Good afternoon. Welcome to the Xencor fourth quarter and year-end 2019 financial results conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the company's request. At this time, I would like to pass the call to Charles Liles, Associate Director and Head of Corporate Communications and Investor Relations at Xencor. Please proceed.
Thank you, Sydney. Good afternoon. Welcome to Xencor's fourth quarter and year-end 2019 financial results conference call. Earlier this afternoon, 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 a business overview and review our licensing partnerships. Allen Yang, Senior Vice President and Chief Medical Officer, will review our clinical stage programs. John Kuch, Senior Vice President and Chief Financial Officer, will review the financial results from the fourth quarter and the 12-month period. 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, and research and development programs. These forward-looking statements are not historical facts, but rather are based on our current expectations and beliefs and are based upon 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 sections of our most recently filed annual report on Form 10-K.
With that, let me pass the call over to Bassil.
Thanks, Charles, good afternoon, everyone, and thanks for joining us. Xencor's approach to creating antibody and cytokine therapeutics is centered on 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 the suite of XmAb Fc domains that we've created 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 will independently advance, which we will partner, and which we will terminate.
In the last few years, we have focused our R&D on the expansion and use of our XmAb bispecific platform to create drug candidates that bind two or more different therapeutic targets simultaneously. We've initiated six phase I clinical studies evaluating XmAb bispecific antibodies. Our plug-and-play approach to engineering enables the rapid design and simplified development of antibodies and other protein structures like cytokines. Bispecific antibodies and cytokines are a rapidly emerging area of therapeutic development, particularly in oncology. In order to stay at the forefront of innovation in this space, we use our engineered heterodimeric Fc domain as a robust scaffold to rapidly develop new candidates that we group into three classes: T-cell engagers, tumor microenvironment activators, and cytokines. The first and most advanced class is the T-cell engagers.
These are tumor-targeted bispecific antibodies that contain both the tumor antigen binding domain and a cytotoxic T-cell binding domain, specifically a CD3 binding domain. These T-cell engagers, which we also call CD3 bispecifics, activate T-cells at the site of the tumor in order to potently kill malignanT-cells. We've expanded this class of bispecifics by developing our XmAb 2+1 bispecific format. It uses the same heterodimeric XmAb Fc domain as our other bispecific antibodies and cytokines, but has two identical tumor targeting domains and one CD3 targeting domain. This format enables higher selectivity for tumor antigen-expressing cells and greater flexibility in tuning the potency and hence efficacy and tolerability of the molecule. We're looking forward to presenting preclinical data from several of our internally developed XmAb 2+1 bispecific antibodies this year.
The next group of our bispecific antibodies are our tumor microenvironment activators. Rather than directly bridging a cytotoxic T-cell to a tumor cell, our TME activators seek to more effectively reactivate tumor-reactive T-cells in existing therapies. These antibodies simultaneously engage multiple T-cell targets, such as checkpoints or agonists. The key feature of our design is to choose individual binding affinities for each T-cell target to be suboptimal for binding to T-cells with only one of the two targets present on the surface, but to have high binding when both targets are present. This zipping up when multiple handholds are present is called avidity. Our approach reduces the need for multiple antibodies typically used in combination therapy and also allows for more selective targeting of T-cells that have multiple checkpoint expression, which are typically found more in the tumor microenvironment than in the periphery.
Finally, we've been developing a suite of cytokines, which are immune signaling proteins that are built upon the XmAb bispecific Fc domain and incorporate our Xtend technology. Using our Fc domain and tuning the potencies enables more druggable cytokines with potentially superior tolerability, slower receptor-mediated clearance, and longer half-life. Before we move on to reviewing our portfolio of drug candidates, our ability to develop these XmAb technologies, advance our programs into late-stage clinical development while positioning them for commercialization, and to support our ongoing efforts to identify additional partnerships, this is all dependent on the skill sets and experience we have on our team. Really beginning in late 2018, we started strengthening our senior management team with key appointments in product and alliance management, business development, regulatory affairs, legal, and most recently, Dr. Allen Yang joined us as Chief Medical Officer in December.
Together, these additions allow us to execute more productively on all of our corporate priorities. I'd like to introduce Allen, who joined us after our previous CMO, Paul Foster, retired. Allen will be leading the strong internal clinical development organization that we've built over the past five years to advance our multiple therapeutic candidates. Allen?
Thank you, Bassil. Just briefly to touch on my background since I'm new, I'm an M.D., Ph.D. by training and was a board-certified oncologist practicing as an academic oncologist for many years before joining industry. Most recently, I was at Jazz Pharmaceuticals, where I originally joined as the Therapeutic Area Head for Hematology-Oncology and was eventually promoted to Head of Clinical Development and Acting CMO. Prior to Jazz, I worked at other biopharma companies, including Amgen, where I worked on several development products, including BLINCYTO, the first approved bispecific antibody in oncology. During my career, I've been fortunate to work on and lead several new drug approvals. I'm delighted to join Xencor for its strong foundation in protein engineering, multiple platform technologies that are in high demand by industry partners, and its broad internal portfolio of bispecific antibodies.
Bispecifics, which have rapidly emerged as an important area in oncology and drug development. Onto a brief overview of our internal clinical development portfolio of bispecific antibodies and cytokines. First, XmAb14045 is our CD123 x CD3 bispecific antibody that's being developed in collaboration with our partner, Novartis. It's in an open-label phase I dose-escalation study to assess its safety, tolerability, and preliminary antitumor activity in patients with relapsed or refractory AML, as well as other CD123-expressing hematologic malignancies. In the second quarter of 2019, we resumed enrollment in the study following the lifting of a partial clinical hold. We continued dose escalation in this study and are planning to initiate additional clinical studies evaluating XmAb14045 this year, pending alignment with our partner, Novartis. Our second hematology program, XmAb13676, has received the non-proprietary name plamotamab.
It's a CD20 x CD3 bispecific antibody and is being evaluated in a phase I study for patients with advanced B-cell malignancies like non-Hodgkin's lymphoma and chronic lymphocytic leukemia. We presented initial safety data and clinical activity from early dose escalation cohorts at the ASH annual meeting this past December. These results indicated that in early dosing cohorts, plamotamab was generally well-tolerated, with safety events being mild to moderate in severity, and it demonstrated encouraging clinical activity. The safety analysis included 53 patients treated with plamotamab. The most common treatment-emergent adverse events are consistent with other bispecifics being used in patients with hema malignancies and were pyrexia, CRS, or cytokine release syndrome, and anemia. The 18 patients with diffuse large B-cell lymphoma who received doses of 80-170 mcg/kg were included in the analysis to describe clinical activity.
Those doses are about 6-12 milligrams flat dose as adjusted per patient body weight. The objective response rate was 39%, and the complete response rate was 28%. Responses were apparently dose-dependent. Additional complete responses were observed in patients with follicular lymphoma, Waldenstrom's macroglobulinemia, and Richter transformation of chronic lymphocytic leukemia. Dose escalation and optimization of the dosing schedule, including a priming dose and step-up regimen, are ongoing. We plan to initiate additional clinical studies with plamotamab and should be able to provide more detail into those clinical development plans later this year. Note that initial clinical results for both hematology programs, as presented in ASH 2018 for XmAb14045 and ASH 2019 for plamotamab, are available on our corporate website, xencor.com, under Investors on the Events and Presentations page.
XmAb18087 is our third CD3 T-cell engager, which targets somatostatin receptor 2, or SSTR2, an antigen highly expressed on some solid tumors. In early 2018, we started dosing patients in a phase I dose-escalation study to assess its safety, tolerability, and preliminary antitumor activity in patients with neuroendocrine tumors and gastrointestinal stromal tumors, and we expect to present initial data from this study later this year. Moving on from our CD3 bispecifics, last year, we started dosing the first patients in our second and third clinical trials evaluating our tumor microenvironment-activating bispecific antibodies. These are phase I dose-escalation studies for XmAb22841 and XmAb23104. Along with the first program, a phase I study of XmAb20717, we are focused on enrolling patients with several advanced solid tumor types into these studies.
Using the avidity hypothesis Bassil discussed earlier, our hope with these programs is to be able to drive to stronger antitumor responses with improved tolerability for patients. This year, we anticipate presenting initial dose escalation and biomarker data from the first of these, the XmAb20717, a PD-1 x CTLA-4 bispecific antibody. We'll end the review of our internal portfolio with our cytokine programs, our first cytokine program, and lead in our collaboration with Genentech, which was announced in February of last year as XmAb24306. It's an IL-15/IL-15 receptor alpha complex fused with our bispecific Fc domain and targets the expansion and activation of T-cells and NK cells.
XmAb24306 is intended for the development with a wide range of combination agents. Importantly, we can perform our own clinical trials with both our pipeline assets and non-Genentech agents within this collaboration, subject to some conditions. We look forward to planning a number of these combination studies pending completion of the initial dose escalation study. Genentech's IND application is open. We would anticipate a first-in-human study to be dosing patients very soon. Our second cytokine candidate, XmAb27564, is an IL-2 Fc fusion protein that we are planning to develop for patients with autoimmune diseases. Similar to the IL-15 program, our XmAb27564, we reduced the potency of IL-2 and incorporated our Xtend technology in order for the candidate to have more drug-like properties. We are currently conducting preclinical activities and anticipate initiating phase I study in healthy volunteers in 2021.
With that, I'll hand it back to Bassil.
Thanks, Allen. We'll now switch to reviewing some updates from our partnerships, which continue to provide revenue in the form of upfront payments, milestones, and royalties that help fund development of our own internal pipeline candidates. The plug-and-play nature of our XmAb technologies enables us to license access to these platforms with partners needing very limited resources and effort from us. We won't review each program, we have 10 ongoing partnerships for XmAb technology, which have resulted in one marketed product, seven clinical-stage candidates, and more in earlier stages of development. The most advanced of these is Ultomiris, a complement inhibitor with improved half-life using our Xtend technology, which Alexion launched last year and has seen significant progress in conversions of patients from Soliris, their first-generation inhibitor. Ultomiris is the first antibody to incorporate an XmAb technology to be marketed.
Ultomiris has now received multiple global marketing authorizations in the U.S., Japan, and Europe for the treatment of adult patients with PNH and in the U.S. for aHUS. We're receiving royalties on net sales in all indications and geographies worldwide. New among our technology licenses, last month, we entered into a tech license agreement with Gilead, who will access our extended half-life and cytotoxic Fc technologies for developing and commercializing GS-9722, their first-in-class broadly neutralizing anti-HIV antibody in phase I clinical development, as well as up to three additional anti-HIV antibodies. This is the second license for antiviral antibodies using our Xtend technology. We've also entered licensing agreements with exclusive worldwide development and commercialization for our own pipeline candidates. MorphoSys, in 2010, licensed from us tafasitamab, which was previously known as MOR208 and as XmAb5574 before that.
It's an anti-CD19 antibody that we designed and initially developed, incorporating our cytotoxic Fc domain for high ADCC function. MorphoSys completed their BLA submission to the FDA in late December for treating patients with diffuse large B-cell lymphoma in combination with lenalidomide. We are eligible for additional milestones and royalties on sales in the high single-digit to low double-digit %. As we've stated, we shifted our internal development focus toward our emerging bispecific antibodies and cytokines in oncology and have sought partnerships for our XmAb7195 and obexelimab programs. In February 2020, we granted Aimmune Therapeutics an exclusive worldwide license to develop and commercialize XmAb7195, our anti-IgE monoclonal antibody with enhanced binding to the Fc gamma receptor IIb. It's now called AIMab7195, it's designed to rapidly eliminate IgE, a key mediator of allergic response, from the circulation and to prevent IgE production.
We evaluated it in allergic asthma and other IgE-mediated disorders. Aimmune intends to develop it in food allergy, a therapeutic area that is rapidly developing and needs new agents. Aimmune is very experienced in food allergy, has demonstrated clinical success, and has the capability to advance AIMab7195 with its highly complementary pipeline programs. We received an upfront payment of $5 million in cash and $5 million in Aimmune stock and are eligible to receive milestones and royalties that range from high single digit to mid-teen percentages . We've also entered into research collaborations that include the creation of novel XmAb bispecific antibodies to be advanced by partners.
Recently, a phase I study has been initiated for an undisclosed Novartis XmAb bispecific antibody. We expect initiation of phase I soon for Amgen's AMG 509, a STEAP1 x CD3 bispecific antibody for patients with prostate cancer that uses an XmAb 2+1 bispecific format. With that, I'm going to turn the call over to John Kuch to review our fourth quarter and year-end 2019 financial results.
Thank you, Bassil. During 2019, Xencor continued to strengthen its balance sheet, which enables us to continue supporting development of our bispecific antibody and cytokine programs and technologies. First, I would like to provide an overview of 2019 financial results and then some thoughts on 2020. Cash, cash equivalents, and marketable securities totaled $601.3 million as of December 31st, 2019, compared to $530.5 million on December 31st, 2018. The 2019 year-end cash balance reflects upfront payments and milestones from our partners and collaborators of $155 million received net of spending on operations during the year. For the fourth quarter ended December 31st, 2019, revenues were $3.5 million compared to $11.6 million for the same period in 2018. Fourth quarter 2019 revenues were primarily from Alexion royalties, while revenues for the same period in 2018 were primary milestone payments received from Alexion.
Research and development expenses for the fourth quarter 2019 were $27.3 million, compared to $27.1 million for the same period in 2018. General and administrative expenses for the fourth quarter 2019 were $6.7 million, compared to $5.5 million in the same period 2018. The fourth quarter 2019 net loss was $26.9 million, or $0.47 on a fully diluted per share basis, compared to net loss of $18.2 million, or $0.32 on a fully diluted share basis, for the same period in 2018. The higher loss for the fourth quarter 2019 over the loss reported same period 2018 is primarily due to lower revenues reported in the fourth quarter 2019. Turning to full-year results, total revenues for the 12-month period ending December 31st, 2019 were $156.7 million, compared to $40.6 million in 2018.
Revenues earned in 2019 reflect collaboration in milestone revenue earned from our Genentech, Astellas, Alexion, Amgen, and Novartis partnerships, compared to milestone revenue earned from Alexion in 2018. Research and development expenses were $118.6 million in 2019, compared to $97.5 million in 2018. The increase in R&D expenses in 2019 over amounts incurred in 2018 reflects additional spending on our bispecific and cytokine clinical and early-stage candidates and technologies. Note that our reported R&D expenses are net of reimbursements from our partners under cost-sharing arrangements for programs that are being co-developed. Total general administrative expenses were $24.3 million in 2019, compared to $22.5 million in 2018. Additional spending on G&A expenses in 2019 reflects increased facility staffing and spending on intellectual property.
For the full year of 2019, net income was $26.9 million, or $0.46 on a fully diluted per share basis, compared to a net loss of $70.4 million or $1.31 on a fully diluted per share basis for 2018. Net income reported for 2019 compared to the loss report for 2018 is primarily due to additional collaboration milestone revenue recognized in excess of additional spending on R&D during 2019. Non-cash share-based compensation expense for 2019 was $31.9 million, compared to $20.5 million for 2018. The total shares outstanding were 56.9 million as of December 31st, 2019, compared to 56.3 million as of December 31st, 2018. Taking a brief look at 2020, as Bassil noted, we started the year with two new collaboration agreements with Gilead and Aimmune, and these are providing upfront payments and potential future milestones.
Considering our projected revenue and current spending plans, we expect to have cash to fund research and development programs and operations into 2024, and to end 2020 with between $500 million and $550 million in cash equivalents, and marketable securities. With that, we'd now like to open up the call for your questions. Operator?
Ladies and gentlemen, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Alethia Young with Cantor Fitzgerald. Please proceed with your question.
Hey, guys. Thanks for taking my question. Maybe a couple from me. One, I just wanted you to talk about with the CD20 x CD3 and the data you had at ASH. I know there are a lot of assets that are similar out there. I just wanted you to talk a little bit about how you think about future studies which could lead to differentiation, whether that be through combinations. My second question is just administrative. On the XmAb18087 and on the XmAb20717 , should we expect data in the first half of the year, or should we expect it now to be somewhere over 2020? My last question is just can you talk a little bit about the Gilead thing and the deal you did with those guys and how you think about your technology and its applicability in HIV things?
Sure. I guess you start off with a housekeeping question. We're expecting for XmAb20717 mid-year update along the lines of what we said in our press release, biomarkers and initial phase I data from dose escalation. For XmAb18087, we're guiding towards in the second half, so mid-year second half. Let's see, for the CD20 data, maybe I'll also let Allen comment here a bit. There are a number of programs that use bispecific technology to engage CD20 to try to sort of move the ball in B-cell malignancy, specifically lymphoma at first, beyond where Rituxan combination therapies have gone. I think you're right that combination therapy is the only way forward to really advance regimens that are going to move the needle. There's a variety that we could think about, and I think it's about the right biologies.
You comment, Allen, on the different kinds of biologies and how we'll guide specifically later this year.
Yeah. First, let me start off with an overview of B-cell malignancies. There are a lot of B-cell malignancies. What I want to remind everybody is where we're at with our phase I study. We're still in dose escalation. We've seen good activity in diffuse large B-cell lymphoma, enough activity that we're encouraged about that and want to move forward in diffuse large B-cell lymphoma. We're continuing to dose patients in follicular lymphoma, Waldenstrom's, CLL, and so forth. I think that there's still a lot of activity that we need to explore. With that said, you're right. In diffuse large B-cell lymphoma, it's still a very large unmet need. I think there's a lot of opportunities.
If you look at previous approvals for other agents in the relapse/refractory diffuse large B-cell lymphoma space, they've been approved with either single-arm studies or accelerated approvals or breakthrough therapy designation, more specifically. With that said, we are exploring our opportunities. We think combinations are a key way to go. I think there's a lot of opportunities with other agents that are targeted well and have different mechanisms of action.
Yeah. We're really focusing on things that already have their own data showing they can kill tumor cells that are B- cells, right? To focus on that rather than thinking of IL/IL combinations. To address the Gilead point, the technology they licensed was our good old Fc engineering technology to extend half-life and to induce ADCC function, in this case, in antibodies that are broadly neutralizing for HIV. So they stick onto the HIV.
One of the proteins in HIV, we can't disclose which one, that's up to them. There's sort of two things you want from our Fc engineering. One is just to have the antibody last longer. An antiviral antibody is essentially, it's what's called passive immunization. Your body's not making the antibody. There's no vaccine to have an antibody forced to be made. You give the body sort of artificial immunity by giving people a neutralizing antibody exogenously. Obviously, in that case, you want it to last as long as possible. The use of our Xtend technology is sort of spread throughout the academic community in anti-infective antibodies quite widely, and I think Gilead sort of was following along with that lead.
You'd rather give somebody a passive immunization shot every three months or every six months or what have you, depending on what the antibody can give you. In addition, the ADCC technology, because of the way the biology of HIV works, you often have budding virus particles on immune cells, and you'd like to kill the immune cells that are harboring that virus. That's also been a modality that's been studied in academic labs for a number of years, how antibodies can kill HIV-bearing cells. GS-9722 happens to incorporate both of these approaches in one Fc domain, and we're very happy to have them go forward. Earlier in the year, we announced a partnership for our half-life extension Xtend technology with Vir Bio, an early-stage company looking at a variety of different anti-infective antibodies. Sorry, antiviral antibodies.
We think there's a lot of utility for our approaches in antivirals.
Great. Thank you.
Thank you. Our next question comes from Ted Tenthoff with Piper Sandler. Please proceed with your question.
Great. Thank you very much. Just kind of picking up on the PD-1 CTLA-4. When should we be expecting that preliminary update, and have you already started dosing that in combination with any other agents, or is that where we really see the opportunity to dose that one as sort of an enhanced checkpoint inhibitor, thanks.
Yeah. We'll guide on what kind of next phase strategy we're contemplating mid-year. I guess that the initial development is as single agent, because the goal here is to add functionality to PD-1 inhibition within the same molecule, and hopefully in a way that using our avidity hypothesis creates a regimen that's more tolerable by focusing on just T-cells that are double checkpoint positive. That's hypothesis. We're excited to see some initial data to see whether we can get that kind of T-cell activation function, but without some of the immune-related adverse events that seem to really bedevil PD-1 CTLA-4 combination therapy. Really initially, it's about single agent. I think when you think about combinations, it's about what indications you go into. Some indications you're going to want to combine with chemo. Some indications you're going to want to combine with targeted therapies.
The milieu of solid tumor indications, each one has its own specific drivers, and we're going to be able to guide on what directions we're taking later in the year.
Okay. I think I see that.
I'm sorry, what was that, Ted? You kind of were tough to hear.
I said thanks so much. Looking forward to the update.
Oh, thank you so much, Ted. Take care.
Thank you. Our next question comes from Mara Goldstein with Mizuho. Please proceed with your question.
Great. Thank you very much. I had a question on, and it's essentially a similar question for XmAb18087 and XmAb20717, and that is really trying to understand the threshold for advancement, in particular with XmAb20717, and whether the focus ends up being more on sort of safety aspects or efficacy aspects and how you think about that. Also a housekeeping question on the Novartis payment in December. Is that booked as a deferred revenue item, or should we anticipate that being booked in the first quarter of the year?
Hi, Mara. How you doing?
Hi.
I'll address the first question with respect to the Novartis payment. That milestone was not in deferred revenue. That's a separate item. It's sitting in receivable. The $10 million sitting in receivable as December 31st.
Okay.
That's totally separate from any deferred item in that arrangement.
Thank you.
Again, your question, Mara, on XmAb20717 and XmAb18087, our PD-1 x CTLA-4 and our SSTR2 x CD3 antibodies, was around how we're going to assess the data, I guess, and define plans for going forward. Again, these are initial dose escalation data sets.
Yeah.
We're looking for all sorts of indications. I mean, Allen, do you want to give it a shot?
Yeah. Let me start with the XmAb20717 first, because I think you were asking the question of, are we trying to improve better efficacy or better safety? Just from my experience, I won't tell our strategy, but just from my experience, proving safety is challenging in a clinical trial design. The way that a molecule is designed, we believe it's going to be improved tolerability, which will allow us to escalate where we can get better efficacy. Now, note, it's sort of targeting PD-1 and CTLA-4, which has already approved targets in terms of checkpoint inhibitors, approved agents out there, they're well entrenched. What we would want to do is sort of benchmark it against those sort of previously completed studies, and we should have a high bar to move forward given the entrenchment compared to our other molecules in that space.
Going to XmAb18087, I don't know, should I take that question, Bassil?
Sure.
Okay. Going to XmAb18087, clearly somatostatin is expressed in neuroendocrine tumors and GI stromal tumors, we're studying those. In addition, it's expressed in other tumors to a lesser extent, but larger tumor population, small cell lung cancer, liver cell cancer, to name a few. We're evaluating those right now, and we'll hopefully give guidance on a more complete strategy later on.
Okay.
Yeah. Please go ahead, Mara.
Sorry. No, you go ahead first. Sorry.
Okay. Just to sort of come back to the sort of strategy around it for our PD-1 CTLA-4 molecule, XmAb20717, the strategy for the phase I design was expansion cohorts as we've established a go-forward dose, and those are going to be in the relapsed refractory setting of post-PD-1 exposed patients in PD-1 approved tumors. Things like melanoma, non-small cell, et cetera, where the high bar that Allen's referring to is actually a fairly low number in terms of response rate. We won't have expansion cohort data by midyear, but we should be well along in those cohorts by then. That's arm one, is go for that, relapsed refractory population to PD-1 therapy, where there's a very high unmet need, and even modest activity could be a very big opportunity.
The second area we're looking at is, and we'll be able to guide more later on, is indications where PD-1 therapy alone has not had resounding success, but where the addition of CTLA-4 there's good biological rationale, and we'll be exploring that set of opportunities as well and be able to give specifics on what indication we want to pursue. I think for both, and I guess this comment will bear on XmAb18087 as well, is we want to establish that you can give these agents, that they're safe and tolerable, that we're seeing some initial activity, and then use that as a launching point for how we can exploit them. For XmAb18087, you've got the rare tumor, neuroendocrine tumor, and you've got other ones like Merkel cell that are rare or small cell that are less rare.
It's just how do we get from the starting point we've gotten to with our biology to the best strategy. We'll guide more later.
Okay. If I could also just ask on plamotamab, just in the discussion around looking at things like clinical trial design for accelerated approval and whatnot, is there an opportunity or is it something that the company's interested in pursuing at looking at post-CAR T as a sort of speed to market strategy?
I'm not so sure there's enough there to make that a speed to market strategy in terms of patient volumes.
We've treated post-CAR T patients. We have had a response for post-CAR T patients. We will continue to enroll them and evaluate it as we see enrollment trends and see if there's enough need there.
Okay. Thank you.
Thank you. Our next question comes from Gregory Renza with RBC Capital Markets. Please proceed with your question.
Hey, guys. Thanks for taking my question, and congrats on the progress. Bassil and team, my question is related to the fact that 2020 looks like a very busy year with early-stage programs, and certainly as you touch on the plug and play for your technology, just curious if you could touch a little bit about commenting about the plug and play of your resources and operationally how you're staying nimble to essentially enable matching some of these goals ahead with the right resources and capabilities. Thanks.
Yeah. We've built an organization that can very capably handle a pretty large volume of early-phase clinical trials, specifically in oncology, where there's a lot of portability of skill sets, of talent, of the infrastructure from CROs that you need to access as well. We've built that part of the organization to really feed our strategy of exploiting a very broad and capable platform and having that produce the shots on goal we need to hopefully produce winners in our clinical portfolio out of the reality that biology is very hard to predict as our competitive landscape's three, four years in advance. We want to have the highest likelihood as possible of one or more of our programs coming out the other end in the late-phase development and hopefully one day commercialization by Xencor.
We built an early-phase broad capability, and we're building now out off of that internal clinical development and preclinical capability the tools to do late-phase development that ought to be ready in time for one of these programs to jump into in the next year or two. We're very mindful of that, and that's why we've expanded the management team and added people with a lot of late-phase experience and commercial experience into the mix.
Great. Thank you very much.
Thank you. Our next question comes from Arlinda Lee with Canaccord. Please proceed with your question.
Hi, guys. Thanks for taking my questions. I guess maybe just to follow up on those discussions that Bassil just had, I was curious about how many programs do you think you can take forward yourself to advance to a registrational trial and beyond, and how you think about the mix of your pipeline as it's advancing through?
Yeah. I'll say for the first one, I have no idea because it depends on the specifics of which programs go forward, whether that's one because it requires multiple broad phase III or whether it's two or three because each one is a relatively small, well-focused clinical study in a smaller population. You can't really say. What you've got to do is build all the pieces for late-phase development, which include altogether additive kinds of capabilities and everything from biometrics and data handling to market assessment to clinical data management and medical monitoring. It's more the capabilities rather than just the numbers of people. Now, sorry, what was the second part of your question?
I think that actually addressed both of them. Can you maybe talk about? Like the scope of the data that we might expect for plamotamab that we're going to get later this year, is that going to help explain what your strategy is? Or talk about early indications of what might be interesting to pursue a little bit further before you commit to doing a registrational program?
We're going to be guiding on what our next stage clinical trials and strategy are later this year. We're not committing to a data release this year. It's a little bit early. We're just coming off of ASH. We'll guide more on when we'll have our next data release. The strategy we want to be able to articulate more clearly.
Okay.
Yeah.
Sorry, go ahead.
Hi, Arlinda. This is Allen Yang calling. I just want to address something that you and Gregory alluded to. First of all, I want to say that, in my short time, we have a fantastic clinical development team, and I think Bassil is right. It's really dependent on the data. Some of the agents you can get approved, let's say if they're highly active in a rare tumor type, that's a large unmet need. You know we don't need that many patients and a lot of resources to get it approved. However, if it's a more competitive space and it'll be a larger program, then we would probably have to commit more of our resources to that. Again, as Bassil alluded to, it'll be based on the data.
We're actually suffering from a very good problem, which is multiple agents that are exciting to develop. I think that's a good place to be at right now. Sorry, Arlinda, I interrupted your question. Go ahead.
Yeah. I guess I was also curious about whether this update was specific to plamotamab or might we get some indication of where you might be going with some of the combinations that you have that are maybe perhaps less common in the competitive landscape, like your CTLA-4, LAG-3 or PD-L1/ICOS or something like this?
We're not anticipating having specific guidance on next phase clinical trials this year outside of plamotamab and XmAb14045, where we expect to have additional information on the next set of trials that we're launching, the specific indications in myeloid malignancy.
This is Allen. The teams are very busy, sort of progressing all the programs in parallel.
Yeah, for this year, next phase guidance would be on the two that I just mentioned, the Heme programs.
Thank you.
Thank you. Our next question comes from Dane Leone with Raymond James & Associates. Please proceed with your question.
Hi. Thank you, and congrats on a great 2019. I just want to touch on a couple things. Can you give us a little bit more detail in terms of where you think the clinical hurdle is going to be for XmAb18087? Just in kind of a tricky indication with some pretty specific things that you need to look at. Can you give us a little bit more detail on where you hope to get to the XmAb14045 program this year? Just anything you can tell us in terms of potential partnerships on Obex. Thank you.
I'll sort of go in reverse order real quickly. We can't really guide on potential partnerships for obexelimab. Partnerships, as I've said, they're hard to define. We're working hard to both continue to educate people on the continued analysis from our lupus study, where the rich biomarker work that we did in that study is maturing more and more, but as well look at other opportunities to advance it with different kind of financing arrangements. We're busy at work there, but it's very hard to predict how that's going to land. We didn't have a good timeline for XmAb7195, and we're very happy with the partnership with Aimmune in food allergy, which I think is a tremendous opportunity for that kind of molecule. With regard to XmAb14045 details, with our Novartis partnership, we can't speak to when we can announce results details.
Again, we should be able to guide pretty specifically on the next set of plans for that. For the clinical hurdle for XmAb18087, for that one, you're right, it's an unusual rare tumor with an interesting bar. I think it's as much as anything about what we learn in NET and GIST and how we position it broadly in the other tumor types that might be benefiting from it.
Yeah, I would like to add, this is Allen Yang. neuroendocrine tumors and GI stromal tumors, there have been some recent approvals. We know the pathway for the approvals in terms of the clinical development program. I think the challenge is these are tumors that are not highly responsive in terms of CR. You would have to sort of plan larger studies based around PFS. There are other tumors that express somatostatin. We're sort of exploring those types of tumors. More recently, Merkel cell, which is a much smaller unmet need. Clearly is responsive to immunotherapy. These are things that we are sort of mulling over, I would say, we're thinking about very carefully right now. Hopefully we'll have more details for you later in the year.
As for XmAb14045, without disclosing any confidential information, AML is an area that I know very well. CD123 in my previous company, we actually had a partnership for CD123 target agents, so I seem to know the space pretty well. Reviewing the data, it's very interesting, and hopefully we'll have scientifically driven and clinically sort of considerations into the clinical market space, and we'll have a plan around that shortly publicly.
Yeah, that we can talk about publicly once that moves forward. Any other stuff, Dane, or?
Oh, yeah, sorry. Actually, on that note, could you just remind us how the partnership works on XmAb14045 with Novartis? How is the decision-making done and the disclosures?
Yeah. Xencor has U.S. commercial rights, Novartis has ex-U.S. commercial rights. We split the cost 50/50 for development. We have to have real agreement. It's 50/50. Nobody has a veto power on decision-making, so you have to agree, which is both challenging and good, and that means you get full dialogue on things. On disclosure, both parties have to agree to do a disclosure, which means neither one can veto any disclosure. As we've said in the past, Novartis is not a company that is into disclosure when it doesn't have to.
Okay. Super helpful. Thank you.
Yep.
Thank you. Our next question comes from Shanshan Xu. Please proceed with your question.
I have actually two questions for Allen. Hi, Allen. Welcome to Xencor earnings call. For your plamotamab, that's your CD20 x CD3 molecule. You are very clear that combination's the only way to move the needle as right now. In terms of this drug partner, you seem to have shied away from an IL/IL combination. If I understand you correctly, you don't want to combine it with PD-1. Roche actually presented some very interesting data at ASH 2019 for their CD20 x CD3 in combination with Gazyva. How do you like that strategy? Would you consider your CD20 x CD3 in combination with obinutuzumab? I have two follow-ups.
Okay. Hey, Shanshan. How are you doing? Getting back to 676, I think I'm very happy that the molecule is very active as a single agent in diffuse large B-cell lymphoma. Saying that we wouldn't develop it in other indications as a single agent, I think it's too early to commit to that. We just don't have enough data. In terms of combinations and competitive landscape, you have to look at what's going on with CAR T, the MorphoSys compound as well. I think combinations make a lot of sense in terms of value, in terms of what's going to be initially in the relapse refractory space, and eventually what you would like to do in the front line where combination is the standard of care.
I know that's not a lot of detail, but I don't want to disclose what our plans are at this point. Yes, we are thinking combinations. We are thinking of broader indications. What was your other? Oh, the checkpoint inhibitors. I think it's still early, and I think there's a lot of combination potentials into other immunotherapies, antibodies without a payload that seem to have high activity, whether they be CD20 or CD19. I think there's a lot of opportunities, chemotherapies, ADC as well. I think there's a lot of opportunities, and I think the checkpoint inhibitors are sort of a class that we wouldn't consider at this point.
In terms of CD20 antibody and which CD20 antibody to consider, I think there's overlap with our target, and so scientifically, we would be more interested in sort of other targets since we have a CD20 targeted bispecific. I don't know if that answers your question.
That's good.
Yeah. Go ahead.
Right. That's perfect. Thanks. Roche and Genentech hosted an analyst day last week and started to talk more about theirs. Actually, it's your IL-15 franchise. Given that there are several therapeutic strategy to target IL-15, such as superagonist or a bispecific strategy to dual target PD-L1, IL-15, can you please provide your perspective just to compare and contrast a little bit regarding those different strategies?
We think a strategy of having a molecule that maximizes therapeutic window is the best one. That was our goal when we designed XmAb24306, and really was the basis for our whole IL-15 program. We attached to our Fc domain, we specifically dialed down the potency of the IL-15 unit so that you didn't super activate the T-cells, create a pulse of cytokine release and toxicity, and then burn out the T-cells, have their activity wane, and rapidly clear your drug. We wanted long duration and tolerability. We tuned down the IL-15, like I said, attached to our Fc domain, and used our extended half-life technology. That was a package that Genentech found very attractive. That's a baseline, how to get broad systemic IL-15 activation.
The next strategy beyond that, which there's no real clarity on whether it's better, worse, nobody knows, is to target the IL-15 functionality to specific populations, whether they're NK cells or T-cells. Using our bispecific Fc domain, we've developed, or rather constructed a number of such molecules that we're working on in collaboration with Genentech. Those are about, again, optimizing therapeutic index, about steering the functionality to the T-cells that you want or the NK cells that you want. A lot of unknown biology, but I think the idea of making cytokines much more specific and localized in their function has been a holy grail of cytokine engineering for a long time. We're very happy to have tools to let us target that to T-cells and NK cells, and we'll see where that takes us in the next few years.
Note that we do expect Genentech to dose the first patient for our non-targeted IL-15 very soon.
Okay. The last one, I promise. This year, actually committed to reading out the solid tumor data for your CD3 bispecific antibodies. Historically, it has been challenging to develop a CD3 bispecific in solid tumor, given the severity of the CRS. Is there anything in the molecular design of the XmAb18087 and also AMG 509 that could potentially prevent that pitfall? Thank you.
Yeah, they were designed differently. XmAb18087 has one antigen binding domain and one CD3 binding domain. In that case, we were going after a tumor type that's known to be very resistant to having objective responses, neuroendocrine tumors in particular. We went with a fairly potent molecule strategy. Again, there's a lot of unknown here. We need to see what the tolerability looks like, what the kind of activation of immune function looks like. Note, of course, that these Fc constructed bispecifics as we do them, are significantly less potent than the first-generation BiTE-type structures. In the order of 100 - 500 fold less potent. There's already been a tuning down. We'll just see where that lands.
AMG 509 was constructed with two binding domains to the antigen STEAP1 and one to the CD3. Our partners at Amgen did a lot of work looking at how much potency and affinity to have on each side of that bispecific to hit the tumor cells they wanted. That's an example of using a format that gives you the avidity against your tumor antigen, STEAP1, to steer yourself towards the righT-cell. There's all these tools that have come about, the formats themselves and the 2+1 format to give you higher antigen density selectivity, that they're all themes being played. We're going to see those more and more, and every tumor type is going to have its own answer. We'll see.
Thank you.
Thank you. Our next question comes from Jonathan Chang with SVB Leerink. Please proceed with your question.
Hi, guys. This is John Barrett on for Jonathan. Thanks for taking my questions. My first one, we noticed that the XmAb24306 clinical trial identifier was posted for exploration with atezolizumab. Previously, you commented that Genentech wants to move really fast into combinations with this molecule. Could you comment on what the next combination strategies could be, the types of patients you want to recruit for these trials, and any opportunity for a rough timeline of when we might see the first data?
Unfortunately, I can't answer any of those questions because those are Genentech's questions to answer the way this IL-15 collaboration is constructed. The atezolizumab combination is, I think, a fairly obvious one given their franchise there. We think it's a very good scientific hypothesis. I could imagine they're going to have a pretty broad clinical development approach there, as we've stated, and that's a variety of different indications atezo's already approved in. We'll see where they take that one. As for timing of data, I can't say, but I would not expect any this year.
Got it. We were talking a lot about avidity and affinity recently, and there has been some interest in IgM antibodies recently and the engineering of those types of antibodies. Could you just compare and contrast the advantages and disadvantages of engineering IgM versus IgG and how they might compare in the clinic when we get to those data?
Well, given that there is never really been much in the way of IgM antibodies over the years, I think there is not a lot of data to go on or do the comparison. They have always been very difficult to manage, and nobody has really pursued them except for one company. I guess they are in the clinic now, so they have clearly made excellent progress. I think that what you are seeing with bispecific antibodies in general, and again, the vast majority are IgG formats, is the ability to move these binding domains around and have multiple valencies has given us an enormous palette to deal with just from the IgG format. For example, 2+1 IgG formats, because you have two antigen binding domains, allows you to tune the potency so broadly because you can do a lot to that potency and still stick selectively to your target.
We've published data showing no detectable cytokine release in vitro from 2+1 formats tuned the right way. We've got a really broad palette of tools in the IgG formats, and that's only going to get broader as we look at cytokine fusions, as we look at multiple antibody binding domains with different kinds of proteins attached as well. That really robust, stable, easy-to-use scaffold gives you an enormous flexibility already. I think the time will come not that far off that we stop worrying about this individual format, we start trying to worry about what format makes sense for this target, or that target or the other one.
Got it. Thanks for answering my questions.
Thank you. Our next question comes from Michael Schmidt with Guggenheim. Please proceed with your question.
Hi, this is Etzer on for Michael. Thanks for taking my question and the updates here. First, is there an opportunity for an accelerated path for XmAb14045 in relapsed refractory AML, given historical responses in that setting? I wondered if you could also provide a little bit more color on plans to evaluate XmAb14045 in the broader CD123 positive indications. The last question, a number of programs in the clinic right now, I'm wondering if you could maybe talk about the pace of R&D spend in 2020 relative to 2019, to the extent that you can comment. Thanks.
You always roll out all the questions at once, so we can't remember what the first one was by the time you get to the last. Sorry, I wrote them down. I have a pen. Accelerated approval pathways, we really aren't going to comment on specific regulatory pathways when we haven't even announced what the specific slices of indication are. There's always that potential in relapsed refractory tumors or in any tumor with a high unmet need, but that's too much more detail than we really can offer at this point. Ditto on the specific kinds of indications. That'll come a little bit later in the year. We're happy to tell you about it all then. I don't know how much granularity we're giving on the guidance, John, if you want to comment. I don't think we typically go R&D versus G&A.
The only thing I can comment is R&D spending went up about 20% from 2018 to 2019. We expect the spending to continue to increase because we've got more programs going to further stages. All we can count at this point, it will be higher. I think going 20% is a starting point. We did 2018 and 2019, somewhere along there, possibly higher.
Great. Well, that's helpful. Thank you.
Thank you. I'm not showing any further questions at this time. I will now turn the call over to Bassil Dahiyat for any further remarks.
Thanks very much, operator. Thank everybody very much for joining us today. We look forward to giving further updates on our progress throughout the year. Goodbye.
Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.