Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the second quarter 2020 Xencor conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To participate in that portion of the call, you will need to press star one on your telephone. If you require any further assistance, please press star and zero. I would like to turn the call to your speaker today, Charles Liles, Head of Investor Relations.
Thank you. 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 partnerships. Allen Yang, Chief Medical Officer, will review recently presented clinical data. John Desjarlais, Chief Scientific Officer, will provide updates from preclinical development, and John Kuch, Chief Financial Officer, will review financial results. We will 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 factor 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.
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 structure, specifically in its Fc domain, 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 bispecific structure. This flexibility and portability enable us to take multiple shots on goal simultaneously in the clinic and generate proof of concept data to guide which programs we'll independently advance, which we'll partner, and which we'll terminate.
We're focusing our R&D on the expansion and use of our XmAb bispecific platform to create antibodies that bind two or more different targets simultaneously, and also to engineer cytokines with structures optimized for particular therapeutic use. We're currently running six phase I clinical studies evaluating such XmAb bispecific antibodies. 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 operations. The pandemic did not significantly disrupt patient enrollment of Xencor's six ongoing clinical trials during the second quarter. However, our study initiations for obexelimab, as we've 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.
As is still the case today as it was three months ago, unfortunately, the situation is very fluid, we'll continue to update it as soon as appropriate. Within the company, we've implemented a number of measures to protect the health and safety of our employees and of our community. These include some laboratory operation adjustments, symptom self-assessment guidelines, and weekly SARS-CoV-2 virus testing at our facility. We are maintaining a requirement for all non-laboratory employees to work remotely. 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 for 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. 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've created. With the small changes to the Fc structure that we've engineered, we can, for nearly any antibody, improve the activity, half-life, or readily create bispecific structures. We have 11 ongoing partnerships for XmAb technology, which have resulted now in two marketed products, seven clinical-stage candidates, and more in the earlier stages of development. The most significant recent development among our partners occurred just this past Friday with the early FDA approval of MorphoSys' tafasitamab, which they licensed from us in 2010 when it was known as XmAb5574.
It's an antibody that we created and put our XmAb Cytotoxic Fc domain on two. We also initiated its clinical development, running the phase I trial. Its trade name is now Monjuvi. It's 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 lymphoma and who are not eligible for autologous stem cell transplant. This approval is the first for second-line treatment of DLBCL from the FDA. We couldn't be happier here at Xencor, as this approval expands the options for patients with this difficult-to-treat blood cancer.
Monjuvi will be co-commercialized in the U.S. by MorphoSys and Incyte, the European Marketing Authorization application for tafasitamab is currently under review by the EMA. From time to time, we enter into research collaborations that include the creation of novel XmAb bispecific antibodies to be advanced by partners. Amgen's a prime example. AMG 509 is Amgen's STEAP1 by CD3 XmAb 2+1 bispecific antibody. That was developed under our collaboration with them. They're developing AMG 509 for patients with prostate cancer and Ewing sarcoma, a phase I study is currently recruiting for patients with advanced prostate cancer. The first bispecific antibody that Amgen developed under this collaboration is AMG 424, a CD38 by CD3 bispecific antibody that they evaluated in a phase I study in 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 agreement, the rights to the CD38 program, including AMG 424, revert to Xencor, and the company's currently assessing the asset's potential for further development, including treating different patient populations and applying mitigating treatments for the adverse events. 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 with improved properties. Alexion's ULTOMIRIS, a C5 complement inhibitor, uses Xtend 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 in 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 Biotechnology shows the broad applicability of our technology in areas such as viral infectious disease. Vir has non-exclusive access to our Xtend SC technology to extend the half-life of VIR-7831 and VIR-7832, both novel antibodies that they're investigating as potential treatments for patients with COVID-19. They plan to submit an IND for VIR-7831 and commence a phase II/III clinical trial program in August, and they plan to initiate a study evaluating VIR-7832 later this year.
I'll 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 Atreca. John?
Thanks, Bassil. Xencor's XmAb bispecific Fc domains were specifically created to enable the rapid design and simplified development of bispecific antibodies that can bind two or more different targets. First in class that we have developed were CD3 bispecific antibodies that contain one anti-tumor binding domain and one CD3 binding domain. Engagement of CD3 on T-cells promotes recruitment and activation of T-cells against the tumor cells. The activating receptor on T-cells doesn't have to be limited to CD3, though. For example, we are also investigating bispecific antibodies that target CD28, a key co-stimulatory receptor on T-cells. Importantly, we designed these CD28 engagers to activate only when bound to tumor cells, with the goal of avoiding the superagonism that led to the disastrous clinical experience of other companies targeting CD28 nearly 15 years ago.
More near term, however, we have developed a mixed valency format, our XmAb 2+1 bispecific antibody, with two domains that bind the tumor target and a single domain that binds CD3. These antibodies may preferentially kill tumor cells with high target expression and may potentially avoid low-expressing normal cells, taking advantage of a property called avidity. We believe these properties will be particularly important for many solid tumor targets. We presented preclinical data for three internally developed two plus one bispecifics at the second session of the AACR meeting in late June. Preclinical models show strong selective tumor killing from 2+1 programs that target PSMA, mesothelin, and ENPP3, the last of which is an underexplored tumor antigen overexpressed on renal cell carcinomas.
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 they are good applications for this new format. The ENPP3 program, XmAb30819, is the most advanced of these. Preclinical data indicate that XmAb30819 binds preferentially to tumor cells compared to normal cells and effectively recruits T-cells to kill tumor cells selectively. It demonstrates strong reversal tumor growth in tumor xenograft models, and it was well-tolerated with expected pharmacodynamics in an antibody-like half-life in non-human primates. We are planning to file an IND for XmAb30819 in 2021. Last month, we formalized a collaboration with Atreca to research, develop, and commercialize CD3-engaging bispecific antibodies to novel targets.
Atreca's unique discovery platform complements our protein engineering capabilities by providing novel, tumor-selective antibodies and targets to couple with our CD3 bispecific platform. Up to two joint programs will be mutually 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 antibodies for the potential treatment of patients with cancer. With that, Allen Yang will review our clinical portfolio. Allen?
Thanks, John. In May, we provided initial dose escalation data from our ongoing phase I study evaluating XmAb20717 in patients with advanced solid tumors. XmAb20717 is a dual PD-1/CTLA-4 checkpoint-inhibiting bispecific antibody. We have tuned the antibody's affinities for PD-1 and CTLA-4 for selective engagement of T-cells expressing both targets, which distinguishes it from combination therapy and most 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 these 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-CTLA4 and anti-PD-1 antibodies, for example, which has delivered better responses at the cost of tolerability. In our first six-dose escalation cohorts, we observed that XmAb20717 to be generally well-tolerated in heavily pretreated patients. Consistent with our hypothesis of inhibiting both PD-1 and CTLA4, we observed robust dose-dependent increases in biomarkers of T-cell activation and pharmacodynamic activity consistent with blockade of both receptors. It was also encouraging to observe cases of clinical activity as we moved into the higher dose cohorts, which we detailed in the press release in May.
Based on these data, we opened expansion cohorts in several tumor types at 10 mg /kg , as well as additional dose escalation cohorts starting at 15 milligrams 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 20717 program, as well as our other tumor microenvironment targeting bispecific antibody programs in phase I studies. XmAb23104 targets PD-1 and the costimulatory receptor ICOS, and XmAb22841, which targets the checkpoint CTLA-4 and LAG-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 bispecific antibodies that contain both the tumor antigen binding domain and the cytotoxic T-cell binding domain, specifically CD3 binding domain.
These CD3 bispecifics activate T cells at the site of the tumor in order to potentially kill malignant cells. We continue to dose patients in our phase I studies of vibecotamab, which targets CD123 in acute myeloid leukemia, plamotamab, which targets CD20 in B-cell malignancies. 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 I study of tidutamab, which targets the somatostatin receptor 2, and we expect that we will present initial data from this ongoing study in patients with neuroendocrine tumors in the second half of this year. Finally, we're developing a suite of cytokine switches, our immune-stimulatory proteins that are built on the XmAb bispecific Fc domain, incorporate the Xtend technology.
Using our Fc domain and tuning the properties enable cytokines with improved drug-like 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's an IL-15/IL-15R-alpha complex fused with our bispecific Fc domain. It targets the expansion and activation of T cells and natural killer cells. Genentech is currently enrolling patients in a phase I study evaluating XmAb24306 and quickly moving in combination with atezolizumab, their anti-PD-L1 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'll hand the call over to John Kuch, who will review the second quarter and first six-month financial results. John?
Thank you, Allen. Xencor continues to maintain a strong financial position, which enables us to support our portfolio of clinical research-stage bispecific antibody and cytokine drug programs. Our diversified portfolio of partnerships and collaborations continue to provide us with upfront payments, milestones, and royalties, important sources of non-diluted capital. With the FDA approval of MorphoSys Monjuvi last Friday, we will receive a $25 million milestone payment, which we will recognize as revenue in the third quarter. As a reminder, we are also eligible to receive royalties on worldwide net sales in the high single to low double-digit percent range and additional development, regulatory, and sales milestone payments. At June 30, 2020, our cash equivalents, marketable, and equity securities totaled $587.4 million, compared to $601.3 million at December 31st, 2019.
The decrease reflects cash used 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 million for the same period in 2019. These revenues include royalty revenue from Alexion and licensing revenue from Gilead compared to the same period in 2019, where revenue was primarily reflect research collaboration revenue from Genentech and Astellas and milestone revenue from Alexion. For the first six months of 2020, revenues were $45.5 million, compared to $131.4 million for the same period in 2019. Our revenues in 2020 include royalty revenue from Alexion, milestone revenue from MorphoSys, and licensing revenue from our Gilead and Amgen collaborations, compared to licensing and collaboration revenue earned from Genentech and Astellas in 2019.
Research and development expenditures for the second quarter of 2020 were $43.5 million, compared to $33.3 million for the same period in 2019. For the first half of 2020, they were $77.4 million, compared to $61.5 million for the same period in 2019. The increases in R&D is primarily due to increased spending on our plamotamab and XmAb2717 clinical programs, as well as our preclinical IL-2 cytokine program, XmAb27564, and our preclinical ENPP3 x CD3 2+1 bispecific antibody program, XmAb30819, both of which we have advanced into IND-enabling activities. We note that there was lower spending in 2020 in our XmAb24306 and obexelimab programs. General administrative expenses for the second quarter of 2020 were $7.2 million, compared to $5.8 million the same period in 2019.
For the first six months in 2020, G&A expenses were $14.4 million, compared to $11.3 million for the same period in 2019. Additional spending here is primarily due to increased staffing and spending on professional fees. The net loss for the second quarter of 2020 was $35 million or $0.61 on a fully diluted share basis, compared to a net loss of $16 million or $0.28 on a fully diluted share basis for the same period in 2019. The higher net loss reported 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 on a fully diluted per share basis, compared to net income of $64 million or $1.10 on a fully diluted per share basis for the same period in 2019.
The net loss for the first six months of 2020 compared to the net income reported for the same period in 2019 is primarily due to revenue recognized Genetech collaboration 2019. Non-cash stock-based compensation expense for the first six months of 2020 was $14.7 million, compared to $15.2 million for the same period in 2019. Total shares outstanding were $57.2 million as of June 30th, 2020, compared to $56.5 million as of June 30th, 2019. Based on current operating plans, Xencor expects to have cash to fund research and development programs and operations into 2024. Xencor expects to end 2020 with between $525 million and $575 million in cash equivalents, marketable securities and equity securities. With that, we'd now like to open up the call for your questions. Operator?
Thank you. As a reminder, ladies and gentlemen, if you have a question at this time, just press star then one on your telephone keypad. To withdraw your question, just press the pound or hash key. Our first question is from Ted Tenthoff with Piper Sandler. Please go ahead.
Great. Thank you very much. Can you hear me okay?
Yes. Audible.
Oh, awesome. Congratulations on the tafasitamab approval. I'm wondering, 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.
Sure. Thanks. I hope you're staying safe, Ted, out with that tropical storm in New York, along with all the other New Yorkers.
Sorry. Yes, go ahead.
The royalties are high single to low double digits, and they're tiered. That's the most detail we're allowed to share.
Yep
At this point. They are worldwide royalties, you consider worldwide sales regardless of whether the company selling is Incyte or MorphoSys, and of course, Incyte has ex-US commercial rights. There are significant milestones for both development in other indications within oncology as well as non-oncology, though there is no development going on for that at the moment that we are aware of. There is other oncology indication regulatory, development regulatory milestones, and there are sales milestones. John, do you want to give a little bit of granularity on the magnitude of those?
Yeah. The sales milestones are $50 million, and the other development regulatory are anywhere in the $50 million-$75 million range.
Yes, depending on which ones.
Depending on the additional indications, yeah.
Thank you.
Great. Well, thank you so much, and congrats. It's another good example of the model working.
Thank you so much. We're very excited about the Monjuvi approval.
Thank you. Our next question comes from Alethia Young with Cantor Fitzgerald.
Hey, guys. This is Leon on for Alethia. Thanks for taking the call. I guess the first one is on tidutamab. I know you're going to present some data later this year. Just wondering, can you just talk about what types of data that we might see? Like, how many patients? Can you just frame for us what is the general sort of response rate seen with the standard care? Second, I wanted to ask about this Atreca collaboration. Can you just talk about what drove you guys into doing this deal? Thank you.
Sure. For Tidutamab, the data that we are going to present later this year is for the neuroendocrine tumor population that's within the phase I. Just that population, where SSTR2 is a sort of definitive marker. For the type of data, it's going to be our dose escalation data for that trial, which is in advanced stage NET patients. That data would be of course, our safety data. This was a high risk, potential high return program because we know that SSTR2, though expressed heavily on the tumors in NET, are also expressed on various healthy neuroendocrine tissues. We believe there ought to be a therapeutic window that we could design against, we're testing that hypothesis now with this CD3 antibody. The type of data would be, of course, safety data, that's going to be important thing to look at.
It's going to be what dose we've gotten up to in this population, and of course, any efficacy data and biomarker data that we get out of the patients. Note that the standard of care in this tumor type typically has around a 10%-ish response rate. It's a very low response rate, because these tumors don't generally regress. They're usually sort of halted in their tracks and their functionality is reduced. Allen, were there any points that I missed there about this kind of population?
Yeah. It'll predominantly be the dose escalation cohorts, and we may have some expansion data at the time of the meeting. Again, not that many patients at this point.
Yeah. We're talking maybe a couple of dozen.
Yep.
Now you wanted me to switch to discuss the Atreca collaboration. As for why, I think it's because we have a platform that lets us create antibodies that are really tuned for a particular target and use. We can dial the potencies up or down. We can make it more selective for high-expressing cells than for low-expressing cells, all depending on the nature of the target. The key ingredient for that kind of approach is, of course, really exciting targets. We think finding new targets is an important endeavor. We thought working with one of the best companies out there that can find new target antibody pairs, made a lot of strategic sense. That's the rationale.
We want to take this toolkit we've built and apply it against the broadest range of biologies we can get to, and there's technologies out there for finding new targets and antibody pairs against them that we don't have, right? We have to then find the best out there. Were there any technical points on that that you wanted to add, John? Does that adequately describe it?
Yeah. I would just add that we really admired the Atreca platform. The idea of taking checkpoint responsive patients and mining their B-cell repertoires for new antibody responses that emerge, presumably as part of the response to the tumor. Then, the first thing they do is then check those antibodies to see if they react with other patients' tumors. Putting all that story together just seemed like a perfect fit for what we're trying to do at Xencor, and again, a way to access novel targets.
Yeah.
Thank you.
All right. Great. Thank you.
Our next question comes from Jonathan Chang with SVB Leerink. Please go ahead.
Hi, guys. Thanks for taking my questions. First question, what are your latest thoughts on plamotamab development strategy, and when could we see the next data update from that program?
Our latest thoughts are that this molecule that we have now, we're seeing very promising activity. It's a highly active agent in late-line lymphoma, DLBCL in particular, is the largest population, and it's generally well-tolerated. We have a dosing regimen that we're nearly done optimizing. We have this kind of agent, and it's a very competitive space, and we think that the central value proposition for this class is going to be how you run the clinical development, what other agents you combine it with, and we think there's many agents with orthogonal killing mechanisms of the tumor cells that are a great combo approach. As we've seen from Rituxan's history, the real power and breadth of use and movement across all different lines of therapy is because it's been used in combination very effectively.
I think the tolerability profile and activity profile we've seen so far with plamotamab support that kind of development effort, of course, with a much higher level of baseline activity than you see with Rituxan. We don't want to dismiss the potential of monotherapy approaches, in particular niche populations to advance more rapidly. That certainly can be value creating and move you forward, but I think what we don't want to do is abandon that combination approach. We should be announcing later this year the specific trials that we plan to initiate around combinations as well as monotherapy.
Just when could we see data out of?
I'm sorry. Yeah, sorry. Two questions. We're not guiding to any specific data readouts yet for plamotamab. We're being mindful of potential, though they haven't impacted us much yet, COVID impacts, and so we'll guide on that a little bit later on, what our next data disclosures would be.
Got it. Just second question, could you provide any additional color around the AEs observed with AMG 424, and what could potential next steps for the program be? Thank you.
Right. I think for the moment, we're going to stick to the AMG public disclosures. They were AEs that were very likely CD38 mediated, certainly CD38 targeting with both marketed drugs like daratumumab as well as numerous development programs have shown that there's pretty characteristic adverse events for targeting CD38 with an antibody. A lot of hematologic adverse events, as one would expect. We're not going specifically into the details of the AMG 424 program, mostly because we've only recently, within the last few weeks, gotten all the detailed data, and we're still sifting through it. I think that there is, as we're initially assessing, potentially a path forward for that molecule, and a way to get CD38 targeting with a CD3 killing mechanism advanced.
There's a wide range of tumor types, of course, hematologic tumor types that express CD38 in addition to myeloma, where Amgen has been developing. Okay.
I'm going to move on to the next questions, Mr. Chang. I hope that answered your question. Our next question is from Mara Goldstein with Mizuho. Please go ahead.
Great. Thanks for taking the questions. Just a couple, and the first is on X
On XmAb20717, the PD-1 CTLA-4 bispecific. Can you just talk a little bit about what you would consider the bar for success for that agent, given what we know in the, broadly speaking, in the checkpoint field right now? I'm also curious as to XmAb30819 and the perceived advantages of using a bispecific as opposed to some of the development we've already seen with that target via ADC.
Sure. For 20717, I would say the bar for success depends on which of the two different indication types or classes that we're pursuing, for example, in our expansion cohorts. There's the post PD-1 treated patients in an indication where there's ample PD-1 use and approved PD-1 agents in those expansion cohorts.
Then there's the indications where there's no PD-1 approved and there's not a lot of PD-1 use, but there's a reasonable hypothesis, in particular, why CTLA-4 engagement as well could boost activity are different there. I think in the post PD-1 patients, generally speaking, anything close to a 20% response rate in patients that have failed PD-1 therapy in, say, a non-small cell lung or in a melanoma would be really great. Allen, do you want to comment on both anything further on the post PD-1 sort of, PD-1-proven indications and then maybe comment on the non-PD-1-approved indications.
I think, as Bassil said, it's a complicated question, Mara. You have to look at the patients, that data we'll have to look at very closely, and you'll have that chance to look at that when we present that data. If you think about melanoma, many patients are just treated with PD-1, and some are treated actually with the combination. Depending on what their prior response was, your expectation for what the response would be in that refractory population. Remember, the phase I is being conducted in the U.S., all the melanoma and non-small cell lung cancer patients have seen checkpoint inhibitors. Now, in non-small cell lung cancer, you're probably going to use only a PD-1, it's 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.
Most of the patients in the phase I have seen prior checkpoint, either pembrolizumab or both nivo, ipi, or PD-1 CTLA-4 combination. In terms of percentage, it will probably be low in this refractory population as a baseline. Again, there's 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've gotten before, what their response was, how long it lasted, and then see what the response was to this particular agent.
There was also the discussion around non-PD-1 approved indications.
Yeah. I think that depends. There are a limited number of non-PD-1 indications where there's activity. It seems like there's a lot of clinical activity, but you would expect it to be higher. Depending on the indication, you would probably seek to see responses maybe up to 30%-50%.
Of course, that's in indications where PD-1 therapy is known to work. We're exploring indications where they're not necessarily known to work.
Yes. That's exactly right, Bassil. Where it's known to work, but then there's not been treated because these are U.S. patients, because there's no indication for that in that. In other words, there's a small clinical study that shows activity, but then there is not an approval in that indication yet. Those patients are rare into the study right now.
Okay. For the anti-CD3 target.
For the 30819, why a CD3 bispecific versus an ADC? I think this goes to this 2+1 design and the advantages it could have. John, maybe you want to touch on that?
Yeah. First of all, one of the reasons we liked the target was because of the data that was generated with the drug conjugate. Although, you probably already figured out that they had sort of dose-limiting ocular toxicities, the standard class effect with the conjugate. We thought that made the target look pretty good. As to why CD3 would do better, there's reasons beyond not having that sort of class effect toxicity. One is that renal cell carcinoma tends to have more T cells than just about any other solid tumor. We've got a lot of effector cells to draw from in terms of meeting the activity. Second of all, you might imagine, and other people are talking about this as well, is that once you're engaging CD3 T cells, you're also helping to promote an endogenous T cell response, right?
You're expanding T cells by activating them. You're mobilizing cytokines and chemokines, there are additional dividends to engaging T cells in terms of long-term activity, potentially even developing a memory response against the cancer.
Okay. I apologize, but if I could just ask a point of clarification on the financial arrangement for Monjuvi. Do you still get payments on those indications that Incyte would undertake on its own?
Yes, it's irrelevant who the party is.
Okay. Thank you. I really appreciate it.
Thank you, Mara. Stay safe there in New York.
Thank you.
Thank you. Our next question comes from Etzer Darout with Guggenheim Securities. Please go ahead.
Hey, good afternoon. This is Paul on for Etzer. Thanks for taking our questions. I guess I have a more specific follow-up to the previous question on plamotamab. In light of the recent Monjuvi approval, have you explored the potential for combining Monjuvi with plamotamab or explored any potential synergies with anti-CD19 and DLBCL in general? Then a second question, I'm wondering if you'd comment on if there's been any increased conversation or interest in your CD20 program from a deal perspective, on the heels of the recent Genmab and AbbVie agreement. Thanks.
Sure. I'll take that. For the idea of combining plamotamab or CD20/CD3 with an anti-CD19 antibody like Monjuvi, no. Certainly, it's an interesting hypothesis. We're not commenting specifically on any of our combination studies just yet. We're going to do that a little bit later in the year. 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, in this particular context, further boost the T cell function to kill the B cells, that plamotamab is doing enough of that. In some indications with different CD3 antibodies, you might want to have, say, a PD-1 inhibitor to boost T cell function. What's complementary to a CD20? A CD19 is a different target, and you've got different killing mechanisms with, say, an ADCC-driven antibody like Monjuvi.
It's a reasonable hypothesis. We also think that there's a variety of targeted small molecule agents that could be really interesting hypotheses. It's an interesting point you raise. Now, regarding CD20 deal conversations, we can't really guide on business development activities because we believe business development activities can never be predicted perfectly because there's always another party involved. I will say that the value of a CD20/CD3 as a very important part of what's going to happen in B-cell lymphoma and potentially as a backbone therapy that would be part of displacing Rituxan after all these years, I think that's widely appreciated is what I'll say.
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. That's a program where a partnership might play a complementary role, right? Sometimes you do that to expand the scope or scale of development or find good combination partners. We'll guide on that when the time is right, when we actually have a deal to announce.
Great. Thanks very much.
Thank you. Our next question comes from Arlinda Lee with Cowen. Please go ahead.
Hi, guys. Thanks for taking my questions. I maybe just wanted to follow up on plamotamab a little bit more. It entered the clinic in 2017. Can you maybe talk about the scope of the data that you plan to present whenever you do provide an update? Just some housekeeping things. I think you also previously mentioned expectations for filing an IND for your IL-2-Fc. Can you talk about maybe where that program stands right now? Then, as well, ideas on your CD123/CD3 XmAb14045, the additional phase I that you're thinking about. Thanks.
Sure. Maybe the easy one, the short answer first. File the IND for the IL-2-Fc, that's on track. It looks like it's going to be very early in the new year. That's moving forward. That's our IL-2 engineered to be selective to activate regulatory T cells for potential use in autoimmune diseases. It's not an oncology program, but a really exciting molecule design. For plamotamab, the sort of scope of data that we would want to have at our next data release would be really the completion of the phase I, the establishment of our dosing regimen and schedule for going forward. Of course, whatever efficacy data continues to flow out of that phase I would be what we would want to show the world.
Of course, the plans for what we were going to do with it can come before or along with that data. You're always working very hard to get everything pulled together for your next phase of clinical trials as you're wrapping up the ones you're working on. For the CD123 additional phase I, you were sort of getting at what ideas would you have on that, is what you're saying. I would say, there's different slices of AML, and I think, in particular, we have to look at how the landscape in AML is changing. I think the biggest change there is the emergence of venetoclax as an agent, both in frontline in the elderly, frail population, as an induction therapy.
It's being used more and more in the relapse setting, and I think it's going to have a label there soon, probably. We want to make sure we're mindful of that, and I think that there's different places where a highly active T-cell engaging antibody that depletes the cells can be used. Using that in the context of whether it's consolidation or whether it's in the right relapse setting is where we're looking. Again, we'll specify more on that later when we can. We are in partnership with Novartis there. We have to be mindful of disclosure requirements. Does that answer your question, Arlinda?
Thanks very much. Yes.
Thank you.
Thank you. Our next question comes from Gregory Renza with RBC Capital Markets. Please go ahead.
Hi, this is for Greg. Thank you for taking my question. My first question is a follow-up to the previous question on AMG 424. How should we think about the potential read-through from the discontinuation to the development of AMG 509? Thank you.
I don't think there is any read-through. As Amgen disclosed, the toxicities were very likely CD38 mediated. If you kill CD38 positive cells, things happen. Their conclusion from the review of the data, and we agree from our initial review of all the phase I data, is that that's quite likely what the case was. CD38 toxicity does not read through to the AMG 509 program, which of course is targeting a prostate cancer antigen. There did not appear to be something fundamental about CD3 targeting in general or our constructs or XmAb bispecifics in general at all to be read through from the AMG 424 AE data.
Great. Thank you. Just one more from me, if I may.
Please.
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.
Right. Though we are not investing in it in further development internally, we have been continuing to analyze the data from our lupus phase II trial, which had a very, very robust and really cutting-edge biomarker strategy around it. We do expect to be disclosing some information around the biomarker work we've done there, which we should be able to talk about in the next couple of months, I believe. I think that does bear on the strategy for the molecule, though, again, we're still committing to developing it external to Xencor.
Got it. Thank you again for taking my question.
Thank you.
Thank you. Our next question comes from Tom Shrader with BTIG. Please go ahead.
Good afternoon. I had a question about the timeline of the Atreca deal. I agree it's a pretty exciting screen to match with your format. Is this a true discovery deal, or is it Atreca's antibodies that they've already discovered and you're just constructing antibodies? Could we see something pretty quick here, or is it sort of back to square one for this screening approach?
I would say, it's really about using the fruits of their screening work that's created antibodies where there's some functionality around them. Of course, they're always updating that and adding new. Though as a discovery program, of course, you're not going to have anything into the clinic in a couple of years, but I think this is about exploiting all the great foundational work they've done while they continue to add to it. John, do you want to add anything on that?
No, that's about right. They're coming to the table with an existing basket of antibodies, they're certainly not slowing down their ongoing discovery activities. The well could be replenished as we go through the collaboration.
The benefit we bring is-
Okay, great.
To be able to rapidly make drug candidate quality molecules where you can test how that antibody works in, say, a CD3 bispecific context, and then if it works, you're immediately off to the races in development.
Great. I had a quick remedial question on the 2+1 format. Is there any sense of how powerful that is? I know a regular antibody, a tiny fraction actually goes to the target. Is there a sense of how much better this is? If there's anybody's imaging data that we could look at? I think we only have one example where the format was compared to a conventional format. Isn't that right? The Roche CD20 case, where really all that happened is tox got worse.
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. They saw promising activity in really late-line populations. Direct comparison, John, do you want to touch on where the real power is, whether it's in better avidity or better selectivity?
Yeah. Just to go through the concept again, the idea is, particularly in the solid tumor setting, where you can't - you're not like in heme-onc, you , and it turns out that people can live better than we ever thought they could without any B cells. You can kill not only the malignant B cells, but the cell of origin as well, and the patient's just fine. In the solid tumor setting, that's probably not going to be the case for a lot of these targets. They're expressed on important organs.
This is really about just trying to expand the therapeutic index between attacking tumor cells versus attacking normal cells. To Bassil's point about the CEA, the 2+1 in Roche's hands, they sort of led the way on this. We've been working on this concept for a while now. There's been some nice preclinical publications out of the Genentech group in the context of HER2 that really pretty nicely lay out the concept with a lot of different comparative studies. We do think there is a lot of promise for this format.
Okay. Thank you.
Thanks, Tom.
Thank you. Our next question comes from Peter Lawson with Barclays.
Thanks, Peter. Peter, are you there?
Looks like his line dropped, sir. I'm going to move on to the next question from Dane Leone with Raymond James. Please go ahead.
All right. Thanks for the update and taking the questions. I just want to get a sense of the timeline that you might understand on seeing data for 24306.
Right. Genentech is executing the clinical trial for XmAb24306, which is our IL-15 molecule for oncology. They started the phase I study in Q1 of this year. I think given both where the study is, advancing in dose escalation as well as Genentech, we have to agree with them on a data disclosure, so they have the right to say when, as well as we do, so we have to both be in sync on that. I think it's unlikely we'll have any data this year, for sure. As to whether next year, we'll have to confirm with Genentech later in the year. We really can't give you anything more specific than that, unfortunately.
Can you remind us how the economics of the partnership work?
Sure, of course. We signed a deal in February of 2019. It is a 55%/45%, where 45% is Xencor worldwide split of the profit and loss. We had $120 million up front paid, and there's $160 million in clinical stage milestones for the lead program, XmAb24306. In addition to splitting all development costs and then splitting the P&L 55%/45%, Genentech will pay 100% of all what are called launch costs, so pre-approval commercialization preparation activities. An important non-economic part of that deal, and so in addition to having a very large stake in the ultimate value of the asset, we also have the right to run combination studies with XmAb24306 and both internal Xencor pipeline candidates, as well as candidates or molecules, drug molecules of third parties, as long as they don't directly compete with molecules in the collaboration.
Combination is where an IL-15 is going to be used. It'll boost the T cells, boost the NK cells for other therapies action.
Okay. Makes a ton of sense. Just one more question, maybe a macro question for you. As you have a lot of assets in the portfolio in early stage development, is there a way to give us a sense of maybe over the next 12 months, how many of those programs you would want to nominate into more later stage phase II testing, or how you want to approach later stage development for some of these assets? Just understanding how you internally expect the programs to advance as we head into 2021.
Over the next 12 months, hopefully we'll have more data we can talk about publicly around XmAb20717, the PD-1 CTLA-4 inhibitor across both these expansion cohorts of both sort of PD-1 experienced solid tumors as well as sort of non PD-1 approved solid tumor indications. That should help guide us on more specifics of do we go in one basket of indications, say post PD-1, do we go in the non post PD-1, do we go in neither, do we go in both? Data will have to drive it. I think we should have more clarity there, how that program is going to be able to proceed. I think that as we provide the specifics, as our plans are really coming together around plamotamab in the CD20/CD3, that also, we should be able to provide significant clarity there for how we're thinking of later stage.
I think in that case, we feel very comfortable that the data we have already strongly supports moving forward, at least in DLBCL, and as we continue the studies and do more work, we hopefully can bring other indications forward in a data-based way. I think those are the ones I think that we should have more clarity on. The others we're going to continue to generate further data.
Okay, great. Thank you very much.
Hey, thank you, Dane.
Thank you. As a reminder, ladies and gentlemen, if you have a question, just press star then one to get in the queue. Our next question is from Shanshan Xu with Berenberg. Please go ahead.
Hi. Good afternoon. Thank you for taking my questions. I have a few here. First is on the SSTR2 for NET. Just, I guess, can you overview what the treatment landscape particularly related to Lutathera? Do you think your program needs to beat Lutathera to be competitive or to be approved? Also on that program, what are the safety signals you are mostly concerning about? Secondly, on the IL-2 program, I know it's early in the days, but, I guess, do you guys have an idea what indications you are potentially pursuing? Are you looking for a partner for this program? Thank you.
Thank you. I got four questions. Let's make sure we can run through them. For SSTR2 Lutathera, how does that play in a competitive context? We clearly are seeing patients that are non-post Lutathera even though Lutathera is indicated for them, so not everybody gets a radiotherapy. The obvious distribution issues with radioisotopes are clear. The safety signals we will be looking for, ones where we know SSTR2 is expressed. There's expressed in gastric tissues, expressed in pancreatic islet cells, expressed in some lungs. We're going to look at all of those. Now, for IL-2, we're not ready to guide on indications. We are an oncology-focused company, so I think we'll be willing to entertain partnerships earlier for the IL-2, but we are prepared to move it forward to get some meaningful inflections, even post-biomarker phase I data.
Okay. Then do you also have IL-2 for oncology in the works too, or?
No, we do not. IL-15 program, we believe is a better starting point. We believe we have a very attractive, hopefully best-in-class product profile for our IL-15, which of course engages IL-2 beta gamma receptors downstream, but completely avoids the CD25 binding that you usually have to work to get rid of for IL-2. No.
Okay, great. Thank you for the question.
Thank you.
Congrats on the progress.
Thank you. Our last question comes from Peter Lawson with Barclays. Please go ahead.
Hi, Bassil. Thank you. I'm back. Just on CD20, CD3. That's a crowded but really exciting landscape. Just how should we think about your position in there? Is it moving into combos or different indications, or do you think it's a question of driving up efficacy?
No, I think it's about combinations. I think from the efficacy data we have and that we see with our competitors like at Roche and Regeneron, I think we have a pretty good feel for where the efficacy falls for this class, and I think there's a lot of commonality there. I think it's gonna 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 a CD20/CD3 might work. We're all discovering what niches these particular mechanisms of action might best suit. We'll of course chase that signal very rapidly. I think there's certainly potential opportunities around indications or slices, whereas we learn things we can maybe get the jump on competitors.
I think the focus right now is how do you best combine and best position yourself both in this relapsed/refractory setting and then ultimately to want to move into earlier line. It's going to be about, I think, that more than anything.
When do you think we get a kind of complete picture around that? When are you gonna roll out the strategy?
Well, we still expect to be able to give a lot further guidance on our strategy later this year.
Got you. Thank you. Then just on the CTLA-4 PD-1, when should we see the next data, and is that patient still in CR?
Sure. 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's five cohorts, so can't get all of them done at once, but we should have that initial bolus of data coming out within the next 12 months. I'll defer the question on the CR patient. I'll ask Allen, do we have definitive knowledge about that patient anymore, now that they've gone so far out past?
The patient has come off of study for investigator choice and patient decision. We know that they were in CR at the time of coming off study. We don't have additional data from that patient.
Great. Okay. Thank you so much. Thanks for the additional color.
Thank you.
Thank you, ladies and gentlemen. This concludes our Q&A session. I would like to turn the call back to Bassil Dahiyat for his final remarks.
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-19 pandemic. Have a great evening, and look forward to updating you again in the future. Bye-bye.
With that, ladies and gentlemen, we thank you for participating in today's conference. You may now disconnect. Have a wonderful day.