MacroGenics, Inc. (MGNX) Q3 2021 Earnings Report, Transcript and Summary

Good afternoon. We will begin the MacroGenics' 2021 Third Quarter Corporate Progress and Financial Results Conference Call in just a moment. [Operator Instructions] At this point, I will turn the call over to Chris James, Vice President of Investor Relations and Corporate Communications of MacroGenics.

Thank you, operator. Good afternoon, and welcome to MacroGenics' conference call to discuss our third quarter 2021 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'd like to turn the call over to Dr. Scott Canning, 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 highlights 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 for the third quarter.

Thank you, Scott. This afternoon, MacroGenics reported financial results for the quarter ended September 30, 2021, which highlight our financial position as well as our recent progress. As described in the release this afternoon, MacroGenics' total revenue consisting primarily a revenue from collaborative agreements, was $15.7 million for the quarter ended September 30, 2021, compared to total revenue of $18.3 million for the quarter ended September 30, 2020. Revenue for the quarter ended September 30, 2021, included $3.6 million net sales of MARGENZA. Our research and development expenses were $49.8 million for the quarter ended September 30, 2021, compared to $44.7 million for the quarter ended September 30, 2020. This increase was primarily related to increased clinical trial and development costs related to the company's product candidates, as well as research costs related to preclinical molecules, partially offset by decreased clinical costs and BLA support activities for margetuximab, and decreased development and manufacturing costs related to flotetuzumab. Selling, general and administrative expenses were $17.2 million for the quarter ended September 30, 2021, compared to $9.7 million for the quarter ended September 30, 2020. This increase was related to the MARGENZA launch, labor-related costs and legal expenses. MacroGenics' net loss was $52.9 million for the quarter ended September 30, 2021, compared to a net loss of $36 million for the quarter ended September 30, 2020. Our cash, cash equivalents and marketable securities balance as of September 30, 2021, was $298.9 million compared to $272.5 million as of December 31, 2020. Finally, in terms of our cash runway, we anticipate that our cash, cash equivalents and marketable securities as of September 30, 2021, in addition to anticipated and potential collaboration payments should enable us to fund operations through 2023, assuming our programs and collaborations advance as currently contemplated. And now I'll turn the call back to Scott.

Thank you, Jim. We are very pleased by the continued progress towards our goal of providing patients with multiple potentially life-changing therapeutics in the pursuit of fighting cancer. At ESMO in September, we presented encouraging preliminary clinical results from the ongoing Phase I study of MGC018, our anti-B7-H3 antibody drug conjugate. In October, we submitted an IND application for MGD024 a next-generation DART molecule targeting CD123 and CD3 for the potential treatment of AML and other CD123 expressing hematological diseases. And finally, the FDA recently approved our GMP manufacturing facility to produce MARGENZA drug substance, representing an important achievement for the company. With that backdrop, let me use this time to walk you through updates on our portfolio of clinical molecules, starting with our molecules targeting B7-H3. Let me first discuss MGC018, our investigational antibody drug conjugate designed to deliver a DNA escalating duocarmycin cytotoxic payload to tumors expressing B7-H3. MacroGenics presented an encouraging update of clinical data from the ongoing Phase I study of MGC018 in patients with advanced solid tumors in a poster presentation at ESMO in September. The safety analysis included all enrolled patients with the activity analysis focused on the metastatic castration-resistant prostate cancer or MCRPC and non-small cell lung cancer expansion cohorts, as enrollment continues in the other 3 tumor cohorts. As of August 16, 2020 data cutoff, the preliminary results demonstrated a PSA reduction of 50% or greater and 21 of 39 or 54% of patients with MCRPC. Antitumor activity was observed in 10 of 16 or 63% of resist evaluable patients and 4 of 16 or 25% of patients achieved a partial response, including 2 and 2 unconfirmed partial responses. As presented at ESMO, preliminary results in the non-small cell lung cancer cohort expansion demonstrated antitumor activity in 13 of 16 or 81% of patients with measurable disease who had their first 9-week imaging results available, including 4 of 16 or 25% of patients with unconfirmed responses. The adverse events for all 86 patients in the dose expansion was reported to be manageable and included, most notably, hematologic toxicity and low-grade fatigue, skin toxicities and infusions. Overall, we continue to remain pleased and encouraged by the growing data from our ongoing study of MGC018. Following ESMO, we had multiple discussions with practicing prostate cancer physician researchers, and we look forward to sharing our future development plans for MGC018 in MCRPC during the first quarter of next year. In addition, enrollment in the MGC018 Phase I study is ongoing in the triple-negative breast cancer, squamous cell carcinoma of the head and neck and melanoma cohorts. We expect to provide clinical updates on multiple expansion study cohorts in the first half of next year. In addition to monotherapy-based studies, we anticipate commencing a combination study of MGC018 with one of our PD-1-based product candidates in the first half of next year. 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. In March, we initiated a combination study of enoblituzumab in a chemotherapy-free regimen in frontline squamous cell carcinoma of the head and neck with either tebotelimab for patients who are PD-L1 negative or with retifanlimab in patients who are PD-L1 positive. Enrollment in this study continues to progress across sites in the United States, Europe and Australia. In September, our partner, I-Mab Biopharma, announced that its IND to initiate a Phase II trial of enoblituzumab in combination with pembrolizumab in patients with select solid tumors was accepted in China, which triggered a net $4.5 million milestone payment to MacroGenics. Next, let me discuss our efforts to bring products to market to help treat patients with acute myeloid leukemia or AML and our investigational bispecific CD123 x CD 3 DART molecules. We continue to enroll the single-arm clinical study to evaluate flotetuzumab in patients with refractory AML, and we anticipate providing further updates on the clinical development of flotetuzumab in 2022. In addition, I'm very pleased to share that we recently submitted an IND application to the FDA for MGD024, our next-generation CD123 x CD3 DART molecule that we intend to study in patients with relapsed or refractory hematologic malignancies. The IND application is pending clearance by the FDA. MGD024 incorporates a CD3 component designed to minimize cytokine release syndrome, while maintaining antitumor cytolytic activity, along with an Fc domain to prolong circulating half-life and permit intermittent dosing. We expect to present preclinical MGD024 data at ASH in December. Next up, let me walk you through our PD-1-based assets. Tebotelimab is our investigational bispecific PD-1 x LAG-3 DART molecule. Tebotelimab blocks the binding of T cells expressing PD-1 and LAG-3 to their ligands and allows for the reactivation of exhausted T cells and enhancement of immune capacity against tumors. Tebotelimab has demonstrated synergistic T cell activation in vitro, superior to that seen with other PD-1 and LAG-3 combinations with PD-1 or LAG-3 as single agents. We are currently evaluating tebotelimab in patients as both monotherapy, as well as in combination with other agents. Zia Lab, our partner in Greater China, expanded the Phase Ib/II study of tebotelimab in combination with a PARP inhibitor, niraparib, into new indications in Greater China, including gastric cancer, triple-negative breast cancer and biliary tract cancer. In addition, Zia Lab enrolled the first patient in the endometrial cancer cohort in October 2021. Next, MGD019 is our investigational bispecific checkpoint DART molecule that targets PD-1 and CTLA-4. We are conducting a Phase I dose expansion study in cohorts of patients with microsatellite stable colorectal cancer, checkpoint-naive, non-small cell lung cancer, MCRPC and melanoma. We look forward to providing an update on the study next year. Let me next turn to retifanlimab, the investigational anti-PD-1 antibody that we licensed to Incyte. Incyte is exploring development of retifanlimab, as monotherapy and potentially registration-enabling studies in patients with anal cancer, MSI-high endometrial cancer, Merkel cell carcinoma and lung cancer. In addition, Incyte is evaluating the molecule in combination with other assets in their immuno-oncology portfolio. At the 2021 Society for Immunotherapy of Cancer or SITC, virtual meeting next week. Incyte will present clinical results in poster presentations from both a Phase 2 study of retifanlimab in patients with advanced or metastatic Merkel cell carcinoma, and a tumor-specific expansion cohort study in patients with the current MSI-high or deficient mismatch repair recurrent endometrial cancer. Next, our second investigational ADC, IMGC0936, which targets ADAM9 is being advanced under a co-development agreement with Immunogen. Under our 50-50 collaboration immunogen is leading clinical development, and they have indicated they anticipate disclosing initial data from a Phase 1 study in multiple solid tumors in 2022. Last but not least, I will provide an update on margetuximab. We have been evaluating margetuximab in the Phase 2/3 MAHOGANY study in patients with advanced gastric and gastroesophageal junction cancer. This trial consists of 2 modules designed to evaluate margetuximab as an investigational agent in combination with a checkpoint inhibitor with or without chemotherapy, as a potential first-line treatment for patients with advanced or metastatic HER2-positive GC or gastroesophageal junction cancers. At ESMO in September, clinical results from Cohort A Part 1 of the Phase 2/3 MAHOGANY study of margetuximab in combination with retifanlimab in patients with advanced gastric and gastroesophageal junction cancer were presented. 21 of 40 or 53% of resistant valuable patients in MAHOGANY Cohort A achieved confirmed responses by independent review. Although the number of confirmed responses exceeded the prespecified futility boundary for the trial after further evaluation of company resources and priorities, we have decided to discontinue enrollment of Cohort A based on a number of factors, including the prioritization of our other product candidates given the competition in this indication and the accelerated approval of combination therapy with pembrolizumab. Our partner for margetuximab in Greater China, Zia Lab, continues to enroll patients in Cohort B. Also in September, the company announced final overall survival analysis from the Phase 3 SOPHIA study, which did not demonstrate a statistically significant advantage for MARGENZA plus chemotherapy over trastuzumab plus chemotherapy in patients with HER2-positive metastatic breast cancer. We plan to present these results at the San Antonio Breast Cancer Symposium in December. In addition to the results from the intent-to-treat population our prespecified non-alpha allocating analysis of CD16A genotyping in the trial showed a numerical OS advantage in favor of margetuximab in F homozygous patients and a numerical OS advantage in favor of trastuzumab in V homozygous patients. With regard to margetuximab in metastatic breast cancer, recall that MARGENZA was launched in mid-March in coordination with our commercial partner, EVERSANA. MARGENZA is approved in combination with chemotherapy for the treatment of adult patients with metastatic HER2-positive breast cancer who have received 2 or more prior anti-HER2 regimens, at least one of which was for metastatic disease. In October, Zai Lab announced that its bridging study of margetuximab plus chemotherapy in advanced previously treated HER2-positive breast cancer met its primary endpoint with acceptable safety and tolerability. The study showed that efficacy of this combination in Chinese patients was consistent with that seen in the global population in the SOPHIA trial. Zia Lab has indicated that it anticipates submitting a BLA in China for pretreated metastatic HER2-positive breast cancer by approximately year-end 2021. We continue to believe patients may benefit from MARGENZA, as another marketed cancer therapy option. As reported, net sales were $3.6 million from MARGENZA in the third quarter. Given the competitive realities that have taken place in the HER2-positive breast cancer market, including multiple new approvals, we continue to have modest expectations for MARGENZA sales. We expect to provide MARGENZA sales guidance after the product has been on the market for at least a year. Finally, we recently received U.S. FDA approval to manufacture MARGENZA drug substance at our GMP manufacturing facility in Rockville, Maryland. The supplemental BLA approval for MARGENZA represents another important achievement for MacroGenics. We look forward to continuing to build momentum, and advancing our pipeline of innovative product candidates throughout 2021 and into 2022. We would now be happy to open the call for questions. Operator?

[Operator Instructions] And our first question comes from the line of Peter Lawson with Barclays.

Scott, just, I guess, on B7-H3, just any sense of timing around melanoma triple-negative prostate and lung for next year? What's the kind of the sense of the order there?

Thanks very much, Peter. As we commented on ESMO, we had completed the enrollment in the non-small cell lung cancer cohort with regard -- in addition, obviously, to the metastatic castration-resistant prostate cohorts. The triple-negative breast, the melanoma in head and neck, continue to enroll, have not completed enrollment of that. We expect the melanoma and the triple-negative breast to enroll before the end of the year. And obviously, the head and neck to continue into 2022. So obviously, we want to follow those patients after all the patients have been enrolled. So certainly at one of the scientific conferences in the first half of the year, will be available to provide additional updates. And of course, we'll provide continued updates on the other 2, the prostate and the lung studies at an appropriate time as well. I should also say with, as I've commented on earlier today, very encouraged by the progress on prostate. We have engaged a large number of key opinion leaders in prostate cancer who are very encouraged by the data to-date.

Got you. And then is it a sense of like in the first half, you want to have kind of a meaningful update from, what, 2 or 3 kind of indications?

At this point, I would say that the priority right now is around advancing the prostate. We didn't enrolled the greatest number of patients. We have obviously a very significant data set. And therefore, we'd like to focus on looking at the next stage of development for that opportunity. For many of the other cohorts where we've enrolled less patients, for instance, 20 patients in a cohort, we'll have to make a decision whether additional patients will be required before we make a final decision going forward on registration. So until we see the data, I can't really make comments on that.

Got you. And then just final question, just kind of similar question just around your PD-1 LAG-3. When do we get to see data or further data around that?

Peter, as we have spoken before, and as Zia commented publicly about this, we’ve provided a sizable amount of data last year at 3 different conferences we’ve had incremental data on the ongoing trials. And again, from the studies that we were conducting, the data remains very encouraging. As I reported earlier today, we’re going to expect additional data, both from the combination studies that we’re conducting. And as you heard, many other additional trials that Zia is conducting right now. I can’t speak about the timing of when they’ll update their results. My sense is, is that we have sufficient amount of data right now to make decisions on further development of that molecule in specific solid tumor and liquid tumor indications. What is taking time for us is engaging the various parties that would be working with us on any of these indications. So right now, be a little patient, given all the efforts right now on B7-H3, that obviously has the highest priority within our portfolio, but we have not lost sight on the opportunity on tebotelimab, both as a potentially single agent or combination agent and expect properly to provide updates in the first part of 2022.

And our next question comes from the line of Kaveri Pohlman with BTIG.

I guess, my first question is for the MGD024. Maybe if you can give us some insight on your development strategy there. And tell us a little bit about how different the molecule is flotetuzumab besides Fc? Is it like a difference CD123 epitope or a different CD3 binding affinities?

Larry, thank you very much, and welcome to the call today. With regard to MGD024, we're very excited about the prospects of this platform, which we're first now applying to the 123 x CD3 specificity. As we have spoken before, we have conducted comprehensive studies, incorporating a slightly modified CD3 variants that was in the flotetuzumab molecule that has the ability to reduce theoretically cytokine release, particularly based on our preclinical studies, both in vitro and in vivo. This also has, as you note, an Fc domain, so that we are able to give this molecule intermittently because of the longer half-life as compared to flotetuzumab. With regard to your specific questions around decreased affinity, it does have affinity for CD3, but that is not the whole story. A lot of it is the relative on and off rates for the specific molecules. And what this will allow us to do is, to achieve a Cmax without precipitating what we believe is a significant cytokine release. So if this performs clinically as we've seen preclinically, this should be a major advance that could be applied not only for the AML indication and other CD123 bearing malignancies, but also could be used for solid tumor indications as well. With regard to the specific design of the study, this will be a fairly conventional 3 plus 3 design, dose escalation. But I think we can do, given our experience with flotetuzumab, a rapid dose escalation and then get to a proposed dose moving forward.

Got it. And for Module B of MAHOGANY study. You're evaluating patients regardless of their PD-1 status. And in melanoma, at least, the Nivo and IPI combination works well for PD-L1 negative disease. Do you think the cohort combining with 019 PD-1 CTLA-4 makes sense before starting a large cohort?

So I think there were 2 questions. Module B and the use of 19 in melanoma. So with regard to Module B, correct, this is being advanced in patients with irrespective of PD-L1 status. Patients are being enrolled currently right now in Greater China by Zia Lab. With regard to melanoma and the utility of MGD019 we have a monotherapy study ongoing. Obviously, we have had very positive data, for instance, with the 018 study in the dose escalation in melanoma. We have an expansion study ongoing there as well. So there are a lot of prospects from our portfolio of being able to address patients with late-stage melanoma that had progressed on current standard of care. So stay tuned for next steps forward for potential molecules in our portfolio that could address the needs in melanoma.

And our next question comes from the line of Yigal Nochomovitz with Citi.

This is Asha Babaric on for Yigal. I guess, can you provide any additional color on the decision to discontinue the MAHOGANY Cohort A module? I'm sorry, Cohort Module A. And were you able to speak with the FDA on the bar for accelerated approval? And I'm also just curious about if you think there might be any benefit to adding chemo to that regimen in PD-L1 high gastric cancers?

Asha, thank you very much for the question. It was a very tough decision for us with regard to Module A. Given that we achieved what we hoped to with regard to response rate, meaning our predefined response of 53% in a chemo-free regimen, I should again, reemphasize, which we’ve discussed before, the side effect profile was dramatically better than what has been previously reported for ToGA and then the more recent 811 study. What obviously caught us a little bit by surprise is that 811 data came out probably a good year before we expected it and led to accelerated approval. And as a result, we asked the question, with continuing putting resources behind us for an accelerated approval in a chemo-free regimen being the best use of our funds and also for patients. We certainly believe that this has potential use, particularly in patients that may not tolerate chemotherapy. But when we assess the market opportunity here, we deemed it too small to pursue at this time. We will publish the data from the ongoing and recently discontinued study. So you’ll get a good sense of that this is a very good combination of use of margetuximab and the anti-PD-1 Redefault experimentally. So we did have engagement with the FDA. Again, there was questions that will continue to be raised about contribution of and how to best address that. So that there was no real clear pathway to really get an accelerated approval without putting a lot more resources behind this molecule. With regard to the combination with chemotherapy, in fact, if you look at the 811 study, 87% of the patients in that triple combination of Herceptin chemotherapy and pembrolizumab were PD-L1 positive. And so the majority of these patients with newly diagnosed, gastric cancer and gastroesophageal cancer are PD-L1 positive. So the addition of chemotherapy, which is essentially what is being done in module B, should be able to achieve that goal. And again, our expectations is that the marge of retifanlimab or potentially tebotelimab combination with chemotherapy, we hope would perform very well.

Our next question comes from the line of Jonathan Chang with SVB Leerink.

First question, what are your latest thoughts on what the potential opportunities for MGC018 could be in indications beyond prostate cancer?

Well, Jonathan, again, nothing has really changed since ESMO. As you know, we're in 5 total expansion cohorts, as monotherapy. We've also indicated that we're going to begin a combination study, which will be open to many different tumor types with one of our checkpoint molecules. And at this point, I see this opportunity is quite vast in the solid tumor space. It's just too early at this point, not having some of the data yet completed on these additional expansion cohorts, that any one of these or multiple of the ones we've been already testing could be good opportunities. I should also point out, given that there are competitors moving into the space, who are also identifying other B7-H3 expressing tumors having responses to alternative of molecules, there's no reason to think that MGC018, or for that or even in enoblituzumab in combination with our checkpoint shouldn't work as well there. So we are very high on the opportunities in B7-H3, the ones in the clinic now. We have also additional ones preclinically that we are developing. And so we will be putting a lot of efforts going forward towards this target.

You actually answered my follow-up question on the competitor data. So maybe I'll switch to another question on MGC018, and that is on the next development steps. How are you thinking about which dose and regimen to move forward with?

Excellent question, Jonathan. As I commented on earlier, #1, as we stated out, was to engage the KOLs, and we have a huge number of KOLs that we have interviewed and met in groups to discuss the ongoing study to address, a, the results to date, #1, #2, the safety profile and #3, the dosing regimens. Again, very encouraged on all fronts from the feedback that we have received from them. As we have noted before, we are looking at the 40 additional patients in the expansion cohort for pharmacokinetics of the patients looking at the various doses that these patients receive and modifications of the dose and how they correlated ultimately with their responsiveness. We have identified a potential pathway forward. Again, we are fine-tuning that with regard to the dosing strategy. This has not been finalized, but could include some initial reduction of the initial dose or reducing the frequency of the dosing going forward. But we have not a final decision about that. These decisions will come very shortly, though, as we get the additional data on the 40 patients before the end of the year. And then we will also engage the regulatory agencies on design, clearly identifying controlled populations that we would use going forward in our registration intent study.

And our next question comes from the line of Jonathan Miller with Evercore ISI.

| Even if I am your second favorite, Jonathan. I would like to revisit the PD-1 LAG-3 bispecific. I know you gave some commentary earlier on the call about the things that you presented this year. But it seems like we're still waiting on a development path forward for that molecule trial designs and indication expansions and that sort of thing. But given the value competitive LAG-3s are getting, I'm surprised you're not pushing that program even harder. And I wonder what the gating factors are for next steps in getting more clarity on that development path moving forward?

Well, John, I will state you are savored, Jonathan, in the ones we know. So don't feel that your second call was reflective of our interest in speaking to you. With regard to the PD-1 and LAG-3 competitive landscape, yes, we do recognize that there are many companies working on separate antibodies in combination and a couple working on bispecific molecules. I would say that if we didn't have such a robust B7-H3 portfolio, there would certainly be more accelerated effort here on this specific molecule. But given the wealth of number of other molecules, not the least of which is also our PD-1 x CTLA-4 bispecific, we obviously have to make some tough choices in terms of prioritization. Given that we do -- are looking very closely at the appropriate design going forward for a solid tumor indication, as well as potentially a liquid tumor indication. Again, a lot of this work, I would like to have completed before we discuss next steps. Again, as you point out, there is a competitive landscape, and I'd rather not tip off exactly where we're going here. Some of the other things that one should consider about this in the context of what Bristol has shown in their data with melanoma and others is what is the utility, for instance, of LAG-3 expression is a diagnostic valuable. And those are some of the things we are working through going forward in designing what the appropriate study. So please be patient. We do like the activity of this molecule. We expect, as I pointed out earlier, additional data from Zia Lab in a lot of indications going forward over the next few months. So I think that will also help us to hone in on what the appropriate next steps for this molecule are.

One follow-up. Earlier on the call, it sounded like you might not disclose data from the smaller initial expansion cohorts for 018, if you decide to increase cohort size later before making decisions about later stage studies. Can you clarify what your criteria would be for disclosure in any given of those multiple expansion cohorts that we could get next year?

Yes. We haven't made any specific decisions about what and when and what are the criteria going forward. Again, we're very wary of the competitive landscape here. And rather than tip off somebody on, which ones we are pursuing for a registration study I would like to sort of hold us close to the best until we make that decision. So please be patient with us with regard to that. Having said that, we are trying to set very high bars on assurances. And so sometimes, for instance, I'll give you a perfect example. We presented the initial data very quickly on the non-small cell lung cancer that was 20 patients, of which there were 3 different histological types. So before we want to make a decision on what's the next step possibly lung cancer, you want to make sure that you're picking the right tumor type going forward if that is decided to be pursued. So those are some of the things we're thinking about going forward.

One follow-up from earlier presentation from the prostate cancer cohorts, and the KOL call you had after ASCO. I'm pleased to hear that you're having productive dialogues with the KOLs in the indication thus far. And when we look forward to that update in the first quarter next year, can you give us a little hints, as to what people have been saying about the updated safety profile that you observed at ESMO and how regimen modifications or dosing modifications has worked in the context of that indication?

Yes. I think very consistent with what I’ve said before, which the toxicity is manageable that the strategies we’ve taken with regard to mitigate some of these side effects seem to be working well. And even further changes of what we’ve discussed with regard to some dosing strategies should further improve the safety profile here. So all in all, as the data stands now, obviously, I can’t predict what’s going on in the future. We’re very encouraged on what we have implemented and where the safety data set stands right now.

Our next question comes from the line of Silvan Tuerkcan with JMP Securities.

Congrats on the quarter. My first question is, if you could please comment on what goes into future planning of flotetuzumab? And do you need human data from next follow-up molecule MGD024? Is there a certain bar you're looking for for MGD024, maybe even in the ASH data in this early data set? Or is it one or the other molecule? Or maybe both? Could you just comment about your options around that, please?

Silvan, thank you very much, and welcome to the call. And again, with regard to the opportunities in AML, this is a landscape that continually becomes more complex, as more opportunities are being provided to patients. And so again, very encouraged on what we have achieved with flotetuzumab with regard to dosing strategies, identifying populations that would be most responsive to the drug, these particularly primary induction failure population. As you know, we are conducting this single-arm study with flotetuzumab. We will be taking interim looks during the enrollment of the patients with regard to the robustness of that data. And we'll continue to look at that while we are moving forward with the dose escalation on MG024, which, in theory, could provide some additional benefits with regard to the patient's convenience and obviously, potential side effect profiles. So I would say that we will -- we're continuing to push forward on flotetuzumab. We hope to have in 2022, some of the initial data on seeing if 024 meets our anticipated profile, and then we'll make decisions going forward on how to address the AML space and the largest space in general. So we will provide updates in 2022 as more data comes in.

But just from the side effect profile in terms of CRS that we've seen with flotetuzumab to-date. Do you think that molecule is, by itself, competitive in this space, the trial is studying?

We do think it’s competitive in the particular indications that we’re pursuing is particularly primary induction failure, if it obviously meets some of the criteria that we anticipated through our discussions with the FDA. There are additional opportunities also based on much of our preclinical data, which we have not shared with you at this point that could even expand it to other AML populations. So, yes, I do think that AML has great opportunity. But again, if MGD024 meets all the criteria that we have set out to achieve, it could be even a much more effective drug and a larger opportunity than flotetuzumab.

And our next question comes from the line of Stephen Willey with Stifel.

Just going back to 024, have you guys contemplated a dosing strategy for the Phase 1 dose escalation in terms of whether or not you're going to start off with a flat dosing or based upon the exposure relationships you've seen preclinically, is there a step up dosing regimen that you have in mind? And then I guess, maybe second to that, have you thought about at all pursuing a subcutaneous formulation to further blunt Cmax a little bit?

So with regard to the current dosing, again, based on our experience in flotetuzumab and the opportunity here, we're going to start out, as intravenous dosing as one would expect. But with regard to the dose escalation, we think given our experiences here and what we have shown preclinically in terms of a much better safety profile and reduced cytokine release we should be able to move up fairly quickly in a dose escalation, a typical Phase 1 study. Yes, we have obviously thought of the opportunity in giving subcu. Again, you have to be a little wary in AML chemic patients with certain complications there, but certainly, that has been something that we have discussed going forward. It probably is not something we're going to highlight immediately, but it certainly has been discussed internally.

Our next question comes from the line of David Lebowitz with Morgan Stanley.

This is Avatar on for David today. We have another question on the gastric cancer opportunity for margetuximab. So following the results from MAHOGANY Module A, can you provide any granularity on your expectations for Module B in terms of just incremental benefit on response rates? And at minimum, what would you view as a successful outcome in module?

Avatar, thank you very much for the question. Our expectations would likely require, obviously, an adequate safety profile that was at least as good, but certainly better would be preferred than what was seen in the 811 study in the combination with pembro. With regard to overall response rate, if you recall, in that triple combination, they had a 74% response rate, we would certainly like to meet or exceed that. And one of the things that still is very open because we don't have the data from them is their PFS rate was not that good. If you recall that PFS was 10.6 months, our chemoprevention with MAHOGANY A was 10.3 months given that it was also a smaller number of patients. So it's quite comparable. So ultimately, we're going to have to take a look at what their benefit with regard to PFS and potentially overall survival. And again, that would be something that we would look to exceed that whatever turns out to be for 811.

[Operator Instructions] So with that, I'll turn the call back over to management for any closing remarks.

Thanks, everyone, for participating in the call today. We look forward to updating you on our programs in the near-term and hope that you have a great Thanksgiving holiday.

This concludes today's conference call. Thank you for participating. You may now disconnect.