Okay. Good afternoon. One of the senior biotech analysts at TD Cowen. I wanna thank you for coming to TD Cowen's 46th Annual Healthcare Conference. Our next session, we have a presentation followed by some Q&A with MacroGenics.
From MacroGenics, I'm happy to introduce Eric Risser, the CEO. It's a privilege to have you here. Thank you so much for coming. You can get started on your presentation any time. I'd let you kick it off, and then we will get started on Q&A after that.
Great. Well, thank you so much for the introduction, Tara, really excited to be here today at the TD Cowen conference. I'll just highlight a couple overview slides on the company then would love to again jump into Q&A with you. I will be making some forward-looking statements as I go through my slides, please refer to our SEC filings for additional disclosures on the risks that affect the business.
Just to encapsulate MacroGenics, we are focused on next-generation antibody therapeutics for the treatment of cancer. We leverage a number of proprietary platforms. Some of these are homegrown, like our DART and Trident platforms that enable bispecific and trivalent targeting. Some of them we actually leverage through third-party licenses.
For instance, on our ADC platform, we've been able to tap into proprietary drug linker chemistries, including those from Synaffix, which is now part of Lonza, which has some really nice features around site-specific conjugation, enablement of conjugation to exatecan, which is typically a hydrophobic payload, but they've been able to address some of those challenges with their proprietary linker chemistries.
We also have our dual checkpoint molecules, which I'll talk a little bit about. Company has four fully owned product pipelines. We've all product candidates. We also have a number of assets that we've partnered on, which I'll describe, and three assets that actually came from the early development efforts that are now marketed products, which I love to be able to say that we're not just a technology boutique with great technology.
We're very much focused on product development and how do we drive assets to important clinical inflection points, have a very seasoned clinical, regulatory, and CMC team. We're also very well capitalized as a business. Have cash runway that's now into late 2027. In our Q3 earnings call in November, we actually extended that guidance from mid 2027 towards the end of 2027. That's been done largely through non-dilutive funding.
Actually, in the last three years alone, we've brought in over $600 million in non-dilutive capital, and we've been very prolific on the corporate deal-making even over the last decade. Every year, we've done one, if not multiple, transactions that have brought in non-dilutive capital for the business. I stepped into the CEO role last August, so about six months.
We've had a very intense process to really refocus the business. I laid out what were described as these six key strategic imperatives for the business that we're gonna extend through the end of 2026. I'm happy to say we've made a lot of progress already in that short period of time. lorigerlimab, you know, we've also been, you know, trying to be very disciplined in terms of where we allocate capital and how we allocate capital. We had a readout of our prostate study there, which was a combo study with docetaxel. Based on the early look at the data, we decided to end that study and shunt resources into other parts of the program.
More recently, our Linnet study, which is focused on a series of gynecologic cancers, was put on a partial clinical hold, meaning that we're not continuing to enroll new patients, but we will continue to dose patients already on the study. That was just announced last week. We're actively working to resolve that hold and working very closely with the FDA.
Our ADC pipeline. Both O26 and O28 are already in the clinic. One of these has the potential to be a potential best-in-class asset targeting B7H3. O28 is a potential first-in-class program targeting ADAM9. The third ADC program listed on this slide is O30. That will be moving towards IND filing later this year.
All three of these assets leverage a similar drug linker, again, leveraged by Synaffix, which has a site-specific conjugation to the native glycan that also renders the Fc domain inert and obviates any of the Fc-gamma receptor interactions, which we believe, and there's been data published that could also mediate seen with other Topo 1 ADCs.
You know, very excited about that platform. We also have a payload, which is exatecan, a more potent Topo 1 relative to deruxtecan, where we've seen in some of the preclinical studies about two to five-fold enhanced potency, better bystander killing effects, and also ability to kind of avoid some of the multidrug resistance that you see with other payloads.
We continue to have a very active preclinical and discovery engine with about one new IND being advanced every year, continued progress being made there. We will continue to be active, as I alluded to, on the corporate partnering with the most recent transaction being a Gilead partnership that we disclosed in November. This is now the third molecule that we're working together with Gilead.
Continued emphasis to figure out how do we continue to extend the cash runway, which we made some nice progress late last year with the $25 million payment with Gilead and additional $50 million from Gilead. This is the pipeline. You can see, it's a very, I'd say, balanced portfolio spanning three different mechanisms of action, ADCs, T-cell engagers, dual checkpoint modulators.
We also have a mix of both validated targets as well as some that has potential first-in-class potential. You can see four wholly owned assets at the top. On the bottom panel, you can see just the breadth of our partnering efforts and also the opportunity to provide additional annuities of cash for the business, given that Tersera, there's some sales-based milestones embedded in there.
Incyte, which is a partnership around the ZYNYZ asset, which recently has now frontline approvals in anal cancer, as well as Merkel cell carcinoma, as well as an expanding coverage across now Japan, which was approved in December, and other geographies potentially expanding. There we also have, I think $540 million of residual biobucks. Sanofi has $330 million of residual biobucks.
$50 million we just collected in November. That was part of the disclosure there. Gilead, with these three molecules, there's about $1.6 billion of biobucks embedded across those three assets. I think, you know, very well-positioned with the mix of wholly owned assets, partnered assets, and a nice balance across the portfolio of different mechanisms and targets. That you can see here, based on our last cash, there was the Q3 number was $146 million with the $75 million pro forma, that's about $221 million of cash as of Q3.
Then again, we'll have the year-end earnings release on Monday, so in a couple days, and we'll provide obviously the year-end results and additional guidance in terms of, you know, some of the disclosure plans for the business going forward. With that, you know, I think that's a nice encapsulation of what the business is all about, but would be happy to address additional questions from Tara.
All right. Great. Thank you so much for that presentation. We can, I guess, sit on over here. Get comfortable. All right. Lots of recent updates on lorigerlimab, and you still, you know, you have the Linnet study still going, progressing towards data, even though you know, despite the pause. But can you help frame for us what would be the bar for success that you would want to see to justify continued development of the program, once enrollment resumes?
The Linnet study, the design actually encapsulates two populations. One arm of that trial was a serious platinum-resistant ovarian cancer population. The second arm was a clear cell gynecologic cancer. Those are actually very distinct populations. If you look at the molecular profiling of those indications, the clear cell histology also tends to be much more susceptible to immunotherapy, and it also tends to be more refractory to conventional platinum-based chemo.
It is a smaller population, but it could be an opportunity to enable an expedited development path. The PROC cohort or platinum-resistant ovarian cancer, you know, there, if you look at historical benchmarks for immune checkpoints, PD-1 monotherapy has been single digit, low single-digit response rates.
Obviously there's a lot of activity in that sector with emerging ADCs. One of the challenges with some of these ADCs is even though they can induce nice, you know, debulking of the tumor and resist responses, the durability of those responses are not so robust as we would like, which is again, where combination opportunities could be part of a long-term roadmap.
Chemo in late line settings is typically, you know, low double digit, you know, 10%-15%. We're obviously looking for, you know, meaningful responses, but what I think is equally important is the durability of those responses. Actually disease control rate is the other, you know, important component to look at for an early, you know, clinical data set.
Okay. Yeah. Great. You said it yourself, the history with checkpoint inhibitors is not great in these indications, right? Maybe you could tell us a little bit more about what gives you confidence in lorigerlimab specifically. Is it, you know, the mechanism, the design that gives you that confidence?
Not all checkpoints are the same, so most of that benchmarking is based on PD-1 monotherapy experience. I will say in our phase 1 study with lorigerlimab, there we did, you know, look at a mix of indications. Prostate was one of the early indications that, you know, showed a promising signal, and that again, is a population that historically is not sensitive to immune checkpoints.
We had a 26% confirmed ORR. Several of those patients had very long duration of treatment, in some cases extending beyond two years, which is unusual for traditional those where the ipilimumab is only dosed for two or three cycles, and even with that short course triggers, you know, pretty profound toxicities. Colitis, for instance, you see grade four, grade five colitis.
We only saw one or two episodes of grade three colitis in that early phase 1 experience. Clearly the ability kind of with our tetravalent structure to preferentially target TILS that are double positive for PD-1 and CTLA-4 potentially provides a better safety profile relative to just systemic delivery of two separate antibodies. That's part of the, you know, the excitement around the molecule.
I guess maybe a longer term question. How are you gonna I mean, strategy-wise, how, you know... Based on what you see in any early data, how are you gonna move it forward? You know, what are you gonna prioritize for dose optimization?
Right
Patient selection and whether you go after the monotherapy or a combination program going forward, how are you gonna make those decisions?
You know, obviously one of the themes since I've stepped in that the whole team is looking at even more rigorous than they have in the past, is just how do we optimize allocation of capital, recognizing that that's a precious resource and trying to really look at that risk across the portfolio. If you think about what are the drivers of risk, it could be, you know, platform risk, it could be operational risk.
You know, how hard are these studies to recruit? Do we need to incorporate biomarkers or other components that make it a more challenging effort? There's market risk, which on oncology, all these areas have some level of competition and being vigilant or about where we can really compete and also differentiate.
There's platform risk, you know, which obviously as we bring on new technology, making sure we have conviction that the platforms will deliver as expected. That's a dynamic process. We obviously look at it at a molecule level, and we will look at it at a pipeline level. I'd say right now with the four clinical assets, one of which is already, you know, partnered with Gilead, that seems to be an appropriate, you know, breadth of portfolio.
You know, we always will be thinking about how do we further focus and put more meaningful capital behind the winners. In some cases, you know, there will be some pruning of the portfolio just so that we can again, optimize for that return expectation.
Okay, great. In trying to think about what would inform that, maybe could you go into more of what you learned from the Lorikeet program and how maybe that de-risks your current approach and your future thinking on the strategy?
I mean, within the lorigerlimab program, which Lorikeet and Linnet were really the two lead development efforts, the Lorikeet in process which we've deprioritized. It is tough to make these cross-study comparisons given that they are different populations, it's a different regimen. Lorikeet was combination with systemic docetaxel and prednisone.
That's a complicated regimen in a fairly compromised population with lots of comorbidities. I think our general bias, and I think also the field, is moving away from systemic chemo. I think that's the promise of ADCs, that you can get much more targeted delivery for what is essentially a cytotoxic payload.
The fact that we have within our pipeline now three modalities, T-cell engagers, bispecific checkpoints, and ADCs, I think that's also an opportunity that, you know, we're well-positioned to take advantage of and try to, again, obviate the reliance on systemic chemo.
Okay. Maybe then we can move to ADCs, and let's start with MGC026. Same kind of question, you know, with the history that even you guys and others have had with this target, what gives you confidence in MGC026 being a promising asset from here?
That's probably a twofold answer. You know, one is the actual underlying technology that we've employed on MGC026, where I mentioned we think we have a very good antibody. It's one that internalizes very efficiently. We've done some benchmarking, even, for instance, against the Daiichi molecule, and see some benefits on some of the preclinical data.
We think we have a very good linker, which creates a very uniform DAR 4 species, and as I alluded to in the talk, also abrogates the FcγR binding, which could be an opportunity for better safety. That was something actually that Daiichi reported recently, that they had some fatal events around ILD. They had a partial hold on their study. We know topoisomerase inhibitors in general can, you know, precipitate ILD, but obviously, severity and frequency seem to be a concern in that program.
That's something that, based on the design of the molecule, could create some advantages. Then we know the payload has some addition, benefits with regards to 2-4 higher potency than the Daiichi molecule, better bias standard killing effects, less susceptibility to MDR. The overall system that we're relying on, I think, is very robust.
That being said, whether these elements of differentiation will really translate into the clinical setting, you know, we haven't obviously presented the data yet, although we will be starting to lay some groundwork of what those disclosure timelines are as we get into our earnings release next week. The other critical variable will be indication prioritization, like where are you gonna compete?
One of the attractive features on the B7-H3 target is you got a very broad expression pattern across a number of solid tumors. You see a lot of early interest in small cell lung cancer, more recently, you're seeing activity in prostate cancer, esophageal cancer, nasopharyngeal cancer, sarcoma. I think there's, quite frankly, still the early innings of what the utility of this target is.
Additionally, the real win in this horse race will be can you move into earlier lines of therapy? Combinability is, in many cases, dictated based on the safety profile. If we can, you know, potentially show that we can avoid some of these class-related toxicities that other groups have shown, that could enable us to further differentiate.
Okay, great. Maybe we can move on to MGC028, the ADAM9-targeted ADC. maybe you could tell us when we see data, what does proof of concept look like to you here?
That will be obviously an indication by indications, assessment. ADAM9 does have a broad expression profile, expressed in the number of GI-related cancers, including colorectal cancer, pancreatic cancer, gastric cancer.
We've highlighted also expression across a number of lung indications. I think for each of those, we'll obviously need to look at, you know, benchmark data, what systemic chemo is doing, what some of the emerging ADCs are doing. In some of these disease areas, ADCs have had less of a presence. That's something we'll be assessing.
Which competitive program specifically would you suggest we watch more closely?
For which target? For ADAM9?
Yeah.
ADAM9, we're still encouraged that we're ahead of the pack. You know, we know it's a target of interest. We've seen even in the last few months, others making overtures that they're now also prioritizing investment against ADCs that target ADAM9. DualityBio actually has recently started a phase 1 of their own. B1 has indicated intentions to start a phase 1.
I think that actually is somewhat comforting that, you know, shows you increased conviction from the marketplace that this is a target worth pursuing, but we're well-positioned given our head start, and again, with a very promising antibody and a very promising drug linker system that we're relying on, which is again all leveraging the Synaffix platform, which is the same as for MGC026.
Okay, great. Being ahead of the pack, when do you estimate we could see initial data, and what can we expect in that?
we'll have... You know, again, It's a little premature today to kind of lay out
Yeah
... data disclosure plan. That is something we're actively working on and hope to provide that guidance externally in terms of data disclosure roadmap for all the clinical programs.
Okay. Looking forward to hearing about what target you guys have selected for MGC030. I guess what, like, what else do you have left to do for the IND, either before it enters the clinic or before you tell us the target?
The guidance on that program, it's another Topo 1-based ADC, similar linker and payload as the other assets. We're guiding towards a 2026 IND submission. Still have a very strong conviction on that program. We're excited by the fact that, you know, very limited competition.
You know, I was in China actually a couple weeks ago and did not see any group working on this target as an ADC. That I think positions us well, and that's obviously by design that we're not trying to trumpet what we're doing on this program, given that we know that the competitive environment is so intense right now.
Yeah, that makes sense. Obviously novelty is something that you look for in an attractive target. What else? What else do you look for?
Very strong expression pattern. Obviously, in the preclinical setting, the cyno toxicology is great at de-risking, you know, potential liabilities around normal tissue interactions. Then obviously convincing efficacy data based on, you know, PDX animal modeling. Those are typically the things that we rely on, and they obviously they don't buy down all the risk of a clinical program, but it gives us some, you know, conviction that we're on the right path.
Then, you know, from a develop-ability perspective, we're looking for a range of solid tumor indications that also align with tumor types where we still perceive high unmet clinical need and not as competitive of a milieu as, you know, for instance, ovarian cancer for ADCs or small cell lung cancer for ADCs.
These are extremely competitive areas with actually, in some cases, multiple targets, with the same class of payload going after those indications. That's something we would typically wanna avoid.
Okay. Yeah, that makes sense. Let's see, what else? In the pipeline. Okay, yeah. MGD024, I know you've been working with Gilead on that. What should we look for next in that? When's the inflection point?
That's a partnered asset with Gilead. You know, we're very excited about that relationship. Originally, we consummated that first partnership in late 2022. About a year later, you know, they took another bite at the apple. They wanted to expand with a second molecule, and then in November, now we've added a third molecule into the mix. O24, the data disclosure plans for that are largely dictated by Gilead.
Other than, you know, declaring that we're still in the midst of our phase 1 study, we have not yet provided a more granular disclosure on that program other than saying it's an active effort and, you know, of continued interest to both companies at this point.
Okay. Speaking of partnerships, you know, I know you, I've heard you have been particularly instrumental in setting up all of the partnerships that you guys have, and it's, you know, it's been a continued source of non-dilutive capital for you guys. I'm curious if you could tell us more about your and the company's strategy in pursuing additional partnerships. I know you mentioned that very briefly in the beginning, but what's your framework for deciding when and with who that you partner with?
Right. We have a very close interface with all the top 50 pharma, so good touchpoints across all those companies, and we're always thinking about, you know, what's the right time to partner, which assets make the most sense to partner. Obviously, it's for some of the programs that maybe have real breadth in terms of developability across lots of indications.
We're gonna be less equipped to stand up, you know, six phase 3 studies. A partnership there makes a lot more sense than maybe an asset where we see a clear line of sight with a more focused development path that we maybe can support on our own. That's a judgment, and it's also a question of timing.
Even if there is partnering interest, we may actually refrain from, you know, trying to mobilize an active partnering effort and try to really invest in the programs and catalyze what could be a more meaningful transaction for the company.
Absolutely. Okay. I have one last question for you. It's my favorite to ask. What do you believe is the most underappreciated aspect of MacroGenics?
Well, I'd say given current share price, you know, where we're trading at, you know, below kind of cash value, I think just the inherent option value across the portfolio, the fact that we have a number of clinical programs that have positioning as best in class or first in class, the fact that we have a stable of partnerships that have meaningful non-dilutive capital kind of captured under payments that might be made in the future.
The fact that we've had a track record of executing high value transactions that's persisted for over a decade, it's the same team that's, you know, leading and driving those transactions. It's not just myself. We have actually a very strong, capable BD team that's out on the front line, you know, exploring new partnerships.
We have a CDMO facility that's also kind of an embedded part of the business, which we disclosed in our Q3 earnings call that that's now about $19 million-$20 million was the quarterly revenue there, which is also benefiting from all the onshoring interest. There's a lot of value drivers and different levers in the business, and as I think about relative upside, downside risk for the business, I think that option value is actually very attractive and probably underappreciated.
All right. I agree. Eric, thank you so much for your time and your insight, and thanks everyone for listening.
Thank you so much. I appreciate it.
Thank you.