Good day ladies and gentlemen and welcome to MacroGenics’ Fourth Quarter and Full Year 2014 Financial Results Conference Call. [Operator Instructions] At this time, I would like to hand the conference over to Mr. Jim Karrels, Chief Financial Officer. Sir, you may begin.

Thank you, operator. Good afternoon and welcome to MacroGenics conference call to discuss our fourth quarter and full year financial and operational results. For anyone who has not had a chance to review our results, we issued a press release this afternoon, outlining today’s announcement which is available under the Investors tab on our website at www.macrogenics.com. You can also listen to this conference call via webcast on our website. It will be archived there for 30 days beginning approximately two hours after the call is completed. I’d like to remind listeners that we will make forward-looking statements on today’s call. And therefore, I would like to also remind you that today’s discussion will include statements about the company’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provision under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our annual, quarterly and current reports filed with the SEC. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Now, I’d like to turn the call over to Dr. Scott Koenig, MacroGenics’ President and Chief Executive Officer.

Thank you, Jim. I’d like to welcome everyone participating via conference call and webcast today. Thank you for joining us. 2014 was a year full of milestones for MacroGenics. We now have for oncology product candidates in clinical development, we signed three new strategic collaboration agreements, we made significant progress with our proprietary and partnered pipelines and extended our cash runway into 2018. In a few moments I'll review our fourth quarter accomplishments in more detail and then provide some key highlights on our pipeline. After our prepared remarks, we will open up the call for a question-and-answer session, but first I'd like to hand the call over to the Jim who will give a brief recap of our financial results.

Thank you, Scott. This afternoon, we reported financial results in line with our expectations. Briefly as we described in our release, MacroGenics had research and development expenses of $70.2 million for the year ended December 31, 2014, compared to $46.6 million for the year ended December 31, 2013. This increase was in line with our expectations as we continued to move into later-stage clinical trials and add product candidates to our pipeline. We had general and administrative expenses of $15.9 million for the year ended December 31, 2014, compared to $11.1 million for the year ended December 31, 2013. We recorded total revenues consisting primarily of revenue from collaborative research of $47.8 million for the year ended December 31, 2014, compared to $58 million for the year ended December 31, 2013. Collaborative research revenue includes the recognition of deferred revenue from payments received in previous periods as well as payments received during the year. For the year ended December 31, 2014, we had a net loss of $38.3 million, compared to a net loss of $0.3 million for the year ended December 31, 2013. Our cash and cash equivalents as of December 31, 2014 were $157.6 million, compared to $116.5 million as of December 31, 2013. I’ll point out that we also closed a global collaboration and license agreement for MGD011 with Janssen Biotech, Inc. and JJDC made an equity investment in MacroGenics. But since the closing of these transactions happened after Hart-Scott-Rodino clearance in January, the $125 million we received from these transactions was not included in our 2014 financial statements. Based on the company’s cash balance and our current operating plan, MacroGenics expects that its current cash and cash equivalents combined with anticipated non-equity funding under its various strategic collaborations should fund the company’s operations into 2018. With that, I’ll hand the call back to Scott.

Thanks, Jim. In the fourth quarter, we continued to advance our portfolio of product candidates both those fully owned by MacroGenics and those being developed in partnership with our collaboration partners. Our proprietary protein engineering technologies have led us to develop a portfolio of product candidates designed to specific therapeutic applications. The first technology, Fc-optimization platform, enhances the body’s immune system to mitigate the killing of cancer cells through antibody-dependent cellular cytotoxicity or ADCC. The second proprietary technology, our Dual Affinity Re-Targeting or DART platform enables the targeting of multiple antigens or cells by using a single molecule with two antibody specificities. We also utilize our proprietary cancer stem like cell technology to identify cancer targets shared both by tumor-initiating cells and the differentiated cancer cells derived from them. For the successful integration of these platforms into our product development efforts, we now have four oncology programs in the clinic, including two DART molecules and we remain on track to have six oncology product candidates that we created internally in the clinic by the end of 2015. Our most advanced clinical candidate margetuximab is a monoclonal antibody engineered using our Fc-optimization technology and directed to HER2, which is an antigen expressed in some forms of breast, gastroesophageal and other types of solid tumors. We previously announced that we plan to commence a pivotal Phase 3 clinical trial in the third quarter of 2015 that we are calling SOPHIA. This study will evaluate margetuximab in HER2 positive metastatic breast cancer. The decision to pursue breast cancer was based on several factors, including clinical data from our ongoing Phase 1 expansion cohorts testing a once every three week dosing regimen. We’re encouraged by what we’ve seen in patients with breast cancer and we are planning to present the full Phase 1 data…

[Operator Instructions] And your first question comes from Michael Schmidt from Leerink Partners.

On margetuximab, what exactly – how many patients worth of data are you planning to present at ASCO from this Phase 1b study?

So we’re going to present obviously the original dose-escalation studies and the additional expansion cohorts, which patients were dosed at 10 mg/kg, 15 mg/kg and 18 mg/kg every three weeks. There were six patients in each one of those cohorts, that’s a total of 18 additional patients. We have previously shown results from three of these patients at a chemotherapy meeting in November 2013, so it will be additional 15 patients. We do have some ongoing additional patients being dosed and depending on how far along those patients are on acute three-weekly basis, we may choose to include that data, but at this point what I can guarantee is the additional 15 patients, of which half of those were patients with breast cancer.

And then on MGA271, you mention you are launching a combination study with ipilimumab, among others, what drove that iteration, why wouldn’t you look at CD1 antibody, there’s been some data published recently showing that non-small cell lung cancer, tumors with over-expressed B7-H3 respond particularly well to PD01 inhibition, for instance, what are your thoughts there?

So clearly we are looking in a broad landscape of combining 271 with other immune checkpoint inhibitors. We’re starting out with ipilimumab. Obviously, the data that has been seen in some cancers which has been quite favorable in the combination hasn’t necessarily translated globally to other cancer types. In certain cases, this has been compounded by problems with toxicity. And given the very good safety profile with MGA271, we like to explore the opportunity of combining with ipilimumab to see if in fact we can get both a good clinical outcome and a good safety profile. That does not preclude, in any way, the opportunity for us to look at the combination of MGA271 with anti-PD1 and other immune checkpoints. So stay tuned, later this year, we’ll have some more updates in that regard.

And then a bigger picture question, how are you thinking about drawing the DART pipeline, are you planning to remain focused on T cell recruiters or are you also looking into different modes of therapy, I’m thinking about dual checkpoint inhibition and other types of antibodies that could be developed?

Again Michael, as you know, one of the attractive features for our DART platform is its versatility and its applications quite broadly both therapeutically as well as mechanistically. We are continuing to look at opportunities both at redirected killing mechanism targeting both T cells and other cell types as well as one monotherapy. And as you know, we’ve now exploited the ability to co-signal two molecules on B cells for MGD010 in the autoimmune setting. We’re clearly working on looking at combinations of various checkpoints and we can think about this quite broadly both in terms of ones that have been approved for therapy, ones that look promising for therapy. We can look at combinations either on the ligand side or on the immune T cell side or cross functionally between an immune cell T cell and tumor cells which may express one of the ligands. What I can say is that we have a broad activity in these initiatives internally, pre-clinically and again stay tuned later in the year as we advance some of these programs forward.

And one more if I may, any progress on any of your more data partnerships, and I’m asking because I noticed an abstract accepted at the AACR conference that names some Pfizer employees on there, any progress in any of the other partnerships?

Obviously, we are somewhat limited in speaking publicly about those specific collaborations, both in terms of the state of the development of those molecules and the identification of the specific molecule that have incorporated into our platform. Having said that, we are very pleased that Pfizer has submitted an abstract for the upcoming AACR session where they have identified a specific solid tumor target using the DART technology in which T cells will be recruited through CD3. So this is the beginning, hopefully, of some public disclosure from some of these collaborators.

Our next question comes from Christopher Marai from Oppenheimer.

This is actually Michelle Gilson in for Chris. We’re wondering if you could potentially expand on your development task for the CD3 targeted antibody for type I diabetes and what you guys were thinking in terms of the next data read out?

As we’d indicated previously, we have an ongoing study that is largely funded by NIDDK looking at the application of trastuzumab in patients who are at high risk for developing type I diabetes by having detectable antibodies as well as a family history of type I diabetes. The study is recruiting story. Because there was a long period of read out from the time a patient has the first detection of these antibodies till they have a diagnosis of diabetes, this study will go on for a number of years. What we have indicated more recently is that we like to see this program advance further in patients with new type I diabetes, sort of a redo of the Protégé study we did a number of years ago now using different set of entry criteria as well as different end points. As we have indicated and have published, we saw some very nice activity of trastuzumab in these new-onset diabetics in terms of retaining the ability to produce insulin and retaining levels of C-peptide compared to control populations. Given that a lot of the focus of the company has shifted particularly focusing on oncology, but not abandoning autoimmune diseases, we think that there is merit for patients to have this molecule available for treatment on patients with new onset type I diabetes. But given our changing focus, we are now in discussions with other companies for the possibility of outlicensing this technology so that a new Phase 3 clinical study can start. And we will give you some more updates as we make progress in these outlicensing efforts.

Our next question comes from Steve Byrne from Bank of America.

What do you expect the cost of that SOPHIA study to be? And is your conviction on that one going essentially head to head against trastuzumab, is that based on the data from these additional patients that you have in Phase 1 program and do you see those patients being enriched in that genotype that favors margetuximab, low binding affinity for the macro phases, is that enriched in this patient population?

With regard to cost, we are not going to give any guidance specifically on this study. You can imagine a study of over 500 patients is considerable for the company. We feel that the pricing in what we have outlined is reasonable for the size of this trial. With regard to the specific data, what we are very encouraged by, as I’ve indicated before and again we will be presenting this data in the middle of the year, is that the breast cancer patients, these are the patients with gene amplification had been on multiple therapies. The average number of previous therapies of this were 4.5, many of these patients have seen multiple HER2 therapies, all the patients have seen at least one HER2 based therapy. What we had seen in these additional patients is both evidence of an objective responses as well as indication that these patients were being maintained on drug margetuximab much longer than historically seen in patients who had been treated by trastuzumab. So we’re very encouraged by this data set and that in a large way had encouraged us to move forward. And clearly we had also presented this data to a large number of KOLs who have reviewed this data and have agreed with our conclusions. So again, the data, the validation by these KOLs and obviously the need for patients there is what propelled us moving forward. With regard to the specific genotype question, what I can say is that if I recall correctly, if not all, almost all of the patients were either heterozygous or homozygous for the low binding wheel, again consistent with our observation that patients in those two genotype groups tend to have a better increased anti-tumor activity compared to those with a higher binding wheel.

And then shifting over to the 271 antibody, if you see a meaningful signal in this kind of broadening study that you have, does it make sense to consider a DART that binds to that ligand with maybe a CD3 on the other side?

So as you have noted quite correctly, we are very encouraged by the profile of B7-H3 expression. As we’d indicated previously, with the particular epitope that we are targeting for B7-H3 and 271, we see higher expression in most solid tumors with very little expression in the normal in their normal tissues. As you must recall, Steve, as I often presented at meetings, I’ve indicated that when we identify a target of interest, we are fairly agnostic on the mechanism of the platform that may be applied. So creating a DART like molecule would in fact potentially make sense targeting CD3 that could be quite complimentary to the ability to recruit macrophages and K-cells and other cells here. And so we will keep that in mind and stay tuned.

And then on that new DART that you have that’s wholly-owned, the 009 that targets a solid tumor antigen, can you comment on whether or not that’s a surface antigen or MHC bound antigen?

That is a surface associated antigen highly over-expressed on solid tumors.

Our next question comes from Debjit Chattopadhyay from Roth Capital.

Just quickly, should we just assume the SOPHIA study, do you have a similar kind of powering as a original MAGENTA study that’s in gastroesophageal cancer?

Debjit, I think that would be a correct assumption.

And from the combination with [indiscernible] are you thinking about, given the toxicity profile of the [indiscernible] are you thinking of the treatment of approved dose or do you think you can go in lower dosage?

That’s an excellent question and I think we will be exploring various doses of [indiscernible]. So it would be interesting if we can actually achieve better clinical responses with lower doses and obviously a better safety profile.

And the choice of [indiscernible] and going back to one of Michael’s question, how are you thinking in terms of tumor environment and the down regulation of T cells? And then by choice, between [indiscernible] versus the other PD1 or PDL1 antibodies?

So with regard to the stronger environment, as you recall for MGA271, this is one of the attributes of this particular molecule. As I’ve indicated before, B7-H3 is up-regulated on much of the – many of these tumor types. And so we actually have some ability to hit the vascular churn and potentially some tissue as well just from the 271 molecule. We are not excluding the opportunity now of combining 271 with [indiscernible] and potentially other molecules, again we want to look at the ability to build the best therapeutic profile here. And as other molecules get defined for their improvement of targeting stromal tissues we will also consider those.

Our next question comes from Stephen Willey from Stifel.

With respect to the 271 data that we’ll be getting in the second half of this year, can you may be just characterize what if any data we might be getting from these additional expansion cohorts that have been recently enrolled?

So just a clarification, what we will do in the second half of this year, we will go to the dose escalation part of the study which had 26 original patients, we then had three cohorts of approximately 15 patients each of melanoma, prostate and then sort of a mixed basket of several other tumor types. As I have indicated, we finished enrollment now, the mixed basket group, we finished enrollment of the melanoma group, a number of those patients are still on therapy and we have a couple of patients yet to recruit on the prostate side and several patients are still on therapy on the prostate side. So my expectation is we will include all that data in the second half of this year and then if there is some additional data from some of the five new cohorts that we have previously defined and I mentioned earlier today, we will try to include that as well.

And then I guess a question around 271 and B7-H3 targeting is, how dominant the immune checkpoint component mechanism is versus that which is directly tied to tumor genetic, and I’m just wondering if there is any ancillary data that you may or may not be able to provide in conjunction with just basic response data that may be helps to provide some insight into that question.

Unfortunately I don’t have anything new on that vantage point. As a pointed out in previous sessions, the attractiveness of this particular molecule is the multiple mechanisms by which it may act. And given our preclinical data, in the absence of any union checkpoint examination, just by enhancing the FC binding we got dramatic increase in the killing profile of the 271 molecule and we felt that this alone, you will if there was no additional immune checkpoint component to it, could serve patients very well. But now if you can add on both the immune checkpoint component and the two other features, one which I already mention that it can target vascular churn in some of these tumors as well as cancer stem cells which we were not testing in our in vivo models, we feel that this profile coupled with a very good safety profile that we’ve seen to date could serve the patients well. And so we’re really trying to get a suitable data set looking at a loss number of tumor types and also looking at combinations with other therapies to see which would be the best way to develop this molecule. But I don’t have anything specific that hones in on the immune checkpoint mechanism per se.

Is it safe to say then just because of the second of timing that we should hear something about Servier opting decision prior to the presentation of the data?

So I can’t answer that because the timing of that may – the presentation may occur before they are requirement for making their decision. So having not set the particular venue yet for the presentation, I can say it will be before or after when they have the make the decision. So stay tuned and again I will provide some more clarity on this later this year.

And then just lastly, maybe for Jim, how should we be thinking about the accounting treatment of the upfront payment from J&J?

We are working through that, obviously that will be a Q1 event, because the deal was closed in the first quarter. Certainly, the $50 million upfront payment will likely and I would caveat that greatly, will likely be mostly recognized in Q1. And in the portion of the equity investment representing the premium which is in excess of $10 billion will also likely be recognized as revenue in the first quarter. However, I would assess that and say that that is subject to continued discussion with our auditor.

[Operator Instructions] And our next question comes from David Nierengarten from Wedbush Securities.

Hi, this is [Dilip] sitting in for David. I was just wondering when Phase 1 data for the 66 and 77 DARTs are expected? And also whether these strategies for the 99 DART is to wait until after it enters the clinic before you seek a possible partnership?

With regard to our 607, I previously indicated we are going to complete dose – we’re going to try to complete dose escalation during 2015. Again, it may spill over to 2016. So we are not going to provide at this time in a clinical update on that – on those two molecules until we complete the dose escalation phase. With regard to 009, we have no intention at this time to partner 009, but obviously we will assess opportunities as they present to us.

I’m showing no further questions at this time gentlemen.

So thank you everyone for joining us today and I like to let you know that we will look forward to updating you on each of these programs that we discussed today as we continue to make progress throughout the rest of 2015. Have a good day.

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