MacroGenics, Inc.

point 8 million for the quarter end of September 30, 2021. The decrease was primarily related to decreased manufacturing costs for insight and decreased cost related to discontinued studies. These decreases were partially offset by increased development, manufacturing, and clinical trial costs related to MGCO18, increased expenses related to discovery projects and preclinical molecules, and increased clinical expenses related to loradrolumab and MGD-024. Our selling general and administrative expenses were $15.4 million for the quarter ended September 30, 2022, compared to $17.2 million for the quarter ended September 30, 2021. The decrease was primarily related to decreased Margenza selling costs, as well as decreased consulting expenses. Our net loss was $24.8 million for the quarter end of September 30, 2022 compared to a net loss of $52.9 million for the quarter end of September 30, 2021. Our cash equivalence and marketable securities balance as of September 30, 2022 was $123.6 million compared to $243.6 million as of December 31, 2021. The September 30, 2022 balance did not include $60 million subsequently received from Gilead in October 2022. Finally, in terms of our cash runway, we anticipate that our cash, cash equivalents, and marketable securities balance as of September 30, 2022, the $60 million subsequently received from Gilead, projected and anticipated payments from partners, product revenues, as well as anticipated savings from our previously announced corporate restructuring plan should extend our cash runway into mid-2024. This updated cash runway guidance reflects anticipated expenditures related to the planned Phase 2 portion of the MGC 018 Tamarack study, as well as Macrogenics' other ongoing studies. In addition, we note that the potential approval of the Teplizumab DLA later this month, which would obligate Prevention Bio to provide us with a $60 million milestone within 90 days of that approval, would help us achieve a two-year cash runway. And now, I'll turn the call back to Scott.

Thank you, Jim. In the past few months, we demonstrated our ability to generate non-dilutive capital via partnering efforts. which enabled us to collect $30 million in milestone payments from Insight and the subsequent receipt of the $60 million upfront payment from Gilead. We are very excited to advance MGD-024 in collaboration with Gilead. Also, we continue to operationalize the Tamarack study of MGC-018, which has a new name over minimab duocarmazine in prostate cancer and believe we should be able to dose a first patient in the study by year end. Finally, with enrollment completed in the monotherapy dose expansion study of loridrolumab, we look forward to sharing clinical data in first quarter of 2023. With that backdrop, let me walk you through updates on our portfolio of investigational clinical molecules, starting with bobrimidumab duocarmazine, or MGCO18, Our ADC is designed to deliver a DNA-alkylating duoclomycin cytotoxic payload to tumors expressing B7H3. B7H3 is a member of the B7 family of molecules involved in immune regulation. Bovermitumab duocarmazine was designed to take advantage of this antigen's broad expression across multiple solid tumor types. We continue to make progress as we operationalize the Tamarack study. We've begun initiating clinical sites and expect to start the Tamarack study by year end, with anticipation of interim data from the phase two portion of the study in 2024. Next, let me update you on lorajerolamab. We continue to dose patients in the phase one dose escalation combination study of obramidamab duocarmazine with lorajerolamab in patients with advanced solid tumors, including renal cell carcinoma, pancreatic cancer, ovarian cancer, hepatocellular carcinoma, MCRPC, and melanoma. You may recall that based on data from our preclinical studies, anti-tumor activity with gobrimidimat duocarmazine may be enhanced by combination therapy with an anti-PD-1 agent without significant incremental toxicities. During the second quarter, We completed enrollment of the Phase I-II Dose Expansion Study with lorajirulamab as monotherapy in cohorts of patients with microsatellite-stable colorectal cancer, MCRPC, melanoma, and checkpoint-naive non-small cell lung cancer. Many patients are still on study. And while we will wait to provide a clinical update on this study in the first quarter of 2023, I'll mention that we're very encouraged by what we've seen so far. We look forward to sharing data with you in early 2023. Next up, MGD024 is our next generation bispecific CD123 by CD3 DART molecule that incorporates a CD3 component designed to minimize cytokine release syndrome while maintaining anti-tumor cytolytic activity and permitting intermittent dosing through a longer half-life. Our phase one dose escalation study of MGDO24 is ongoing in patients with CD123 positive relapse or refractory hematologic malignancies, including acute myeloid leukemia and myelodysplastic syndrome. Of course, we're thrilled to have Gilead as a collaboration partner to advance MGDO24. Last month, we entered an exclusive option and collaboration agreement with Gilead to develop MGDO24 and up to two additional bispecific research programs in oncology. The agreement grants Gilead the option to an exclusive license to MGDO24. As part of the agreement, Gilead paid us an upfront payment of $60 million, and Macrogenics will be eligible to receive up to $1.7 billion in target nomination, option fees, and development regulatory and commercial milestones. Macrogenics will also be eligible to receive tiered double-digit royalties on worldwide net sales of MGDO24 and a flat royalty on worldwide net sales of products resulting from the two additional research programs. Macrogenics will be responsible for the ongoing phase one study of MGDO24, and Gilead may elect to exercise its options to license the program at predefined decision points. The phase one study will include a dose escalation segment and an expansion segment that is intended to evaluate NGDO24 as monotherapy and in combination with other therapies across multiple indications. Next, I will provide an update on our product candidates being developed by our collaboration partners for which we retain certain economic rights. As Jim mentioned earlier, we in prevention await the FDA's decision on teplizumab, an anti-CD3 monoclonal antibody that prevention acquired from us under an asset purchase agreement in 2018. Prevention is developing teplizumab for both the treatment and prevention of type 1 diabetes. The extended PDUFA target action date for the prevention of type 1 diabetes indication is November 17, 2022. Macrogenics is eligible to receive royalties on net sales of teplizumab if approved, in addition to milestone payments that total $170 million, inclusive of the $60 million U.S. approval milestone. Retifamilamab is an investigational anti-PD-1 mab that we exclusively license to Insight Corporation. Macrogenics is eligible to receive royalties on net sales of retifamilamab if approved, in addition to milestone payments. In July 2022, Macrogenics received $30 million in milestone payments from Insight as part of its collaboration agreement. Adafanilamab is currently being studied as monotherapy or in combination with other agents across multiple studies. Finally, as a reminder, we previously announced in August our restructuring plan, which included the prioritization of our pipeline of product candidates, a 15% workforce reduction, and plan closure of two facilities with the goal of delivering value-creating data with our existing and anticipated financial resources. All of these cost-saving measures are proceeding according to plan. With our continued progress through 2022, we remain committed to developing and delivering life-changing medicines to cancer patients. We would be now happy to open the call for questions.

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. The first question comes from John Miller at Epicor. John, go ahead with your question.

Hi, this is Jessica Hui on for John. Two questions for me. My first question is, what exactly is included in the cash runway guidance that gets you to mid-2024? Besides the $6 million upfront payment from Gilead, the PR mentioned projected and anticipated future payments from partners and product revenues, and those are part of the anticipated cash runway. Can you give us an idea of what payments these include? and what potential milestones can further extend the cash runway to at least the end of 2024? For example, that $60 million milestone payment from Prevention Bio, is that already baked in? Or the data update that you're expecting for their PD-1 CLA-4 in 1Q23, can that lead to something? And then my second question is, the PR also mentioned that Gilead may elect to exercise its option to license the program at quote unquote predefined decision points. Can you give us a little bit more color on what these decision points entail? Like is it fair to say that the phase one data would be one of these points? Does Gilead have a clock on their choice? Thank you.

All right, stand by for our second question.

Our next question comes from Jonathan Chang of SVB Securities. Jonathan, go ahead with your question.

Hi, guys. Thanks for taking my questions. First question, congrats on the recent Gilead partnership. I'm curious to hear your thoughts on business development broadly. regarding other pipeline assets post this deal.