Good afternoon, and welcome to the Xencor Fourth Quarter and Full Year 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. Please be advised that this call is being recorded at the company's request. At this time, I would like to turn the call over to Charles Liles, Associate Director and Head of Corporate Communications and Investor Relations at Xencor. Please proceed.
Thank you, operator. Good afternoon. A few minutes ago, we issued a press release which outlines the topics we plan to discuss today. The release is available at xencor.com. Today on our call, Bassil Dahiyat, PhD, President and Chief Executive Officer, will discuss the company's business highlights. Paul Foster, MD, Senior Vice President and Chief Medical Officer, will provide an update on Xencor's clinical programs. John Kuch, Senior Vice President of Finance and Chief Financial Officer, will review the financial results from the fourth quarter and full year. We will open up the call to 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, plans and objectives of management for future operations, partnering efforts, capital requirements, future product offerings, the timing and success of clinical trials, and research and development programs. These forward-looking statements are not historical facts, but rather are based on Xencor's current expectations and beliefs and are based on information currently available to us.
The outcomes 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 materially differently from the results anticipated by these forward-looking statements, including but not limited to those factors contained in the risk factor sections of Xencor's most recently filed annual report on Form 10-K and quarterly report on Form 10-Q. With that, let me pass the call over to Bassil.
Thanks, Charles, and good afternoon, everybody. At Xencor, we engineer monoclonal antibodies with dramatically enhanced biological functionality and performance versus their natural counterparts. Our proprietary XmAb technology focuses on the constant portion of an antibody, its Fc domain, or the bottom half of the Y-shaped antibody structure. We modify Fc domains with just a few amino acid changes to produce antibodies and now cytokines with improved activity, a longer half-life, or bispecific structure. These XmAb Fc domains can be readily substituted for natural Fc domains, and over the last 16 years, we've created a large intellectual property estate around these novel domains, which has enabled us to build a broad and diverse portfolio with 12 XmAb-based candidates currently being evaluated in the clinic, both internally and by our partners.
In December 2018, we were delighted to hear that one of these 12 candidates, Alexion's ULTOMIRIS, also known as ALXN1210, was approved by the FDA for marketing in the United States. This is the first XmAb technology-containing approved antibody. ULTOMIRIS is a complement inhibitor indicated for the treatment of adult patients with paroxysmal nocturnal hemoglobinuria or PNH, and it incorporates our extended Fc technology, which allows for a longer duration of action and less frequent dosing regimens compared to SOLIRIS, the first-generation complement inhibitor at Alexion. We congratulate Alexion on their achievement and look forward to subsequent approvals in other geographies and their progress toward expanding the label. Beyond the extended Fc technology used in ULTOMIRIS, we have additional XmAb Fc technologies and drug candidates that we have partnered with other companies, and we seek to continue to license and partner to maximize their potential.
These technologies include our immune inhibitor Fc domain, which provides for a selective immune inhibition and rapid target clearance, and our cytotoxic Fc domain, which provides for more potent antibody-dependent cell cytotoxicity or ADCC. The bulk of our R&D focus over the last few years, however, has been the expansion and use of our XmAb bispecific Fc platform. Our plug-and-play approach to engineering enables the rapid design and simplified development of antibodies and other protein structures that bind two or more different targets simultaneously. Bispecifics are a rapidly emerging area of biotherapeutic development, particularly in oncology, and we're using our XmAb bispecific Fc domains as a robust scaffold to develop a pipeline of bispecific antibody and cytokine drug candidates. To date, we've created seven drug candidates in oncology using XmAb bispecific Fc domain, which can be grouped into three distinct classes.
Our CD3 bispecifics, our tumor microenvironment activators, which target two different T-cell checkpoint or agonist receptors, and lastly, our cytokines. As you know, XmAb14045 is the lead CD3 bispecific candidate from our oncology pipeline. I'll turn the call over to our Chief Medical Officer, Paul Foster, to review our recent clinical developments from the XmAb14045 program.
Thanks, Bassil. XmAb14045 is our CD123 by CD3 bispecific antibody that's being developed in collaboration with our partners, Novartis. It's being evaluated in an open-label, phase I, multiple-dose, dose escalation study to assess its safety, tolerability, and preliminary antitumor activity in patients with relapsed or refractory acute myeloid leukemia, or AML, and other CD123-expressing hematologic malignancies. Last week, we announced that the FDA placed a partial clinical hold on the study. While patients currently on treatment and benefiting from treatment may continue treatment on the study, no new patients will be allowed to enroll until the partial clinical hold is lifted by the FDA. The partial hold is related to our recent reports to the FDA of two patient deaths that were considered at least possibly related to treatment.
One patient experienced cytokine release syndrome, or CRS, after their first dose, the treatment of which was complicated by the patient's decision to withdraw care prior to full implementation of standard CRS management. This patient received an infusion of 1.3 mcg per kilogram. As of our ASH presentation with the data cutoff of October 19th, 2018, 25 patients were treated at this initial dose or higher. Since then, multiple additional patients have been treated at this initial dose and for subsequent doses at higher levels. Second patient received several doses of XmAb14045. Within a week of their last infusion, the patient developed chest tightness and worsening shortness of breath during a platelet transfusion for the management of thrombocytopenia related to her AML. The patient subsequently developed acute pulmonary edema and then died several days later.
The partial clinical hold will remain in place pending the FDA's review of additional details regarding these events, safety and efficacy information across the study, and satisfactory review of amendments to the study protocol and related documents. We continue to work closely with study investigators and the FDA to resolve the partial clinical hold, and we'll provide an update when information on resuming enrollment can be shared. This past December, we presented initial results from this phase I study at the American Society of Hematology Annual Meeting. As we previously announced, these early data show encouraging signs of efficacy in a heavily pretreated population for weekly administered XmAb14045. As of the data cutoff, 66 patients with relapsed or refractory AML were enrolled. These patients had a median age of 61 years and had experienced a median of three prior therapies, and 30% had a history of hematopoietic stem cell transplantation.
A maximum tolerated dose had not been determined. As expected, CRS was the most common adverse event occurring in 55% of patients and was generally managed with premedication. Four patients or 6% experienced Grade 3 or Grade 4 CRS. CRS is generally more severe on the initial dose, accounting for most Grade 3 or higher episodes. Additional adverse events within 24 hours of infusion that were consistent with component symptoms of CRS, but not reported as CRS by the investigators, were seen in an additional 29% of patients. Regarding efficacy, 28% of evaluable patients at the two highest doses studied, that is 1.3 mcg and 2.3 mcg per kilogram, achieved either complete remission or a complete remission with incomplete hematologic recovery. There remains an urgent need for effective new therapies in AML. Based on these encouraging early data, we believe 14045 may have meaningful potential in this area.
Now I'll turn it back to Bassil to review updates on the remainder of our pipeline.
Thanks, Paul. Before moving on to review developments in the remainder of our oncology pipeline, I'll speak about obexelimab, which is XmAb5871, and our first-in-class monoclonal antibody that targets CD19 with its variable domain and uses our XmAb immune inhibitor Fc domain to target Fc gamma receptor IIb, a receptor that inhibits B-cell function. B-cell inhibition is a proven strategy for many autoimmune diseases, and we believe obexelimab offers patients and physicians a potentially differentiated therapeutic option because of its subcutaneous delivery format and its highly potent and broad blockade of B-cell activation occurs without depleting or destroying B-cells. This means that the natural immune system is able to function normally once treatment is no longer needed.
To date, we've conducted phase II clinical trials in several autoimmune diseases, and we've demonstrated the potential disease-modifying ability of obexelimab in systemic lupus erythematosus, which we presented last October at the ACR Annual Meeting, and in IgG4-related disease. Data from these studies support further development of these indications and show the potential of obexelimab in other autoimmune disorders. Given obexelimab's potential disease-modifying activity observed across multiple diseases, the scale of potential registrational studies, and the opportunities provided to us by our novel bispecific Fc technologies, we believe that further development, including potentially pivotal phase III studies, should be conducted with a development partner that has the infrastructure and resources to maximize the potential of this drug candidate in the broadest set of patient populations.
To ensure alignment with potential collaborators, without a partner, we will not start the phase III study in IgG4-related disease that we have been planning. I'll shift now to our rapidly growing bispecific oncology pipeline. About six years ago, we began work to create bispecific antibodies that contain Fc domains. We engineered Fc domains that spontaneously form bispecific structures and can be decorated with nearly any antigen binding domain in a variety of formats. They can be made using standard antibody production techniques, and they have antibody-like half-lives. Our plug-and-play approach has enabled the rapid and simultaneous development of a wide range of bispecific drug candidates addressing a wide range of targets. We strive to be at what we think is going to be the forefront of the next wave of antibody engineering, which has the potential to deliver new treatments in oncology and other areas.
Now, at the ASH Annual Meeting this past December, in addition to us, we saw multiple data readouts from a variety of bispecific antibody platforms in several hematologic malignancies. We believe this heralds the future where bispecific antibodies are a major part of the field of antibody therapeutics. Now I'll speak about our CD3 bispecific class. Now, earlier we mentioned that we currently have three categories of drug candidates built on this bispecific Fc domain. The first and most advanced is the CD3 class. These include XmAb14045, XmAb13676, and XmAb18087. These are tumor-targeted antibodies that contain both a tumor antigen binding domain and a cytotoxic T-cell binding domain, which is the CD3-binding domain. They activate T-cells at the site of the tumor in order to potently kill malignanT-cells. All three of these CD3 bispecifics are in phase I development.
After 14045, which Paul discussed, XmAb13676 is our CD20 by CD3 bispecific antibody currently being evaluated in open label phase I multi-dose dose escalation study to assess its safety, tolerability, and preliminary anti-tumor activity in patients with B-cell malignancies. In early January, we announced that as part of a strategic pipeline reprioritization, our partner, Novartis, decided to return its rights to develop and commercialize XmAb13676. We intend to continue development as planned, and initial data from the study are expected in the second half of this year. In addition, additional data from the phase I study of XmAb18087, our somatostatin receptor 2 by CD3 bispecific antibody for neuroendocrine tumors and gastrointestinal stromal tumors, are also expected late this year. Our second group of bispecific antibodies are our tumor microenvironment activators.
Rather than directly bridging a T-cell to a tumor cell, our TME activators seek to more effectively reactivate tumor-reactive T-cells in existing therapies by engaging multiple T-cell targets simultaneously, such as checkpoints or agonists. Now, this approach not only eliminates the need for the multiple antibodies usually used for combination therapy, but allows for more selective targeting of T-cells with high checkpoint expression, which are typically overrepresented in the tumor microenvironment. We currently have three TME activators in development, each testing a distinct mechanism of TME activation. First, XmAb20717, a PD-1 by CTLA-4 bispecific antibody that's currently being evaluated in a phase I study for patients with advanced solid tumors.
We dosed the first patient of the study, which we call DUET-2, in July 2018, and we expect to report initial data on the safety tolerability, pharmacokinetics, pharmacodynamics, immunogenicity, and preliminary antitumor activity in the second half of 2019. Additionally, both investigational new drug applications for XmAb23104, our PD-1 by ICOS bispecific antibody, and XmAb22841, our CTLA-4 by LAG-3 bispecific antibody, were allowed to open by the FDA. We expect to initiate phase I studies for each in patients with select advanced solid tumors in the second half of this year. Or sorry, in the second quarter of this year. XmAb22841 will be studied as a monotherapy and also in combination with pembrolizumab to evaluate triple checkpoint blockade of CTLA-4 and LAG-3 on top of PD-1 inhibition. Finally, we're developing a suite of cytokines built on an XmAb bispecific Fc domain.
They contain both cytokine and cytokine receptor domains to selectively expand and activate immune cells that can be recruited against tumors. The first of these programs is XmAb24306, an IL-15 cytokine which we designed specifically to create sustained T-cell and natural killer cell expansion via modulated potency. IL-15 is differentiated from its cousin, IL-2, due to its natural inability to bind CD25, an important receptor for regulatory T-cell activation. Our IL-15 bispecific cytokine platform, of which 24306 is the first candidate, provides a more druggable version of the cytokine with potentially superior tolerability, slower receptor-mediated clearance, and a prolonged half-life, and is intended for development with a wide range of combination agents. Which brings us to the collaboration we announced with Genentech earlier this month, and for which we expect HSR clearance for soon.
We will co-develop XmAb24306 and other potential IL-15 programs, and we will share in 45% of development costs and profits. While Genentech will commercialize medicines worldwide, we have the option to co-promote in the U.S. We are also engaging in a two-year research program to discover new IL-15 drug candidates, including ones targeted to specific immune cell populations, a feature enabled by the bispecific Fc domain. For Genentech's exclusive worldwide license to XmAb24306 and for new IL-15 drug candidates, we will receive $120 million upfront and will be eligible to receive up to $160 million in development milestones for the 24306 program and up to $180 million in development milestones for each new IL-15 drug candidate. This pays the share of our development costs up to those amounts and what we plan to be a very extensive clinical program exploring numerous combination agents.
We expect to support Genentech's IND application for XmAb24306 in multiple oncology indications in the second half of 2019. Importantly, we can perform our own clinical trials with both our own pipeline assets and non-Genentech agents, subject to some conditions, and we look forward to planning a number of such studies pending completion of the initial dose escalation study for 24306. Now, stepping back, we believe our broad pipeline of oncology drug candidates, built on our bispecific Fc domain, provide us multiple distinct opportunities to impact the treatment of patients with cancer. We are committed to exploiting the full potential of this platform, both internally and through potential collaborations that preserve the long-term value that we have in our proprietary programs.
Additionally, licensing transactions provide us with multiple revenue streams that help fund the development of our most promising wholly-owned product candidates while requiring limited resources from our internal team and providing external validation of our XmAb technology. Eight pharmaceutical companies and the National Institutes of Health are advancing novel drug candidates that were either discovered at Xencor or that rely on our XmAb technology for bispecific structure, higher cytotoxicity, longer half-life, or improved stability. Several programs are currently in clinical development, including Alexion's ULTOMIRIS, which I mentioned earlier. We remain eligible for up to $8 million in regulatory milestone payments and $30 million in sales milestone payments, in addition to low single-digit royalties on sales, regardless of geography, indication, or route of administration.
The next program, MOR208, is a compound that we discovered and initially developed internally at Xencor, which MorphoSys is evaluating in multiple pivotal trials for patients with relapsed/refractory diffuse large B-cell lymphoma. Beyond that, Amgen's AMG 424, a CD38 by CD3 bispecific antibody, is being evaluated in a phase I study for patients with multiple myeloma, and Amgen has also announced AMG 509, a bispecific antibody built with our XmAb bispecific Fc technology, is in preclinical development for patients with prostate cancer. With that, I'll turn the call over to our Chief Financial Officer, John Kuch, to review our fourth quarter and full year 2018 financial results.
Thank you, Bassil. I'd like to briefly touch base on our fourth quarter year-end results for 2018. Our total cash, cash equivalents and marketable securities as of December 31st, 2018 total $530.5 million, compared to $363.3 million on December 31st, 2017. The increase reflects net proceeds of $245.5 million from our public offering in March 2018, partially offset by cash used to fund operating activities in 2018. Before turning to our fourth quarter P&L, I'd like to once again remind everyone that our financial statements reflect the adoption of Accounting Standards Codification Topic 606. The Financial Accounting Standards Board's revised accounting rules on revenue recognition, which went into effect this year. As such, we adopted ASC 606 effective January 1st this year and have revised revenue reported for the prior period ending December 31st, 2017, to reflect this new standard.
Revenues for the three months ended December 31st, 2018, were $11.6 million compared to $30.1 million for the three months ended December 31st, 2017. Revenue in the fourth quarter 2018 was primarily milestone revenue received from Alexion, where revenue in the fourth quarter 2017 included $10 million milestone revenue from Amgen and $20 million of revenue earned from our Novartis collaboration. Total revenues for 2018 were $40.6 million, compared to $46 million for 2017. Total 2018 revenue included $20 million of milestone revenue received from Alexion and $20 million of revenue earned from our Novartis collaboration, while 2017 revenues consisted of milestones received from Amgen, MorphoSys, and CSL, which totaled $26 million, in addition to $20 million earned from our Novartis collaboration. Research and development expenditures for the three months ended December 31st, 2018, were $27.1 million compared to $20.4 million for the same period in 2017.
R&D expenditures for the full 12 months of 2018 were $97.5 million, compared to $71.8 million for 2017. The increased R&D spending in the three and 12 months ended December 31st, 2018, over R&D spending in the same periods of 2017 is primarily due to the additional spending on our bispecific Fc technologies and expanding pipeline of bispecific oncology candidates, particularly our tumor microenvironment activator candidates and our initial cytokine candidate, XmAb24306.
General administrative expense for three months ended December 31st, 2018, were $5.5 million compared to $4.4 million for the same period in 2017. So, G&A expense for the full 12 months of 2018 were $22.5 million compared to $17.5 million for 2017. Increased G&A spending in 2018 period will report over 2017 spending for the same period reflect additional compensation costs, including increased stock-based compensation charges.
Non-cash share-based compensation expense for 2018 was $20.5 million compared to $13.7 million for 2017. The net-loss for three months ended December 31st, 2018, was $18.2 million compared to net-income of $7.4 million for the same period in 2017. Net-loss for the year-end December 31st, 2018, was $70.4 million compared to net-loss of $38.5 million in 2017. Increased loss in 2018 report periods over the same period of 2017 is primarily due to increased R&D spending in 2018.
As we look forward to 2019 and considering the net impact of R&D reimbursements, upfront payments, milestones, and royalty revenue on our gross spending for the year, we expect to end 2019 with between $575 million and $600 million in cash, cash equivalents, and marketable securities. Based on our current operating plans, we expect to be able to fund research and development programs and operations beyond 2024. With that, we'd now like to open up the call for questions. Operator?
Ladies and gentlemen, at this time, if you have a question, please press the star and the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. To prevent any background noise, we ask that you please place your line on mute once your question has been stated. Our first question is from Ted Tenthoff from Piper Jaffray. Your line is now open.
Great. Thank you very much. Congratulations on an exciting year. A lot of progress coming, and I'm looking forward to an update on the clinicals. One quick question, if I may. With respect to ULTOMIRIS, how will you be recognizing those royalties? Is it a lag period? Will you be breaking out a line? Maybe you can just tell us a little bit about that. Thank you.
Yeah. It's most likely, the reporting under the agreement is gonna be after the period. We're not gonna know until later. As far as breaking it out, we'll have to see how the numbers come down the pike really before we start making that kind of decision. We'll have to see how they specifically break it out because they haven't given much guidance at what point they're going to separate the ULTOMIRIS from the SOLIRIS sales. I think that's gonna play out over the next two to three quarters, to be honest with you, Ted.
Okay, cool. We'll keep our eyes open for that. Just with respect to the data readouts, when do you think it's most likely which medical meetings could we get some updates from the bispecifics that are advancing in phase I? Thanks very much.
I would say, without having foreknowledge of the medical meetings, schedules, and abstract submission deadlines, I would just say late in the year. I don't want to commit to any specific conferences before we make those decisions on what submissions to make, but late in the year.
Fair enough. Thanks, Bassil. Thanks, John.
Thank you.
Thank you. Our next question is from Alethia Young from Cantor Fitzgerald. Your line is now open.
Hey, guys. Thanks for taking my question. Just two of them, if I may. I just wanted to talk a little bit more about the partial hold and maybe the second case where I noticed you mentioned a couple, seemed like the person who had AML and was getting platelets. Was the edema, how related to drug was it, I guess is the question. It seems like there were a lot of things kind of going on in this patient. Just a little bit more color there. On the second question, you obviously are going to have close to probably $600 million potentially in cash. I just wanted to talk a little bit about how that starts to frame and change the company's strategy as far as being able to commercialize assets.
It seems like it would be in oncology, but are there any kind of particular areas where you really think you can grow and build a commercial operation there? Thanks.
Yeah. I'll just answer the second one first. The cash balance gives us the optionality to pursue multiple different programs, and that's the strategy we've been laying out for the last few years, to access multiple different biologies using our Fc technology, particularly the bispecific technology, to go down different avenues because biology risk is inherently the largest risk in drug development. We don't know biology until we try things in the clinic. With that, we do have ambitions one day to hopefully be a fully integrated company.
I think we're a ways off from being able to give specific guidance on that because we need to progress multiple programs forward, see which ones have the data that supports their advancement, see which ones have the characteristics that support a go it alone for Xencor, or at least go it alone in the U.S., for example, with our Novartis partner program. I think you're right about where we want our ultimate trajectory to be. I think it's too early to commit to anything. I think it is very important to have a strong balance sheet to be able to carry forward a broad platform sort of driven strategy of making a number of different biological bets in the clinic. With that, I'll turn to your first question regarding, I guess you were asking about causality vis-a-vis the patient that had the pulmonary edema.
Yeah. The sequence of events is as we've reported, that's about the extent that we want to share at this point. We continue to work with the investigators and with the agency to gather more data and do analysis and hopefully get to more information about causality. In this particular case, the investigator considered it possibly related, and as such, it's our requirement to report this event.
Just to follow up to that, do you guys have any kind of thought on potential timeline around resolution of the partial hold?
Well, we're going to be submitting responses in a small number of weeks as we gather data together. There is a 30-day window for the FDA to respond, that response can be anything. It can be more questions. I think that what we plan on doing is when we resolve the hold, we'll certainly immediately announce that. We're working very hard and very quickly with our investigators and staying close to the FDA.
Great. Thanks.
Thank you. Our next question's from Arlinda Lee from CG. Your line is now open.
Hi, guys. Thanks for taking my question. I guess, I had a couple questions on 24306 and when we might hear more about your extensive combination trials that you've planned, what is the data flow timelines for hearing about when you might start, when the phase I might read out sufficiently that you can start the combination. Secondly, on 509, have you disclosed what the target in prostate cancer is for Amgen?
To your first question on XmAb24306, our IL-15 program, the first lead asset with our Genentech collaboration, we expect to support Genentech's filing of the IND, because we've already obviously done almost all of the preclinical work, manufacturing, et cetera. We support that filing in the second half of this year and try to get patients on as soon as possible. That could be very late this year or early next year. After initial monotherapy dose escalation, as is customary with combination agents, you would then go into combination. I wouldn't expect any of that to happen until the second half of 2020. Readouts from that, I think, again, it's starting to get far enough out that it's impossible to say. It is a very extensive strategy across different indications, different combination agents.
We, of course, have our own trials that we would like to pursue, with our own combination agents, That's far enough off that we'll have ample chances to guide you on that as we go forward. Now, regarding AMG 509, the newly announced agent for prostate cancer, that's a bispecific antibody. They have not released any details on the targets for that agent, we can't say.
Okay. I guess, lastly on ULTOMIRIS, you mentioned that $8 million in regulatory milestones remain. Are those fairly near-term, or are they on additional approvals, and maybe a little bit further out?
I would say it's fair to say they're relatively near-term.
On the sales milestones, are those set up to be fairly near-term, or are those also?
I think that's one we're going to have to get a feel for the launch trajectory before we can comment on that.
Okay, thanks.
Thank you. Our next question is from Jonathan Chang from SVB Leerink. Your line is now open.
Hi. Thanks for taking my questions. Jonathan Chang from SVB Leerink. First question, can you provide more color on the decision to not start late-stage development for obexelimab until securing a partnership? What triggered this change from past guidance, and how should we be thinking about the type of partnership that you're looking for?
Yeah. I think what triggered the change is, as we've been looking at our various partnering opportunities, and as we've been looking at the kind of trial that we can start, in particular, the inherent uncertainty in a brand-new disease where we're making sure you can build enough data to show the clinically meaningful benefit, that is how a patient feels, functions, or survives, how that ties to the readily measurable endpoints. I think that with that uncertainty and how you would best go about doing that, it seemed putting the cart before the horse to initiate before understanding exactly what the potential partner you might end up with would want to do.
I think the kind of partnership that we would like to pursue is one, first and foremost, with a partner that can aggressively pursue the development of the asset broadly, because we've shown disease-modifying activity now in three indications: RA, lupus, IgG4-related disease. It's clearly an agent that has good tolerability. We've got a subcu format, and I think that for us now, it's the best way to maximize the value in autoimmune disease where clinical development is long and arduous and expensive, is to focus solely on partnering. That really emerged over the last really few weeks as we've narrowed down what our thinking is on how to proceed with both the trial and as our thinking about partnering has matured. What kind of partnership would be structural wise beyond what I just said, I think there's a variety of opportunities.
We would like some opportunity to potentially participate commercially. I don't necessarily know if that's an absolute for this program, because as we shift to our oncology focus, the kind of deal structures that we've been able to achieve, with regard to U.S. commercial rights or partial U.S. co-promotion rights, I think are attractive. I think we've got more flexibility around this program because, again, it's not feeling the same gravitational pull as the rest of our portfolio is in the oncology area.
Got it. Just one other question from me, a broader question. How should investors be thinking about the risk of cytokine release syndrome seen with CD3 bispecific antibodies development both at Xencor and at other companies?
I think cytokine release syndrome is a consequence of the inherent activity of turning T-cells on to kill tumors. I think it's ultimately not separable. I think that it's a question of manageability and severity and incidence. We've seen this progression from the very first-generation CD3 bispecifics like blinatumomab, where they're profoundly potent, hundreds of times more potent than the kinds of molecules that are Fc structure-based like ours or like some of our competitors. I think that drop in potency that inherently occurs based on the flexibility that happens from attaching binding domains on an Fc structure. I think that's helpful in allowing now people to do short infusion administration, get a bunch of drug on board, as opposed to having to dribble it in slowly with infusion pumps.
I think the field has progressed to give tools to make the whole situation a lot more manageable, and I think just as important is the maturing of how people manage CRS early on is happening. We've all learned a lot from the CAR- T therapeutic efforts and are now learning a lot from the bispecific. But I think it's not separable. I think it's a question of how much more manageable we make it with further refinements in design, things like adjusting the potencies of your molecule with other levers like affinity, and further refinements of how we do dosing schedules and when all those things play in. It's not going to be separable. It's a question of who figures out how to make it the most manageable.
Got it. Thank you.
Thank you. Our next question is from Christopher Marai from Nomura. Your line is now open.
Hello, this is Jackson Harvey on for Christopher Marai. Thank you for taking my question. For the SSTR CD3 bispecific antibody, what kind of toxicity are you expecting given expression of SSTR2 on pancreatic islet cells? Perhaps there's some insight from your prior studies in monkeys that may have read through the humans.
Sure. I guess the sort of question you ask is sort of a salient one for generally speaking, excuse me, going after solid tumor targets with a CD3 bispecific or really with any kind of cytotoxic modality, where with solid tumors in particular, it is very unusual. I don't know if I can think of an example where your tumor target is really restricted to the tumor. In hematologic malignancies, it is a much simpler situation where even if you have healthy tissue expression, usually like in the case of a CD20 antibody, that healthy tissue's expression is on a cell population that a patient can survive without. With regard to SSTR2, that is an example, yeah, you do have healthy tissue expression of somatostatin receptor 2 in a variety of tissues like in islet cells.
I think it is a question again of the balancing act of potency against your tumor cell versus potency against your healthy tissues. We have certainly seen, and I think there is reports of if you hit SSTR2, you can induce various effects like glucose intolerance. If you hit it too hard, you will get all sorts of, any kind of tissue that expresses it, you are going to expect to have damage to. I think it is a question of tuning that effect so that you mostly hit the tumor cells.
It is a general question that the whole field is looking at as we go into solid tumors and new approaches using Fc containing bispecifics such as going to higher valencies of binding where you can use avidity effects to steer your agent towards cells that have a higher density advantage. All these kinds of things are starting to be tried.
Great. Thank you.
That gives us a feel for the kind of toxicities to look for, obviously.
Great. Then I just have one follow-up on the CD123 bispecific. Were you able to look for PD-L1 upregulation in the patients, or is it too early for that kind of data?
It's too early just yet. It's a very interesting thing to look for, I agree.
Great. Thank you very much.
Thank you. As a reminder, ladies and gentlemen, if you have a question, please press the star then the number one key on your touch tone telephone. Our next question is from David Nierengarten from Wedbush Securities. Your line is now open.
Thanks for taking my question. I remember it might be a little dim after two and a half years, but I recall a discussion around your Analyst Day about tuning CD3 binding domain, about down tuning it to avoid CRS or other side effects. If I recall the CD123 by CD3 that you have, I don't think the CD3 domain was different or tuned down, however you want to term it. Are any of the other clinical candidates, if you refresh your memory, modified in any way on the CD3 domain, or are they all the same? Thanks.
Of the three clinical candidates we have for CD3, that are CD3 category, the XmAb14045, the CD123, the CD20, and the SSTR2, they all have what I would call a moderately high sort of single-digit nanomolar affinity for CD3, not very high like many antibodies can be. They all share the same one. I will point out, though, that for our CD20/CD3, I think the Analyst Day that you're talking about, we went through a fairly detailed exercise of looking at both CD3, but more importantly, it turns out in the case for the CD20 molecule, looking at CD20 affinities that are lower to see how that impacts cytokine release and half-life of the molecule and tolerability versus depletion of the target cell.
We did an exercise in our non-human primate preclinical models that showed that in the case of the CD20/CD3 bispecific, tuning the CD20 side seemed to have the best effect in balancing the reduction of cytokine release with maintaining activity against the target cells. We're always looking at tuning. For the first three programs, you're correct about the CD3 affinities. We've reported those. I think there's often more to it than that, I would say the Amgen program, AMG 424, the CD38 by CD3, they published very nice data about a year ago showing that using our toolkit of differing affinities against CD3 and CD38 in that instance, trying a lot of different combinations of reduced affinity to thread the needle in a very challenging target, CD38, which is expressed broadly off tumor. Those are definite points, and you're right.
The first three share that, I would say, moderately high affinity single-digit nanomolar CD3. Definitely a lot of activity in the field though, looking at those parameters.
Yep. Got it. Thank you.
Thanks, David.
Thank you. At this time, I am showing no further questions. I would like to turn the call back over to Bassil Dahiyat, CEO, for closing remarks.
Thanks very much, operator. We expect a very busy year pursuing and expanding our pipeline and feel that we have a platform, partners, and balance sheet to really help facilitate that. With that, I would like to thank you all for joining today's call.
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.