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Edited Transcript of XNCR.OQ earnings conference call or presentation 5-Nov-20 9:30pm GMT

·39 min read

Q3 2020 Xencor Inc Earnings Call Monrovia Nov 7, 2020 (Thomson StreetEvents) -- Edited Transcript of Xencor Inc earnings conference call or presentation Thursday, November 5, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Allen S. Yang Xencor, Inc. - Senior VP & Chief Medical Officer * Bassil I. Dahiyat Xencor, Inc. - Co-Founder, CEO, President & Director * Charles Liles Xencor, Inc. - Associate Director and Head of Corporate Communications & IR * John J. Kuch Xencor, Inc. - Senior VP & CFO ================================================================================ Conference Call Participants ================================================================================ * Arlinda Anna Lee Canaccord Genuity Corp., Research Division - Analyst * Edward Andrew Tenthoff Piper Sandler & Co., Research Division - MD & Senior Research Analyst * Etzer Darout Guggenheim Securities, LLC, Research Division - Senior Analyst * Kar-Bow Fung Mizuho Securities USA LLC, Research Division - Research Associate * Kaveri Pohlman BTIG, LLC, Research Division - Associate * Wei Ji Chang SVB Leerink LLC, Research Division - MD of Emerging Oncology & Senior Research Analyst * Zhiqiang Shu Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 Xencor Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Charles Liles, Head of Investor Relations. Thank you, and please go ahead, sir. -------------------------------------------------------------------------------- Charles Liles, Xencor, Inc. - Associate Director and Head of Corporate Communications & IR [2] -------------------------------------------------------------------------------- Thank you, and good afternoon. Earlier today, we issued a press release, which outlines the topics we plan to discuss today. The press release is available at www.xencor.com. Today on our call, Bassil Dahiyat, President and Chief Executive Officer, will provide updates regarding COVID-19 impacts as well as our partnerships; Allen Yang, Chief Medical Officer, will review updates throughout our clinical portfolio; and John Kuch, Chief Financial Officer, will review financial results. And then we'll open up the call for your questions. Before we begin, I would like to remind you that during the course of this conference call, Xencor management may make forward-looking statements, including statements regarding the company's future financial and operating results, future market conditions, the plans and objectives of management for future operations, the company's partnering efforts, capital requirements, future product offerings, research and development programs and the impacts of the COVID-19 pandemic on these topics. These forward-looking statements are not historical facts, but rather are based on our current expectations and beliefs and are based on information currently available to us. The outcome of the events described in these forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to, those factors contained in the Risk Factors section of our most recently filed annual report on Form 10-K and quarterly report on Form 10-Q. With that, let me pass the call over to Bassil. -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [3] -------------------------------------------------------------------------------- Thanks, Charles, and good afternoon, everyone. Xencor's approach to creating antibody and cytokine therapeutics is centered around our XmAb protein engineering platform. By making small changes to an antibody's structure, specifically in its Fc domain, we can improve its natural functions and performance and create new mechanisms of action. The plug-and-play nature of our suite of XmAb Fc domains allows us to engineer nearly any antibody to have improved activity, longer half-life or bispecific structure. This flexibility and portability enable us to take multiple simultaneous shots on goal in the clinic. And the proof-of-concept data we generate will guide which programs we independently advance, which we will partner and which we will terminate. We're focusing our R&D on the expansion and use of our XmAb bispecific platform to create antibodies that bind 2 or more different targets simultaneously and also to engineer cytokines with structures optimized for particular therapeutic use. We're currently running 6 Phase I clinical studies evaluating such XmAb bispecific antibodies. And we continue to explore novel mechanism of action for oncology treatments with our XmAb bispecific platform. And we're presenting 3 preclinical programs at the Society for Immunotherapy of Cancer Meeting, or SITC, meeting next week. Our B7-H3 x CD28 bispecific is a preclinical program that targets a T cell costimulatory signal via CD28 to the pan-tumor target B7-H3. This creates an opportunity to enhance treatment in a wide range of tumor types with T cell-targeted therapies like checkpoint inhibitors and CD3 engagers. We're also presenting our PD-1 targeted TGF-beta receptor blocker for T cell activation and our potency engineered IL-12 program, both of which are engineered to enhance tolerability and duration of action while providing highly active immune stimulation in tumors. Now before we move on to our clinical portfolio today, I'd like to provide an update on the impact of COVID-19 pandemic on our operations. The pandemic did not significantly disrupt patient enrollment in our 6 ongoing clinical studies during the third quarter. Manufacturers that provide our drug supply, however, notified us that they're currently experiencing critical shortages of material used in their manufacturing processes. We have sufficient supplies of drug material to continue conducting our ongoing studies without interruption. However, we expect a small delay in the development time lines for the preclinical XmAb30819 program, our ENPP3 x CD3 bispecific for renal cell carcinoma. Time lines for advancing additional early-stage programs into the clinic and for our ongoing clinical programs could be affected if the supply interruption goes longer than we currently estimate. The autoimmune IL-2 Fc program, XmAb27564, however, is not affected by this, and the initiation of a Phase I study is on track for early 2021. We'll continue to update you on manufacturing impacts from COVID if and when they emerge. Within the company, we're maintaining a requirement for nonlaboratory employees to work remotely. But we're also continuing our on-site measures to protect the health and safety of our employees and of our community. With that, Allen Yang, our Chief Medical Officer, will review updates to the clinical portfolio. Allen? -------------------------------------------------------------------------------- Allen S. Yang, Xencor, Inc. - Senior VP & Chief Medical Officer [4] -------------------------------------------------------------------------------- Thanks, Bassil. Yesterday, the American Society of Hematology published an abstract containing updated data from our Phase I study of vibecotamab in patients with relapsed and refractory acute myeloid leukemia, which we will present in December. Vibecotamab is a CD123 x CD3 T cell engager, one in a class of tumor-targeted bispecific antibodies that contain both the tumor antigen binding domain, in this case CD123 and a cytotoxic T cell binding domain, such as CD3. CD3 bispecifics activate T cells at the site of the tumor in order to potentially kill malignant cells. Data emerging from the study suggest that the patients with AML having low baseline disease burden and specific T cell signatures may be more likely to respond to treatment with vibecotamab. The primary toxicity, cytokine release syndrome, is generally mild to moderate in severity when observed and is manageable. We continue to optimize the dosing regimen in this study. Along with our partner, Novartis, we are exploring opportunities to develop vibecotamab in patients with lower baseline leukemic disease burden for whom an intermittently dosed CD123 targeting antibody could be a needed therapeutic option. Next, a Phase I study of plamotamab, our CD20 x CD3 bispecific antibody, continues to enroll patients with non-Hodgkin's lymphoma and chronic lymphocytic leukemia, with planned expansion cohorts expected to open in 2021. In addition, operational preparations are underway for a Phase II monotherapy trial in diffuse large B-cell lymphoma and for a Phase II combination therapy study as well. Our third clinical stage CD3 bispecific antibody is tidutamab, which targets somatostatin receptor 2. Last month, we presented initial dose escalation data from the ongoing Phase I study in patients with neuroendocrine tumors, or NETs. Tidutamab was generally well tolerated at the recommended dose identified for the expansion portion of the study at 0.3 micrograms per kilogram priming dose and a subsequent 1.0 microgram per kilogram repeat dose. Peripheral blood biomarkers indicated tidutamab induced acute and sustained T cell activation. Dose-dependent increases in proliferation and activation markers of CD positive T cells -- CD8-positive T cells were observed, which is consistent with tidutamab's mechanism of action. In 14 patients where we described clinical activity, the best of overall response was stable disease, and the median duration of treatment was approximately 7 months. We believe completion of enrollment and longer follow-up are required to evaluate progression-free survival and the clinical utility of tidutamab for patients with neuroendocrine tumors. Early next year, we plan to initiate an additional clinical study in patients with Merkel cell carcinoma and small cell lung cancer, which are somatostatin 2 receptor expressing tumor types known to be responsive to immunotherapy. In addition to these CD3 bispecifics, we have developed another suite of bispecific antibodies, where the binding affinities are tuned for selective engagement of T cells. And we call these our tumor microenvironment activators. Selecting for dual checkpoint expression, for example, distinguishes these from combination therapy and most checkpoint inhibitors. T cells that have multiple checkpoint expression are typically found more in the tumor microenvironment than in the periphery. Our design of this class seeks to more effectively reactivate these tumor-reactive T cells than existing therapies and is meant to potentially drive improved efficacy and tolerability compared to the dosing of separate anti-CTLA-4 and anti-PD-1 antibodies in combination. In mid-October, after abstracts for the SITC annual meeting were temporarily available to the public, we issued an 8-K with an abstract containing data from our ongoing Phase I study evaluating XmAb20717, a dual PD-1, CTLA-4 checkpoint-inhibiting bispecific antibody in patients with advanced solid tumors. The SITC meeting is next week, so we won't review the abstract in its entirety now. In summary though, XmAb20717 continue to be well tolerated in heavily pretreated patients, and we are encouraged by the anti-tumor activity observed in patients with various types of advanced solid tumors at the 10 milligram per kilogram dose level. The study is currently enrolling patients with renal cell carcinoma to expansion cohort and continues to enroll patients with additional dose escalation cohort starting at 15 milligrams per kilogram as we did not reach the maximum tolerated dose. Expansion cohorts with melanoma, advanced nonsmall cell lung cancer, prostate cancer and other cancers without approved checkpoint therapies are fully enrolled. The first study is evaluating 2 other clinical stage tumor microenvironment activators, XmAb22841 and XmAb23104, continue to enroll and dose patients with advanced solid tumors. Finally, we're developing a suite of cytokines, which are immune-signaling proteins we have engineered with the XmAb bispecific Fc domains. We also tune the potency of these cytokines to improve their properties and make them more drug-like, for example, by slowing their receptor-mediate clearance and extending their circulating half-life. Our first cytokine program and lead in our collaboration with Genentech is the IL-15 fused to its alpha receptor and our bispecific Fc domain, which is XmAb24306 or RG6323. It targets the expansion and activation of T cells and natural killer cells and is not biased towards regulatory T cells like its cousin, the cytokine IL-2. Genentech is currently enrolling patients in a Phase I study evaluating XmAb24306 initially as a monotherapy and then in combination with atezolizumab, their anti-PD-L1 antibody. We are planning to explore a number of our own combination studies after safety and dose in the ongoing Phase I has been established. Our second cytokine candidate, XmAb27564 is an IL-2 Fc fusion protein that we are planning to develop for patients with autoimmune diseases. It is engineered to selectively activate regulatory T cells. And similar to the IL-15 program, we reduced its potency and incorporated our Xtend technology in order for it to have more drug-like properties. As Bassil mentioned, we are on track to start dosing healthy volunteers in early 2021. We look forward to keeping you informed about all our clinical programs as they progress. Bassil? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [5] -------------------------------------------------------------------------------- Thanks, Allen. So now on to partnerships. A core part of our business is to complement our internal development portfolio with partnering. These partnerships generate payments from the licensing of XmAb technologies, the clinical advancement of XmAb candidates as well as royalties from sales of approved products. There were no COVID-19 impacts to partnering revenue during the third quarter, but we will continue to monitor potential impacts, of course. Now our many partnerships really highlight the plug-and-play nature of the suite of XmAb Fc domains that we've created. With small changes to the Fc structure that we've engineered, we can, for nearly any antibody, improve its activity, half-life or readily create stable multivalent structures. We have 12 ongoing partnerships for XmAb technology, which have resulted in 2 marketed products: Alexion's ULTOMIRIS for rare blood disorders and now MorphoSys' Monjuvi or tafasitamab as the first second-line treatment for patients with an aggressive form of lymphoma, diffuse large B-cell lymphoma. Unlike ULTOMIRIS, where we just licensed the Xtend Fc technology to Alexion, we created tafasitamab, which MorphoSys licensed from us in 2010 and also initiated its clinical development running the Phase I study. It's a CD19 antibody engineered with our XmAb cytotoxic Fc domain. MorphoSys has guided the decision on tafasitamab's European Marketing Authorization application should be in the second half of 2021. The plug-and-play nature of our XmAb technologies enables partners to advance their programs with very few resources from us, and we selectively license access to our XmAb technologies. We recently entered into an agreement with Omeros Corporation, providing them a nonexclusive license to our Xtend Fc technology. As is typical for these types of agreements, Omeros is responsible for all development and commercialization activities for all candidates. We received an upfront payment of $5 million and are eligible to receive milestone payments and royalties. Finally, I just wanted to touch on progress our partners are making in advancing antibody therapies that incorporate Xtend Fc domains for the treatment of patients with COVID-19, Alexion and Vir. Alexion is conducting a randomized controlled Phase III study of ULTOMIRIS in hospitalized patients with advanced COVID. Vir has nonexclusive access to our Xtend Fc technology to extend the half-lives of VIR-7831 and VIR-7832, both novel antibodies that they're investigating as potential treatments for COVID-19. Vir has commenced a Phase III clinical study for VIR-7831 for the early treatment of COVID-19 patients who are at high risk of hospitalization, and they plan to initiate a clinical city of VIR-7832 in the near future. Our partnership with Vir additionally demonstrates the broad applicability of Xtend across viral infectious disease as their other antibody programs, VIR-3434 hepatitis B virus infection and VIR-2482 in influenza A, are both advancing through early-stage clinical development. Now I'll hand the call over to John Kuch, our CFO, who will review the third quarter and first 9-month financial results. John? -------------------------------------------------------------------------------- John J. Kuch, Xencor, Inc. - Senior VP & CFO [6] -------------------------------------------------------------------------------- Thank you, Bassil. During the third quarter, Xencor's portfolio of partnerships, collaborations and licensing arrangements continue to generate strong cash flow, which help offset the growing investment in our pipeline of clinical and early-stage drug candidates. In this afternoon's press release, we reported cash, cash equivalents and marketable securities totaling $582.9 million as of September 30, 2020, compared to $601.3 million at December 31, 2019. The decrease reflects cash used to fund operating activities in the first 9 months of 2020, offset by total proceeds of $89.1 million received in upfront payments, milestone payments and royalties from licensing agreements. Total revenue for the third quarter ended September 30, 2020, was $35.4 million compared to $21.8 million for the same period in 2019. Revenues in the third quarter included milestone revenue from MorphoSys related to approval of Monjuvi, licensing revenue from Omeros and royalty revenue from Alexion compared to revenues from the same period in 2019, which were -- primarily reflects milestone revenue from the Alexion, Amgen and Novartis collaborations. Total revenue for the 9 months ended September 30, 2020, was $80.8 million compared to $153.2 million for the same period in 2019. Revenues for the 9-month period in 2020 include royalty revenue from Alexion, milestone revenue from MorphoSys and licensing revenue from Gilead, Aimmune and Omeros compared to licensing and collaboration revenue from Genentech and Astellas and milestone revenue from Alexion, Amgen, Novartis collaborations in 2019. Research and development expenditures for the third quarter ended September 30, 2020, were $44.5 million compared to $29.8 million for the same period in 2019. Total R&D expenses for the 9 months ended September 30, 2020, were $121.9 million compared to $91.3 million for the same period in 2019. Additional spending on R&D for the third quarter and first 9 months of 2020 over amounts for the same period in 2019 is primarily due to increased spending on our clinical programs, including plamotamab, XmAb20717 and our IL-2 Fc cytokine development program, XmAb27564. General and administrative expenses for the third quarter ended September 30, 2020, were $7.6 million compared to $6.3 million in the same period in 2019. Total G&A expenses for the 9 months ended September 30, 2020, were $22.1 million compared to $17.5 million for the same period in 2019. Additional spending on G&A for the third quarter and the first 9 months of 2020 over amounts for the same periods in 2019 is primarily due to increased compensation costs related to additional general and administrative staffing and spending on intellectual property, including patents and licensing costs. Noncash, stock-based compensation expense for the 9 months ended September 30, 2020, was $23.1 million compared to $24.7 million for the same period in 2019. Net loss for the third quarter ended September 30, 2020, was $12.6 million or $0.22 on a fully diluted per share basis compared to a net loss of $10.2 million or $0.18 on a fully diluted per share basis for the same period in 2019. The higher net loss reported for the third quarter of 2020 compared to the same period in 2019 is primarily due to increased R&D spending over increased revenue earned during the period. For the 9 months ended September 30, 2020, net loss was $55.6 million or $0.97 on a fully diluted per share basis compared to net income of $53.8 million or $0.92 on a fully diluted per share basis for the same period in 2019. The net loss reported for the 9 months ended September 30, 2020, compared to net income reported for same period in 2019 is primarily due to higher collaboration licensing revenue reported in 2019 compared to 2020 and increased spending on R&D programs in 2020 over 2019 amounts. The total shares outstanding were 57.4 million as of September 30, 2020, compared to 56.7 million as of September 30, 2019. Based on current operating plans, projected spending and expected proceeds from our partnerships and collaborations, we expect to have cash to fund research and development programs and operations into 2024 and to end 2020 with between $525 million and $575 million in cash, cash equivalents and marketable securities. With that, we would now like to open up the call for your questions. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from Ted Tenthoff of Piper Sandler. -------------------------------------------------------------------------------- Edward Andrew Tenthoff, Piper Sandler & Co., Research Division - MD & Senior Research Analyst [2] -------------------------------------------------------------------------------- A nice update. I wanted to ask with respect to 14045 on your CD123 for AML. Definitely I was intrigued to see the clean safety and some responses there. Maybe you can go into a little bit more detail in terms of what next steps might be? And is there the potential to use that in combination with other agents? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [3] -------------------------------------------------------------------------------- Thanks, Ted. I'll just state at the outset, of course, we have some restrictions because of our ongoing partnership with Novartis around 14045 about how much we can say. I don't know, Allen, do you want to comment on the population? -------------------------------------------------------------------------------- Allen S. Yang, Xencor, Inc. - Senior VP & Chief Medical Officer [4] -------------------------------------------------------------------------------- Yes, I have to be cautious here. But it was kind of an interesting scientific observation that we found more activity in patients with lower burdens of disease. And there are specific populations in people with myeloid malignancies that will have lower burdens of disease. Ted, I'm sorry, I can't say more at this time, but I think it's fairly obvious where you could go with this. -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [5] -------------------------------------------------------------------------------- Yes. And regarding combination agents, I think we did observe also a correlation of response to people who express certain T cell markers. So we would potentially explore that as well. But the next step is as Novartis and Xencor advance along the time line to getting the next set of groups of patients enrolled, we'll be able to disclose things more fully. -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- Our next question comes from Peter Lawson of Barclays. -------------------------------------------------------------------------------- Unidentified Analyst, [7] -------------------------------------------------------------------------------- This is Mitchell on for Peter. For vibecotamab, I can appreciate how you can't say so much about positioning. But could you talk about maybe the bar for AML in this population? And how you see that? And then maybe your view on peer CD123, CD3 data in the space? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [8] -------------------------------------------------------------------------------- Yes, without commenting too much on peer data, I think that the populations that are possible with this agent if we focus on low leukemic burden, there's a variety of different bars depending on the specific subpopulation. So it's hard to give you an answer to that, though we do have good ideas about what the bar is without also disclosing, unfortunately, things we can't disclose. -------------------------------------------------------------------------------- Unidentified Analyst, [9] -------------------------------------------------------------------------------- Okay. And then I think you've mentioned potential other indications that the asset could go into. Do you have any ideas of where you might be able to take it beyond the low burden AML? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [10] -------------------------------------------------------------------------------- I would say it's low burden myeloid diseases in general that they are pretty broad expressers of CD123, things from this -- from myeloid lineages, and there's a variety of myeloid malignancies beyond in addition to AML. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- Our next question comes from Gregory Renza of RBC Capital Markets. -------------------------------------------------------------------------------- Unidentified Analyst, [12] -------------------------------------------------------------------------------- This is (inaudible) for Greg. I also have a question on vibecotamab. I was just wondering, in light of the recent publication on another CD3, CD123 bispecific that demonstrated association between specific mutations and complete response in AML. Just wondering what your thoughts are on the retool there? And have you explored or plan to explore the potential in subpopulations of AML patients with specific mutations? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [13] -------------------------------------------------------------------------------- Yes, I don't think specific mutations are how we orient this molecule. CD123 is a pan marker in various myeloid malignancies. And so we think of it from a sort of a broader use perspective, focusing now on where we see lower disease burden. So I don't think there's too much readthrough from there. Does that answer your question? -------------------------------------------------------------------------------- Unidentified Analyst, [14] -------------------------------------------------------------------------------- Yes. Yes, they did. And I have another one if I may. Just wondering what's your level of confidence in the tolerability of 20717 based on the data so far? And how do you think the design of the molecule contribute to its differentiation from other PD-1 CTLA-4 bispecific or combination therapy? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [15] -------------------------------------------------------------------------------- Yes. I'll comment on the design. And then, Allen, maybe you should jump in and talk about our tolerability observations. So the design of the molecule was so that to take advantage of its bispecific structure, it allowed us to design a molecule that requires cooperative binding for -- in order to have strong binding, cooperative binding to both PD-1 and CTLA-4. So there's only one PD-1 binding domain, only one CTLA-4 binding domain. They have fairly modest affinity. So if there's only one target or the other on the cell, they're not going to stick too well, which means they don't have a terribly high affinity T cells that have low expression of one or the other of the markers. You have to have both. If you have both markers, you get nice avid binding. You have like both arms you're able to grab on and pull yourself on to the cell. So that was -- so we would focus our -- the molecules activity at derepressing these checkpoints on specific subpopulations that are typically more overrepresented in tumor microenvironment. That's a double positive checkpoint cell. So that's the distinction of the design, and the hope there was to activate the cells that matter for better tolerability and efficacy profile. So that's the essence of the design. And I think that's distinct from -- certainly from a combination therapy of 2 different antibodies, but it's also distinct from most of the PD-1, CTLA-4 bispecific antibodies that are in early clinical development alongside 20717. Now Allen, maybe you want to touch on the tolerability and the sort of nature of AEs that we see. -------------------------------------------------------------------------------- Allen S. Yang, Xencor, Inc. - Senior VP & Chief Medical Officer [16] -------------------------------------------------------------------------------- Yes. We're very pleased with the tolerability profile to date. As Bassil alluded to the design, it's hard to sort of demonstrate differences in safety in a clinical study, especially a Phase I clinical study from sort of predecessor molecules. But with that said, there seems to be a suggestion that the AE profile is slightly different. We're seeing a lot of rash. We don't tend to see colitis. At the way this study was designed, 10 milligrams -- or milligrams per kilogram was our sort of top dose, we didn't hit an MTD. So we're continuing to dose escalate now at 15 milligrams per kilogram to see if we can dose higher. The idea is if you have better tolerability, you could possibly dose higher and then get more efficacy. But we still have to sort of see what the maximum tolerated dose is. In addition, in the abstract, there was a grade 5 and a grade 4 event, and I can add some color to that. The patient with the grade 5 pancreatitis did have pancreatic involvement and metastases. And the one with the grade 4 myocarditis had nonsmall cell lung cancer that involve the myocardium. So that is sort of something that's in the abstract, but I think this helps to understand the AE profile. We're actually very pleased with the data so far. -------------------------------------------------------------------------------- Operator [17] -------------------------------------------------------------------------------- Our next question comes from Jonathan Chang of SVB Leerink. -------------------------------------------------------------------------------- Wei Ji Chang, SVB Leerink LLC, Research Division - MD of Emerging Oncology & Senior Research Analyst [18] -------------------------------------------------------------------------------- First question, can you provide any more color on the planned plamotamab monotherapy in combination studies in DLBCL? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [19] -------------------------------------------------------------------------------- At this time, all that we're really able to say is that they're Phase II studies that were both in relapsed refractory DLBCL. They'll be looking at specific groups of patients or defined populations within there. But more details will be forthcoming. I think that the strategy, though, has always been that the broad use of a CD20 CD3 is going to depend on the strategy you have for how you combine it with other agents because there's so many agents of different MOAs that work in non-Hodgkin lymphoma. What we've seen for the last 20 years with the success of Rituxan chemo was combining them in the right way gives you the best outcomes. And I think we're going to have a whole generation of these combination regimens to choose from going forward. But a monotherapy in this setting could give you rapid acquisition of data and a much faster-to-market strategy sort of to try to have both prongs going. As I said, we'll have more details forthcoming as the final operational plans and nuances lock into place. -------------------------------------------------------------------------------- Wei Ji Chang, SVB Leerink LLC, Research Division - MD of Emerging Oncology & Senior Research Analyst [20] -------------------------------------------------------------------------------- Got it. And just second question still on plamotamab. When could we see updated data from that program? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [21] -------------------------------------------------------------------------------- We will be presenting updated data next year, and we'll give specifics on the exact timing of that as we get a little closer to the data disclosures. -------------------------------------------------------------------------------- Operator [22] -------------------------------------------------------------------------------- Our next question comes from Tom Shrader of BTIG. -------------------------------------------------------------------------------- Kaveri Pohlman, BTIG, LLC, Research Division - Associate [23] -------------------------------------------------------------------------------- This is Kaveri for Tom. For the autoimmune disorders, I believe 2 different approaches are being evaluated in the clinic. One is to suppress auto CD8 or effector T cells and the other like yours, which is to stimulate or activate T leg. Can you tell us what are the advantages and what type of autoimmune disorders makes sense for your approach? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [24] -------------------------------------------------------------------------------- Yes. I think that it is a bit -- it's sort of suggesting too much to think that anybody really understands the specific cellular etiology and drivers of any particular autoimmune disease. I recall not too many years ago, MS was considered a T cell-driven disease and RA was considered a B-cell antibody-driven disease. And yet of course, you see highly effective MS treatments from B-cell targeting therapies like Ocrevus. And you see highly effective therapies when you look at T cell-blocking therapies in RA like Orencia. So I think simple descriptions of what drives the disease makes it hard to decide our priority what a particular agent or particular mechanism of action, which specific disease types it might benefit. So I think that, that means that we have to look at the factors like population, unmet need, the preclinical models that will help us pick the indications for our autoimmune IL-2 program. But I'm not a true believer that there's detailed enough mechanistic understandings of most -- the vast majority of autoimmune diseases to really dial yourself and like that. -------------------------------------------------------------------------------- Kaveri Pohlman, BTIG, LLC, Research Division - Associate [25] -------------------------------------------------------------------------------- Sure. Right. Yes, that makes sense. And just the last one for me. With all the engineering going around the IL-2 molecules to avoid CD25 binding, which seems to prevent TREC activation and vascular leak syndrome at least preclinically, how is the IL-15 approach different from these novel attenuated IL-2 molecules? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [26] -------------------------------------------------------------------------------- So IL-15, and this is for our oncology program, our XmAb24306 currently in Phase I studies with Genentech, our partner, IL-15 doesn't bind the CD25 or IL-2 alpha receptor. It just doesn't, right? So I think that, that's a critical feature that you might be able to tune away IL-2 alpha receptor binding or eliminate it by pegylating in the right spot. IL-15 starts out at that as a baseline. And so that's, we believe, are just an inherent benefit and a risk reducer. The other factor is the potency reduction we do is dependent on -- or rather was selected to have really the minimal amount of potency you could have and still activate the cells. Since I can't comment on the exact degree of how people attenuated the potency of their molecules, but we think having a single defined composition of matter that has a specifically well-known potency is in advantage over, say, mixtures of different potencies or kinetically variable potencies based on some chemical reaction around the molecule. And having it attached to our Fc domains, with our Xtend technology on it to sort of smooth out those bumps, I think, is also a benefit. And we'll see how that all plays out in the humans in our 24306 program. -------------------------------------------------------------------------------- Operator [27] -------------------------------------------------------------------------------- Our next question comes from Etzer Darout of Guggenheim Securities. -------------------------------------------------------------------------------- Etzer Darout, Guggenheim Securities, LLC, Research Division - Senior Analyst [28] -------------------------------------------------------------------------------- Great. Congrats on the updates here on the progress. Just a couple for me. So first, just went back to clinical trials to remind myself of the other 2 checkpoints, TME bispecifics. And just sort of given sort of we've been dealing with COVID for the better part of the year. Just wondering about the progress of these programs in Phase I and when we could expect to see clinical data from those 2 assets. -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [29] -------------------------------------------------------------------------------- Right. We'd like to guide on when we're going to have clinical data when we're pretty close to getting those disclosures going. Note, those 2 programs started about a year after our 20717 program, which we just had our first data disclosures over the last few months. So they're about a year less mature, having been in the clinic now for something like 15 or 16 months each. I can't say without -- until we get closer and have more definitive information to tell you when we would update those programs. But they are most actively enrolling. They have not had either of them any meaningful impacts from COVID, dose escalation. And they both have dose escalation and expansion cohorts baked into them that we should be able to talk to people about in due course and hopefully not that long, but we can't give any specific guidance right now. -------------------------------------------------------------------------------- Etzer Darout, Guggenheim Securities, LLC, Research Division - Senior Analyst [30] -------------------------------------------------------------------------------- Yes. No, that's helpful. That's helpful. And second question, just wondered, I guess, to the extent that you can speak to this, any major differences in patient characteristics that you can speak to and the upcoming vibecotamab data relative to sort of the previously reported data back in 5-2018? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [31] -------------------------------------------------------------------------------- I guess, within the bounds of the abstract, I don't know, Allen, if there's much we can say about the different -- I'm assuming you're asking about demographics, Etzer? -------------------------------------------------------------------------------- Etzer Darout, Guggenheim Securities, LLC, Research Division - Senior Analyst [32] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Allen S. Yang, Xencor, Inc. - Senior VP & Chief Medical Officer [33] -------------------------------------------------------------------------------- Yes. There haven't been any significant change to the inclusion/exclusion criteria. So in terms of population, shifts of the total patients enrolled, there's probably not going to be changes. -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [34] -------------------------------------------------------------------------------- Yes. So it wouldn't reflect our insights around the kinds of patients in the lower disease burden that were better likelihood of response. It would not reflect that. -------------------------------------------------------------------------------- Operator [35] -------------------------------------------------------------------------------- Our next question comes from Gabriel Fung of Mizuho Securities. -------------------------------------------------------------------------------- Kar-Bow Fung, Mizuho Securities USA LLC, Research Division - Research Associate [36] -------------------------------------------------------------------------------- This is Gabriel on for Mara Goldstein. Just a question here on the IL-15 24306 candidate. How are you thinking about planning on expansion studies -- how are you thinking about the planning of expansion studies moving forward? Would these be more of combinations with portfolio products or leaning more towards established external candidates? And does the agreement with Genentech have any restrictions on which targets either party can explore? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [37] -------------------------------------------------------------------------------- So I'll take that one. So in terms of timing, of course, you have to establish safety and dose schedule with the agent before we can kick off other combinations. We would look at not just our own internal candidates but also third-party molecules, some of which have been predefined in the contract that we're planning on doing combination studies with, some of which we can just propose and initiate. There are some restrictions around, of course, creating problematic safety signals and things like that. Those are sort of part of the course for combination studies. But also we cannot and we would not want to have the same exact mechanisms of action compete with each other within the sort of overall study approaches, right? So it will be fairly broad. And we know Genentech has a pretty broad view beyond just in the Phase I doing that initial combination with atezolizumab, which is something that's been disclosed. -------------------------------------------------------------------------------- Kar-Bow Fung, Mizuho Securities USA LLC, Research Division - Research Associate [38] -------------------------------------------------------------------------------- Right. Good. And also just one, actually a quick question on the -- on your comment about -- on vibecotamab earlier when you discussed the -- are you seeing more rash than colitis? Could you provide more color as to your discussions with the physicians on the trial as to how meaningful this difference is? And if maybe a physician would prefer a rash over colitis events for the drug? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [39] -------------------------------------------------------------------------------- Yes. Allen, you want to take that without obviously speaking for all the doctors and oncologists in America? -------------------------------------------------------------------------------- Allen S. Yang, Xencor, Inc. - Senior VP & Chief Medical Officer [40] -------------------------------------------------------------------------------- Yes. So again, just to clarify, it wasn't for vibecotamab. It was for XmAb20717, our PD-1, CTLA-4. And I think it's still early in the development to say that we're going to sort of distinguish it based on its safety profile. But I think it does suggest differences in the design of the molecule, and it's doing the things that we're hoping it's doing. So at this stage, I'm optimistic, but I'm not going to go and say that people are going to use or prescribe differently based on the AE profile. That's always been challenging in oncology because when you talk to oncologists, it's always about efficacy. -------------------------------------------------------------------------------- Operator [41] -------------------------------------------------------------------------------- Our next question comes from Arlinda Lee of Canaccord. -------------------------------------------------------------------------------- Arlinda Anna Lee, Canaccord Genuity Corp., Research Division - Analyst [42] -------------------------------------------------------------------------------- I had questions about your dose escalations for 14045 and vibecotamab. So neither of these you've reached an MTD. And I'm wondering if you're still dose exploring, what you're looking for to decide on a go-forward dose? And then on 14045 is -- do you think that going into a lower burden myeloid malignancy would have the same dose? And I'm curious on the better efficacy that you're seeing, are you also seeing lower CRS? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [43] -------------------------------------------------------------------------------- So there's several layers of questions there. Maybe to start with the first. And I -- so you're talking about one program here, vibecotamab, right? -------------------------------------------------------------------------------- Arlinda Anna Lee, Canaccord Genuity Corp., Research Division - Analyst [44] -------------------------------------------------------------------------------- And the 20717. Well, mainly the vibecotamab but also 20717, you have it. -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [45] -------------------------------------------------------------------------------- Okay. So now I can multiply all that by 2, hold on a sec, let me just make a note. So I think the places we're still nailing down the details around dosing regimen for 14045 are around exactly the schedule of priming doses to give. So that's that piece. That's always the last bits of details. And it's fair to say that the restrictions around dose changing and escalation within a patient that we had put on us by the FDA coming off the clinical hold just definitely make that a little slower of a process. So that's fair to say that, that made it definitely more difficult. So you then asked a question about lower burden disease having necessarily the same or a different dose. Allen, you might want to take that? I guess you would expect more flexibility around the tolerability of the agent with lower disease burden now. -------------------------------------------------------------------------------- Allen S. Yang, Xencor, Inc. - Senior VP & Chief Medical Officer [46] -------------------------------------------------------------------------------- Yes. It's a great question, Arlinda. And it's really around not so much the dose, but remember, we're giving ours intermittent dosing. So every other day or weekly, and it's the schedule and how quickly you can escalate because we know that you can get fairly high doses that can be tolerated. But they have to be sort of prime, and you have to sort of move up to that dose. And so it's really a balancing act of how quickly do you want the dose to go up and how high do you need it to go up to get the efficacy that you want to see. And I think there's a little bit of work that still needs to be done there. Clearly, if you have lower burdens of the disease, you may need a different dose or schedule, but I don't think we have that completely figured out yet. -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [47] -------------------------------------------------------------------------------- And then lower CRS with lower burden disease, I don't know that we have enough data to even comment on that, though nothing jumps out. -------------------------------------------------------------------------------- Allen S. Yang, Xencor, Inc. - Senior VP & Chief Medical Officer [48] -------------------------------------------------------------------------------- Yes. We are watching that. I will say from the history of bispecifics, that has been sort of demonstrated. Clearly with Blincyto, the higher leukemic burden has more CRS, et cetera. So it's something that we would expect to see, and we will keep an eye out for that. -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [49] -------------------------------------------------------------------------------- Yes. Now for 717, because we saw activity at 10 mg per kg, we did expand there. It's a tolerable dose. And we're exploring higher, but not letting exploring higher doses hold us back from really pushing forward with 10 mg per kg and then maybe adjusting later if higher is really well tolerated and suggests it might give us an incremental bit of activity. But we are confident that 10 mg per kg is an active dose. -------------------------------------------------------------------------------- Operator [50] -------------------------------------------------------------------------------- Our next question comes from Zhi Shu of Berenberg. -------------------------------------------------------------------------------- Zhiqiang Shu, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [51] -------------------------------------------------------------------------------- Congrats on the progress. A few questions here. In your prepared remarks, you mentioned about the strategy of the company is to decide which program to move forward, which program to terminate. I guess at the current state of the other assets, which ones would you say that you would definitely move forward? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [52] -------------------------------------------------------------------------------- Well, they're all moving forward right now to get that key proof-of-concept data that gives you that ability to make the decision. And that's essentially where most of our programs stand. I think our plamotamab and 20717 programs are at that point where the proof-of-concept data is emerging as we observed, right? It doesn't all happen at once in these open-label oncology trials. Data emerges and rolls out and gives you the directions to take. So we're in the midst of that decision process for how to advance plamo and 20717. And we're actually optimistic about both. I think we feel pretty confident that both are going to continue advancing. For the others, we'll await data, and we'll have the thumbs up, thumbs down on those as data emerges. -------------------------------------------------------------------------------- Zhiqiang Shu, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [53] -------------------------------------------------------------------------------- Okay. Great. And then for IL-12 and IL-15, I understand both are for oncology. Based on, I guess, preclinical or translational data, do you see the difference in terms of which indications for either program? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [54] -------------------------------------------------------------------------------- Not really. I think that they both have a broad activity at an improving T cell function and number. I don't think there's anywhere near the granularity of data you would want to look at indication based on their specific mechanisms. -------------------------------------------------------------------------------- Zhiqiang Shu, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [55] -------------------------------------------------------------------------------- Okay. Understood. And finally, for the IL-2 program for autoimmune disease, I understand that you mentioned eventually probably this will be partnered out as the company's (inaudible) on oncology. When do you think will be a good time for the company to start looking? Do you want to get the Phase I data ready? Or are you looking at -- for parties outside that right now? -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [56] -------------------------------------------------------------------------------- I would actually park the idea that we're definitely going to partner the IL-2 program. I think it really comes down to the indication strategy that we select that we're right now pulling all the pieces together on that we would implement immediately after we come out of our healthy volunteers dose escalation, which we hope happens very quickly because that's the beauty of healthy volunteer studies in these autoimmune indications, just to get your mechanism of action, your pharmacodynamics, your PK nail down. That indication strategy is going to drive whether we want to keep the asset for the long haul or partner it. I think that we have to be realistic that sometimes an autoimmune disease partnering is what you need to do. But I don't want to make that a predicative that's what we're definitely going to do with that program. We'll be able to give more color on that as our -- as we can start hopefully disclosing our strategy. -------------------------------------------------------------------------------- Operator [57] -------------------------------------------------------------------------------- I would now like to turn the call back to Bassil Dahiyat for closing remarks. -------------------------------------------------------------------------------- Bassil I. Dahiyat, Xencor, Inc. - Co-Founder, CEO, President & Director [58] -------------------------------------------------------------------------------- Thank you very much, operator, and thank you, everybody, for joining us today. Take care of yourselves. Have a great evening. We look forward to updating you again over the coming weeks. -------------------------------------------------------------------------------- Operator [59] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.