Xencor, Inc.
Q2 2020 Earnings Call Transcript

Published: 5 Aug 2020

[Operator:]

Good afternoon ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2020 Xencor Conference Call. [Operator Instructions] Now I would now like to turn the call to your speaker today, Charles Liles, Head of Investor Relations. Thank you and good afternoon.

[Charles Liles:]

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 and our partnership. Allen Yeng, Chief Medical Officer will review recently presented clinical data. John Desjarlais, Chief Scientific Officer who will provide update from pre-clinical development and John Kuch, Chief Financial Officer, will review financial results. Then we will open up the call for your question. 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, 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 Dahiyat:]

Thanks, Charles and good afternoon everyone. Xencor’s approach to creating antibody and cytokines therapeutics is centered around our XmAb protein engineering platform. By making small changes to an antibody structures, specifically in FC domains, we can improve its natural functions and performance and create new mechanisms of therapeutic 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 by specific structure. This flexibility and portability enabled us to take multiple shots on goal simultaneously in the clinic, generate proof of concept data to guide which programs will independently advance, which will partner and which will terminate. We are focusing our R&D on the expansion and use of our XmAb bispecific platforms to create antibodies to find two or more different targets simultaneously, and also to engineer cytokines with structures optimized for particular therapeutic use. Now we are currently running six Phase I clinical studies evaluating such as XmAb bispecific antibodies. Now before I update on some of our partnerships, we want to provide a brief update on the impact of the COVID-19 pandemic on our operation. The pandemic did not significantly disrupt patient enrollments to Xencor six ongoing clinical trials during in the second quarter. However, our study initiations for Vibecotamab, as we previously disclosed have been delayed, as many clinical sites have delayed the trial startup process. We had modestly slowed enrollment in the CD3 bispecific antibody studies attributable to COVID-19. And no effect on our studies for the three tumor microenvironment activator molecules. Now, as it is still the case today as it was three months ago. Unfortunately, the situation is very fluid and we'll continue to update it as soon as appropriate. Now, within the company, we have implemented a number of measures to protect the health and safety of our employees and of our community. These include some laboratory operation adjustments, our symptom self-assessment guidelines and weekly SARS-CoV-2 virus testing in our facility. We are maintaining requirement for all non-laboratory employees to work remotely. Okay, now on to partnerships. A core part of our business is to complement our internal development portfolio with partners. These partnerships generate payments from the licensing of XmAb technologies, the clinical events in XmAb candidates, as well as royalties from sales of approved products. There were no-COVID-19 impacts here during the second quarter, as we continue to earn revenues from partners like Alexion and Gilead. But we will continue to monitor potential impacts of course. Partnerships like these really highlight the plug-and-play nature of the suite of XmAb FC domains we have created. With the small changes to the SC structure that we have engineered. We can for nearly any antibody, improve the activity, half life or readily create bispecifc structures. We have 11 ongoing partnerships for XmAb technology, which resulted now in two market products, seven clinical stage candidates and more in the early stages of development. The most significant recent development among our partners for just this past Friday, with the early FDA approval of Morphosis is tafasitamab which stabilizes this from us in 2010 known as known as XMAB5574. It is an antibody that we created and put our XMAB cytotoxic FC domain on. We also initiated its clinical development running the Phase I trial. Its trade name is now Monjuvi. It is a CD19 directed cytolytic antibody indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma not otherwise specified. Including DLBCL arising from low grade lymphomas and who are not eligible for autologous stem cell transplant. This approval is the first per second line treatment of DLBCL from the FDA. Now we couldn't be happier here at Xencor, this approval expands the options for patients with this difficult to treat blood cancer. Monjuvi will be co commercialized in the U.S. by Morphosis and Insight, and the European marketing authorization application for tafasitamab is currently under review by the EMA. Now from time-to-time, we entered into research collaborations that include the creation of novel XMAB bispecific antibodies to be advanced by partners. Amgen is a prime example. AMG-509 is Amgen’s steep one by CD3 XMAB two plus one bispecific antibody. Now that was developed under our collaboration with them. They are developing AMG-509 for patients with prostate cancer and immune sarcoma, and a Phase 1 study is currently recruiting for patients with advanced prostate cancer. The first bispecific antibodies Amgen developed under this collaboration is AMG-424, a CD38 by CD3 bispecific advisors they evaluated in a phase 1 study and patients with multiple myeloma. Amgen terminated the program in the second quarter and indicated the program was stopped for adverse events that were likely CD38 target related. Under the terms of the agreements, the rights to the CD38 program, including AMG-424 revert to Xencor and the company is currently assessing the assets potential for further development, including treating different patient populations and applying mitigating treatments to the adverse events. Now the plug and play nature of our XMAB technologies enables additional partners like Alexion and VIR to advance their programs needing very little resources or effort from us. Our strategy is to selectively license access to our XMAB technologies for creating and developing antibodies and improved properties. Alexion’s Ultomiris a C5 complement inhibitor using extend technology for longer half life. The program continues to receive marketing authorizations worldwide, the last of which was the European approval for adults and children with atypical hemolytic uremic syndrome this June. In addition to evaluating Ultomiris a broad late stage development program, Alexion is currently conducting a randomized, controlled Phase III study in hospitalized patients with advanced COVID-19. Our partnership with VIR Biotech shows the broad applicability of our technology in areas such as viral infectious disease. VIR has non-exclusive access to our extend FC technology to extend the half life of VIR-7831 and VIR-7832 both novel antibodies that they are investigating potential treatments for patients with COVID-19. They plan to submit an IND for VIR-7831 and commence Phase II, III clinical trial program in August. And they plan to initiate a study evaluating VIR-7832 to later this year. I will now turn it over to John Desjarlais who will provide an update on some of our preclinical programs, and our new discovery and development collaboration with [Indiscernible]. John.

[John Desjarlais:]

Yes, thanks Bassil. Xencor's XMAB biospecific FC domain was specifically create to enable the rapid design and simplified development of biospecific antibodies combined two more different targets. First in class that we have developed were CD3 biospecific antibodies that contain one anti-tumor binding domain and one CD3 binding domain. Engagement of CD3 and T-cells promotes recruitment and activation of T-cells against the tumor cells. The activating receptor or, T-cells doesn't have to be limited to CD3 though. For example, we are also investigating by for the antibodies that target CD-28. A key co-stimulatory receptor on T-cells. Importantly, we design these CD28 engagers to actually only who are bound to tumor cells, with the goal of avoiding the super [indiscernible] that led to the disastrous clinical experience of other companies targeting CD-28 nearly 15-years ago. More near-term however, we have developed the mixed valency format or XmAb 2 plus 1 bispecific antibody with two domains to find the tumor target and a single domain to find CD3. These antibodies may preferentially kill tumor cells with high target expression and they potentially avoid low expressing normal cells taking advantage of a property called affinity. We believe these properties will be particularly important for many solid tumor targets. We present a preclinical data for three internally developed two plus one bisospecifcs close at the second session of the AACR meeting in last year. Preclinical models for strong selected tumor killing from 2 plus 1 programs to target PS domain [indiscernible] and ENPP3, the last of which is an under explored tumor antigen over express immuno cell carcinoma. These targets, although they tend to be strongly expressed on prostate cancer, ovarian cancer and kidney cancer respectively, can also have some normal tissue expression suggesting there are good applications for this new format. The ENPP3 program XmAb30819 is the most advanced of disease. Preclinical data in case that expense really when I advise preferentially to tumor cells compared to normal cells, and especially recruits T-cells to kill tumor cells selectively. Demonstrate strong versatile tumor growth and tumor in the graph models. And it was well tolerated with expected pharmacodynamics and an antibody like half life in non-human primates. You are planning to file an IND for XmAb 30819 and 2021. Finally, last month, we formalized a collaboration with Atreca to research developing course by CD3 engaging bispecific antibodies to novel targets, Atreca’s unique discovery platform compliments our protein engineering capabilities by providing novel tumor selected antibodies and targets decoupled with our CD3 bispecific platforms. Up to two joint programs will be initially selected for further development and commercialization with each partner sharing costs and profits equally. Each company will lead one of the joint programs. The agreement also allows for each partner to pursue up to two programs independently. This collaboration offers both Xencor and Atreca with several opportunities to advance novel first in class CD3 bispecific antibody for the potential treatment of patients with cancer. With that Allen Yeng will read your clinical portfolio. Allen.

[Allen Yeng:]

Thanks, John. In May, we provide an initial dose escalation data from our ongoing Phase 1 study evaluating XmAb20717 patients with advanced solid tumors. XmAb20717 is a dual PD-1 and CTLA-4 checkpoint inhibiting by specific antibody. We have assume the antibodies, affinities for PD-1 and CTLA-4 for selective engagement of That-cells expressing both targets, which distinguishes it from combination therapy, and most specific bispecific checkpoint inhibitors. T-cells that have multiple checkpoint expression are typically found more in the tumor microenvironment than in the periphery. All of our tumor microenvironment activators, as we call them, seek to more effectively reactivate the tumor reactive T-cells than existing therapies. This design is meant to drive improved tolerability at higher doses compared to the dosing of separate anti CTLA-4. Four and anti PD-1 antibodies, for example, which is deliver better responses at the cost of tolerability. In our first six dose escalation cards, we observed an XmAb20717 to be generally well tolerated and heavily pretreated patients. Consistent with our hypothesis of inhibiting both PD-1 and CTLA-4 we observed a robust dose dependent increases in biomarkers of T-cell activation and pharmacodynamic activity consistent with blockcaid of both receptors. It was also encouraging to observe cases of clinical activity as we move into the higher dose cohorts, which we detailed in the press release in May. Based on these data we open to expansion cohorts in several tumor types at 10 mg per kilogram, as well as additional dose escalation cohorts starting at 15 mg per kilogram, as we did not reach the maximum tolerated dose. Expansion cohorts for patients with melanoma and advanced non-small cell lung cancer are fully enrolled. We look forward to sharing continued progress from the 27017 program, as well as our other tumor microenvironment targeting by specific antibody programs in Phase I studies. XmAb2314 PD-1 co-stimulatory receptor ISOs. And XmAb22841, which targets the checkpoint CTLA-1 and LI-3. The latter, which has begun dosing patients in combination with pembrolizumab. Moving on to our clinical stage T-cell engagers. These are tumor targeted bio specific antibodies that contain both the tumor antigen binding domain and the cytotoxic T-cell binding domain, specifically CD3 binding domain. These CD3 bispecific, activate T-cells at the site of the tumor in order to potentially kill malignanT-cells. We continue to dose patients in our Phase one studies of vibecotamab which target CD123 and acute myelogenous leukemia, and plamotamab which targets CD20 B-cell malignancies. And as we have previously disclosed, we plan to initiate additional clinical programs, subject to impacts from the COVID-19 pandemic likely next year. We also continue to dose patients in the Phase 1 study of Tidutamab, which targets the somatostatin receptor too, and we expect that we will present initial data from these ongoing study in patients with neuroendocrine tumors in the second half of this year. Finally, we are developing a suite of cytokines, which are immune signaling protein that are built on the XmAb bispecific FC domain incorporate the extend technology. Using our FC domain and tuning the potencies enables cytokines with improved drug lights properties, such as slower receptor-mediated clearance and longer half life, and potentially superior tolerability. Our first cytokine program and lead in our collaboration with Genentech is XmAb24306, which they call RG6323. It is an IO-15 receptor alpha complex fused with our biospecific FC domain. It targets the expansion and activation T-cells and natural killer cells. Genentech to then type is currently enrolling patients in a Phase one study evaluating XmAb24306 and six and quickly moving in combination with eculizumab their anti PDL-1 antibody. We plan to explore a number of our own combination studies pending completion of the initial dose escalation study. We also look forward to keeping you informed about all our clinical programs as they progress. Now I will hand the call over to John Kuch, who will review the second quarter and first six months financial results. John?

[John Kuch:]

Thank you, Allen. Xencor continues to maintain a strong financial position, which enables us to support our portfolio of clinical, research stage biospecific antibody and cytokine drug programs. Our diversified portfolio of partnerships and collaborations continued for brightest with upfront payments, milestones and royalties. Important sources of novels with capital. With the FDA approval of MorphoSys Monjuvi last Friday, we have receive a $25 million milestone payment, which we recognized as revenue in the third quarter. As a reminder, we are also eligible to receive royalties on worldwide net sales in a high single low double-digit percent range and additional development, regulatory and sales milestone payments. At June 30, 2020, our cash, cash equivalents, marketable and equity securities totaled $587.4 million, compared to $601.3 million at December 31, 2019. The decrease reflects cashews to fund operating activities in the first six months of 2020 offset by upfront payments, milestone payments and royalties from our partnership and licensing arrangements. For the second quarter 2020 revenues were 13.1 million compared to 19.5 for the same period of 2019. These revenues include royalty revenue from Alexion and licensing revenue from Juliet compared to the same period in 2019 revenue was primary to reflect research collaboration, revenue from Genentech and the milestone revenue from Alexion. For the first six months, 2020 revenues were 45.5 million compared to 131.4 million for the same period in 2019. Our revenues in 2020 includes loyalty revenue from Alexion, milestone revenue from MorphoSyS and licensing revenue from our Gilead and immune collaborations compared to licensing collaboration, revenue earned from Genentech and Astellas in 2019. Research and development expenditures for a second quarter 2020, were 43.5 million compared to 33.3 million for the same period of 2019. And for the first six months in 2020, they were 77.4 million compared to 61.5 million for the same period in 2019. The increases in R&D is primarily to increase spending on plamotamab and XmAb2717 clinical programs, as well as our preclinical IL2 cytokine program XmAb27564 and our preclinical ENTP3 by CD3 2 plus 1 by specific antibody program XmAb30819 both of which we have advanced into IND enabling activities. We know that there was lower spending in 2020 and our XmAb2406 and obexelimab program. General administrative expenses for the second quarter 2020 were 7.2 million compared to 5.8 million in the same period from 2019. The first six months in 2020 G&A expenses were 14.4 million compared to 11.3 million for the same period in 2019. This spending here is primarily due to increased staffing and spending our professional fees. The net loss for the second quarter 2020 was 35 million or $0.61 on a diluted share basis compared to a net loss of 16 million or $0.28 on a fully diluted share pair the basis for same period in 2019, the higher net loss report in 2020 is primarily due to lower partnership and collaboration, revenue and higher R&D expenses in 2020. For the first six months in 2020 net loss was 43.1 million or $0.76 per share basis compared to net income of 64 million or $1.10 per share basis for the same period of 2019. So net loss for the first six months of 2020, compared to that income report for the same period of 2019, it is primarily due to revenue recognition collaboration 2019. Non cash stock based compensation expense for six months 2020 was 14.7 million compared to 15.2 million for the same period in 2019, total shares outstanding were 57.2 as of June 30, 2020 compared to 56.5 million as of June 30, 2019. Based on current operating plans and of course cash to fund research and development programs and operations into 2024. Then of course, the 2020 was between 525 million and 575 million in cash, cash, equivalents and marketable securities and equity securities. With that we would now like to open up the call for your questions operator.

[Operator:]

Thank you [Operator Instructions] Our first question is from Edward Tenthoff with Piper Sandler. Please go ahead.

[Edward Tenthoff:]

Give us a sense of what the royalties are, and whether there are other future milestones beyond the approval milestone for other indications and things like that. Thanks so much.

[Bassil Dahiyat:]

Sure. Thank you. I hope you are thinking staying safe set out with that tropical storm in New York along with all the other New Yorkers. So, the royalties are high single to low double digits, and they are tiered. That is the most detail we are allowed to share. At this point. They are worldwide royalty. So, you consider worldwide sales, regardless of whether the company is selling it inside or more. Of course, inside is actually less commercial rights. And there are significant milestones for both development in other indications within oncology, as well as non-oncology though there is no default going on at the moment that we are aware of. So, there is other oncology indication, regulatory, development, regulatory milestones, and there are sales milestones. So, John, do you want to give a little bit of granularity on the magnitude of those?

[John Kuch:]

Yes, the sales milestones are $15 million. And the other development regulatory are anywhere in the $50 million to $75 million range.

[Bassil Dahiyat:]

Yes, depending on which ones we like.

[John Kuch:]

So then the additional education.

[Edward Tenthoff:]

Okay. Well thank you so much and congrats it is another good example of the model working.

[Bassil Dahiyat:]

Thank you so much, and we are very excited about the Monjuvi approval.

[Operator:]

Thank you. Our next question comes from Elisa Young with Cantor Fitzgerald.

[Elisa Young:]

I guess the first one is on to Tidutamab. No, you are going to present us some data later this year. So, just wondering, can you just about what type of data that we might see, like seeing how many patients and then can you just frame for us what is the general sort of response rate seeing with a standard of care? And then second, I wanted to ask about this a [Triguard] (Ph) collaboration. Can you just talk about what to do guys into doing a deal? Thank you.

[Bassil Dahiyat:]

Sure. So, for Tidutamab the data that we are going to present later this year is for the neuro endocrine tumor populations within the Phase I. So, just that population we are SSTR2 is a sort of definitive marker. For the type of data it is going to be our dose escalation data for that trial, which is an advanced stage net patients. And that data would be, our course our safety data. So, this was a high risk potential high return program because we know that SSTR2, though expressed heavily on the tumors in net, are also expressing very healthy neuroendocrine tissues and, and we believe there ought to be a therapeutic window that we could design against. And so we are testing that hypothesis now with the CD3 antibody. So, the type of data would be a core safety data. So, that is going to be important thing to look at. It is going to be what dose we have gotten up to in this population, and of course, any efficacy data and biomarker data that that we get out of the patients. And note that the standard of care in this tumor type typically has around a 10 percentage response rates, it is a very low response rate. Because these tumors don't generally regress these, they are usually sort of halted in their tracks and the functionality is reduced. Alan, were there any points that I missed there about this kind of population.

[Allen Yeng:]

Yes, presumably be the dose escalation cohorts and we may have some expansion data at the time of your meeting. But again, not that many patient at this point.

[Bassil Dahiyat:]

Yes, we are talking maybe a couple of dozen. And then now you want me to switch to the arm discuss the Atreca collaboration. As for why I think it is because we have a platform that lets us create antibodies that are really tuned for a particular target and use, we can style. Potency up or down, we can make it more selective for high expressing cells that are low expressing cells all depending on the nature of the target. And, and the key ingredients for that kind of approaches, of course, really exciting targets. And we think finding new targets is an important endeavor. And we thought, working with one of the best companies out there that can find new target antibody pairs, and made a lot of strategic sense. And so that that is the rationale. We want to take this toolkit we built and apply it against the broadest range of biology. We can get to, and there is technologies out there for finding new targets and antibody pairs against them. That that we don't have. Right. We have to we have to then find the best out there. Were there any technical points on that that you want to add, John or is that adequately describe this?

[John Desjarlais:]

Yes. I mean, I would just add that we really admire Atreca platform the idea of taking checkpoint responses patients and mining their B-cell repertoires for new antibody responses that emerge, presumably as part of the response to the tumor. And then, the first thing they do is then check those antibodies see if they react with other patients tumors. And, putting all that story together as it seemed like a perfect fit for what we are trying to do at Xencor and again a way to access novel targets.

[Elisa Young:]

Thank you.

[Bassil Dahiyat:]

Yes. Alright. Thank you.

[Operator:]

And our next question comes from Jonathan Chen with SVB Leerink.

[Jonathan Chen:]

Hi guys, thanks for taking my questions. First question, what are your latest thoughts are plamotamab development strategy? And when could we see the next data update from that program?

[Bassil Dahiyat:]

While latest thoughts are that the module we have now -- we were seeing very promising activity, it is a highly active agent in late line lymphoma, DLBCL in particular, the largest population and it is, it is generally well tolerated. We have a dosing regimen that we are nearly done optimizing. So we have this kind of agent and it is a very competitive space that we think that the central value proposition for the class is going to be how you run the clinical lab and what other agents you combine it with. We think there is many agents with orthogonal killing mechanisms of the tumor cells, that are a great combo approach. Because as we have seen from Retoxin's history, the real power and breadth of use and movement across all different lines of therapies because it is been used in combination very effectively. And I think the tolerability profile and activity profile we have seen plamotamab support that kind of development effort of course, with a much higher level of baseline activity and you see with Retoxin. We don't want to dismiss the potential of monotherapy approaches, in particular niche populations. It advances more rapidly and that certainly can be value creating and moving forward. But I think we don't want to do is abandon that that combination approach we should be announcing later this year the specific trials that we plan to initiate around combinations as well as well as monotherapy

[Jonathan Chen:]

And just when could we see data?

[Bassil Dahiyat:]

I'm sorry. Sorry, two questions. And we are not guiding to any data, specific data readouts, yes, for promoter map, we are being mindful of potential though they haven't impacted as much yet COVID impacts. And so we will guide on that a little bit later on. What our next data disclosures would be.

[Jonathan Chen:]

Got it. And just a second question, could you provide any additional color around any observed with AMG-424 and what could potential next steps for the program? Thank you.

[Bassil Dahiyat:]

Right. I think for the moment we are going to stick to the Amgen public disclosures they were AE that were very likely CD38 mediated certainly CD38 targeting with marketed drugs, like human as well as numerous development program to shown that there was a pretty characteristic adverse events for targeting CD38 with an antibody. A lot of logic adverse events, as one would expect. So we are not going specifically into the details of the AMG 424 program, mostly because we have only recently within the last few weeks, gotten all the deeper data. We are still sifting through it. But I think that there is, as we are initially assessing potentially path forward for that molecule. And a way to get CD38 targeting with a CD38 killing mechanism advanced. There is a wide range of tumor types, of course some tumor types express CD38. In addition to myeloma, where Amgen has been developing.

[Operator:]

I'm going to move on to the next question. Mr. Chairman, I hope that answered your question. Our next question is from Mara Goldstein, Mizuho.

[Mara Goldstein:]

Just a couple of them. And the first is on XmAb20717 PD-1 and CTLA-4 bispecific. Can you just talk a little bit about what the, you would consider for success for that agent, given what we know, in the broadly speaking the checkpoint field right now. And I'm also curious as to XmAb30819 and the perceived advantages of using a bispecific as opposed to some of the development we have already seen with that target here ADC?

[Bassil Dahiyat:]

Sure. For 2717, I would say the bar for success depends on which of the two different indication types or classes that we are pursuing. For example, in our expansion course there is the post PD-1 treated patients and an indication where there is ample PD-1 use and approve PD-1 agents. And those extension cohorts and then there is the indications where there is no PD-1 approved and there is not a lot of PD-1 use, but there is a reason one, in particular CTLA4 for engagement as well could boost active or different there. I think in the post PD-1 patients generally speaking anything close to 20% response rate in patients that have failed PD-1 therapy and say a non-small cell lung or in a melanoma would be really at. Allen, do you want to comment on both interrupting further on the first PD-1 sort of PD-1 proving indications and then maybe comment on the PD-1 approved indications in our -.

[Allen Yeng:]

Yes. So I think, as Bassil said, it is a complicated question Mara. I mean, you have to look at the patients and so that data we will have to look at very closely and you'll have that chance to look at that when we present that data. But if you think about melanoma, many patients are just treated with PD-1 and some are treated actually with the combination, and depending on what their prior response was, your expectation for what the response would be in that refractory population. Remember the Phase 1 is being conducted in the United states, so all the melanoma and non-small cell lung cancer patients have seen checkpoint inhibitors. Now in non-small cell lung cancer, you probably going to use only a PD-1, but it is usually given in combination with chemotherapy. Now for patients where there have been checkpoint activity and are naive, you'd expect a higher response rate. But most of the patients in the Phase 1 have seen prior checkpoint, either pembro or both nivo or PD-1 CTLA combination. And in terms of percentage, it will probably be low in this refractory population as a baseline. But again, there is not a lot of good data, and I think rather than looking at the percentage as an absolute, you probably want to look at individual patients, see what they would gotten before, what their response was, how long it lasted and then see what the response was to this particular agent. And then there was also the discussion around non PD-1 approved patients. Yes. So, I think that depends. You know, there are a limited number of non PD-1 indications where there is activity. It seems like there is a lot of clinical activity. But you would expect it to be higher. And depending on the indication, you would probably seek to seek responses maybe for 30% to 50%.

[Bassil Dahiyat:]

But of course that is in PD-1, that is an indications where PD-1 therapy is known to work. We are exploring indications where they are not necessarily known to work.

[Allen Yeng:]

Yes, yes, that is exactly right Bassil said. It is known to work, but they are not been treated because these are U.S. patients because there is no indication for that. In other words, there is a small clinical study that shows activity, but then there is not an approval in that indication yet. And those patients are referred into the study right now.

[Mara Goldstein:]

Okay. And then for CD3 target?

[Bassil Dahiyat:]

For 30819, why CD3 biospecific versus an ADC, I think this goes to this two plus one design and the advantages they could have. John, maybe you want to touch on that.

[John Desjarlais:]

Yes. I mean, first of all, one of the reasons we like to target was because of the data that was generated with the drug cons you get, although, you have probably already figured out that they had sort of dose limiting optimal toxicities, the standard class effects with the conjugate. So, we thought it was made the parts of us pretty good as to why CD3 would do better, there is reasons beyond, not having that sort of flat toxicity. One is that real flux carcinomas tend to have more T-cells than just about any other solid tumor. And so we have got a lot of effector cells to draw from in terms of meeting the activity. And then second of all, you might imagine, other people are talking about this as well is that, once you are engaging CD3 T-cells, some of those you are also helping to promote endogenous T-cell response, right. Because you are expanding T-cells by activating them. You are mobilizing cytokines and chemical lens. And so, there is additional dividends to engage in T-cells in terms of sort of long-term activity, potentially even developing a memory response against the cancer

[Mara Goldstein:]

Okay. And I probably, if I could just ask a point of clarification on the financial arrangement for Monjuvi, can you still get payments on those indications that insight would undertake on its own?

[John Desjarlais:]

Yes, it is irrelevant who the party is.

[Mara Goldstein:]

Okay. Thank you. I really appreciate it.

[Operator:]

Thank you. Our next question comes from Etzer Darout with Guggenheim Securities. Please go ahead.

[Unidentified Analyst:]

This is [Paul] (Ph) on for Etzer. Thanks for taking our question. I guess I have a more specific follow-up to the previous on plamotamab, so in light of the recent Monjuvi approval. Have you explored potential for combining Monjuvi with plamotamab or explode any potential synergies with [indiscernible] DLBCL in general? And then the second question, I'm wondering if you could comment on if there is been any increased conversation or interest in your CD20 program from your deal perspective, sort of on the heels of the recent [indiscernible] agreement. Thanks.

[Bassil Dahiyat:]

Sure. So I will take that. So for the idea of combining a plamotamab, our CD20 treated with an anti CD19 antibody like Monjuvi, no certainly it is a, it is an interesting hypothesis. Now we are not commenting specifically on any of our combination studies just yet. We are going to do that a little bit later in the year, but in general, we believe that you want to have different mechanisms of action for killing tumor cells working together. We don't really see the need to further boost in this particular context, further boosts the T-cell function to kill the B cells that plamotamab is doing enough of that. With some indications with different CD3, antibodies, you might want to have, say a PD1, inhibitor that boost T-cell function now what is complimentary to a CD20. Well, CD19 is a different target and you have got different killing mechanisms with say an ADCC driven antibody, like Monjuvi. So it is a, it is a reasonable hypothesis. We also think that there is variety of targeted. So I'm only simulations that could be really interesting hypotheses, but it is a, it is an interesting point you raised, now regarding CD20 deal conversations. We can't really guide on business development activities because we believe that development activities can never be predicted perfectly because there is always another party involved. I will say that the value of a CD20, CD3 as a very important part of, of what's going to happen in B cell lymphoma and potentially as a backbone therapy, that would be part of displacing reduction after all these years. I think that is widely appreciated as what I will say. And we think that we could certainly build a lot of value in our program, which we are very excited by the data build a lot of value in our program as we continue to advance it on our own and further flesh out the plans. Though that is a program where a partnership might play a complimentary role, right. Sometimes you do that, to expand the scope or scale of development or find to combination partners. But we have got on that one when the time is right when we actually have a deal to announce.

[Unidentified Analyst:]

Great. Thanks very much.

[Operator:]

Our next question comes from Arlinda Lee with Canaccord. Please go ahead.

[Arlinda Lee:]

Thanks for taking my question. I just wanted to follow-up on plamotamab a little bit more, an entrance to the clinic in 2017. Can you maybe talk about the scope of the data that you plan to do that and whenever you do provide an update and then just some housekeeping things. I think you also previously mentioned expectations for filing an IND for your aisles to FCC. You talk about maybe where that progress stands right now. And then as well, ideas on yours sitting CD12383 looking for five additional out of Phase I that you are thinking about?

[Bassil Dahiyat:]

Sure, so maybe the easy one, the short answer first file, the IDC [indiscernible] that is, that is on track. It looks like it is going to be very early in the new year. And so that is moving forward that is our IO2 engineer to be selective to activate regulatory T-cells for potential use in autoimmune disease, so it is not oncology program. But a really, really exciting molecule design. For plamotamab the sort of scope of data that we would want to have it on our next data release would be really the completion of the Phase I, the establishment of our, our dosing regimen and schedule for going forward. And of course, whatever efficacy data continues to flow out of that, that Phase I would be what we would want to want to show the world. So, and of course, the plans for what we were going to do with it can come before along with that, that data, there is sort of, you are always working very hard to get everything pulled together for your next phase of clinical trials as you are wrapping up the ones you are working on. And now for the CD123, additional Phase I, what you were sort of getting out what ideas would you have on that is what you are saying? So, I would say there is different slices of AML and I think, in particular, we have to look at how the landscape and AMLs changing. I think the biggest change here is the emergence of [indiscernible] has an agent focus in frontline in the sort of elderly, frail populations as an induction therapy, and then of course, it is going to start being used more and more in the relapse setting. And things can have a label there soon, probably. So, we want to make sure we are mindful of that. And I think that there is different places where a highly active T-cell engaging environment police themselves can be used and using that in the context of whether it is consolidation or whether it is in the right relapse setting is where we are working. Something else will specify more on that later when we can, we are in partnerships to Novartis there we have to be - that way we have to be mindful of disclosure requirements. That answers your question, Linda.

[Arlinda Lee:]

Thanks very much. Yes.

[Operator:]

Thank you. Our next question comes from Gregory Renza with RBC Capital Markets. Please go ahead.

[Unidentified Analyst:]

[indiscernible] on for Greg. Thank you for taking my question. My first question is a follow-up on to the previous question on AMG-424. How should we think about the potential route through from the discontinuation to the development of AMG-509? Thank you.

[Bassil Dahiyat:]

I don't think there is any read through the as Amgen disclosed the toxicities were very likely CD 38 mediated. If you kill CD 38 positive cells things happen. It is their conclusion from the review of the data and in our we agree from our initial review of all the Phase I data is that that is quite likely what the case was. And so, to me toxicity does not read through to the AMG 509 program, which of course is targeting prostate cancer antigen. There did not appear to be something fundamental about CD 3 targeting in general or our constructs or XMAB biospecifics to general at all to be read through from the AMG-424 data.

[Unidentified Analyst:]

Great. Okay. Just one more follow-up if I may. Can you talk about how your strategy for obexelimab has evolved and what your latest thinking is around the future of this program. Thank you.

[Bassil Dahiyat:]

Right. So though we are not investing in it in further development internally. We have been continuing to analyze the data from our lupus phase two trial, which had a very, very robust and really cutting edge biomarker strategy around it. And we do expect to be disclosing some information around the biomarker working down there, which we should be able to talk about in the next couple of months I believe. And I think that does bear on the strategy for the molecule though again, we are still committing to developing an external presented for.

[Unidentified Analyst:]

Got it. Thank you again for taking my question.

[Bassil Dahiyat:]

Thank you.

[Operator:]

Thank you. Our next question comes from Tom Shrader with BTIG. Please go ahead.

[Thomas Shrader:]

Good afternoon, I had a question about the timeline of the Atreca deal. I mean, I agree it is a pretty exciting screen to match with your format. Is this a true discovery deal? Or is it a Atreca’s antibodies that they have already discovered? And you are just constructing antibodies? Could we see something pretty quick here or is it sort of back to square one for this reading approach?

[Bassil Dahiyat:]

I would say it is really about using the fruits of their screening work that is created antibodies where there is some functionality around them, but of course they are always updating that and adding new. So, though as a discovery program, of course, you are not going to have anything into the clinic in a couple of years. But I think this is about explaining all the great foundational work they have done while they continue to add to it. John, do you want to add anything on that?

[John Desjarlais:]

No, that is about right. I mean, there is they are coming to the table with, with an existing basket of antibodies. But, they are certainly not slowing down their ongoing discovery activity. So there is the well could be replenished as because of the collaboration.

[Bassil Dahiyat:]

And there we bring is able to rapidly make drug candidate quality molecules where you can test how that antibody works and say a CD3 bispecific context and then if it works, you are immediately off to the races and development.

[Thomas Shrader:]

Great. And then I had a quick remedial question on the 2 plus 1 format. Is there any sense of how powerful that is? I mean, I know a regular antibody, a tiny fraction actually goes to the target. Sense of how much better this isn't there is anybody's imaging data that we can look at it. I think we only have one example where the format was compared to a conventional format, isn't that right? The low CD20 case were really all that happened its talks got worse.

[Bassil Dahiyat:]

Well, I think that molecule still has interesting promise. But remember, of course, I don't know about a direct comparison. But Roche also had a CEA, so colorectal cancer target antigen in that kind of format with a CD3 bispecific. And they saw promising activity and really late line populations. So the direct comparison. John, you want to touch on where the real power is, whether it is in better avidity or better selectivity?

[John Desjarlais:]

Yes, I mean that is that just you have to go through the concept. Again, the idea is, particularly in the solid tumor setting where you are not like and [Indiscernible] you target B-cells, and it turns out that people could live better than we ever thought they could without any B-cells. So you can tell not only the malignant T-cells, but the cell of origin as well, the patient's just fine. The solid tumor setting, that is probably not going to be the case for a lot of these targets, right. Because they are expressed on important organs. So this is really about just trying to span the therapeutic index between attacking tumor cells versus attacking normal cells. But you know to Bassil’s point about the CEA, the 2 plus 1 [indiscernible] they sort of lead the way on this year, we have been working on this concept for a while now. There is been some nice preclinical publications on the Genentech Group in the context of two, that really pretty nicely lay out the concept with a lot of different comparative studies. So we do think there is a lot of progress for this format.

[Thomas Shrader:]

Okay. Thank you.

[Bassil Dahiyat:]

Thanks Tom.

[Operator:]

Our next question comes from Peter Lawson with Barclays. Looks like his line drop, sir. We are going to move phone to the next question from Dane Leone with Raymond James.

[Dane Leone:]

Hi thanks for the update and taking the question. I just want to get a sense of the timeline that you might understand on seeing data for 24306?

[Bassil Dahiyat:]

Right. So Genentech is executing the clinical trial for XmAb24306, which is our out 15 molecule for oncology. They started the Phase 1 study in Q1 of this year, I think given both where the study is advancing this escalation as well as Genentech, we have to agree with them on a data disclosure. So they have the right thing, when, as well as we do, we have to both be in sync on that. I think it is unlikely we will have any data this year for sure. And as to whether next year, we will have to confirm with Genentech later in the year. So we really can't give you any more specifics than that, unfortunately.

[Dane Leone:]

Can you remind us of economics or the partnership for?

[Bassil Dahiyat:]

Sure. Of course, we signed a deal in February of 2019. It is a 55%, 45% or 45% of Xencor worldwide split the profit and loss. We had 120 million upfront paid, and there is 160 million in clinical stage milestones for the lead program to 24306. And so in addition to splitting all development costs, and then spitting the P&L 55, 45 Genentech 100% of all what are called launch costs. So, pre approval commercialization preparation activities. An important non-economic part of that dealing when in addition to having a very large stake and the ultimate value of the asset , we also have the right to run combination studies with 24306 and both internal Xencor pipeline candidates, as well as candidates are molecules, drug molecules of third parties as long as they don't directly compete with molecules in the collaboration, because combination is where an IL-15 is going to use, it will use the T-cells to see NK cells for other therapies actions.

[Dane Leone:]

Just one more question, maybe a macro question for you. If you have a lot of assets in the portfolio and kind of early stage development. Do you, can kind of is there a way to give us a sense of maybe over the next 12-months, how many of those programs you had wanted to nominate into more later stage Phase II testing, or how you want to approach later stage of development for some of these assets? And just kind of understanding how you internally expect the programs to advance as we head into 2021.

[Bassil Dahiyat:]

Yes. So, over the next 12-months, hopefully we will have more data we can talk about publicly around XmAb20717 the PD-1 CD4 inhibitor across both of these expansion cohorts of both sort of PD-1 experience solid tumors, as well as sort of a non PD-1 approved solid tumor indications. And, that should help to guide us on more specifics of, did we go in one basket of indications post PD-1 or do we do go into non PD-1 or we go in both. Data will have to drive us. So, I think we should have more clarity there, how that program is going to have to be able to proceed. And I think that as we provide the specifics, as our plans are really coming together around plamotamab and CD20 x CD3 that also should give clarity there as we are thinking of later stage. I think in that case, which we are very comfortable with the data we have already strongly supports moving forward at least in CL BCL and as we continue to studies and do more work, we hopefully can bring other indications according to database. I think those are the ones I think that we should have more clarity on and the others we are going to continue to generate further data.

[Dane Leone:]

Okay. Great. Thank you very much.

[Bassil Dahiyat:]

Hey. Thank you, Dan.

[Operator:]

Thank you. [Operator Instructions]. Our next question is from [indiscernible] Please go ahead.

[Unidentified Analyst:]

Hi. Good afternoon. Thank you for taking my question. I have a few here. First is on the SSTR2 for net. Just I guess, can you overview what the treatment landscape particular related to [Lutahera] (Ph) And do you think the your program needs to meet Lutahera to competitive or to be approved? And then also on that program, what are the safety symptoms that you are mostly concerned about. And then secondly, IL2 program. I know it is early today but I guess do you have an idea what the indications you are potentially pursuing? And then, are you looking for a partner for this program? Thank you.

[Bassil Dahiyat:]

Thank you. So I got four questions. Let's make sure, I can run through, we can run through them. For SSTR2, Lutahera how does that play in a competitive context? We have, we clearly are seeing patients that are non-postlude even though Lutahera is indicated for them. So not everybody gets radiotherapy. The obvious distribution issues with radioisotopes are clear. The safety signals where we will be looking for. We are looking for ones where we know SSTR2 is expressed and expressed gastric tissues, expressed in pancreatic isle T-cells, express itself in lung. So, we are going to look at all. Now for IL2, we are not writing a guide on indications and we are an oncology focused company. So I think we will be willing to entertain partnerships earlier for the IL2, but we are prepared to move it forward to get some meaningful inflections, even post Phase I later.

[Unidentified Analyst:]

Okay. And then so you also have a IL2 for oncology in the works too or -.

[Bassil Dahiyat:]

No, we do not IL15 program, we believe is a better starting point. We believe we have a very attractive, hopefully best-in-class product profile for our teams. Of course, engages IL2 beta gamma receptors downstream, but completely avoid the CD25 binding that you usually have to work to get rid of too, so no.

[Operator:]

Our last question comes from [Peter] from Barclays. Please go ahead.

[Peter Lawson:]

Just on the CD20 x CD3, really excited. Just how should we think about your position in there, significant to [indiscernible] pick an indication or what you think is the questions driving up efficacy.

[Bassil Dahiyat:]

I think it is about combinations. I think from the efficacy data, we have it, we see with our competitors like Regeneron. I think we have a pretty good feel for where the efficacy falls to the class. And I think there is a lot of commonality there and I think it is going to be about working in the right combinations. And of course, if you see a signal, as you explore in your various indications that you get coming into your trial, where I think CD20 x CD3 might work, we are all discovering what niches these particular mechanism of action might best suit we'll of course, chase that signal very rapidly. So I think there are certainly potential opportunities around, around indications or slices whereas we learn things. We can maybe get the jump on competitors, but I think the focus right now is how do you best combine and best position yourself, both in this relapse refractory setting, and then ultimately to want to move into earlier line. It is going to be about I think that more of anything.

[Peter Lawson:]

And wouldn’t be anything we kind of complete picture around that when you are going to roll out the strategy?

[Bassil Dahiyat:]

Well we still expect to be able to give a lot further guidance on our strategy later this year.

[Peter Lawson:]

Got you and then just on the CTLA-4, PD-1 when we should we see the next day and is the patients stood in CL.

[Bassil Dahiyat:]

Sure. So, for CTLA-4, PD-1 within the next 12 months, we should have at least an initial bolus of data out of our expansion cohorts. Of course, there are five cohorts, so can't get all of them done at once. We should have that initial bolus of data coming out within the next 12 months. And, I will defer the question on the CR patient. Do we have any, I will ask Alan, do we have definitive knowledge about that patient anymore that they've now that they've gone so far out.

[Unidentified Company Representative:]

No the patient has come off of study for investigator choice and patient decision. And so we know that they were in CR at the time of off study, but we don't have additional data from that patient.

[Operator:]

Thank you. Ladies and gentleman this concludes our Q&A session. I would like to turn the call back to Bassil Dahiyat for his final remarks.

[Bassil Dahiyat:]

Great. Thank you very much operator and thank you everybody for joining us today. We hope our friends and colleagues on the East coast and in New York are keeping safe from the tropical storm and that everybody takes care of themselves in the COVID pandemic. Have a great evening and look forward to updating you in the near future. Bye, bye.

[Operator:]

And with that ladies and gentlemen, we thank you for participating in today's conference. You may now disconnect. Have a wonderful day.