane regimens that are allowed?

There is a limit on the second on the number of taxane. So it’s one taxane and most likely will be docetaxel. With regard to its use in the castration sensitive, I actually don’t know the answer. Stephen, I will have to follow-up with you on that question.

Okay. And I guess in the discussion with FDA was there any in terms of trial design – was there any discussion just around I guess the card results? And I guess some of the clinical awareness now that sequencing these novel hormonals behind each other don’t necessarily achieve a maximal amount of clinical benefit. And I know in just having some physician conversations with regards to other development programs, there has been a little bit of a pushback on this notion of sequencing these agents in patients in later lines of therapy. So just wondering if I guess even outside of your FDA discussions you have had any kind of clinical or KOL conversations to inform the selection of a control arm here.

Yes. Steve, we had both extensive discussions with investigators. And we have also had had a very good discussion with the FDA. And what I would say is there is no one easy solution given where the state of treatment is right now. As you know, there are different things one could select. And there was no perfect answer to that question. And actually, the FDA in fact commented to that point. And so they again discussed with us obviously, in any of these studies, it’s always up to the investigator if unless it’s a use safety concern and that was not raised and obviously we have incorporated the design to deal with safety issues in the future. But the fact of the matter there is something we will obviously continue to examine as we go through the Phase 2 portion of the study and see where the state of treatment is at that time. But the FDA definitely agreed that this selection for the control population was one that was certainly adequate to move forward.

Thank you. Our next question comes from Jonathan Miller with Evercore ISI. Your line is now open.

Hey guys. Thanks for taking my question. One maybe on the 018 dosing obviously, it’s less intense, so I understand the better expected tox profile. But the PR in your prepared remarks seem to suggest that it’s getting close to the practical realized dose in the Phase 1 after you account for dose reductions and delays with those patients we are getting. So, I guess how would you characterize or how much lower is exposure at the new dose, versus where patients ended up at leader cycles in the Phase 1 at the 3 mg Q3 dose? And then secondly, maybe switching gears a little bit on the runway guidance. Presumably that includes that admirable job that you have done so far streamlining the pipeline, but you also suggest that there might be additional prioritization or optimization to come. So, beyond 018, which assets remain a focus for accelerating development versus maybe sitting on the backburner a little while, while you try and get through the lead program Phase 2?

We had a question there. So, let me sort of start with the address the first part, which was the dose. As you saw that we made modifications, that is bounded both by between 2 and 2.7, with obviously, a slightly increased dosing interval. What I would say is that, given the size of the number of patients we had to evaluate, the dose that we approximated was sort of right in the middle there. So, the question is a little bit more or a little bit less, the ideal one, that’s why we ultimately selected these two doses to go forward. So, I think hopefully, will be appropriate guidance to the data safety monitoring committee. And we will be able to select the best dose to move forward in the Phase 3 arm of the study. With regard to the runway guidance, we obviously are continually looking at the portfolio and pruning things which we don’t think will have the highest prospects for the greatest success. It’s very clear that we have held off on accelerating the TiVo program, beyond the combination study in the head and neck at this point. But we certainly are spending a lot of effort in the background, determining what the best trial design is for both the solid tumor and potentially for lymphoma. But again, we will not engage in the development of those – of that until we have certainly enough capital to support the MGC018 study and some other programs that you will hear about later in this year that we have high hopes for. So, you will continue to hear more Jonathan, on how we will prioritize our programs going forward, where we think we will have the greatest chance to success.

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

Hi. Thanks Scott and Jim. On the interim analysis for the Phase 2 for MGC018, what have you said about what will trigger that interim, this is a typical situation just a certain number of radiographic PFS events. And if you could share what that is?

We haven’t given the specifics with regard what moves things forward. There is a futility component to this analysis, which will be guided via the data safety monitoring committee. But at this time, we are not in a position to specify the go/no go decisions with regard to that.

Okay. And then on MGD024, I am just curious if you could help put this molecule in perspective with some of the other competitors out there that have the same construct. To cite one example, there is another one from [indiscernible] 436 also targeting CD123. Just wondering if you could help elaborate on how your molecule is different?

Well, we have actually constructed a TiVo mimic version. It has some nice properties about it. But we have certainly from our preclinical analysis of our molecule of MGD024. We certainly think that this can be a superior molecule I should point out as I stated earlier, not only do we see this being developed in late line refractory populations. But given very robust activity we have seen in preclinical models, combining these with other approved active agents that are used for AML, number one. And then our plans, which are much broader beyond AML to using this in other hematologic malignancies once we have established the dose, I think this could be a really a standalone CD123 in its class. Especially given the way it’s designed if we see the markedly reduced cytokine release profile that will certainly add greater value to this molecule compared to what has been at least discussed publicly on the TiVo molecule in terms of cytokine release.

Thank you. Our next question comes from David Dai with SMBC. Your line is now open.

Hi. Thank you for taking my questions. So, one question on MGC018 program Phase 2/3 design. Could you just comment on the receptor occupancy at lower doses? Especially based on the PK/PD modeling, could you share whether you will be able to occupy the similar amount of receptors at lower doses? I know this might be a little bit tough to perform, because the molecules are internalized. But any color will be helpful.

David, I don’t – I can’t really answer that question. I think you have alluded to the problem here is that because this is an ADC molecule you actually don’t need a full receptor occupancy to get the biological activity. What you need is an antibody directed to an epitope on the receptor that will incorporate that molecule. In this case, we will go through the lysosomal pathway and get the cleavage of the toxin which then travels to the nucleus and promotes alkylation of DNA. And so really, you don’t need full saturation of this, the sub-saturating levels. Given that the doses we have intending to move forward in the Phase 2/3 are not that different than what we have already described in Phase 1 and given the broad activity we have seen. And furthermore, in our dose escalation study, even seeing activity at lower doses, I think we have sufficient drug in the circulation to do what we wanted to do. And again, hopefully mitigate some of the side effects by this dose reduction.

That’s really helpful, Scott. So, just another question on 018, from your facelift study, the safety profile is pretty clean, where we didn’t see any colitis and we saw some lower levels of Grade 3 diarrhea and rash. So, to reduce the levels to 2 mg and 2.5 mg, if you can just show us what kind of adverse event you are trying to mitigate at the lower dose level?

Excellent question, we modeled this on the major side effect profiles and the one that we saw that was not as big an issue with the investigators themselves, but more with the patients was hand-foot syndrome, where we saw a very low grade three side effect profile. But the fact is we had higher levels of grade two, which causes pain in patients. And so our goal here is both to decrease. In this instance, the hand-foot syndrome incidents, but also the grade, hopefully driving them to more grade one type side effects for hand-foot. And hopefully, obviously, for other side effects that are most prominent, most notably, some of the hematologic side effects which include neutropenia. In that case, we can treat the neutropenia by giving GCSF. And the fact is, to-date, we are not seeing a major clinical problem with a neutropenia, meaning we are not seeing any febrile neutropenia, or any notable increased infectious infection rates as a result. So, oncologists have good ways to treat the neutropenia and also thrombocytopenia both by holding doses and giving stimulating agents. So, that is the intent of these dose modifications.

Thank you. Our next question comes from Charles Zhu with Guggenheim Securities. Your line is open.

Good afternoon, everyone. And thanks for taking my question. Just one quick one on enoblituzumab. So, it sounds like you will have that combination update in PD-L1 positive head and neck cancer later this year. So, we have a pretty good idea of what single agent PD-1 benchmarks look like. But just given your data coming up, as well as given some of the language and guidance around cash runway, I guess what are you looking for out of these programs in terms of go/no-go decisions? And it won’t give you confidence in really pursuing this in some sort of a more potentially registrational development pad? Thanks.

Yes. Excellent question Charles. The fact is, as we pointed out today, the historical data and later line, even though the cohort was small, we were seeing overall response rates 30%. And as we reported on today, a very much more prolonged overall survival in the population, certainly about doubling from the historical data. So, it’s again in a chemo free regimen in this frontline head and neck study. If we are achieving a 25% to 30%. response rates, we are in that range in a chemo free regimen, I think we have both the ability to develop this further as a potential chemo free regimen or contract to pursue other possibilities of combining with chemo going forward. So, well, we look forward to having some maturation of the data later this year to be able to update.

Great. Thanks for taking my question. Thanks.

[Operator Instructions] Our next question comes from Silvan Tuerkcan with JMP Securities. Your line is open.

Thank you. Good afternoon, and congrats on the quarter. And thanks for taking my questions. My first question is a little bit more on the 018, I guess pacing out of going from three weeks to four weeks dosing. What evidence we have from the PK/PD profile that you will have a shot of maintaining the efficacy you have seen before, apart from the AUC. And have there been any patients in the ongoing I guess dose expansion arms that have received doses spaced out further maybe due to the dose reductions or by giving freedom to the investigators to space them out. And then I have a follow-up. Thank you.

Silvan, yes, exactly that’s what we did in our retrospective analysis of the patients on the 3 mg Q3 weekly. All the patients started out at that dose. But a large percentage of those patients were either having dose reductions or doses were held either for – mostly for side effects before they were resuming. So, there were a number of patients that actually were held for four weeks or even longer up to six weeks in some of these patients. And so we were able to model that and compare the responsiveness of those patients with these longer intervals and side effects and their response rates. And that’s how we were able to simulate and come to the doses and the dosing intervals that we have ultimately decided on. So, yes, we did have patients that in fact, were not treated on a Q3 weekly basis, but less frequently.

Great, thank you. And just a quick question on lorigerlimab here, actually – sorry, tebotelimab, here I think your partner in China, Zai Lab discontinued development. I think you disclosed that in the 4Q call, but – and you said that they may have future plans. What are those? Do you have any update on their future plans and how they may align with your future plans following the update that we will get in the second half?

Yes. I think that, again, I think they are looking towards us in terms of next opportunities. As I have alluded to before, we’re looking at the potential of a solid tumor indication than potentially in a lymphoma setting to explore the use of tebotelimab. And depending on what we decide, they will potentially have an opportunity to participate in those studies, but nothing has been formalized as yet.

Thank you. I have a follow-up with Stephen Willey with Stifel. Your line is now open.

Yes, thanks for the follow-up. So lorigerlimab I believe is currently being evaluated on a Q3W schedule. And just wondering if there is going to be any attempt to harmonize dosing when you start combining this with MGC018 on a Q4W schedule? Thanks.

Steve, yes, in fact, there will be an amendment to provide lorigerlimab on a Q4 weekly regimen to coincide with the dosing of MGC018.

Okay. Thanks for taking the question.

Thank you. And I have a follow-up with Yigal Nochomovitz with Citigroup. Your line is open.

Thanks. Yes, Scott, just one more on 018 and Phase 1/2 expansion, I think you noted encouraging activity in melanoma and given that you are seeking to add patients to non-small-cell that also appears to be generating an interesting signal. I am not sure if you can elaborate at this point in time in terms of anymore quantification of those trends?

I think, our plan is to provide some guidance again on some of these expansion cohorts later this year. So, stay tuned for that. But again, as I have noted before, first, obviously on the melanoma, we would like to see on this 2.7 to 4 response rates in melanoma in a similar population and how those additional 20 patients will respond both in terms of safety and efficacy. With regard to lung, we need to do a little more work in terms of given the heterogeneity of the lung population both in terms of histologies as well as the expression pattern B7-H3 among the different tumor types, which specific lung population we want to further explore. So we are doing a little bit more homework on that before we decide the move forward for expansion in the lung population.

Thank you. And our next follow-up comes from Silvan Tuerkcan and JMP Securities. Your line is open.

Thank you. Just one last follow-up here. Now that you are enrolling patients at 2.7 milligrams in melanoma and potentially also non-small cell lung cancer and your other expression cohorts, is there any way that in that scenario having those patients already in that Phase 1/2 or Phase 2 dose expansion that you could skip the Phase 2/3 of a pivotal trial and just go into Phase 3 following that or convert the dose expansion into a pivotal trial by enrolling more patients? Thank you.

So let me be quite clear, we have not started dosing at 2.7 in the melanoma nor obviously in the lung population. We are likely given the ease of adding additional patients to be able to start that before or approximately the same time as the Phase 2/3 prostate, but we will not use that data, because it will be just too early and too delayed to get sufficient enough data to guide the prostate. The prostate will be an independent and actually, more importantly, it’s having it as a controlled study to understand the response rate as well as the safety profile compared to the control population in the sizable number of patients. So no, we will not use the data in those other tumor types to guide us for the prostate study.

Thank you. And I am currently showing no further questions in the queue at this time. I’d like to hand the conference back to Dr. Koenig for any closing comments.

Thank you, operator and thank you all for participating in our earnings call today. We look forward to providing further updates on so many of our programs later this year. We hope you have a great afternoon and evening.

Ladies and gentlemen, thank you for your participation in today’s conference. You may now disconnect. Everyone have a wonderful day.