All right. I got to remind myself to turn my microphone back on after I go to the bathroom. I'm always worried about hot micing myself. Anyway, thanks everyone for being here. Very glad to have with us for the next discussion, the CEO of MacroGenics, Eric Risser. We're going to have a casual chat. If anyone has a question, feel free to raise your hand. We'll get you acknowledged and your question answered. Eric, really appreciate you being here this morning, and any opening comments you want to make before we dive into Q&A?
Yeah. No. Well, first of all, thanks for inviting us to the conference. It's my pleasure to give you an update on the company. We will have actually our Q3 earnings release coming up in a couple days.
Okay.
That will obviously provide additional context. I will just say generally, and I've been in the CEO role now a little over a year, it's been a very busy year for the company. It's been a transformative year. We've done a lot of work to really refocus the enterprise. We actually divested what was an embedded CDMO operation earlier this year. Been pretty active on the corporate development partnering tact, which has helped also solidify the balance sheet for the company. So we have about $290 million of capital, all non-dilutive, that was brought into the company. We've really focused the development priorities across the pipeline with two critical verticals right now, our ADC portfolio, which include three
clinical stage assets. Two of these are first-in-class programs that have the promise to be disruptive new therapies, and then one is the B7-H3 asset, which we can talk about. We had some recent data highlights at ESMO. Then we also continue to have a strong emphasis on T-cell engagers. That encompasses both a few assets that are partnered with Gilead, but we're also expanding and evolving that portfolio to include some wholly owned assets. A lot of what we've been doing this year is obviously positioning the company for what could be a really exciting 2027, which is then the opportunity to have multiple inflection points as we have additional program updates and really showcase the innovation and potential of the pipeline.
Okay. Maybe we can start with MGC026. This is the B7-H3 you just referenced. I know you just presented data at ESMO. Maybe before we get into the data, you can just kind of talk about the rationale that underlied the selection of tumor types that you did in dose expansion, right? So head and neck, endometrial, melanoma, sarcoma.
Correct.
Maybe speak to just how the selection of those tumor types specifically was guided by biology and/or some degree of competitive white space.
Sure. First of all, I'll just say the target itself is pretty remarkable when you think about the broad clinical validation that we've seen over the last couple years with meaningful clinical results probably in over 12 different tumor types. So that's very unique when you compare it to some of the more lineage-specific targets like folate receptor that had some very promising data, but it's primarily confined to the ovarian-
and maybe endometrial subsets. So that breadth of activity makes this a very promising target and positions it as a potential backbone therapy that could be used either as monotherapy or in combination. That also comes with some potential risk because it's a very competitive category. There are a number of groups that have late-stage development programs, and our goal was not to necessarily try to do head-to-head studies with groups that already were well into pivotal studies. That led us to really refocus away from indications like small cell lung cancer-
which is really where most of the early activity is being concentrated. The four tumor types that you mentioned, head and neck cancer, I'd say that's one where the TOP1 landscape is much less competitive. There's obviously a lot of activity with de novo EGFR bispecifics showcasing very impressive data, and we've seen even the more recent headline around the Peto asset from Genmab showing provocative signals. Those are obviously orthogonal mechanisms that could ultimately be complementary with what we're doing. There is some competition, but I'd say the primary ADCs in development are auristatin-based molecules.
that also have a very different profile compared to us. There have been a few datasets with other B7-H3 targeting molecules. Most of these are out of China. CSPC, Kelun-Biotech, both had some data presented at ASCO earlier this year with a mid-teen kind of response rate as a best overall response. That is an opportunity that we, again, it's going to be, as many fields in oncology do require some careful navigation, but that could be a potential foothold to showcase the utility of the asset. Melanoma is another indication. That's an area that is typically more focus of immunotherapy.
Conventional cytotoxic chemo has not been as effective, so that's another potentially white space opportunity to build a foothold. Sarcoma, and specifically soft tissue sarcoma, very aggressive disease with relatively low efficacy bars. It is a smaller disease, but potentially could afford an accelerated development strategy, and there has been some validation with the GSK/Hansoh molecule.
in osteosarcoma. Endometrial cancer, which is the fourth indication, that is an admittedly more crowded area. There again, you have other targets, including folate receptor, that are showing interesting results. B7-H4 is another target. That may be more what ultimately we relegated to a benchmark data set, at least for monotherapy development purposes. That's kind of what really informed our thinking, primarily thinking about competitive landscape.
Yep.
Obviously, the other input was looking at our early dose escalation data, where we did see a confirmed 29% response rate in what we deemed to be the therapeutically relevant dose ranges of six to nine mg. There we did see activity across five different tumor types, which is consistent with what you would expect with this B7-H3 target, the fact that it does have broad utility across many different domains.
Okay. I know the prior iteration of B7-H3 that was in the clinic, this was before you became CEO, if I remember correctly, there was a bit of a melanoma signal that was seen in dose escalation. You guys also did a lot of work in prostate, and I guess I was a little surprised when you announced the tumor expansion cohorts that you weren't looking to try to maybe leverage some of that work that you had done in prostate. What was the rationale there?
Well, prostate, as I mentioned with small cell lung cancer, which is now fairly far along
Yeah
with multiple phase III studies, there are at least two large, very well-resourced phase III programs in prostate cancer. Daiichi Sankyo, I think, put up a 1,400-patient phase III study over a year ago. DualityBio also has a large study. Trying to compete in that domain, we think, would not make sense, given our relatively higher cost of capital and our goal to be really judicious in terms of where we invest our resources.
Okay. The data you presented at ESMO was mostly in kind of like a third-line plus patient population, very difficult to treat. What aspects of the data are you trying to specifically highlight to investors?
It was exactly what you described. It was very heavily pre-treated. In fact, 86% of the patients in that study were fourth, fifth line, or later. All of them had prior platinum-based chemo, checkpoint molecules. Many of them, the majority had taxane. Many of them had EGFR-based molecule as part of their prior treatment course. It was primarily a U.S.-based population, which is also consistent with, as you look at clinical studies in the U.S., they tend to be cycling through many more investigational therapies
versus some, for instance, of the studies that we've seen in China tend to be earlier line populations.
Okay.
That context is important because obviously, if you think about that very late line population, being able to show a deep, durable response in a number of those patients does showcase the utility of our Topo1 approach in that population. What's also important to highlight is the safety. Obviously, we had no treatment-related AEs. If you think about, as a comparison, the auristatin-based molecules, of which there are few in development, those typically are a little bit more challenging to kind of maintain patients on therapy. They're associated with much higher rates of discontinuation. They have ocular toxicities, not always severe, but it does impede patients' quality of life, no longer driving themselves to their physician visits.
Those tend to be concerning AEs. We hear that repeatedly as we talk to investigators and how they see the evolving treatment paradigm. The auristatin-based regimens are typically much more challenging.
Okay. I know you're driving this now kind of through the second stage of dose expansion for head and neck specifically. Is there an effort maybe in this kind of second stage enrollment to try to get patients who may not be as heavily pre-treated? In that way, you can try to interrogate a signal on the basis of not having such an influence on just prior treatment history.
That first roughly 20 patients, which is what was highlighted at ESMO, obviously the enrollment has been continuing briskly. The expectation is we'll have the full 40 patients fully enrolled by the end of the year. We'll have an update middle part of 2027. We will have obviously a mix of patients.
There will be some second, third, fourth, fifth line patients. With a larger N, we will be able to do a little bit more teasing out and looking at various subsets. The other relevant subset to look at is the HPV positive versus negative population.
The early data was a little bit more skewed towards HPV positive, which may be partly an artifact of it was primarily a U.S.-based enrollment, and HPV positive disease is a little bit more prevalent in the U.S.
May also have been a function of competitive enrollment with other studies being run with EGFR-based agents, which are primarily focused on the HPV negative subset. But that's another question that we will want to look at is there a similar level of activity across those two populations, or is it skewed more predominantly to the HPV positive?
Okay. Yeah, because I know the response rate that you presented was directionally higher in, and again, I know it was a smaller number of HPV positive patients. But just curious if you think that there might be any kind of biological basis for this, right? Because I know we've seen another ADC from a competitor in this setting targeting Nectin-4 that also showed a response rate that was heavily biased towards HPV positive patients.
Yeah, and I know they've also highlighted that for their program, the Nectin-4 expression seemed to correlate with the HPV positive status. There doesn't seem to be a priori view that it should only work in one subset and another. It is true that the HPV positive patients tend to be a more highly proliferative disease-
which typically is the population where a cytotoxic-based mechanism may have improved benefit. But again, that's a question we want to ultimately see based on additional patients.
Okay. I think you also outlined plans to initiate development of a frontline combo, looking at MGC026 and pembro. As you kind of referenced from the outset, there's a lot happening in frontline head and neck right now. Where do you see an opportunity to potentially establish differentiation, just kind of relative to some of the data sets that are out there?
As you kind of parse out the data that we generate to date, there are clearly a few insights. One is very promising safety profile. We mentioned it as of the data cut of no evidence of ILD, which you sometimes do see with competing Topo1 payloads. We know ILD can sometimes also be associated with immune checkpoints, so that combination opportunity to avoid compounding toxicities, that's an opportunity.
We also know that B7-H3 is a target. It's not just a target expressed on the epithelial tumor cells. There could be also an immune modulatory component with this target. It's expressed in the tumor stromal compartment, the tumor vasculature. It's also expressed in some of the myeloid-derived suppressor cells that can impede the utility of immune checkpoint molecules. Immune checkpoint combos could make sense. That being said, we're also watching the evolving competitive landscape.
Peto recently, subsequent to ESMO, did highlight their very strong efficacy in a frontline population. That is something we're continuing to assess, and that will inform how do we want to position this, what's the right setting. Quite frankly, the other question we will always assess is how much we want to put our resources behind the program, how much we think a partner might be a relevant strategy to kind of provide either supplemental capital, development capability, but also potentially complementary assets. That's an ongoing assessment that we're going through.
Okay. How should we just be thinking about the timing of additional data disclosures from these expansion cohorts? I know you gave some preliminary enrollment numbers in the non-head and neck cohorts. Should we expect to see those just kind of rolled out at various medical conferences throughout 2027?
Yeah. We did highlight as part of ESMO that the other three indications, endometrial, melanoma, and sarcoma, were relatively small data sets, 10 patients or less, which we didn't think was a representative size to really put out a meaningful update. So those will follow, and again, in 2027, you'll hear some of the head and neck data, and we'll likely be able to also provide additional framing on some of these other indications.
Okay. Maybe we can switch gears to MGC028. So this is the ADAM9 targeting ADC that's in phase I development. I think you've guided to some data update happening before the end of this year. This is not your first ADAM9. You had an iteration of this in the clinic per a collaboration with ImmunoGen. Maybe you can just kind of give us a little bit of the historical context there, just to kind of level set the discussion.
Yeah. So just firstly to kind of frame out why this target is interesting to us. It is a target that is highly expressed, it's a cell surface target, highly expressed across a number of solid tumors. It's a target that has been associated with tumorigenesis.
It's also seen that it's clearly aligned with more aggressive clinicopathologic features, things like poorly differentiated tumors, highly metastatic tumors that are potentially resistant to other chemotherapy-based regimens. So very excited about the biology of the target. We know based on IHC broad expression pattern across a number of solid tumors. In some of our own data, we've highlighted a number of GI-associated cancers, lung. In the field, there's been data published in prostate cancer, renal cancer, triple-negative breast cancer. So broad expression pattern. Based on that, also the actual binder that we have is an extremely efficient internalizer.
We worked with ImmunoGen on a first-gen molecule. It was leveraging a maytansine-based payload called DM21-C. It's actually a little bit more potent version of the DM4 asset that's embedded in mirvetuximab. We took it through the dose escalation. We did see ocular toxicity, which we knew was already evident in some of the preclinical models, and it became a little bit more pernicious as we moved into the higher dose ranges in the clinic. Even with some supportive care measures, looking at things like fractionated dosing, we weren't able to get to our target concentrations where we were really trying to assess the activity of the molecule.
We did discontinue that program. That was a number of years ago, and we reinitiated an effort with the Synaffix platform. It's the same site-specific linker that is in the MGC026 asset, also exatecan, also a DAR4 construct.
This program started our phase I dose escalation early last year. It's made very good progress moving through the various dose levels, and we are still intending to provide a clinical update later this year around the status of that program. As we mentioned with B7-H3, that started as a field that was pretty sparse in terms of competitor set. We were one of the early innovators in that field. Now there's about 15 or so molecules in development. With ADAM9, it's a much more limited competitive field. We know DualityBio has a program that recently initiated a phase I. BeOne is another developer that is developing this asset in a phase I study as well.
One thing we are trying to obviously balance is being responsive to investors who want to see updates and be able to understand what that investment thesis is around the asset, but also not putting ourselves in a position where we're disadvantaging ourselves relative to the competition that is looking at us as the group that's now leading the race for this target.
Okay. Will this update before the end of the year, is this going to be mostly just qualitative in nature in terms of a progress report or
It may be a bit of both, and we will have a little bit more context of what that update is in the coming weeks.
ADAM9 is one of these proteins, because again, it is involved in invasion and tumorigenesis, that it is subject to shedding, right? There are a couple of different cleavage sites on the protein itself. Should we assume that the scaffold that you are using here, I know you talked about it being an efficient internalizer. I am guessing that implies that you are binding some membrane proximal epitope on the protein such that you are not impacted by cleavage?
That is our understanding, and we are still doing some mass spec to really understand exactly what that binding epitope is. What is clear, when we measure soluble shed ADAM9, that the actual circulating ADAM9 levels are at very low concentrations.
Okay.
Less than 10 nanogram per mil. As we look at PK assessments, it is clear that soluble ADAM9 does not represent a meaningful antigen sink for this asset.
Okay
or impede our ability to get adequate systemic exposure.
Okay. Yeah, because I know there's been ADC development efforts against targets like mesothelin, for instance, right, which has a bunch of different splice variants, and you get that kind of pharmacological sink phenomena, which complicates things. But it seems like you're not seeing that.
We're not seeing that.
It's not a risk. Okay. I know you have a third ADC that's in the clinic.
We have a third ADC.
Novel target?
It is a novel undisclosed target. Our initial plan was to get that into an IND in Q3. We were able to accelerate that program with a Q2 IND submission, and actually also cleared with the FDA in Q2. So that is moving nicely through dose escalation. We dosed the first patient recently. We have not disclosed the target, given this is also a potential first-in-class opportunity. We have highlighted a few of the indications that are going to be really the focus of the dose escalation. So it is not an all-comer population. It is really focusing specifically on pancreatic cancer, colorectal cancer, esophageal cancer, and bladder cancer.
Yeah.
Those are kind of the operatives. Really GI-related tumors and bladder, all of which we think there is still ample room for improvement on existing options for patients.
Okay. You talked about the Synaffix linker payload tech, right, that's kind of conjugated to all of these same ADCs at the same DAR. This tech has been clinically validated, right? I think it's on the Innovent Claudin 18.2, for which we just saw phase III data.
Correct
at ESMO. I'm curious as to how you think about deploying this tech across your entire ADC pipeline. Is this kind of like a one-size-fits-all approach, or are you kind of curating the biology and the expression profiles of the targets that you're going after to kind of align with the properties of the linker and payload, right? I guess it's a little bit of like a chicken and egg question.
We are clearly looking at it as the whole system of what's the indication of interest, where's the unmet need, what is the target space? You can see with ADAM9 and MGC030, we're evolving into new areas that are not yet crowded areas in terms of the antigen. We are also actively exploring alternatives to Topo1-based killing mechanisms.
Okay.
That's obviously more part of the preclinical research effort, but that could include things like dual payload targeting, non-Topo1-based approaches to really deal with the increasing and real risks of Topo1-based resistance. I think we're obviously not We're clearly aware that the competitive arena around Topo1-based targeting is becoming increasingly challenging.
Okay. Dual payloads, you like the chemo-chemo strategy?
Yeah, so we haven't yet disclosed specifically what we're doing, but it's really looking at areas that could drive real synergy and things that will specifically deal with challenges with Topo1 resistance. We have had a very productive research team. If you look at the history of the company,
probably on average every year we've had a new IND submitted, and as we think about what's next, we have several active efforts on what I call next-gen ADCs. We also have a number of efforts on what I would call next-gen T-cell engagers, even moving beyond conventional CD3-based approaches. We did highlight our Gilead relationship, which has been longstanding. Originally back in late 2022, we had our first molecule partner with them. That was the CD123 × CD3 construct with a second-gen CD3, where we were able to de-tune the CD3 binder to potentially limit some of the CRS and improve the overall therapeutic index. About a year after, we added a second molecule, and then last fall, actually a third molecule was added into the mix there. So we're really excited about the progress there.
The one clinical asset we have not been able to be as disclosive, given that's subject to a Gilead option-based agreement, where they'll make a decision based on the phase I dataset on whether they want to opt into the molecule, or potentially we would continue to progress the molecule. The other two programs, these are actual development candidates, so they're not just pure research molecules. These are assets where we've already de-risked them, and we have some early leads which are now moving into IND-enabling work, and that's under Gilead's research team at this point.
Okay. Maybe we can talk a little bit about lorigerlimab. This is not a partnered asset. You wholly own this. You presented some updated data at ESMO. I know you've kind of prioritized clear cell gynecological malignancies as the go-forward expansion cohort you're most interested in. You've lowered dose a little bit. Maybe just kind of talk about the status of that program and what you would like to see out of that clear cell cohort to inform a development decision going forward.
Yeah. I mean, this is an asset we've been working on for some time. I'd say there's been some important learnings based on that development experience.
One is the prospects to go into indications that are more immunologically inert indications. Prostate cancer, historically not responsive to checkpoint therapy. Platinum-resistant ovarian cancer, historically not as responsive to checkpoint therapy. That is partly why clear cell is an interesting opportunity. That tends to be more sensitive to immunotherapy, and it's also actually quite resistant to conventional chemo and platinum-based regimens. The other learning is really around the dose exploration. We had a lot of early experience at the six mg dose in the early phase I study. Actually, if you look at activity, we saw meaningful activity at three mgs. Actually, three of the seven patients that were dosed in the dose escalation were responders-
including one that had a complete regression in their target lesions. So we know it's an active dose. Six mg is also an active dose, but we had seen, especially as patients stay on treatment longer, that some of the safety can become more problematic and lead to higher rates of discontinuation. That's why we've really migrated from the six mg experience down to three mg. We're going to be completing that additional 20-patient experience likely later this year, and then we'll have a clinical update next year. That will inform both the dose selection piece, is three mg really the Goldilocks dose that we can still maintain the activity, which the early phase I data suggested? But we want to get obviously a larger dataset than just those seven patients from the phase I.
Also, think about what's next, which could be across a couple indications, and also could be well-positioned to think about opportunities for combo, either with internal pipeline assets or potential corporate partnering.
Okay. Yeah, on the partnering side, I know you guys have a really good history of reliably procuring non-dilutive capital. I know prior to you moving into the CEO seat, you were largely responsible for a lot of that as the Chief Business Officer. Can you maybe just talk about some of the other collaborations you have in place? I know you talked about Gilead, and just your perspective on additional opportunities that you might be able to further leverage or further capitalize here on the partnering side.
Well, we have a large portfolio, a number of wholly owned assets.
We also have some proprietary platforms, so that all could be substrate for future partnering. I think our approach to partnering, you can see we will continue to elevate the bar in terms of what we're looking for. It's not just non-dilutive capital, but potential rights for participation along the assets so that we also have some sharing and long-term upside for these programs. But yeah, we've been very active, one of the most prolific dealmakers, I think, in the industry, as you look at our peer group. We've been doing one or, in some years, multiple high-value transactions for the last 10 years. The expectation as we move into 2027, we'll continue to stay active on that front. We also have obviously a number of legacy relationships that have significant milestones embedded in there.
With Gilead, we have $1.6 billion, now it is bio bucks.
Across the three assets. Sanofi, which we were an early developer of TZIELD.
They are now developing that globally. There are milestones embedded in that partnership. Then, Incyte, which is leading the global commercialization of ZYNYZ, which was a MacroGenics-developed PD1, which we partnered a number of years ago. There is also over $500 million of milestones embedded there, and a royalty, which we did monetize, but that is subject to a cap.
Where once that cap would be realized, the opportunities that the royalty reverts back to us.
Yep.
There is still a lot of latent value, and that is partly those legacy deals, as well as some of the more recent transactions, is what has brought in about $290 million in the last 12 months.
Yeah. ZYNYZ has done pretty well commercially.
It has done very well.
Yeah.
It is approved in first-line anal cancer.
They are going broad with kind of a global commercialization strategy across U.S. and Europe and Asia, and it has shown a really nice uptake in the last couple quarters.
Okay. You talked about kind of all the non-dilutive capital that you procured. Where does the balance sheet runway sit now, and what does that allow you to execute on going forward?
Yeah, so our Q2 cash balance, which again will get updated in a couple days, pro forma is $327 million. And that includes the proceeds from the Bora transaction, one of the Sanofi milestone payments, and one of the Gilead milestone payments. The actual cash on hand was about $173 million as of Q2.
Okay. Anything we didn't discuss that you want to quickly highlight before we wrap things up?
No. I mean, I would say again, a lot of things in motion right now. We are excited about the year ahead. We have a very promising ADC portfolio with three clinical stage programs, a very promising T-cell engager portfolio where we will have additional updates around that, as well as our evolution of our kind of approach to T-cell engagement. That will be coming up next year. And continuing to move these projects forward with a lot of conviction and a lot of urgency.
All right. Eric, really appreciate it. Thank you.
Thank you. Appreciate it.
Thanks, everyone.
Thank you. Thank you.