Good morning, everyone. My name is Ted Tenthoff. I'm a Senior Biotech Analyst at Piper Sandler, and welcome to this year's in-person Piper Sandler Healthcare Conference. Before I begin, I am required to point out certain disclosures regarding the relationship between our first presenting company, Xencor, and Piper Sandler that are located at the back of the room and also at the registration desk. So as many of you know, Xencor is a next-gen antibody company developing an industry-leading pipeline of bispecifics. So beyond its growing wholly owned pipeline, the company has partnered with J&J, Roche, Amgen, and others, and recently sold Ultomiris and Monjuvi royalties to OMERS. Here with us today is Xencor's co-founder, president, and CEO, Bassil Dahiyat. Bassil, always good to see you. I'm also pleased to introduce Dr. Nancy Valente, who's a new Chief Development Officer.
It's with a heavy heart I have to say that this is John's last conference. We were reminiscing over the first one, I mean, a decade plus ago, probably here.
Had a good time.
John, it's just such a pleasure working with you, and I wish you enjoyment and relaxation in your retirement.
Thank you.
Bassil, kick us off. I think the first thing you want to talk about was Amgen and xaluritamig, which used to be, AMG 509. Tell us about this target and the progress they're making and sort of what you're doing in general on the CD3 side.
Yeah. So, xaluritamig is a CD3 bispecific antibody. It targets prostate cancer tumor cells on one arm of its bispecific structure. I should say actually two arms of its bispecific structure, and on the other arm, it targets CD3, a T-cell target that activates T cells for cytotoxic killing. That's the lead example of our sort of next iteration of CD3 bispecifics are specifically aimed at solid tumor CD3s, we call our 2+1 format, that uses the flexibility that XmAb Fc domains create in structural design because of their great stability to build up a structure that can be selectively tuned in for targets that are tough to hit selectively.
So one of the challenges in CD3 bispecifics for years has been having a lot of T-cell killing power you can bring to bear in a tumor, but it kind of is gonna kill any cell that has whatever target you're going after. We've seen that in heme malignancy to great success with CD20, CD3s, like plamotamab, in lymphoma or BCMA CD3s in myeloma. But in solid tumor, you can't just kill any every cell that expresses your marker. Solid tissue, organ tissue is much more sensitive to damage, and so you can't just ablate healthy with diseased tissue. So we designed these molecules to be selective, and you know, Amgen was the first deal we did with this kind of bispecific structure a few years back, and so they're furthest along.
Beautiful target, STEAP1 on prostate cancer cells, relatively well, selectively expressed, but it needed that extra boost of direction to the tumor cell from our 2+1 format. Prior formats that they tried did not work, and so that's a great example of, you know, what protein engineering can do. In short, the data they presented at ESMO was the first real unveiling of our platform, in a tough, cold, nominally IO-cold tumor type, and they had about a 40% RECIST response rate in prostate cancer, really late line patients. The durability look is still a little bit early, but very promising. The majority of responders are still on study or were at the data cut, and, you know, the tolerability was just really the kind of CRS we're used to seeing and really getting much better at managing.
So a really great unveiling of the 2+1 format, I think it really gets us excited about what we're doing internally. So it's always about balancing the partner and internal at Xencor technologies.
You guys really have stated and are guiding that you're focusing on future development on this 2+1 construct and have really several wholly owned targets for solid tumors. Tell us about ENPP3 for kidney cancer, and what you're doing with that one.
Yeah. So same structural design as our STEAP1 CD3, the xaluritamig molecule at Amgen, is our ENPP3 molecule , XmAb819. So ENPP3 is a target that's expressed very brightly on renal cell carcinoma, specifically the majority of them, which are called clear cell renal cell carcinomas. And it has moderate or low, low to moderate expression on a few healthy tissues, like healthy kidney. So it was a perfect candidate, really high expression in a tumor, low but present elsewhere in healthy tissue, to dial in that selective CD3 killing with our 2+1 format. And so we built a molecule to do that, and, you know, maybe Nancy can touch on the phase I, which we started a little over a year ago, and, you know, the rationale in RCC for a cytotoxic antibody.
Yeah. So, we're really excited about our phase I, so are the investigators. They're really pleased that someone's developing a therapy just for kidney cancer. So that's really nice and gets them really excited. So this is a phase I dose escalation. We're giving the drug every week. We're moving through different doses right now. And so when we find the recommended phase II dose, we'll move into probably a few other tumor types and combinations with standard of care chemotherapy. Now, remember, this is a CD3 T-cell engager. And so the dose escalation and finding the exact right dose and schedule is a little more complicated.
You can see that from STEAP1, they took a lot of time to find the priming step and target dose that you need to use to minimize CRS and optimize efficacy. And we are learning from that in our own prior experience and others, how to do that in a faster, more efficient way as well.
Great. Well, we're definitely looking forward to seeing more data on that, and I know you have the upcoming IND for CLDN6 for ovarian cancer, too, as another 2+1 XmAb541, so we're looking forward to that, too. So I want to get to vudalimab, and we're expecting prostate cancer on this one. And again, it's really targeting both CTLA-4 and PD-1. Let's start with the colorectal or the prostate cancer data, castration-resistant prostate cancer. Tell us about... You know, this is a disease or a cancer where, you know, checkpoints really traditionally have not been well suited. So why do you think combining these two checkpoints works well here?
Yeah.
Do you want to?
Yep, sure.
Okay.
Yeah, so vudalimab, as you said, is our dual checkpoint inhibitor, CTLA-4 and PD-1. And we designed this to bind to tumors, to T cells that were in the tumor versus the circulation. We've seen promising data in our own phase I in prostate cancer. So there were two of four patients who had visceral metastatic disease responded, and what was nice is that the duration of response was really long for these two patients, six and 10 months. So really excited about what we saw there. And there's also data that's been out for a while, of the combination of nivo and ipi in prostate cancer.
That prior study from a while ago showed that for patients who are chemo previously treated, a response rate of about 10%, and for chemo-naive patients, about 25%. So when you add a CTLA-4 inhibitor to PD-L1, you improve the response rate and the efficacy in prostate cancer. So we decided between that prior history of some efficacy with the combination and our own data, we'd move into prostate cancer. In our study, in our current studies, we've moved into both a prostate monotherapy study and also a study in combination with chemotherapy and other standard of care for prostate cancer patients.
and so the study, the combination study, is really a genetically or molecularly defined study with different cohorts, either with chemotherapy for aggressive variant prostate cancer, dual chemotherapy for patients with BRCA1 and BRCA2 mutations, in combination with a PARP inhibitor, and so those trials are now ongoing.
Now, in the early dataset, you guys reported, you actually discussed reducing the dose of the chemo combo. What did you see that led to that decision, and what should we expect from this data read early next year?
Yeah. So, we did share about a year ago that when we used carboplatin and a taxane with vudalimab in prostate cancer, that we saw myelosuppression and some GI toxicity. And I think we have to remember, too, that carboplatin and a taxane isn't commonly used in prostate cancer, just for the aggressive variant is that commonly used. So, physicians aren't used to that kind of combination chemotoxicity. And basically, what we saw was that kind of toxicity that you get from that combination. But we did go ahead and remove the carboplatin from all the cohorts, except the aggressive variant. And what we're seeing now is the combination is a lot more tolerable.
Great. Well, we're looking forward to seeing that dataset early next year. And Nancy, you really have had an immediate impact on Xencor in designing, you know, what I'm calling a swing for the fences, lung cancer study, head-to-head versus KEYTRUDA. I love bold drug development. Tell us about this study and why you think it can beat KEYTRUDA in lung.
Yeah. So, we also... You know, again, we're excited about vudalimab and what it can do for patients. In our phase I study, you know, the expansion also included 14 patients with non-small cell lung cancer. There, we had two patients who had a partial response and another five with stable disease, so almost a 50% disease control rate. But importantly, these were patients that were really heavily pretreated, a median of three prior chemotherapies. 40% of these patients had two prior checkpoints, and they were all, I think all but one was checkpoint experienced or failed, however you want to describe it. So we thought the data was encouraging in patients that were so heavily pretreated. And in addition, we looked at competitor data, with a similarly designed molecule, and we saw in patients that were IO naive.
It was an indirect comparison, but when we looked at that, we saw around the same toxicity in our very heavily pretreated patients and their IO naive. And, you know, slightly different overall efficacy rate, of course, because those were first line. And so between those two pieces of data, we decided, like, yes, we can go forward studying this in lung cancer. And what we designed was a phase I-B/II, and the phase I-B is looking at vudalimab at two different doses in combination with the standard of care for non-squamous non-small cell lung cancer, which is carboplatin and pemetrexed.
And then, we'll pick the one of those doses or maybe one in between, and bring that into the randomized phase II portion, and that would be vudalimab with standard- of- care chemo versus pembro with standard- of- care chemo, which is what, what's used right now for non-small cell lung cancer. Yeah, so we're really-
Yeah.
Looking forward to seeing those results.
Us, too. Gonna be an exciting study. So one of my favorite programs is, XmAb104, which is the new name for your IL-15. I've been practicing that all morning. That's the only reason I was able to say that so smoothly. John heard me over coffee. I'm just gonna call it IL-15 going forward, if that's okay.
That's good.
You guys partnered with Roche several years back. Really great. One of the biggest preclinical deals, I think, at the time. And you recently opted out of co-development in exchange for milestones and royalties. What went into this decision, and what are your retained economics?
Yeah. So efbalropendekin alfa , one of my favorite names now, there's a Tolkien reference in there.
Cool.
I was told. So the structure of that deal was to allow Xencor to share really, really heavily in the downstream commercial value. It was a 55/45 P&L split. That also means 45% on the cost side throughout development, which was, you know, a cost that would be offset by the upfront payment of $120 million, the royalties, I mean, and the milestones in between. So the development program has just expanded and expanded. We released a little bit of early data, but, you know, that showed really remarkable best-in-class expansion of NK cells, activation of T-cells. We had responses both in monotherapy and in combo with atezolizumab. And then the studies kept growing. They added two studies in myeloma, combination with a CD3 or with dara.
They're expanding the atezo combos. They've got a phase II plan, and we see the budget growing, but we see data milestones that we could talk about publicly, really pushed out a couple of years because of the nature of oncology drug development in... when you're doing combination studies. You know, cytokines are potentiators, really, of other agents. And so we just did the math and said, "That's not the best use of capital right now." We've got a lot of other things going on. We've got vudalimab, we've got our CD3s that we're expanding. And so we've used an option that we baked into the contract from day one, knowing that we might want this flexibility to flip to a zero-cost Xencor-for-Xencor deal, and we get royalties and milestones.
That starts with double digits and then goes into the mid-teens on the milestones and about $600 million in royalties. So it's a deal comparable to what we would have gotten if we did the deal today, obviously, minus the upfront, which we got, you know, four years ago. So it was a-- it was really about balancing-
Yeah.
Our investment and capital allocation within our own pipeline.
Yeah, it makes a lot of sense. And you guys do have other cytokines that you're working on-
Mm-hmm
-including XmAb662, IL-12, which I think just went into the clinic. How does this differ from IL-15, and where do you see the opportunity to develop it differently?
Yeah, IL-15 is quite similar to IL-2, and it expands the numbers of T cells and NK cells, the lymphoid lineages, and it does get them activated. That's IL-15 and IL-2. IL-12, on the other hand, doesn't really expand numbers so much, but it really polarizes the T cells to NK cells to secrete interferon gamma, which just activates the whole immune milieu. And it's been a cytokine that's been looked at both for, you know, intratumoral injection or systemic injection with a lot of toxicity. So we're hoping that our approach to lowering the affinity to the receptors, lowering the potency, and thereby extending the half-life, in addition to using our long half-life Fc domains, will sort of bring the heat down a bit but keep it bubbling.
Yeah.
So that's the approach. Yeah, we just started. We're gonna look for key biomarker data, looking for that interferon signal, and then really figure out how we're gonna advance it.
Cool. Different profile. Looking forward for that data. Now, on the other side of the coin, you're developing wholly owned XmAb564. This is an IL-2 Fc for autoimmune disease, really your first venture outside of, of oncology. Walk us through the phase I healthy volunteer data, and what would... should we expect from the atopic derm and psoriasis cohorts next year?
Did you want me to take that, or you can take that?
Um, yes.
So, on the design, maybe you do the clinical part.
Yeah.
On the design of it, that's just a flip on the usual IL-2 work, where you're trying to steer the IL-2 molecule now to bind tightly to its, the receptor on regulatory T cells, the cells that quiet down the immune response. That's the CD25 receptor. Of course, CD25 is expressed on a variety of different T cells, you know, Tregs as well as effectors, but it's heavily expressed on Tregs. So steering the IL-2 to bind tighter to that receptor is gonna push you more in that direction. So we did that, built it on our low potency Fc structure, and, you know, got great biomarker data in the phase I. Maybe you wanna talk about phase I MAD/ SAD study.
Yeah. So we did the phase I SAD, saw biomarker data that was consistent with the expansion of Tregs. Went on to a multiple ascending dose. We're now in psoriasis and plans to go into atopic dermatitis as well. Yeah, so that's moving forward. Yeah.
Hey, the real key to these phase I studies is to confirm what we saw in the SAD, which was really a strikingly long expansion of the regulatory T cell compartment. We had over three weeks from a single dose, which was, you know, significantly better than any other programs that are looking at Treg IL-2s had shown, and we're looking for that durability to be potentially an advantage. Hopefully, we can see that as well in the MAD in patients.
Great. So switching gears, just a little bit. We talked about the CD3s. You also have a big CD28 partnership with J&J.
Mm-hmm.
And I believe XmAb808, which targets B7-H3, is a CD28 engager. Tell us a little bit about the different profile between the CD3s and the CD28s. Where might one make more sense? And I know you sort of screen these things pretty thoroughly. So what's that leading you to believe, and what are you working on with J&J?
So CD28 is also a marker on T cells that activates them, but what it tends to do is it makes them sustain their activity over time, instead of just giving you a big spike. And it also tends to increase the number of those T cells, effector cells, that have some kind of antigen recognition going on. So you're sort of expanding the compartment of things that ought to be the tumor killer. So the cool thing about CD28 is that it does that really well. The scary thing is that it can be really toxic when older technologies were used.
So using this kind of bispecific approach and really dialing down that CD28 activation potency is something that lets you tune that turn on to just happen when you're also binding the tumor antigen with the other arm of your bispecific. So that's the hope, that's the promise of bispecific CD28. Janssen is really, really... I guess, J&J Innovative Medicine, their new name-
Mm-hmm.
They asked me to use that, is really, really excited, and it has been about this approach. The cool thing is you can complement and really turn on the tissue microenvironment to any other T cell therapy. So there's checkpoint inhibitors you can turn on, and so our CD28 partner, our B7-H3, been in the clinic a year. It's to potentiate pembrolizumab, PD-1 inhibitor, in a variety of cold tumors, like in prostate cancer. And Janssen, on the other... Or J&J Innovative Medicine, on the other hand, is using it to turn on the environment for CD3 bispecifics that also turn on that also turn on T cells.
And so you have this really broad use you could have to make CD3s more effective, last longer, potentially use less of them and lower their CRS tox, or to turn on cold tumors for a checkpoint inhibitor. So a lot of promise there, but to do all that in a tumor-specific way requires really careful engineering. And we know that there's been some initial CD28 bispecific data out there from a competitor that activated the tumor, turned on tumor killing, but also was really toxic. We came in about 15- or 20-fold less potent in our design, knowing that this could be a potential issue, and so we're really excited looking forward to that. Maybe just briefly on the study, Nancy, for the XmAb808.
Yeah. So the XmAb 808 study, as Bassil just said, is to potentiate pembro, so it's in combination with pembro. Something that's unique is that combination was started from the very first cohort.
True.
So we've got it designed to give it sequentially with pembro and concurrently with pembro. Yeah, and so we're escalating through the doses right now, and really excited about the potential.
Okay.
We're looking forward also to planning, you know, the combinations we'll do for this. I mean, B7-H3, which is the antigen partner, is expressed in lots of different tumor types, so we have lots of opportunities there. And as Bassil said, in particular, in trying to bring immunotherapy into the colder, less immunosuppressive tumors.
You know, as you said, J&J has two programs.
Good.
We've just gotten paid IND milestones for one in prostate cancer and another CD28 program in B-cell malignancy. So they're very committed, to this approach, and we're really excited to have them chasing behind us with our, our own B7-H3 program.
Lots of, lots of data coming in the new year. So John, bringing you into the conversation, you guys just sold Ultomiris Monjuvi royalties to OMERS for $215 million. Rationale seems pretty clear in these challenging capital markets. We estimate you guys hold something like $761 million in cash right now, no debt. How long does this fund the company, and what does it enable you guys to accomplish?
Yeah, thanks, Ted. First, a correction. We did sell the royalties. One, it was the right time. You know, we've had these for a long time. Tough capital markets and the deal it structures allows us upside potential. Ultomiris, we have $12 million in potential milestone over the next year, and we have royalties in excess of the caps. The MorphoSys is more like a straight debt. They give us, like, $22 million, and they get 130%, so it ends up being 14%-15% cost to capital. Because the deal closed in November, but the royalties they get paid were as of Q- at the end of Q2, the net amount is not the 215.
We're gonna end up the year with about $650, and that gives us this runway into 2027, which, you know, in these times, is huge, given, you know, the programs-
Yeah.
... Nancy is carrying forward. We have a lot of optionality with some of these programs, so, I think it was the right deal. You know, we're-
Yeah, and the capped structure, where we keep the excess above the caps, after 2025, I think is really important because there's a lot of, a lot of growth in Ultomiris-
Yeah.
... that's still happening. You know, our own IP portfolio keeps developing, and we're trying to extend our term on that, all of which could have a really good impact for us.
Great. Excellent. Well, thank you all for being with us. We're excited for 2024.
Yeah.
Please stick around for our next presenting company, Sutro Biopharma.