Good afternoon. We will begin the MacroGenics 2023 First Quarter Corporate Progress and Financial Results Conference Call in just a moment. All participants are in listen-only mode at the moment, and we will conduct the question-and-answer session at the conclusion of the call. At this point, I will turn the call over to Jim Karrels, Vice President, Chief Financial Officer of MacroGenics. Please go ahead.

Thank you, operator. Good afternoon. And welcome to MacroGenics conference call to discuss our first quarter 2023 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 two 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 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 Koenig, President and CEO of MacroGenics.

Thank you, Jim. I'd like to welcome everyone participating via conference call on webcast today. This afternoon, I will provide key updates on our clinical programs. But before I do so, let me first turn the call back to Jim, who will review our financial results.

Thank you, Scott. This afternoon, MacroGenics reported financial results for the quarter ended March 31, 2023, which highlight our financial position. As described in a release this afternoon, MacroGenics's total revenue, consisting primarily of revenue from collaborative agreements, was $24.5 million for the quarter ended March 31, 2023, compared to total revenue of $11.1 million for the quarter ended March 31, 2022. Revenue for the quarter ended March 31, 2023, included recognition of the $15 million milestone received from Insight for the US FDA approval of ZYNYZ, $3.6 million in contract manufacturing revenue, and MARGENZA net sales of $3.5 million compared to $3.6 million for the quarter ended March 31, 2022. Our research and development expenses were $45.9 million for the quarter ended March 31, 2023, compared to $61.4 million for the quarter ended March 31, 2022. The decrease was primarily related to decreased vobramitamab duocarmazine development costs and decreased costs related to our discontinued studies. These decreases were partially offset by increased expenses related to discovery projects, preclinical molecules, and increased clinical expenses related to lorigerlimab. Our selling, general, and administrative expenses were $13.5 million for the quarter ended March 31, 2023, compared to $16.3 million for the quarter ended March 31, 2022. The decrease was primarily related to decreased legal and consulting expenses. Our net loss was $38 million for the quarter ended March 31, 2023, compared to a net loss of $66.4 million for the quarter ended March 31, 2022. Our cash, cash equivalents, and marketable securities balance as of March 31, 2023, was $241.7 million compared to $154.3 million as of December 31, 2022. Our cash balance as of March 31, 2023, included the $100 million upfront payment received from a wholly owned subsidiary of DRI Healthcare Trust for the sale of our single-digit royalty and global net sales of TZIELD. Our March 31, 2023 cash balance did not include a $30 million payment subsequently received from Sanofi related to the November FDA approval milestone for TZIELD. Finally, in terms of our cash runway, we anticipate that our cash, cash equivalents, and marketable securities balance of $241.7 million as of March 31, 2023, plus projected and anticipated future payments from partners and product revenues should provide us with a cash runway through 2025. Our anticipated funding requirements reflect expected expenditures related to the Phase 2 TAMARACK clinical trial, the Phase 2 portion of lorigerlimab in metastatic castration-resistant prostate cancer, as well as our other clinical and preclinical studies currently ongoing. And now, I'll turn the call back to Scott.

Thank you, Jim. The US FDA recently approved Insight’s ZYNYZ or retifanlimab for the treatment of adults with metastatic recurrent locally advanced Merkel cell carcinoma. This approval represents the third US marketing clearance of our product originating from our pipeline of proprietary or partnered product candidates with MARGENZA and TZIELD in the first and second respectively. We are delighted that the approval of ZYNYZ provides an additional option for treating patients with Merkel cell carcinoma, a rare and aggressive type of skin cancer. In addition to royalty payments for ZYNYZ and TZIELD, we remain eligible to receive more than $1 billion in milestone payments related to the continued advancement and successful commercialization of these two approved products. Over the past nine months, these and other programs have allowed us to generate $270 million in non-dilutive capital, extending our cash runway fully through 2025. Of course, we continue to believe our proprietary pipeline of product candidates has great promise, and I will walk you through our key programs now. Vobramitamab duocarmazine or vobra duo is our ADC designed to deliver a DNA-alkylating duocarmycin cytotoxic payload to tumors expressing B7-H3. B7-H3 is a member of the B7 family of molecules involved in immune regulation. Vobra duo was designed to take advantage of this antigen’s broad expression across multiple solid tumor types. As we reported on our last earnings call in March, we had initiated the Phase 2 portion of the TAMARACK study of vobra duo in patients with metastatic castration-resistant prostate cancer in late 2022 and modified the study protocol more recently based on the changing treatment landscape for patients with metastatic castration-resistant prostate cancer. Regulatory approval of a modified study protocol, primarily reflecting the removal of a control arm, has been obtained in the US and all countries targeted for study enrollment in the EU. We continue to anticipate commencement of enrollment under the revised protocol beginning this quarter and expect to provide a clinical update in 2024. As a reminder, the TAMARACK study is designed to evaluate vobra duo in 100 patients across two experimental arms, 2 mg/kg or 2.7 mg/kg every four weeks. Next, let me update you on lorigerlimab, our bispecific tetravalent PD-1 x CTLA-4 DART molecule. Please recall that we designed lorigerlimab to have preferential blockade on dual PD-1 CTLA-4 expressing cells, such as tumor-infiltrating lymphocytes, which are most abundant in the tumor microenvironment. At the ASCO General Urinary Cancer Symposium in February, we presented encouraging preliminary clinical results from a single-arm dose expansion study of lorigerlimab in patients with advanced solid tumors in a poster session. Based on the strength of the mCRPC data presented, we plan to commence enrollment of a randomized Phase 2 study of lorigerlimab in combination with docetaxel versus docetaxel in second-line chemotherapy-naive mCRPC patients in the second half of this year. A total of 150 patients are planned to be randomized 2:1. The current study design includes a primary study endpoint of radiographic progression-free survival. In addition, we continue to enroll patients in the Phase 1 dose escalation combination study of vobra duo with lorigerlimab in patients with advanced solid tumors, including renal cell carcinoma, pancreatic cancer, ovarian cancer, hepatocellular carcinoma, mCRPC, and melanoma. Next up, MGD-024 is our next-generation bispecific CD123 x CD3 DART molecule that incorporates a CD3 component designed to minimize cytokine release syndrome while maintaining antitumor cytolytic activity and permitting intermittent dosing through a longer half-life. Our Phase 1 dose escalation study of MGD-O24 is ongoing in patients with CD123 positive relapsed or refractory hematologic malignancies, including acute myeloid leukemia and myelodysplastic syndrome. Recall that Gilead has the option to license MGD-O24 at predefined decision points during the Phase 1 study. Finally, enoblituzumab is an Fc-optimized monoclonal antibody that targets B7-H3. In April, results from an investigator-sponsored Phase 2 study conducted at the Johns Hopkins Kimmel Cancer Center were published in Nature Medicine. In the reported study, 32 men with high-risk or very high-risk prostate cancers who were scheduled for prostate cancer surgery were treated with six weekly infusions of enoblituzumab prior to surgery and were followed for an average of 30 months thereafter. The sponsors reported that 21 patients or 66% had an undetectable prostate-specific antigen (PSA) level, 12 months following surgery, suggesting to the authors that there was no sign of residual disease. Additionally, the investigators reported that the drug was well tolerated overall. No patients had any surgical delays or medical complications during or after the operation. Let me next provide an update of our product candidates being developed by our collaboration partners for which we retain certain economic rights. As we previously announced, we received a $100 million upfront payment in March from DRI for the sale of our single-digit royalty on global net sales of TZIELD, while we retain the right to receive a 50% share of the royalty on global net sales above a certain annual threshold. As a result of Sanofi's acquisition of both Provention Bio and DRI’s royalty interest in TZIELD in April, our economic interests are unchanged, and we are eligible to receive from Sanofi a total of up to $430 million in milestone payments, including $105 million upon the achievement of certain regulatory approval milestones, $225 million upon achievement of certain sales milestones, and $100 million in potential payments that Sanofi assumed from DRI. Also, as previously announced in March, the FDA approved ZYNYZ, a humanized monoclonal antibody targeting PD-1. We had initially developed this molecule and licensed it to Insight in October 2017 pursuant to an exclusive global collaboration and license agreement. Insight continues to conduct global registration studies of retifanlimab across multiple indications, including lung, anal, and endometrial cancer. Under our amended agreement with Insight, we received a $15 million milestone payment from Insight based on the approval of ZYNYZ in Merkel cell carcinoma during the first quarter of 2023, and are eligible to receive up to $320 million in potential remaining development and regulatory milestones and up to $330 million in potential commercial milestones. We are also eligible to receive tiered royalties of 15% to 24% from Insight on any global net sales of the product. Finally, we will manufacture a portion of Insight's global commercial supply of retifanlimab. To conclude, we believe we have shown that we have the technical, development, and clinical expertise and now the necessary financial resources to support execution on our plan of developing and delivering life-changing medicines to cancer patients in 2023 and beyond. We would now be happy to open the call for questions.

Our first question comes from Jonathan Chang with SVB Securities.

First question on cash position. How are you guys thinking about your cash position now following the non-dilutive deals you've completed over the past nine months? At this point, do you feel you have enough to execute on your plans until the next value inflection point, and are you still actively seeking opportunities to continue bolstering your balance sheet?

So we're very pleased, obviously, with our cash position. And as stated on the call, this will take us through 2025 and into early 2026. And yes, this gives us all the opportunities to execute on the plan that we have outlined and the programs that we discussed today and potentially look at additional opportunities, especially in prostate cancer and beyond in solid tumors. Of course, as you know, we have been always very active in business development activities and have continuous ongoing discussions, both in terms of our preclinical and clinical pipelines, and we anticipate in the future that further revenues could be accrued via successful execution of those business deals.

And second question: should we expect clinical data from the vobra duo plus lorigerlimab combo study this year, and if so, could you help set expectations ahead of that update?

So, as I had mentioned on earlier calls, we've been moving forward with identifying the proper dosing for individual components in that combination and obviously open up the study to six different tumor indications to participate in the study. We have not yet settled on the specific dose to move forward in expansion studies and would anticipate once that is achieved, we would move forward in one or two expansion studies of particular indications, which I expect would probably include prostate in one and possibly another. At this point, given where we are this year, it is less likely that we will have data by the end of this year and more likely in the first part of 2024.

Our next question comes on the line of Charles Zhu with Guggenheim.

This is Edward on for Charles Zhu. Maybe just a question on the lorigerlimab docetaxel combo trial that you're looking towards. What sort of efficacy signal would you anticipate from the docetaxel control arm, and what sort of efficacy signal in the combo arm would give you confidence in the combination going forward, and that's both with respect to the control arm and also with the broader competitive landscape in the chemo-naive setting?

So if you look at the historical data of this docetaxel control arm in patients who have progressed on ARAT agents, rPFS has been consistent across the board with KEYNOTE-921, preside Phase 3b and TRIDENT-3 of 8.3 months, and median overall survival of 19 and 18.9 respectively in 921 and TRIDENT-3. So obviously, we would like to exceed those, certainly meet them but certainly exceed them with the current study and obviously, longer is better in this case.

As a follow-up, how do you perceive the competitive landscape evolving in the chemo-naive setting, particularly in relation to PSMA 4? Additionally, how do you view the role of the combination therapy in this context?

Clearly, the historical data on checkpoints in prostate cancer has been disappointing. All the studies conducted with pembrolizumab, including KEYLYNK-010, KEYNOTE-921, 991, and 641, did not achieve the expected outcomes despite being in different lines of therapy and combinations. Additionally, recent data from CheckMate 650 with the combination of nivolumab and ipilimumab showed poor responses, with a 9.3% overall response rate and a PSA-50 of 13.8%. We believe we have a unique bispecific molecule that could introduce a checkpoint inhibitor on top of standard therapy, potentially changing the course of this disease.

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

This is Ash Mubarak on for Yigal. Maybe just asking another one on lorigerlimab. I think in the past you've alluded to the idea of lowering lorigerlimab dose as a way to better manage AEs, but still have full target engagement. And I guess within that context, how are you thinking about dosing for the docetaxel cohort, combo cohort you're planning on starting up very shortly? Are there any specific comments you can make on lorigerlimab dose in that combo?

And as you've noted, we have a very robust data set from our dose escalation and expansion studies where in our dose escalation we went up to 10 mg/kg without dose-limiting toxicity. Designed the study on expansion at 6 mg/kg on a Q3 weekly basis in over 127 patients, which we presented recently at the ASCO-GU Meeting. As we have pointed out previously, we get full occupancy of the PD-1 receptor at 1 mg/kg or higher and have historically shown in a dose escalation study of lorigerlimab, objective response is a 3 mg/kg and also at 6 mg/kg. And we were seeing biomarker data of expansion, both CD4s and CD8s at 1 mg/kg or higher, as well as the induction of ICOS in CD4 positive cells in similar ranges. So we have a very wide window of opportunity to adjust treatment doses based on combinations of drugs that may add on additional toxicities. So back to your initial question, we are starting at 6 mg/kg on a Q3 weekly basis. We have the opportunity to make adjustments, and we're also looking at potential future studies where we would study more than the 6 mg/kg dose in prostate cancer or potentially other tumors as well to get the best safety and efficacy profile for the drugs.

I would like to ask one more question regarding vobra duo. We are still awaiting the TAMARACK data before making any final decisions. Do you have any updated thoughts on the role of vobra duo as a monotherapy for prostate cancer? Once we gain clarity on the treatment landscape in the coming years, is there a chance you might reconsider conducting a pivotal trial focused solely on the monotherapy?

Absolutely. The current plan is focused on the timeline for enrollment after we modified the TAMARACK protocol to eliminate the control group. The goal of this study is to execute as quickly as possible to evaluate both the safety and effectiveness of the appropriate dosage, whether it’s 2 mg/kg Q4 or 2.7 mg/kg Q4. Once we reach that point, we plan to meet the objectives we set for the study and then proceed to a single-arm study in Phase 3. Additionally, we're considering the possibility of combining it with other active agents, including the previously mentioned combination with lorigerlimab and other potential combinations in the future.

Our next question comes on the line of Kaveri Pohlman with BTIG.

Thanks for the updates and congrats on the approval of ZYNYZ. For the Phase 2 trial with docetaxel or lorigerlimab, can you provide any additional color on your development strategy? Can you maybe go for a registration-enabling trial if, let's say, the interim analysis looked positive given the big five of the study?

And obviously, this is designed as a controlled study, 2:1. But given that this is only 150 patients, we do not expect that this study alone would be sufficient to meet the regulatory requirements for an approval and would then base the successful study to expand it into a full Phase 3 study. Obviously, great overarching data trumps all. But right now, we would only intend that this study would serve as a trial for approval.

And my second question is also on lorigerlimab. So based on KEYNOTE-199 and CheckMate 650 trial results, it seems like PD-1, CTLA-4 combination is more active than PD-1 alone. Any thoughts on going into MSI high cRPC prostate cancer as monotherapy; is it commercially attractive? And similarly, does the combination of PARP inhibitors make sense, because CheckMate 650 trial showed better efficacy in HRD positive patients?

In response to your question, I agree with you about the findings from the 199 study and the 650 study. The data we presented at ASCO-GU highlights a 26% objective response rate and over 90% PSA50, with all responding patients showing greater than PSA90 responses. This places us in a strong position to advance this molecule. Regarding MSI-high, we have not established a trial yet, but it is something we might consider. We are definitely exploring additional combinations. Given the evolving treatment regimens for prostate cancer, including the use of PARP inhibitors in early-line therapy even without DNA repair defects, we will contemplate additional combination studies in the future, but currently, we have nothing planned that would incorporate this into our ongoing studies.

Could you provide any information on whether you plan to present any mature data from the Phase 1 trial, particularly since we are awaiting the updated results? I believe the last readout in 2021 indicated the sample size for patients who continued treatment.

As we have noted on previous calls, we've had objective response rates in all the tumor types that we looked at and had historically considered studying additional patients after prostate cancer in melanoma because at that time we did not have the cash runway to justify moving forward with that, we stopped that planned study. What I have said in previous calls is that we will provide data at times when we start or plan to initiate studies in additional indications and not until then.

Got it, that’s helpful. Thanks for taking my questions.

I would like to clarify that during my earlier discussion about the treatment in the lorigerlimab study, I was referring to a single agent, not a single arm study. I want to ensure that there is no confusion regarding my statement.

Our next question comes on the line of Stephen Willey with Stifel.

So I know you've done a couple of licensing deals here just to gain access to some novel linker-payload technology. And I guess just wondering how that preclinical work is progressing, whether you're specifically focused on Topo 1 derivatives, which is I guess kind of seemingly where the entire landscape is tilting right now, and whether the added balance sheet strength now allows you to accelerate some of those development efforts going forward?

As you know, we've been very high on the opportunities that have been afforded to us by these additional licensing deals with Synaffix, originally having access to three linker toxin combinations for specific targets that we expanded to four additional targets, so seven in all. The preclinical development is going exceptionally well. As we've pointed out on an earlier call, we intend to file an IND in the fourth quarter this year with the first of these new agents. And at this point, it's all forward on the next one. And you know, again, without getting precision here, we're trying to target for late ‘24 for the second one as we are building additional molecules going forward. You should be assured that many of these molecules will include a topoisomerase linker toxin opportunity.

Our next question comes from Shay Simin with Barclays.

This is Shay on for Peter Lawson. Maybe first, just quickly on the vobra duo and lorigerlimab combo. It sounds like you're still finding the right go-forward dose here; maybe that is not till 2024. But could you give a little more color on what's built into there? Is that the room to go dose escalate higher or is this more about finding the right balance from a safety perspective?

As noted before, we want to have both combinations that give the safety and activity that we think can be achieved in both an additive or a potential synergistic way. And so we could envision that these could be both. In terms of, let's say, lorigerlimab, which we start at 6 mg/kg, we wouldn't expect to go higher on lorigerlimab. So the opportunity was to keep that or go lower, and the same story with vobra. As you know, we are exploring 2 and 2.7 in the current study. And given the potential here for synergy on activity, there is also an opportunity that you may be able to even lower the doses from the historical use of this drug at 3 mg/kg. And as you know, we started initially at 1 mg/kg in the first cohort going forward. So where we end up at this point, we don't know, and until we have that precision, we won't go forward into the expansion studies.

And just a last quick question, considering the removal of the control arm for vobra duo and prostate. I guess, how are you thinking now about your registrational strategy moving forward?

As you know, the landscape is evolving with the recent introduction of new elements. We want to assess the effectiveness of that drug and explore various therapy combinations. The use of PARP inhibitors was mentioned earlier in this call, and we are currently examining the options as we finalize and determine the doses for vobra moving forward. We will evaluate what the suitable controls might be, which could include a specific control or several options for investigators to select from. However, we are not yet prepared to make that decision.

Thank you. I would like to turn the conference back over to Jim Karrels for any further or closing remarks.

Thank you, operator. This is Scott Koenig. I want to thank everybody who participated in this call today. We appreciate and look forward to updating you on our future studies on the next call.

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