Image source: The Motley Fool.
MacroGenics (NASDAQ: MGNX)
Q3 2024 Earnings Call
Nov 05, 2024, 4:30 p.m. ET
MacroGenics Reports Strong Q3 2024 Earnings, Driven by New Milestones
Company Overview and Call Structure
Operator
Good afternoon. We are about to start the MacroGenics 2024 third-quarter corporate progress and financial results conference call. Please note that all participants are currently in a listen-only mode. A Q&A session will follow the presentations. I’ll now hand the call over to Jim Karrels, Senior Vice President and Chief Financial Officer of MacroGenics.
Key Financial Highlights
James Karrels — Senior Vice President, Chief Financial Officer, and Secretary
Thank you, operator. Good afternoon, everyone, and welcome to MacroGenics’ call regarding our Q3 2024 financial and operational results. For those who have not yet seen our results, they are available on our website under the Investors tab at macrogenics.com.
This call will contain forward-looking statements, reflecting our plans and expectations, which may differ from actual outcomes due to various factors, especially those noted in our SEC filings. Please do not depend on these statements beyond today.
Investing Insights
Before considering an investment in MacroGenics, it’s crucial to know that the Motley Fool Stock Advisor analyst team believes there are currently 10 better stocks for investors to buy, and MacroGenics is not among them. Historical trends show that an early investment in stocks like Nvidia can yield significant rewards; for example, a $1,000 investment on April 15, 2005, would be valued at approximately $833,729 today!*
Stock Advisor is designed to help investors succeed by offering insights on building a portfolio and providing frequent updates, including two new stock recommendations each month. The service has more than quadrupled the S&P 500’s return since 2002.
See the 10 stocks »
*Stock Advisor returns as of November 4, 2024
Current Financial Status
Although we will occasionally update our forward-looking statements, we do not commit to doing so unless required by law. Now, I will pass the call to Dr. Scott Koenig, President and CEO of MacroGenics.
CEO Insights and Program Updates
Scott E. Koenig — President, Chief Executive Officer, and Director
Thank you, Jim. I want to welcome everyone on the conference call and those listening online. I will share updates on our clinical programs shortly, but first, I’ll turn it back to Jim for a review of our financial results.
Diving into Financial Results
James Karrels — Senior Vice President, Chief Financial Officer, and Secretary
This afternoon, we reported financial results for the quarter ended September 30, 2024. MacroGenics’ total revenue for this quarter was $110.7 million, a notable increase from $10.4 million in the same quarter last year. This surge largely stemmed from a $100 million milestone payment from Incyte received in August concerning retifanlimab.
Research and development expenses rose to $40.5 million for Q3 2024, up from $30.1 million in Q3 2023, driven mainly by increased costs for our preclinical ADC pipeline and the TAMARACK clinical trial. Similarly, selling, general, and administrative expenses increased to $14.1 million from $12.4 million, largely due to higher stock-based compensation and professional fees.
The net income for the quarter also showed a significant rise, reaching $56.3 million compared to $17.6 million last year. This recent net income includes the $100 million milestone payment from Incyte, while last year’s income included a $50 million milestone payment from Sanofi related to a TZIELD clinical study.
As of September 30, 2024, our cash, cash equivalents, and marketable securities amounted to $200.4 million, compared to $229.8 million at the end of 2023. This amount does not factor in an expected $40 million upfront payment related to the closing of the MARGENZA transaction, nor the $8 million fee we plan to pay our commercialization partner. With our current resources and anticipated payments, we expect a cash runway extending into 2026, covering our ongoing clinical studies.
Promising Developments Ahead
Now, back to Scott for insights on our key programs.
Scott E. Koenig — President, Chief Executive Officer, and Director
Thank you, Jim. Our proprietary pipeline of product candidates continues to show promise. I’ll highlight our ADC, vobramitamab duocarmazine, or vobra duo, which is designed to target tumors expressing B7-H3, a key player in immune regulation.
We believe the broad expression of this antigen presents significant opportunities for treatment.
MacroGenics Provides Update on Clinical Studies and CEO Transition
Key Developments in Clinical Trials and Strategic Partnerships
MacroGenics remains optimistic about the potential of B7-H3 as a vital target in treating various solid tumors. The ongoing TAMARACK Phase 2 study focuses on patients with metastatic castration-resistant prostate cancer (mCRPC) who have previously undergone treatments with targeted therapies and limited taxane regimens. Though participants are no longer receiving doses, monitoring for side effects, disease progression, and survival continues.
The main goal of the study is to measure radiographic progression-free survival (rPFS). As of the cutoff date, July 9, 2024, only 65 events, or 35.9%, had been recorded. Therefore, the interim rPFS results presented at the ESMO Congress in September are not yet mature and may change as more data is collected. We anticipate having complete rPFS statistics by early 2025.
Future Directions for Vobra Duo and Other Oncological Molecules
Plans for further development of vobra duo depend on final safety and efficacy results from the TAMARACK study, a competitive review of the mCRPC treatment landscape, and potential partnerships. In the meantime, further studies in alternative tumor types and the Phase 1/2 trial of vobra duo combined with lorigerlimab have been paused.
MacroGenics has two additional compounds targeting B7-H3. MGC026 is an investigational antibody-drug conjugate (ADC) featuring a novel topoisomerase 1 inhibitor, SYNtecan E, licensed from Synaffix. This year, the company launched a Phase 1 dose escalation trial for MGC026 in patients with advanced solid tumors. Notably, the same B7-H3 targeting sequence present in vobra duo is used in MGC026.
Enoblituzumab, another B7-H3-targeted molecule, is undergoing investigation in the HEAT study. This is a Phase 2 trial involving up to 219 men with prostate cancer, conducted by academic collaborators.
Overview of Lorigerlimab and Other Clinical Studies
Lorigerlimab, which targets PD-1 and CTLA-4 pathways, is currently part of the LORIKEET study. This randomized Phase 2 trial compares lorigerlimab and docetaxel against docetaxel alone in treatment-naive mCRPC patients. So far, over 100 of the planned 150 participants have been enrolled, with expectations to complete enrollment late in 2024 or early 2025. Initial clinical results should be available in the first half of 2025.
The company is also progressing with MGD024, a next-gen bispecific DART molecule aimed at treating CD123-positive hematologic cancers, including acute myeloid leukemia. Gilead has an option to license MGD024 at certain milestones during the Phase 1 study.
Additionally, MGC028, another ADC targeting the ADAM9 protein—which is linked to several cancers—has had its investigational new drug application submitted to the U.S. FDA.
Financial Transactions and Leadership Changes
After the quarter ended, MacroGenics sold the global rights to margetuximab, branded as MARGENZA, to TerSera Therapeutics for a potential $40 million upfront, plus additional milestone payments. This transaction is set to finalize in Q4 2024, subject to regulatory conditions. Furthermore, the company will produce MARGENZA drug substance for TerSera going forward while incurring an $8 million fee to their current commercialization partner.
This recent deal, coupled with a $100 million milestone from Incyte, enhances MacroGenics’ financial outlook, allowing for a deeper focus on advancing clinical projects and developing early-stage candidates.
Leadership Transition and Future Outlook
In a significant change, the company announced that the current President and CEO will be stepping down early next year after nearly 25 years with MacroGenics. Reflecting on this tenure, he expressed pride in the valuable therapies developed, particularly MARGENZA, ZYNYZ, and TZIELD. The company is in the midst of selecting a successor, with assurance that efforts will continue seamlessly during this transition.
Looking ahead, MacroGenics remains dedicated to advancing its pipeline, building partnerships, and delivering value for patients and stakeholders alike. The leadership is optimistic about the future and is grateful for the support of the MacroGenics team, board, shareholders, and collaborators. A question-and-answer segment concluded the call.
Operator
Thank you. [Operator instructions] Please hold while we compile the Q&A roster. The first question comes from Tara Bancroft with TD Cowen. Your line is now open.
Unknown speaker — — Analyst
Hey, this is Nick on behalf of Tara. Thanks for taking our question. Given the various factors influencing your decisions, what specific outcomes are you looking for from…?
Vobra Duo Development Update and CEO Transition Plans: Key Insights
Scott E. Koenig — President, Chief Executive Officer, and Director
Thank you, Nick. We are nearing completion of data collection from our ongoing studies. Patient observation will continue for up to six more months following their last dosing in July.
In evaluating the progress, the parameters we’ll analyze include final radiographic progression-free survival (rPFS), safety profiles, and how Vobra Duo stands against competitive products. At this stage, it’s too early to set concrete guidelines for future steps, but we expect to share more insights in the upcoming months.
Unknown speaker — — Analyst
Thank you very much.
Operator
Thank you. Our next question comes from Jonathan Chang with Leerink Partners. Your line is now open.
Jonathan Chang — Leerink Partners — Analyst
Hi, everyone. Thank you for taking my questions. First off, best wishes to Scott. Can you shed light on the ongoing CEO search? What timelines should we expect for the transition? Secondly, regarding MGC026, your second B7-H3 antibody-drug conjugate (ADC), how is the Phase 1 dose escalation going, and when might investors expect to see initial clinical data?
Scott E. Koenig — President, Chief Executive Officer, and Director
Thank you, Jonathan. It has always been a pleasure collaborating with you. Regarding the CEO search, as announced last week, a subsection of our board is spearheading the initiative while an external firm assists. This process is in its early stages, and I plan to remain active in our strategy during this transition. Typically, these searches take several months, and I will ensure a seamless handoff to the incoming CEO.
As for the MGC026 study, we are actively engaged in dose escalation. Progress has been promising, and we are entering dosage levels that might elicit responses. We expect to complete this study by 2025, aiming to share the findings the same year.
Jonathan Chang — Leerink Partners — Analyst
Got it. Thank you for your responses.
Operator
Thank you. Our next question comes from Yigal Nochomovitz with Citi. Your line is now open.
Unknown speaker — — Analyst
Hi, this is Reena for Yigal. I wanted to understand the reasoning behind halting the combination therapy now rather than earlier with the TAMARACK trial. Additionally, could you provide more context on the pause with the lorigerlimab combo and what issues you faced, if any, similar to those seen with Vobra’s monotherapy?
Scott E. Koenig — President, Chief Executive Officer, and Director
Thanks for your question. We advanced the combination study until we felt confident with the dosage levels for each medication in the populations we were studying. However, as we prepare for the final data release from the TAMARACK trial in the next few months, we decided to pause expanding the combination studies. This pause will allow us to finalize the appropriate dosing for Vobra before potentially continuing with additional combinations.
Unknown speaker — — Analyst
That makes sense. Thank you for your clarification.
Operator
Thank you. Our next question comes from Etzer Darout with BMO Capital Markets. Your line is now open.
Etzer Darout — BMO Capital Markets — Analyst
Thanks for taking my question. Concerning MGC026, having now tested Vobra Duo preclinically and clinically, what differences do you see in the safety profile of both ADCs?
Scott E. Koenig — President, Chief Executive Officer, and Director
Thanks, Etzer. Given that Vobra is a DNA-alkylating agent while 026 serves as a topoisomerase 1 inhibitor, distinct safety profiles are anticipated. The TAMARACK study has shown progress with respect to dosing adjustments. However, since we are still in the early stages of dose escalation for the 026 study, a detailed comparison is not feasible yet. We expect evident differences, but specifics will emerge as we gather more data.
Etzer Darout — BMO Capital Markets — Analyst
Thank you.
Operator
Thank you. Our next question comes from Jon Miller with Evercore ISI. Your line is now open.
Jon Miller — Analyst
Hi, thank you for taking my question. I would like to follow up on the Vobra-lorigerlimab combination. How many patients were enrolled? What data do you currently have, and is there a chance we could see this data soon? Additionally, what are your thoughts on the landscape for lorigerlimab in combinations, particularly with Vobra or other ADCs in prostate cancer?
Scott E. Koenig — President, Chief Executive Officer, and Director
Thank you, Jon. I appreciate your kind remarks. Regarding patient numbers, we have dosed several patients; however, I do not have specific figures available right now. The assessment included multiple doses with various combinations, but due to the diversity of tumor types, the sample size for each was limited. For now, we will hold off on presenting our findings until we receive conclusive data from the TAMARACK study, which is crucial for determining potential adjustments to the Vobra dosing in future combination studies. The opportunities for lorigerlimab are promising, and we will assess how it integrates into treatment landscapes for prostate cancer moving forward.
MacroGenics Provides Update on LORIKEET Study Progress and Future Directions
In a recent discussion, key figures at MacroGenics detailed their ongoing LORIKEET study, which is exploring lorigerlimab in combination with docetaxel. The enrollment for this study is expected to conclude by the end of this year or early next year, with results anticipated in 2025.
Focus on Expanded Clinical Trials
The MacroGenics team is also considering additional applications for lorigerlimab beyond prostate cancer, although it is too soon to evaluate this potential until the LORIKEET study data is finalized.
Insights from Financial Leadership
James Karrels, the Chief Financial Officer, clarified that the combination of vobra and lorigerlimab has thus far only been studied during dose escalation. Plans for a dose expansion were initially in place for later this year; however, that phase has not begun yet. Therefore, all current findings are derived from initial testing phases.
Understanding the LORIKEET Study
Scott E. Koenig, President and CEO, emphasized that the patient population in the LORIKEET study is chemo-naive, and historical data suggests that docetaxel alone typically offers an rPFS benefit of approximately 8 to 8.6 months. The goal is to significantly improve these numbers, ideally exceeding double-digit months of improvement in rPFS.
Questions from Analysts
Analyzed by Kelsey Goodwin from Guggenheim Partners, the queries focused on the anticipated benchmarks from the LORIKEET trial’s data release in the first half of next year. Koenig reiterated the importance of this study for advancing treatment options.
Updates on MGD024 and Future Collaborations
In response to questions regarding MGD024, Koenig noted that Gilead has several checkpoints in their ongoing collaboration. However, determining the timing for any potential data releases remains uncertain. The study continues to progress, with careful dose escalation being essential in this trial.
MacroGenics’ Strategic Focus
Mayank Mamtani from B. Riley Securities highlighted MacroGenics’ concentrated efforts on prostate cancer and queried if there might be strategic shifts in their focus. Koenig reassured that the company remains dedicated to exploring various solid tumor treatments, citing particular progress in B7-H3 programs and lorigerlimab. Further data is expected in 2025.
Future Data and Potential Implications
The ongoing TAMARACK trial has shown promising responses, particularly within both chemo-naive and chemo-experienced populations. Koenig plans to assess these results closely to determine new treatment paradigms, especially concerning the response rates and safety profiles observed thus far.
As enrollment in the LORIKEET trial approaches completion, analysts are eager to compare participant characteristics with previous trials involving docetaxel in mCRPC. Koenig and his team are committed to sharing insights when OS results and other data become available.
Insights from the Earnings Call: Expectations for Upcoming Clinical Data
Prostate Cancer Trial Insights and Future Data Releases
Scott E. Koenig — President, Chief Executive Officer, and Director
Regarding the LORIKEET trial, the characteristics of the participants were notably similar to those in the TAMARACK study. These patients had already experienced progression on androgen receptor-targeting therapies. This suggests that the group in this study aligns with typical patients receiving standard treatment regimens, which often involve docetaxel. The trial design is controlled, allowing us to compare our data against historical results from patients who received docetaxel alone.
I’m optimistic about our data set’s value in comparison to earlier studies. While it may be premature to provide overall survival (OS) results in 2025, we expect the trial to be fully enrolled by the end of this year or early next year. By 2025, we anticipate sharing findings on responses, PSA reductions, and radiographic progression-free survival (rPFS), though overall survival data will come later.
Updates on B7-H3 Assets and New Developments
Mayank Mamtani — B. Riley Financial — Analyst
Thanks for taking my questions.
Operator
Next, we have Peter Lawson from Barclays. Your line is open.
Peter Lawson — Analyst
Thank you. Turning to the B7-H3 assets, can you tell us how far along your second-generation molecule is in terms of initial data availability? What results from your first-generation B7-H3 would indicate progress?
Scott E. Koenig — President, Chief Executive Officer, and Director
Thank you, Peter. We’re monitoring several developmental molecules. In particular, for the topo 1 inhibitors, we’ve shared data through various scientific channels. We’re seeing encouraging signs with the design of the 026 molecule, which features site-specific conjugation of Synaffix exatecan, alongside the DAR4 profile. Even though the development may lag behind others, we believe the potential here remains robust.
The broad expression of B7-H3 across different tumor types gives us confidence. Competitors have only reported data within a limited number of tumor types, particularly in small cell cancers and some lung cancers. We expect that our 026 molecule will remain competitive once we complete the dose escalation, with Phase 1 study results anticipated in 2025. As for the vobra duo molecule, it’s still early to define its full potential.
Strategic Considerations for MGC028
Peter Lawson — Analyst
Thank you, Scott. It’s always a pleasure discussing these developments with you.
Scott E. Koenig — President, Chief Executive Officer, and Director
I appreciate it.
Operator
Thank you. Our next question comes from Stephen Willey with Stifel. Your line is open.
Stephen Willey — Analyst
Good afternoon. I want to wish you good luck, Scott. It has been a pleasure interacting with you over the years. My question concerns MGC028. Will the Phase 1 dose escalation program focus on specific tumor types, considering ImmunoGen’s prior interests?
Scott E. Koenig — President, Chief Executive Officer, and Director
Thank you, Stephen. Yes, we plan to focus on selected tumor types moving forward. Based on our preclinical data and immunohistochemistry findings, we’ll likely consider tumors such as lung cancer and pancreatic cancer among others. This selection should help us identify activity signals and determine the drug’s safety profile effectively. One challenge with the ImmunoGen molecule was our inability to reach the targeted dose due to high toxicity.
Stephen Willey — Analyst
Thank you for that clarity.
Operator
At this point, I see no further questions. I’ll now turn the call back to Dr. Koenig for closing remarks.
Scott E. Koenig — President, Chief Executive Officer, and Director
Thank you all for your kind words. We look forward to providing updates on our programs and company developments in our next earnings call. Don’t forget to vote if you haven’t yet.
James Karrels — Senior Vice President, Chief Financial Officer, and Secretary
Good night, everyone.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
James Karrels — Senior Vice President, Chief Financial Officer, and Secretary
Scott E. Koenig — President, Chief Executive Officer, and Director
Jim Karrels — Senior Vice President, Chief Financial Officer, and Secretary
Scott Koenig — President, Chief Executive Officer, and Director
Unknown speaker — — Analyst
Jonathan Chang — Leerink Partners — Analyst
Etzer Darout — BMO Capital Markets — Analyst
Jon Miller — Analyst
Silvan Tuerkcan — Analyst
Mayank Mamtani — B. Riley Financial — Analyst
Peter Lawson — Analyst
Stephen Willey — Analyst
More MGNX analysis
All earnings call transcripts
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
