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 speakers' presentation, there will be a question and answer session. Now, I would like to turn the call to your speaker today, Charles Lyle, Head of Investor Relations.
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.zencor.com.
Today on our
call, Basil Dacias, President and Chief Executive Officer, will provide updates regarding COVID-nineteen and our partnerships Alan Yang, Chief Medical Officer, will review recently presented clinical data John Desjollet, Chief Scientific Officer, will provide updates from preclinical development and John Cush, Chief Financial Officer, will review financial results. And then 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-nineteen pandemic on these topics. These forward looking statements are not historical facts, but rather are based on our current expectations and beliefs and are based on information currently available to us. The outcome of the events described in these forward looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward looking statements, including, but not limited to, those factors contained in the Risk Factors section of our most recently filed annual report on Form 10 ks 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 to have improved activity, longer half life or bispecific structure. This flexibility and portability enables us take multiple shots on goal simultaneously in the clinic and generate proof of concept data to guide which programs will independently advance, which will partner and which will terminate.
We're focusing our R and D on the expansion and use of our XmAb bispecific platform to create antibodies targets simultaneously and also to engineer cytokines with structures optimized for particular therapeutic use. Now we're currently running 6 Phase 1 clinical studies evaluating subaximab bispecific antibodies. Now before I update on some of our partnerships, we want provide a brief update on the impact of the COVID-nineteen pandemic on our operations. The pandemic did not significantly disrupt patient enrollment to 6 ongoing clinical trials during the Q2. However, our study initiations for bibacotamab, 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 study attributable to COVID-nineteen and no effect on our studies for the 3 tumor microenvironment activator molecules. Now as is still the case today as it was 3 months ago, unfortunately, the situation is very fluid and we'll continue to update it as soon as appropriate. Now 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-two virus testing at our facility. We are maintaining a requirement for all non laboratory employees to work remotely.
Okay, now on on 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-nineteen impacts here during the Q2 as we continue to earn revenues from partners like Alexion and Gilead, but we will continue to monitor potential impact 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 2 market of products, 7 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 XmAb-five thousand five hundred and seventy four. It's an antibody that we created and put our XmAb cytotoxic Fc domain on to. We also initiated its clinical development running the Phase 1 trial. Its trade name is now MONJUVY. 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 arriving 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. Now we couldn't be happier here at Xencor as this approval expands the options for patients with this difficult to treat blood cancer. LONJAVE will be co commercialized in the U. S. By MorphoSys and Incyte and the European marketing authorization application for tafasitamab is currently under review by the EMA.
Now from time to time, we enter into research collaborations that include the creation of novel XmAb bispecific antibody to be advanced by partners. Amgen is a prime example. AMG 509 is Amgen's with prostate cancer in human sarcoma and a Phase 1 study is currently recruiting for patients with advanced prostate cancer. Now the first bispecific antibody that Amgen developed under this collaboration is AMG424, a CD38xCD3 bispecific antibody that they evaluated in a Phase 1 study in patients with multiple myeloma. Amgen terminated the program in the 2nd 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 4 24 revert to Xencor and the company is currently assessing the asset's potential for further development, including treating different patient populations and applying mitigating treatments for the adverse events. Now the plug and play nature of our XmAb technologies enables additional like Alexion and Vir to advance their programs, needing very little resources or effort from us. Our strategy is to selectively license access to XmAb technologies for creating and developing antibodies with improved properties. Lexion'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 hemolyticuremic syndrome this June.
In addition to evaluating ULTOMIRIS in a broad late stage development program, Alexion is currently conducting a randomized, controlled Phase 3 study in hospitalized patients with advanced COVID-nineteen. Our partnership with Vir Biotech shows the broad applicability of our technology in areas such as viral infectious infectious disease. Vir has non exclusive access to our Xtend Feet technology to extend the half life of Vir-seven thousand eight hundred and thirty one and Vir-seven both novel antibodies that they're investigating potential treatments for patients with COVID-nineteen. They plan to submit an IND for VER-seven thousand eight hundred and thirty one and commence a Phase twothree clinical trial program in August, and they plan to initiate a study evaluating VER-seven thousand eight hundred and thirty two later this year. I'll now turn it over to John Desjorlet, who will provide an update on some of our preclinical programs and our new discovery and development collaboration with Atraco.
John?
Yes. Thanks, Basil. Yes, Xencor's XmAb bispecific Fc domains were specifically created to enable the rapid design and simplified development of bispecific antibodies to combine 2 or more different targets. 1st in class that we have developed were CD3 bispecific antibodies that contain 1 antitumor binding domain and 1 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're also investigating biosevic 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 super organism 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 XmAb2 +1 bispecific antibody with 2 domains that find a tumor target and a single domain that finds 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 3 internally developed 2 +1 bispecifics at the 2nd session of the AACR meeting in late June. Preclinical models show strong selected tumor killing from 2 plus 1 programs that target PSMA, mesothelin and EMPP3, 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 there are good applications for this new format. The EMPP3 program, XmAb3819 is the most advanced disease.
Preclinical data indicate that XmAb3819 binds preferentially to tumor cells compared to normal cells and effectively recruits T cells that kill tumor cells selectively. It demonstrates strong reversal tumor growth in tumor xenograft models and it was well tolerated with expected pharmacodynamics and antibody like half life in non human primates. We are planning to file an IND for XmAb3819 in 2021. Finally, last month, we formalized the collaboration with Atrica to research, develop and commercialize CD3 engaging biocytic antibodies to novel targets. Atrica's Matrica's unique discovery platform complements our protein engineering capabilities by providing novel tumor selective antibodies and targets to couple with our CD3 biocytic bispecific platform.
Up to 2 joint programs will be mutually selected for further development and commercialization with each partner sharing profits equally. Each company will lead 1 of the joint programs. The agreement also allows for each partner to pursue up to 2 programs independently. This collaboration offers both Xencor and Natrica with several opportunities to advance novel first in class CD3 bispecific antibodies for the potential treatment of patients with cancer. With that, Alan Yang will review our clinical portfolio.
Alan? Thanks, John. In May, we provided initial dose escalation data from our ongoing Phase 1 study evaluating XmAb20717 in patients with advanced solid tumors. XmAb20717 is a dual PD-one CTLA-four checkpoint inhibiting bispecific antibody. We have tuned the antibodies' affinities for PD-one and CTLA-four 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 TLA-four and anti PD-one antibodies, for example, which has delivered better responses at the cost of tolerability. In our first 6 dose escalation cohorts, we observed XmAb20717 to be generally well tolerated in heavily pretreated patients, Consistent with our hypothesis of inhibiting both PD-one and CTLA-four, 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 milligram per kilogram, 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 2717 program as well as our other tumor microenvironment targeting bispecific antibody programs in Phase I studies. XmAb2314 targets PD-one and the co stimulatory receptor ITOS and XmAb22841, which targets the checkpoint CTLA-four and LIG3, 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 1 studies of vivacotamab, which targets CD123 and acute myelogenous leukemia and plimodumab, which targets CD20 in B cell malignancies. And as we have previously disclosed, we plan to initiate additional clinical programs subject to impacts from the COVID-nineteen pandemic, likely next year. We also continue to dose patients in the Phase 1 study of tildotumab, 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 sleutocytokines solution, our immune safety linked protein that are built on the XmAb bispecific Fc domain and incorporate the XEN technology.
Using our Fc domain and tuning the proteins 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-fifteen receptor output 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 1 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 Cush, who will review the Q2 and 1st 6 month financial results. John?
Thank you, Alan. Suncor continues to maintain a strong financial position, which enables us to support our portfolio of clinical, research stage, biocytic 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 dilutive capital. With the FDA approval of MorphoSys Montjuvie last Friday, we will receive a $25,000,000 milestone payment, which we will recognize as revenue in the Q3. 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, cash equivalents, marketable and equity securities totaled $587,400,000 compared to $601,300,000 at December 31, 2019. The decrease reflects cash used to fund operating activities in the 1st 6 months of 2020, offset by upfront payments, milestone payments and royalties from our partnership and licensing arrangements. For the Q2 of 2020, revenues were $13,100,000 compared to $19,500,000 for the same period in 2019. Revenues include royalty revenue from Alexion and licensing revenue from Gilead compared to the same period in 2019, where revenues primarily reflect research collaboration revenue from Genentech and Astellas and milestone revenue from Alexion. For the 1st 6 months 2020, revenues were 45,500,000 dollars compared to $131,400,000 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 Aimmune collaborations compared to licensing collaboration revenue earned from Genentech and Astellas in 2019. Research and development expenditures for the Q2 of 2020 were $43,500,000 compared to $33,300,000 for the same period in 2019. And for the 1st time in 2020, they were $77,400,000 compared to $61,500,000 for the same period in 2019. The increases in R and D is primarily due to increased spending on our plimodimab and XmAb2717 clinical programs as well as our preclinical IL-two cytokine program XmAb27,564 and our preclinical ENTP3 IIIxCD3 2 plus 1 bispecific antibody program, XmAb3819, both of which we have advanced into IND enabling activities. We note that there was lower spending in 2020 in our ECCMAB24306 and obexelimab programs.
General and administrative expenses for the Q2 of 2020 were $7,200,000 compared to $5,800,000 in the same period in 2019.
For the
1st 6 months in 2020, G and A expenses were $14,400,000 compared to $11,300,000 for the same period in 2019. This spending here is primarily due to increased staffing and spending on professional fees. The net loss for the Q2 of 2020 was $35,000,000 or $0.61 on a fully diluted share basis compared to a net loss of $16,000,000 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 and D expenses in 20 20. For the 1st 6 months in 2020, net loss was $43,100,000 or $0.76 on a fully diluted per share basis compared to net income of $64,000,000 or $1.10 on a fully diluted per share basis for the same period in 2019.
The net loss for the first 6 months in 2020 compared to net income reported for the same period in 2019
is
primarily due to revenue recognition margin on Tech Collaboration in 2019. Non cash stock based compensation expense for the 1st 6 months 2020 was $14,700,000 compared to $15,200,000 for the same period in 2019. Total shares outstanding were $57,200,000 as of June 30, 2020 compared to $56,500,000 as of June 30, 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 $525,000,000 $575,000,000 in cash, cash equivalents, marketable securities and Equity Securities.
With that, we'd now like to open up the call for your questions. Operator?
Thank you.
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. So congratulations on the tafacitinib 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. And I hope you're staying safe set out with that tropical storm in New York along with all the other New Yorkers.
Sorry. Yes, go ahead.
So, the royalties are high single to low double digit and they're tiered. That's the most detail we're allowed to to
share at
this point. They're worldwide royalty, so you consider worldwide sales regardless of whether the company selling is Insight or MorphoSys and of course Insight is ex U. US commercial rights. There are significant milestones for both development in other indications within oncology as well as non oncology though there's no development going on for that at the moment that we're aware of. So there's other oncology indication regulatory development milestones and there are sales milestones.
John, do you want to give a little bit of granularity on the magnitude of those?
Yes. The sales milestones are $50,000,000 and the other development regulatory are anywhere in the $50,000,000 $75,000,000 range.
Yes, depending on which ones we
Like depending on the additional indications, yes.
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 MONGAVIA approval.
Thank you. Our next question comes from Alethia Young with Cantor Fitzgerald.
Hey, guys. This is Lee on for Alethia. Thanks for taking the call. I guess the first one is on tadalumab. I know you're going to present some data later this year.
So just wondering, can you just talk about what types of data that we might see, like in how many patients? And then can you just frame for us what is the general sort of response rate seen with the standard of care? And then second, I wanted to ask about this Atriga collaboration. Can you just talk about what you view guys into doing your deal? Thank
you. Sure. So for tilduzumab, the data that we are going to present later this year is for the neuroendocrine tumor population that's within the Phase 1, so 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. And that data would be, of 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 expressed on various healthy neuroendocrine tissues. And we believe there ought to be a therapeutic window that we could design against and so we're testing that hypothesis now with the CD3 antibody. So the type of data would be of course safety data, so 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 percentage response rate.
It's a very low response rate, because these tumors don't generally regress. They're usually halted in their tracks and their functionality is reduced. Alan, were there any points that I missed there about this kind of population?
Yes. For Tom, maybe the dose escalation cohorts and we may have some expansion data at the time of the meeting. But again, not that many patients at this point.
Yes, we're talking maybe a couple of dozen. Yes. And then now you wanted me to switch to the, discuss the Atrachea 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 in 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. And the key ingredient for that kind of approach is 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 made a lot of strategic sense. And so 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? Or is that adequately describe it?
Yes. I mean, I would just add that we really admired the Atrica platform, emerged, presumably as part of the that emerged presumably as part of the response to the tumor. And then the first thing they do is then check those antibodies to see if they react with other patients' tumors. And putting all that story together, it just seemed like a perfect fit for what we're trying to do at Xencor and again a way to access novel targets.
Yes. Thank you. All right. Thank you.
And 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 tamotimab development strategy? And when could we see the next data update from that program?
Well, our latest thoughts are that this molecule we have now, we're seeing very promising activity. It's a highly active agent in late line lymphoma DLBCL, in particular, the largest population and it's generally well tolerated. We have a dosing regimen that we're nearly done optimizing. So 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 and 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.
Because 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. And I think the tolerability profile and activity profile we've seen so far clomodimab 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. And that certainly can be value creating and moving forward. But I think what we don't want to do is abandon that combination approach.
And we should be announcing later this year the specific trials that we plan to initiate around combinations as well as monotherapy.
And just when could we see data?
I'm sorry. Yes, sorry, two questions. We're not guiding to any data specific data readouts yet for plimodimab. We're being mindful of potential, what our next what our next data disclosures would be.
Got it. And just second question, could you provide any additional color around the AEs observed with AMG-four twenty four? 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 Amgen 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 is pretty characteristic adverse events for targeting CD38 with an antibody, a lot of hematologic adverse events as one would expect. So we're not going specifically into the details of the AMG-four twenty four program mostly because we've only recently within the last few weeks gotten all the detailed data and we're still sifting through it. But 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.
And 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 question. 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 XmAb20717, the PD-one CTLA-four bispecific. Can you just talk a given what we know in the broadly speaking in the checkpoint field right now? And I'm also curious as to XmAb30,819 and the perceived advantages of using a bispecific as opposed to some of the development we've already seen with that target via ABC?
Sure. For 2717, I would say the bar for success depends on which of the 2 different indication types or classes that we're pursuing, for example, in our expansion cohorts. There's the post PD-one treated patients and an indication where there's ample PD-one use and approved PD-one agents in those expansion cohorts. And then there's the indications where there's no PD-one approved and there's not a lot of PD-one use, but there's a reasonable hypothesis in particular why CTLA-four engagement as well could boost activity or different there. I think in the post PD-one patients, generally speaking, anything close to a 20% response rate in patients that have failed PD-one therapy in, say, a non small cell lung or in a melanoma would be really great.
Alan, do you want to comment on both anything further on post PD-one sort of PD-one proven indications and then maybe comment on the PD-one approved indication in our trial?
Yes. So I think as Babble said, it's a complicated question, Mara. I mean, you have to look at the patients. And so 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. But if you think about melanoma, many patients are just treated with PD-one 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're probably going to use only a PD-one, but 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, But most of the patients in the Phase I have seen prior checkpoint, either pembro or both nivoipi or PD-one CTLA-four combination.
And in terms of percentage, it will probably be low in this refractory population as a baseline. But 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.
And then there was also the discussion around non PD-one approved indications.
Yes. So I think that depends. There are a limited number of non PD-one indications where there's activity. It seems like there's a lot of clinical activity, but you would expect it to be higher. And depending on the indication, you would probably be seek to seek responses maybe up to 30% to 50%.
But of course that's in PD-one that's an indications where PD-one therapy is known to work. We're exploring indications where they're not necessarily
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 MF.
In other words, there's a small clinical study that shows activity, but then there is not an approval in that indication yet. And those patients are rare into the study right now.
Okay. And then for the anti CT3
target? For the 30,819, why CD3 bispecific versus an ADC? I think this goes to this 2 plus 1 design and the advantages it could have. John, maybe you want to touch on that?
Yes. I mean, so first of all, one of the reasons we like 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, that standard class effect with the conjugate. So we thought that was made the target look pretty good. As to why CD3 would be better, there's reasons beyond not having that sort of class that toxicity. One is that renal cell carcinoma tends to have more T cells than just about any other solid tumor.
And so we've got a lot of effector cells to draw from in terms of meeting the activity. And then second of all, you might imagine, and other people are talking about this as well, is that once you're engaging CD3 T cells, some of those you're also helping to promote an endogenous T cell response because you're expanding T cells by activating them, you're mobilizing cytokines and chemokines. And so there are additional dividends to be to engage in T cells in terms of sort of long term activity potentially even developing a memory response against the cancer.
Okay. And I apologize, but if I could just ask a point of clarification on the financial arrangement for MANJAVI. Do you still get payments on those indications that Incyte would undertake on its own?
Yes. It's irrelevant to who the party is.
Okay. Thank you. I really appreciate it.
Thank you, Mara. And stay safe there in New York.
Thank you.
Thank you. Our next question comes from Etzer Dalhut 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 pemodimab. So in light of the recent MINJUVIA approval, have you explored the potential for combining MINJUVIA with pemodimab or explode explored any potential synergies with anti CD19 and DLBCL in general?
And then the second question, I'm wondering if you could comment on if there's been sort of any increased conversation or interest in your CD20 program from a deal perspective, sort of on the heels of the recent Genmab and AbbVie agreement? Thanks.
Sure. So I'll take that. So for the idea of combining plinodumab or C2023 with the Nantec CD19 antibody like MONJUVY, no, certainly it's an interesting hypothesis. Now 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.
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 boost the T cell function to kill the B cells that plimodimab is doing enough of that. In some indications with different CD3 antibodies, you might want to have, say, a PD-one inhibitor to boost T cell function. Now, what's complementary to a CD20? Well, a CD19 is a different target and you've got different killing mechanism as with say an ADCC driven antibody like MYGV.
So it's a reasonable hypothesis. We also think that there's a variety of targeted small molecule agents that could be really interesting hypotheses. But it's an interesting point you raised. Now regarding CD20 deal conversations, we can't really guide on business development activities because we believe the 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. 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's a program where a partnership might play a complementary role, right? And sometimes you do that to expand the scope or scale of development or find good combination partners. But we'll guide on that when the time is right, when we actually have deal to announce.
Great. Thanks very much.
Thank you. Our next question comes from Arlinda Lee with Canaccord. Please go ahead.
Hi, guys. Thanks for taking my questions. I maybe just wanted to follow-up on flotumab a little bit more. And 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? And then just some health keeping things.
I think you also previously mentioned expectations for filing an IND for your IL FC. Can you talk about maybe where that program stands right now? And then as well ideas on your CD123, CD314,045, the additional Phase 1s that you're thinking about? Thanks.
Sure. So maybe the easy one, the short answer first, follow the IND for L2FC, that's on track. It looks like it's going to be very early in the New Year. So that's moving forward. That's our IL-two engineer to be selective to activate regulatory T cells for potentially use in autoimmune diseases.
So it's not an oncology program, but a really exciting molecule For plamotimab, 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 1, the establishment of our dosing regimen and schedule for going forward. And of course, whatever efficacy data continues to flow out of that, that Phase 1 would be what we would want to show the world. So, and of course, the plans for what we were going to do with it can come before or along with that data. There's sort of 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. Now for the CD123 additional Phase 1, you were sort of getting out, what ideas would you have on that is what you're saying.
So I would say there's different slices of AML and I think in particular, if you 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 and the sort of elderly frail population, as an induction therapy. And then of course, it's going to start it's being used more and more in the relapse setting. And I think it's going to have a label there soon probably. So 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 and using that in the context of whether it's consolidation or whether it's in the right relapse setting is where we're looking.
But 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 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 Ying Liu Bang on for Greg. Thank you for taking my questions. My first question is a follow-up to the previous question on AMG-four twenty four. How should we think about the potential read through from the discontinuation to the development of AMG-five zero nine?
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 our we agree from our initial review of all the Phase 1 data is that that's quite likely what the case was. And so CD38 mediated toxicity does not read through to the AMG five zero nine program, which of course is targeting a prostate cancer antigen.
There did not appear to be in general at all to be read through from the AMG 424, general at all to be read through the AMG 424, AE data.
Great. Thank you. Just one more from me, if I may. Can you talk about how your strategy for obexolimab has evolved and what your related thinking is around the future of this program? Thank you.
Right. So, though we have not, we are not investing in it for the development internally. We have been continuing to analyze the data from our lupus Phase 2 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 work we've done 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 it external to Xencor.
Got it. Thank you again for taking my questions.
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 Atrica deal. I mean, I agree it's a pretty exciting screen to match with your format. Is this a true discovery deal or is it a trico's antibody 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 1 for the 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, but of course, they're always updating that and adding new. So 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.
I mean, they're coming to the table with an existing basket of antibodies, but they're certainly not slowing down their ongoing discovery activity. So there's the well could be replenished as we go through the collaboration.
And the benefit we bring is to be able to rapidly make drug candidate quality molecules where you can test how that antibody
Great. And then I had a quick remedial question on the 2+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. Is there a sense of how much better this is?
Is there anybody's imaging data that we can look at? And 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, call it rectal cancer target antigen in that kind of format with a CD3 bispecific. And they saw promising activity in really late lung population. So direct comparison, John, do you want to touch on where the real power is, whether it's in better avidity or better selectivity?
Yes. I mean, that's 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 hemonc, you target B cells and it turns out that people can live better than we ever thought they could without any B cells, right? So you can kill not only the malignant B cells, but the cell of origin as well and the patient is just fine. The solid tumor setting that's probably not going to be the case for a lot of these targets, right, because they're expressed on important organs. And so this is really about just trying to expand the therapeutic index between attacking tumor cells versus attacking normal cells.
But to Basil's point about the CEA, the 2 plus 1 in Roche's hand, 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. So 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? It
looks like your
I just want to get
a sense of the timeline that you might understand on seeing data for 24,306?
Right. So Genentech is executing the clinical trial for XmAb24306, which is our IL-fifteen molecule oncology. They started the Phase 1 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. And as to whether next year, we'll have to confirm with Genentech later in the year. So we really can't give you anything more specific than that unfortunately.
Can you remind us how the economics of the partnership works?
Sure, of course. We signed a deal in February of 2019. It is a 55%, 45%, where 45% is Xencor worldwide split the profit and loss. We had $120,000,000 upfront paid and there is $160,000,000 in clinical stage milestones for the lead program 24,306. And so in addition to splitting all development costs and then splitting the P and L, 50 five-forty 5 Genentech will pay 100 percent 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 24,306 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 because combination is where an IL-fifteen is going to be used. It will 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 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 would want to nominate into more later stage Phase 2 testing or how you want to approach later stage development for some of these assets? Just kind of understanding how you internally expect the programs to advance as we head into 2021?
Yes. So over the next 12 months, hopefully, we'll have more data we can talk about publicly around XmAb20717, the PD-one CTLA-four inhibitor across both these our expansion cohorts of both sort of PD-one experience, solid tumors as well as sort of non PD-one approved solid tumor indications. And that should help guide us on more specifics of do we go in one basket of indications, say post PD-one, do we go in the non post PD-one, do we go in neither, do we go in both? Data will have
to drive it. So I
think we should have more clarity there how that program is going to have
be able to proceed. And I think that as we provide
the specifics, as our plans are really coming together around Plimodinab 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 database way. I think those are the ones I think that we should have more clarity on and the others we're going to continue to generate further data.
Okay, great. Thank you very much.
Hey, thank you, Dane.
Thank you. Our next question is from Shikian 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 Lithera?
And do you think the your program needs to beat Lithera to be competitive or to be approved? And then also on that program, what are the safety signals you are are you mostly concerning about? And then secondly, on the IL-two program, I know it's early in the days, but I guess do you guys have an idea what indications you are potentially pursuing? And then are you looking for a partner for this program? Thank you.
Thank you. So I got four questions. Let's make sure I can run through it 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 where we will be looking for, looking for ones where we know FSCR2 is expressed. There's expressed in gastric tissues, expressed in pancreatic islet cells, expressed in some lungs. So we're going to look at all of those.
Now for IL-two, we're not ready to guide on indications and we are an oncology focused company, so I think we'll be willing to entertain partnerships earlier for the but we are prepared to move it forward to get some meaningful inflections even post biomarker Phase 1 data.
Okay. And then do you also have IL-two for oncology in the works too or?
No, we do not. IL-fifteen program, we believe is a better starting point. We believe we have a very attractive, hopefully best in class product profile for our IL-fifteen, which of course engages IL-two beta gamma receptor downstream, but completely avoids the CD25 binding that you usually have
to work to get rid of
for IL-two, so no.
Okay, great. Thank you
for the questions.
Thank you.
Congrats on the progress.
Thank you. And our last question comes from Peter Lawson with Barclays. Please go
ahead. Hi, Basel. 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 is a lot of commonality there. And I think it's 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 a CD20, CD3 might work, we're all discovering what niches these particular mechanisms actually might best suit will of course chase that signal very rapidly.
So I think there's certainly potential opportunities 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's going to be about I think that more than anything.
And when do you think we can have kind of a complete picture around that when you're going to 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. And then just on the CTLA-four PD-one, when should we see the next data? And is that patient still in CR?
Sure. So for CTLA-four PD-one, within the next 12 months, we should have at least an initial bolus of data out of our expansion cohorts. Of course, there's 5 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. And I'll defer the question on the CR patient. Do we have any I'll ask Alan, do we have definitive knowledge about that patient anymore, now that they've gone so far out?
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 coming off study, but we don't have additional data from that patient.
Great. Okay. Thanks so much. Thanks for the additional color.
Thank you.
Thank you. Ladies and gentlemen, this concludes our Q and A session. I would like to turn the call back to Bassil Dahiyad 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 pandemic. Have a great evening and look forward to updating you again in the future. Bye bye.