Good afternoon. We will begin the MacroGenics’ 2016 Fourth Quarter and Full Year Conference Call in just a moment. All participants are in a listen-only mode at the moment, and we will conduct a question-and-answer session at the conclusion of the call. At this point, I'd like to turn the call over to Jim Karrels, Senior Vice President and Chief Financial Officer of MacroGenics. You may begin.

Thank you, Operator. Good afternoon and welcome to MacroGenics’ conference call to discuss our fourth quarter and full year 2016 financial and operational results. For anyone who has not had the chance to review our results, we issued a press release this afternoon outlining today’s announcements, which is available under the Investors tab on our website at www.macrogenics.com. You can also listen to this conference call via webcast on our website; 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. Now, I would like to turn the call over to Dr. Scott Koenig, MacroGenics’ President and Chief Executive Officer.

Thank you, Jim. I would like to welcome everyone participating via conference call and webcast today. Thank you for joining us. Following our standard format to this call, I'll take a few moments to review MacroGenics progress before handling the call back to Jim who will walk us through our 2016 financial results. Then, in the time available, I'll provide more detail on some of MacroGenics development programs. 2016 was a significant year for MacroGenics. We continue to recruit metastatic breast cancer patients in our Phase 3 SOPHIA study initiated our Phase 2 study in advanced HER2-positive gastric cancer of our Fc-optimized HER2 antibody in combination with an anti-PD-1 molecule and advance our franchise of B7-H3 targeted therapeutics as well as our several DART-based oncology product candidates. During the year, we initiated a Phase 1 study of our own anti-PD-1 antibody and also show that our autoimmune-based DART molecule achieved the anticipated biological effects in the Phase 1 study in healthy voluntaries. Moreover and I think this is a key takeaway for the investment community today, as illustrated in our R&D Day in December, each of our proprietary oncology programs in the clinic has shown initial evidence of the anti-tumor activity. Clearly, this is very encouraging and dragged us to continue to advance our product candidates and future development plans. The progress of MacroGenics diverse pipeline of clinical asset is attributable to our strategy of maximizing the productivity of our antibody engineering platform. Our commitment to develop treatment options for patients suffering from a wide range of diseases is stronger than ever, and we believe we are moving in the right direction. I'll provide more detail on these clinical developments and our overall pipeline shortly, but now I'll turn the call over Jim to give an overview of our financial results for 2016.

Thank you, Scott. This afternoon we reported financial results generally in line with expectations. As described in our release, MacroGenics had research and development expenses of $122.1 million for the year ended December 31, 2016, compared to $98.3 million for the year ended December 31, 2015. This increase was primarily due to increased activity in our preclinical immune checkpoint programs, the initiation of two Phase 1 clinical trials, combining enoblituzumab with other compounds, the initiation of the Phase 1 clinical trial of MGA012 and the addition of the NIAID funded MGD014 contract. These increases were partially offset by decreased manufacturing costs for margetuximab. We had general and administrative expenses of $29.8 million for the year ended December 31, 2016, compared to $22.8 million for the year ended December 31, 2015. This increase was primarily due to increased staff recruiting costs, stock-based compensation expense as well as patent expense. We recorded total revenue consisting primarily of revenues from collaborative agreements of $91.9 million for the year ended December 31, 2016, compared to $100.9 million for the year ended December 31, 2015. Revenue from collaborative agreements includes the recognition of differed revenue from payment received in previous period as well as payments received during the year. For the year ended December 31, 2016, we had a net loss of $58.5 million compared to a net loss of $20.1 for the year ended December 31, 2015. Our cash, cash equivalents and marketable securities as of December 31, 2016, were $285 million, which includes 8 million of non-current marketable securities. The $285 million compared with $339 million as of December 31, 2015. Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities, combined with anticipated funding under our current strategic collaborations should fund the Company's operations through late 2018. And now, I'll hand the call back to Scott.

Thank you, Jim. MacroGenics ended 2016 with nine programs in clinical development including our proprietary programs and those in development with our collaborators Janssen and Pfizer. It's been a commitment of MacroGenics to submit an IND or Investigational New Drug application for at least one new drug candidate each year. I'm pleased to say that we've met this goal in 2016 and extending this commitment we expect to submit two more INDs for new molecular entities in 2017. As a brief review and as many of you know, each of the candidates in MacroGenics pipeline is derived from the Company's antibody engineering platform including our proprietary Fc-optimization and bispecific DART technology. I will now update you on the pipeline as it stands today and provide some guidance on what we expect will be a productive 2017. Our solid margetuximab, a most advanced program and one that is actively enrolling patients in the pivotal Phase 3 SOPHIA study for patients with metastatic HER2-positive breast cancer. In the SOPHIA trial, we're evaluating the efficacy of margetuximab plus chemotherapy as compared to trastuzumab plus chemotherapy following progression after previous HER2 targeted therapy. This study is designed to enroll 530 patients. As of today, we've approximately 185 trial sites activated in both the U.S. and Europe. I would like to note that one of the inclusion criteria for SOPHIA will be changed so that patients will no longer require prior treatment without ado-trastuzumab emtansine or Kadcyla. The study management was based on the analysis of both evolving clinical data in breast cancer and the prescribing patent landscape of currently marketed anti-HER2 agents. While the U.S. and EU regulatory authorities have agreed to this proposed participle change and is expected to become effective with SOPHIA, after review by National Regulatory Authorities and Institutional Review Board…

[Operator Instructions] Our first question comes from Yigal Nochomovitz with Citi. Yigal, your line is open. You may ask your question.

This is [indiscernible] for Yigal. Following on AACR some presentation, it looks like they're going to present two abstracts following the new target AA AMI. Can you talk about your new target and how it's going to be differentiated from other onco targets? Thank you.

As you noted, we've submitted a number of abstracts for the upcoming AACR presentation, and one of these is targeting a protein called ADAM9, which we've identified as over expressed on a number of tumor sites -- tumor types. And we've been working on looking at the utility of targeting this with an antibody drug conjugate, and we'll be presenting some data in collaboration with investigators at ImmunoGen showing activity in preclinical models. So, we're excited about the prospects of this preclinical data to date.

And one more question, so on clinical trial on the DART, the Phase 1 trial for MGD011, you're talking your license to change it. The trial is still expanded I think last September. Do you have any update on the status of the trial?

Yes, as I've noted on previous calls with regard to update on MGD011, the CD19 x CD3 DART molecule, this is the responsibility of Janssen and we're not -- we're precluded from presenting any update. We do have updates with them on a timely basis, and they have indicated in our last conversation that they're continuing the dose escalation in all solid B-cell malignancies and have planned for a future study in combination of Imbruvica. So, all -- as we know of today that seems to be consistent.

Our next question comes from Michael Schmidt with Leerink.

Hi, this is Jonathan Chang stepping in for Michael. Thanks for taking my questions. First, can you and you've touched on this earlier, expand on the rationale behind expanding the SOPHIA eligible patient population to include Kadcyla naïve patients and can we expect an interim futility analysis in late 2017?

As I noted earlier on the call, we had been examining the use of Kadcyla in various lines of therapy and patients with metastatic breast cancer, and we've seen both in the U.S. and Europe that there is a substantial number of patients that are not receiving Kadcyla in the prescribed second line therapy. And with this data, we approached both the FDA and EMA, with this information with the idea that we would have an opportunity to be able to treat a larger population that could benefit from margetuximab. And when they review the data, they agreed with our conclusion and thus permitting us to release the requirement for patients to be treated Kadcyla in the study.

Any color on the interim futility analysis?

Yes, so with regard to the futility analysis, as I said previously, this is an event driven analysis, and we still believe that we will be ready to conduct the futility by the end of 2017.

Great. And then onto B7-H3, can you talk about how we are thinking about prioritizing your different B7-H3 programs? And how are you thinking about B7-H3 development strategy going forward?

As you know, we have a strong commitment to franchise around B7-H3. We are very encouraged by the data we seen today with enoblituzumab showing single agent activity in a number of tumors including those that has been on previous checkpoint. Much of our focus right now as we noted is looking at the combination with other checkpoint inhibitors in particularly anti-PD1. And as I noted earlier, we expect substantial number of these patients to be enrolled in of up to four tumor types this year. And so for enoblituzumab, we will wait to see the data to determine in which particular tumor type to pursue in next clinical trials and the design of that; and clearly, if we do see activity for instances patients that have been on previous checkpoint that are now responding at the population we can address, but right now it’s still too early to make that decision. With regard to MGD009, we were extremely encouraged while still in dose escalation that we were seeing evidence of any tumor activity in at 10 microgram for acute dosing level. And so what we have decided to do is as we continues to dose escalate the drug, to do a small dose expansion at the 10 microgram per acute dosing, and we are now recruiting patients at that dosing level. We expect, as I noted earlier, probably around midyear to identify the specific dose for MGD009. And at that point, we will be moving into six different tumor types for further evaluation. So, our expectation towards the end of 2017 and into 2018, we should be able to make some key decisions about next steps for both enoblituzumab as well as MGD009. And then finally, with regard to our B7-H3 ADC, which again is a completely different mechanism of action. We will complete the toxicology studies this year; and if they are successful, we plan to move forward into clinical trials next year. And obviously that’s too early to determine the pathway to that molecule.

Great and maybe just one last one. Are you able to provide any guidance at this time on when we might see more data from the various piece of B7-H3 study?

Again, the opportunities we believe will arrive in the second half of '17 and in '18, it will be dictated obviously the timing for submissions of abstract to the various scientific meaning. I would say as I have outlined things right now, with expectations of the dose escalation for MGD09 and determining that dose, we may have an opportunity late this year to present that initial data obviously not on any expansion studies. The same thing hold for the enoblituzumab combination studies with PD-1. We will see how the rate of enrollment coming during the course of this year in the four different tumor types that we are exploring. We are not going to wait for all of four to consumer types to provide opportunities update in the investment community on this when we have completed enrollment, and we have an idea about the activity we will provide that. And again that could be in late '17 or in first part of 2018.

Thank you. Our next question comes from Stephen Willey with Stifel.

Hi, this is Philomena Kamya on for Stephen Willey. Thanks for taking my questions and congratulations on the progress. My question pertains to the MGD006 program flotetuzumab. Would you please perhaps give us an update on the supportive care initiatives that were outlined during the R&D Day with respect to management of cytokine release syndrome, how these going so far?

Philomena, thank you very much for the question. Yes, we've been very encouraged by the progress we have made over the last few months on MGD006, as outlined this first DART molecule that went into the clinic. We wanted to address particularly with the initial dosing of this drug, some higher grades of cytokine release that we were observing in these subject. And as you are -- as we noted on our R&D Day, we adopted two-step approach for dose escalation where we had a leading dose of initially 30 nano grams per kg for three days then we increased that to 100 nano grams per kg for four days during the first week of enrollment; and then we were analyzing subsequent dosing over the course of the next few weeks either as a four-day on three-day off schedule or continuous with dosing for 21 days, and then flipping back to the four days on three days off. What I can say is that the strategy seems to be paying off, patients seems to be tolerating the approach quite nicely. We do intervene as necessary for supportive care with anti-cytokines such as giving support with [Toci] and low dose steroids. And we've been able to continue our plan for dose escalation, and we're in the middle of that right now. And as we indicated at our R&D Day, our expectation is that by latter half of this year we hope to establish the dose for this drug and then talk about next plans for expansion in AML and potentially other indications as well.

So, is it my understanding that there's a position for the cytokine suppression to be in and outpatient setting?

So, the answer is that currently we had patients are inpatient initially during that first cycle, but then quickly move over to an outpatient setting.

Our next question comes from David Lebowitz with Morgan Stanley.

I was going to ask about MGD010. I was just curious as to what the status of the program after Takeda had to pull out last year? And what are our next steps?

As we updated at our R&D Day and follow-on from the data we presented at EULAR, last June, we were very encouraged by the activity we're seeing in our normal volunteer dose escalation study. The subjects tolerated the drug quite nicely with no Grade 3s, and very minor Grade 1/2 side effect. And what was very compelling was the biological effects we were observing, which included no loss of circulating B-cells with very profound evidence of biological activity, as noted including the inhibition of B-cell signaling, the depression in a dose dependent manner of IGM level, which were observed as long as 56 days after the single dose, and a down-regulation of surface associated IgD and IgG as well as CD40. We added on additional cohort where we gave MGD010 in combination with active vaccination, in this case to test antigen for Hepatitis A, and showed in a subset of those subjects in December, a profound reduction in induction of antibiotic specific responses. We expect -- we've completed that trial now. We're finishing the analysis of the data and expect to provide an update on the reps of that cohort in the first half of this year, and then making some decisions on how to best develop this in the autoimmune setting. As I noted before we've a number of parties that have approached us given the robustness of the activity, we're evaluating these opportunities individually and we’ll make a decision probably sometime by a mid this year, and we will either decide to continue to develop this ourselves in autoimmune setting or we’ll alternatively look for partnership. So, that’s sort of the progress today.

Your next question comes from Mark Breidenbach with Roth Capital Partners.

First of all, let me just focus on a couple of the DART programs specifically MGD006 and MGD007. Is the intention to present the dose ranging results independently of the dose expansion cohorts, so there is possibility maybe you’re seeing additional clinical data later this year for both programs?

Obviously, we’d like to provide a data as soon as it’s available. We're still doing the dose escalation for 006 and 007. Just to give you a little bit more granularity, I've already described our progress with 006; and as I said our expectation is, we hope to establish the dose by the end of the year for 006. But then with timing of abstract and presentation is possibility being presented by the end of this year, but it may last [Indiscernible] into early ’18. So, I can’t be more definitive at this point until we actually have the data in hand. With regard to 007, as we pointed in R&D Day, again, we believe that we have developed a strategy for mitigating some of the on target effects on the normal GI tract with expression of the gpA33 antigen in the colon and small bowel. We have shown evidence initially at R&D Day of a single patient that using the strategy that had evidenced of the PR. And so, what we have decided to do is sort of a twofold strategy one where we're expanding and we plan to recruit additional patients at the 1 microgram per kg dosing. This could be as many as up to 20 patients; again patients are coming into the trial at that dose. And simultaneously, we are also exploring a small step up of dosing with the drug in a separate population; and so we hope that by the latter part this year, we would have identified a specific dose, obviously look at the evidence of biological activity clinically, and then make the decision about moving forward. And at that time again, we would submit to a scientific forum to present the data, this could be a latest year or early next year, depending on the appropriate forum.

Okay, fair enough. If I can ask a follow-up question, I am thinking back to experience of bispecifics and CAR T therapies in ALL. We've seen that CRS patients who get some level of CRS tend to have or often have positive clinical outcome, at least in liquid tumors. Would you expect the same to hold up in solid tumor indication like colorectal?

So, again the colorectal story is somewhat different than the straight CRS effect. Remember, as I pointed out, the side effect profile we are seeing with MGD007 is a consequence of the target being expressed on normal tissues. And what we have shown quite nicely at our R&D Day is that in subject that had these acute side effect profiles which are manifested by GI effects nausea, vomiting, diarrhea primarily, that with evidenced by biopsy from small intestine, we found the localization at the side of GPA33 expression of T cells at those sides. So, we believe that this is clearly on target effect. There may be local cytokine production there that leads to this side effect profile, but it isn't as now the intensity of what was described in the CAR T cell with ALL where those patients were observing very profound cytokine release syndrome. This was more GI associated toxicity.

Our next question comes from Peter Lawson with Suntrust.

Jim, just a quick question around cash. How should we think about cash flows in 2017? And particularly how should we think about the R&D growth this year as it kind of came to what we saw last year and it's been 20% growth?

Thanks for your question Peter. As I mentioned during the call, we do expect our cash takes us into late 2018. We've not provided a specific guidance regarding our level of spends in '17; although consistent with our past several years, we do anticipate that our burn will increase. So, we should have an increase overall what we as it required for 2016 and it'd be my guess.

And Scott, I may have missed this, maybe manufacturing standard low how frustrating you when you [indiscernible]?

Yes. So, we have the current venue for manufacturing where all our clinical molecule is at our pilot plant in Rockville, Maryland. Except for now the Phase 3 material, which we are -- for the SOPHIA trial, for margetuximab, which we are -- we have engaged a contract manufacturer. We have made last of enoblituzumab both at the contract manufacturer as well as at our pilot plant. As I noted previously, we are in the midst of a expansion of our manufacturing capabilities at our site in Rockville, Maryland at our current headquarter facility and expect that construction to be completed by close the year and then. And then, the equipment obviously needs to be validated which we expect would take sort of middle of 2018, at which time we would have capacity up to 10,000 liter which would be commercial scale. So, we anticipate that could be either the source for most of our next molecules that would go towards commercialization and then could be the backup site for the contract manufacturer for margetuximab.

And then Scott, so around small molecule [IO] inhibitors wants to keep in target IO molecules at the same time, just how you're thinking around that and your developments?

Could you repeat, was that about small molecule use on IO?

Yes, small molecule on IO inhibitors they can target it to IO molecules at the same time. So kind of can give thoughts much smaller?

So, obviously, there're many ways of approaching combinations stories for IO, and there are number of companies that I think in the name or not necessarily looking at too small molecules as often and you know the list is well of a large molecule and small molecules that are being combined together. And we don't exclude the possibility that those opportunities that are out there, I would just say that our experience to-date with our DART platform has been extremely encouraging from the preclinical data we've now generated with our PD-1 x LAG-3. We presented data if you recall at our R&D Day for PD-1 x CTLA-4 looking at two different constructs. We've looked at combinations targeting CD137 and specific antigen. So, we think that we're not excluding the opportunities in small molecule combination, but we think that we have a very good strategy taking advantage of the solitary features of the bispecific DART and Trident platform.

Our next question comes from Boris Peaker with Cowen.

Thanks, this is actually Joe on for Boris. Thanks for taking the question. Just one quick one following upon the amendments to SOPHIA, you mentioned that there's a substantial number of patients who are not receiving Kadcyla in the metastatic setting. I wonder if you're aware of what's driving that decision, and if it's something that’s unique to that patient population?

So, we don't know the full answer for the reasoning behind why the use of this drug is not necessarily following the label indication, but as I noted we've observed that many of the patients are being treated at later lines of therapy with Kadcyla both in the U.S. and in Europe. And whether this is -- they’re seeing other benefits of intervening therapies or they're just holding out, it’s not perfectly clear. But we think that this then does provide an opportunity for us to address a very large significant population after they progress on flotetuzumab and trastuzumab. So, we felt that this was an opportunity for these patients to benefit from our drug.

Okay, maybe just long quick follow-up. You mentioned there are I think 100 plus sites that are up in active for SOPHIA. Is that all planned sites or are you expecting more to open up in 2017?

Very good question, so we have -- as we noted, we had about 185 sites open. We have had interest from additional sites and we are actually exploring adding on some additional sites both in the U.S. and in Europe. So, those are being evaluated now and all likely to come on board obviously this year.

[Operator Instructions] And I am not showing any further questions at this time. I would like to turn the call back over to our host.

I just like to thank everyone again for joining us and let you know that we look forward to updating you on each of the program that we discussed today, as we continue to make progress throughout the year. Have a great rest of the day.

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day.