Good afternoon, and welcome to the Xencor Third Quarter 2018 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 turn the call over to Charles Lyles, Associate Director and Head of Corporate Communications and Investor Relations at Xencor.
Please proceed.
Thank you, operator. Good afternoon. This is Charles Liles with Xencor. Earlier this afternoon, we issued a press release, which outlined the topics we plan to discuss today. The release is available at xencor.com.
Today on our call, Fazil Dahiyat, Ph. D, President and Chief Executive Officer, will discuss the company's business highlights Paul Foster, M. D, Senior Vice President and Chief Medical Officer, will provide an update on Xencor's clinical programs and John Cush, Senior Vice President of Finance and Chief Financial Officer, will review the financial results from the Q3. Then 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 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 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 Xencor's most recently filed Annual Report on Form 10 ks and quarterly report on Form 10 Q. With that, let me pass the call over to Basil.
Thanks, Charles, and welcome aboard at Xencor, 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 bottom half of an antibody structure, its Fc domain, which we tweak to produce antibodies with improved potency, a longer half life or bispecific structure. Now over the last 15 years, we've created a large intellectual property base around these novel Fc 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. Recently, we announced data from 2 internal programs.
The top line results of our Phase 2 study of XmAb5871 in systemic lupus of rheumatosis or SLE that was in October and just last week encouraging initial data from our ongoing Phase 1 clinical trial of XmAb14045 in acute myeloid leukemia or AML, which we'll present more fully next month at ASH. Now as you know, XmAb14045 is the lead candidate from our bispecific oncology pipeline. And while the first in human data from our bispecific platform is a milestone for Xencor, we also believe it is reflective of the emergence of bispecific antibodies as a major part of the field of antibody therapeutics. The concept of bispecific antibodies has been around for decades because the idea of binding 2 antigens at once is greatly increased to greatly increase the breadth of biology the antibodies can do is highly attractive. Now the field is only just starting to make progress towards that potential because of the creation of new molecular engineering tools.
We believe the situation today for bispecifics is analogous to that for therapeutic antibodies around 20 years ago. After a decade of limited utility as a therapeutic class, immunization technologies emerged and avoided emerged only when they were able to avoid immune rejection by the body, which started the massive expansion of the field. That was the development of humanization technology. And in parallel now, the field is developing bispecific antibody technologies. Now the main challenges with bispecific antibodies had been that they lacked the long half lives in vivo, high stability and ease of manufacturing that regular antibodies have because to create bispecific binding, which is a non natural property, most designs eliminated Fc domains and simply stitch 2 different antigen binding domains together.
These missing properties are what make antibodies such good drug platforms, however, and those properties that in large part they in large part do come from antibodies having Fc domains. Now about 6 years ago, we began working to create bispecific antibodies that contain Fc domains. We used our long experience in Fc engineering. We engineered domains that spontaneously form bispecific structures and can be decorated with nearly any antigen binding domains. They can be made using standard antibody production techniques and they have antibody like half lives.
Now this plug and play platform is very flexible and has enabled the rapid and simultaneous development of a wide range of bispecific molecules addressing a breadth of targets. We ought to put Xencor at the forefront of the next wave of antibody engineering, which has the potential to deliver new treatments in oncology and other areas. Now I'll come back to this later. For now, I'll turn it over to our Chief Medical Officer, Paul Foster to review our recent clinical data readouts starting with XmAb5871.
Thanks, Basil. XmAb5871 is our 1st in class monoclonal antibody that targets CD19 with its variable domain and uses our XmAb immune inhibitor Fc domain to target Fc gamma receptor 2b, a receptor that inhibits B cell function. While B cell inhibition is a proven strategy for many autoimmune diseases, we believe 5,871 offers patients and physicians a potentially differentiated therapeutic option because of its subcutaneous delivery format and it's 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. We are currently advancing 5,871 for the treatment of IgG4 related disease or IgG4rd, a newly defined disease characterized by tumor like swelling, a variable degree of fibrosis and potentially irreversible organ damage plus lymphoplasmicidic infiltrate in the effective organs.
Following encouraging data from our Phase 2 trial last year and because IgG4RG is a recently characterized disease with no therapeutic options or regulatory precedence for approval, we have been working closely with the U. S. Food and Drug Administration to finalize the trial design and protocol for our proposed Phase 3 study. We expect to initiate a randomized placebo controlled double blinded Phase 3 study evaluating the addition of 5,871 to the standard of care at corticosteroids in approximately 200 to 250 patients with IgG4RD by early in 2019. In SLE, we reported encouraging top line results from our Phase 2 study of 5,871 at the American College of Rheumatology or ACR Annual Meeting in October.
As we described before, the study used a novel trial design intended to more rapidly assess 5,871's effect on SLE with a shorter time to endpoint and with fewer patients compared to standard SLE studies. We enrolled 104 patients with moderate to severe non organ threatening SLE. Patients continued their background immunosuppressive medications sorry, discontinued the background immunosuppressant medications after receiving a short course of I'm steroids to quiet their SLE disease activity. Patients who achieved the required dose improvement were then randomized to 1:1 3C5e71 or placebo every 14 days for up to 16 doses. The primary endpoint of the study was the proportion of patients with no loss of improvement or LOI in the efficacy evaluable population defined as those completed date 2/25 experienced LOI or discontinued due to a drug related adverse event.
KLOI was defined as an increase of greater than or equal to 4 points on the SLA disease activity index or SLEDI scale or a new British Isles lupus activity group or BILAG A or B score and importantly physician intent to treat with rescue therapy. While the study did not achieve statistical significance on the primary endpoint, data trended positively with improvement maintained at day 225 by 42% of the patients treated with XmAb5871 compared to 28.6 percent of patients treated with placebo. Additionally, the efficacy evaluable population excludes 10 placebo patients and 2 XmAb5871 treating patients who withdrew from the study for reasons other than LOI or adverse events. These exclusions led to higher placebo response rates compared to the intent to treat population. In the intent to treat population improvement was maintained by 40.4% of patients in the Xpamab treated arm compared to 23.1% of the patients in placebo arm at day 2 25.
Predefined secondary endpoints included valuations of time to loss of improvement and safety and tolerability. XmAb5871 treated patients in the efficacy evaluable population experienced a statistically significant longer time to loss of improvement compared to placebo treated patients. A 76% improvement in median time to LOI and a 47% reduction in the risk of LOI. Safety was consistent with previous trials. We are encouraged by these results, which mark the 3rd autoimmune disease demonstrate responsiveness to exosmab5871 treatment.
As we devote our internal resources developing 5,871 and IgG4ID, we look forward to exploring potential partnership opportunities to further develop Xdab5871 for SLE. I'll now to draw by specific pipeline. At the American Society of Hematology meeting next month, we will share initial clinical data from our ongoing Phase 1 trial of XmAb14045, a CD123, CD3 bispecific antibody in development for acute myeloid leukemia and other CD123 expressing hematologic malignancies. As we discussed in the abstract release last week, these early data show encouraging signs of efficacy in a heavily pretreated population for weekly administered 14,045. At the time of data cut off, 63 patients with relapsed or refractory AML and one patient with B cell acute lymphoblastic leukemia were enrolled.
These patients had a median age of 61 years, had experienced a median of 3 prior therapies and 30% had undergone prior allogeneic stem cell transplantation. To date, a maximum tolerated dose has not been determined. As expected, cytokine release syndrome or CRS was the most common adverse event occurring in 77% of patients and was generally managed with pre medication. 7 patients or 11% experienced Grade 3 or Grade 4 CRS. Regarding efficacy, 23% of valuable patients at the 2 highest dose level study 1.32.3 micrograms per kilogram with AML achieved either a complete remission or a complete remission with incomplete hematologic recovery.
While the AML treatment landscape has improved in recent years with the approvals of new drugs, there remains an urgent need for effective new therapies. Based on these early data, we believe 14,045 may have meaningful potential and we look forward to continuing to optimize our dosing regimen as we progress through Phase 1. I'll now turn it back to Bassil to review our bispecific antibody platform and earlier stage pipeline.
Thanks, Paul. As we outlined at the start of the call, all our bispecific antibodies are built on our proprietary XmAbfcedrin to preserve natural antibody stability, long half life and ease of production. This plug and play approach provides great flexibility for designing a range of different bispecific structures. And to date, we've created 7 bispecific oncology candidates, which can be grouped into 3 distinct classes. The first and most advanced group are our CD3 bispecific antibodies, XNAP's 14,045, 13,676 and 18,087.
These compounds are tumor targeted antibodies that contain both the tumor antigen binding domain and a cytotoxic T cell binding domain, CD3 binding domain. They activate T cells at the site of the tumor in order to potently kill malignant cells. Now all 3 of these CD3 bispecific antibodies are in Phase 1 development. In addition to the XmAb14045 data described by Paul, we expect to report initial clinical data in 2019 for XmAb13676, our CD20xCD3 bispecific antibody for B cell malignancies and XmAb18087, our SSTR2xCD3 bispecific antibody for neuroendocrine tumors and gastrointestinal stromal tumors. Now our next class of bispecific antibodies are our tumor microenvironment activators.
Rather than directly bridging a T cell to a tumor cell, our TME activator seek to more effectively reactivate tumor reactive T cells than 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 3 TME activators in development, each testing a distinct mechanism for TME activation. First, XmAb20717, a PD-one by CTLA-four bispecific antibody is currently being evaluated in Phase 1 trial for patients with advanced solid tumors. We just the 1st patient of this study, which we call DUET II in July 2018 and we expect to report initial data on safety, tolerability, pharmacokinetics, pharmacodynamics, immunogenicity and preliminary anti tumor activity in 2019.
Additionally, the IND for XmAb 23104, our PD-one by ICOS bispecific antibody was recently allowed to open by the FDA. And we expect to initiate a Phase 1 trial in patients with select solid tumors in 2019. We also plan to submit an IND for XNAP-two thousand eight hundred and forty one, our CTLA-four x LAG-three bispecific antibody by year end and to initiate a Phase 1 trial in multiple oncology indications next year. Finally, we're developing a suite of bi specific cytokines, which can name both cytokine and cytokine receptor demands to selectively expand and activate immune cells that can be recruited against tumors. First of these programs is XmAb24306, an IL-fifteen therapeutic, which we designed specifically to create sustained T cell and NK cell expansion via modulated potency and built it upon an XmAb bispecific Fc domain that contains our Xtend technology for longer half life.
We hope that it will provide a more druggable version of IL-fifteen with improved tolerability, slower receptor mediated clearance and prolonged half life. We expect to submit an IND for XmAb24306 in multiple oncology indications in 2019. We believe this broad pipeline of bispecific oncology candidates provides us multiple distinct opportunities to impact the treatment of patients with cancer and we're committed to exploiting the full potential of our bispecific platform, both internally and through potential collaborations. To that end, business development remains a key pillar of our corporate strategy, in large part due to the flexibility of our platform. 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.
Today, 8 pharmaceutical companies and the National Institutes of Health are advancing novel drug candidates that were either discovered at Xencor or the relying on XmAb technology for bispecific structure, higher cytotoxicity, longer half life or improved stability. 4 such programs are currently in clinical development, including MOR208, a compound which we discovered and initially developed internally at Xencor, which MorphoSys is evaluating in multiple pivotal trials for patients with relapsed or refractory large B cell lymphoma, diffuse large B cell lymphoma or DLBCL. Further, a compound called AMG424, a CD38xCD3 bispecific antibody and is being progressed by Amgen into Phase 1 for patients with multiple myeloma and they initiated that trial this past quarter. Additionally, in the Q3, we received $9,000,000 in milestone payments from Alexion in connection with the recent submission of marketing authorizations for Alexion-twelve ten to the FDA and EMA for patients with paroxysmal nocturnal hemoglobin area or PNH. In October, ALXION announced that it has submitted an additional marketing authorization to regulatory authorities in Japan and that the U.
S. FDA set a review date for its application in February 2019. Under the terms of our collaboration with Alexion, we'll be eligible for additional milestone payments of up to $28,000,000 and sales regulatory milestone payments and sales milestones up to $30,000,000 in addition to royalties on future sales of Alexion 1210. Now with that, I'll turn the call over to our Chief Financial Officer, John Cush to review our Q3 2018 financial results.
Thank you, Basil. Centcor continues to operate from a strong financial position. In this afternoon's press release, we reported cash, cash equivalents and marketable securities totaling $547,800,000 as of September 30, 2018, compared to $363,300,000 on December 31, 2017. This increase reflects net proceeds of $245,500,000 from our underwritten public offering in March 2018, partially offset by cash used to fund operating activities in the 1st 9 months of 2018. Before turning to our Q3 P and L, I'd once again like to remind everyone that our financial statements reflect adoption of Accounting Standards Codification, ASC Topic 606, the Financial Accounting Standard Board's revised accounting rules and revenue recognition, which went into effect this year.
The company earns revenues from technology licensing fees and milestone payments from our partners for the license of our drug candidates and use of our proprietary XmAb antibody engineering technologies. As such, we adopted ASC 606 effective January 1 this year and revised revenue report for the prior period ending September 30, 2017 to reflect this new standard. Revenues for 3 months ended September 30, 2018 were 29,000,000 compared to no revenue report for the 3 months ended September 30, 2017. Revenues
for the
9 months ended September 30, 2018 were also $29,000,000 compared to $16,000,000 for the 9 months ended September 30, 2017. Revenue in the 3 9 month periods ended September 30, 2018 were from revenue recognized under our Novartis collaboration and milestones received under Alexion collaboration. This compares to revenue from the same period in
2017, which were from milestones received under
our CSL and MorphoSys collaborations. Collaborations. Research and development expenses for 3 months ended September 30, 2018 were $21,000,000 compared to $19,400,000 for the 3 months ended September 30, 2017. R and D expenditures for the 9 months ended September 30, 20 18 were $70,400,000 compared to $51,400,000 for 9 months ended September 30, 2017. Increased R and D spending in the 3 9 months ended September 30, 2018 over R and D spending in the same period as 2017 is primarily due to additional spending on our expanding pipeline of bispecific oncology candidates.
General and administrative expenses for the 3 months ended September 30, 2018 were $7,400,000 compared to $4,200,000 for the 3 months ended September 30, 2017. G and A expenses for the 9 months ended September 30, 2018 were $17,000,000 compared to $13,100,000 for the 9 months ended September 30, 2017. Increased G and A spending in the 3 9 months ended September 30, 2018 over G and A spending in the same period 2017 reflects additional compensation costs, including increased stock based compensation charges. Non cash share based compensation expense for the Q2 ended September 30, 2018 was $15,500,000 compared to $10,200,000 for the same period in 2017. Net income for the 3 months ended September 30, 2018 was $3,200,000 or $0.05 on a fully diluted per share basis compared to a net loss $22,700,000 or $0.48 on a fully diluted per share basis for the same period in 2017.
Net income for 3 months ended September 30, 2018 over loss report for the same period in 2017 is primarily due to revenue recognized from our Novartis and Lexion collaborations in 2018. Net loss for the 9 months ended September 30, 2018 was 52,200,000 dollars or $0.98 on a fully diluted per share basis compared to a net loss of $45,900,000 or $0.98 on a fully diluted per share basis for the same period in 2017. The increased revenue for the 9 months ended September 30, 2018 over amounts for the same period in 2017 was offset by increased spending in R and D in 2018. The earnings per share loss for the 9 months ended September 2018 was equal to earnings per share loss in 2017 due to the increase in shares outstanding during 2018. Total shares outstanding was 56,212,449 as of September 30, 2018 compared to 46,955,365 as of September 30, 2017.
The increase in total shares reflect our underwritten public offering of approximately 8,400,000 shares in March 2018. Based on our current operating plans, we expect to have cash to fund research and development programs and operations into 2023 and to end 2018 with approximately $525,000,000 in cash, cash equivalents and marketable securities. With that, we'd now like to open the call up for your questions. Operator?
Thank you. Our first question is from Ted Tenthoff with Piper Jaffray. Your line is open.
Thanks. Thank you very much for the update guys. And I'll take the questions on the ASH data for presentations when we're out in San Diego. I have kind of a higher level question. Just as the bispecific pipeline advances, obviously decisions are going to be data driven, but how do you foresee balancing kind of which drugs to keep, which drugs to potentially partner?
How will you be making those kinds of decisions with such a rich pipeline?
Thanks, Ted. So we've been stating our strategy for a while now as use both the data and the market potential and clinical and commercial costs and infrastructure needed for a program to sort of guide our thinking on a program. And we've always worked to create a diversity across those different parameters within our pipeline. And we've selected some indications as small ones with a very high unmet need, small in terms of the number of patients, in terms of the kind of marketing approach you'd have to have because we do have ambitions to be a commercial organization one day. Those small indications would be exemplified by our molecules in AML, XmAb14045 and neuroendocrine tumors in GIST, XmAb18087.
Those are molecules that if the data bears out could be molecules we could potentially take forward alone. And I'll remind you that for 14,045 though it is partnered with Novartis commercially in the outside of U. S. Territories. In the U.
S, we have full commercial rights. I think for other assets like our tumor microenvironment bispecifics, we've been stating this since we kicked off those efforts a couple of years ago. We view those as ones where we want to build scientific knowledge of the different hypotheses we're testing for the tumor microenvironment between say XmAb20717 versus XmAb 22841. And as we build data around those hypotheses for the ones with strong data, we feel will be very well positioned to find partnerships that can let us retain a larger fraction of commercial potential, though we do think that broad solid tumor drug development in the late phase in particular in immuno oncology would be challenging as well as marketing would be even more challenging for a small organization. So we sort of balance it that way.
And I hope that gives clarity on how we view the specifics of our pipeline.
Makes a lot of sense. I appreciate it. Thanks so much.
Thank you. Our next question is from Jonathan Chang with Leerink Partners. Your line is open.
Hi, guys. This is David Ruch dialing in for Jonathan. Thanks for taking my questions and congrats again on
the progress.
First question, could you help to set investor expectations ahead of ASH in terms of how much more data we could see versus what was disclosed in the abstract?
Yes. It's only a few months of additional time between data cutoffs. And we'll of course show any new data on patients that we didn't have to disclose prior and be able to discuss some of our thinking for going forward around regimens, but perhaps not in exquisite detail. Does that sort of answer your question? I mean, I don't want to suggest anything about data we might show in a few weeks right now.
No, that's helpful. Thank you. Second question is just with regard to other CD123 presentations expected at ASH and we touched on this a little bit on the call already. But how are you thinking about the competitive landscape there? And what are some things you'll be looking for in those competitive presentations?
Well, I think for us, we've tried to be the leader in having an agent that can be delivered intermittently. That is our initial dosing schedules weekly. We're obviously going to work on optimizing the regimen, but our goal is to have something that can be delivered in that weekly timeframe at least at steady state. And so that's how we sort of position ourselves. That's an important, I think, movement for the whole bispecific antibody field, having dosing that can be done.
As a regular therapy, when you come into the hospital, come into the physician's office to get your drug and then you don't have to be there or have to have drug continuously infused. I think that's an important differentiator parameter that we view is really important for our whole CD3 portfolio. And then I think you have to look at that sort of combination of how tolerability and response rate play off of each other. I think we're well positioned in both at the outset of our work in this Phase 1 and now we're getting down to the next step of trying to find the best possible regimen.
Great. Thank you and congrats again.
Thank you. Our next question is from Arlinda Lee with Canaccord Genuity. Your line is open.
Hi, guys. Thanks for taking my questions. Maybe first on the patients that were enrolled in your Phase 1, 14,045 trial. Can you characterize these patients and whether those overall patient characteristics were representative of those treated at your go forward 1.3 micrograms per kilogram dose and the higher one 2.3?
Well, first, I want to caution, we don't we're not posing those as go forward dose. Those are where we got to in our weekly and we're also looking at other doses and dosing regimens. But putting that aside without getting out of ourselves, Just to be clear, we understand your question is how representative were the patients at those two dose levels of the overall population in our trial because what we disclosed in the abstract was sort of the overall population. Nobody was selected or satisfied. I don't know, Paul, if the details you can even really get into right now.
I can't get into right now. I don't have it at my fingertips, but we don't expect they're any different from the overall population.
Okay. And then can you talk about the overall population, the 30% allogeneic stem cell transplant, how at median 3 prior therapies, those strike me as fairly sick patients, but I'd love to hear what you guys think, how sick were the patients that you
Yes. Well, this was a relapse refractory disease and we were trying to dose escalate. So it was really I mean, there were excluding criteria, but it was a pretty broad set. We got a lot of really sick patients. Paul, if you want to elaborate on this.
Yes. They don't get a whole lot of extra therapy in this disease. So you relapse a couple of times and that's usually as long as they survive. So this is a very sick population. We took all comers that were relapsed refractory.
The allo transplants, these are patients who have failed allo transplant. So they either had relapsed after that or were primarily refractory to that transplant. So very sick population.
Okay, great. Thanks. And then maybe one for John on the milestones. What constituted the rest of the $20,000,000 in revenue?
Yes. Well, there was 2 pieces of revenue. The $29,000,000 was a milestone from Lexion and $20,000,000 was recognized under the Novartis collaboration related to delivery of 1 of the bispecifics under the contract. That was just out of deferred revenue.
Okay, got it. Thanks.
Thank you. Our next question is from Bill Tanner with Cantor. Your line is open.
Yes, thanks for taking the question. Basil, I had a couple for you if I could on 7,195. You mentioned the likelihood of partnering the asset for SLE. I think you've talked in the past about keeping IgG for RD. And just some commentary on being able to thread the needle there in terms of being able to keep something in partner something and depending on the circumstances, sometimes that's maybe less tenable than others.
And then the other one on I mean, on 5,871, sorry. And then the other one on 5,871, just on the SLE results, just any read through or not any commentary on IgG4 RD?
Yes. So on the partnering front, so just to be clear, I would anticipate a partnership for this program would be around all indications. And I know that can get tricky when you're juggling multiple indications. I think that the way I've tried to pose it has been, in a go it alone scenario where lupus trial had not worked out in a way that suggested there was future potential and we think it certainly did work out in a way that suggests its future potential. But in that scenario, we would pursue alone IgG4 related disease and try to build from there because that is a smaller indication.
There is not a deep competitive landscape there like in some other autoimmune diseases like in rheumatoid arthritis. In the context of partnering, you really do need to put all the indications together. But I think that a partnership that we could sort of if we could draw what those most successful kind of partnership would be, it would involve us retaining some kind of commercial rights around all indications by territory. So ideally in the United States, I think that's where the only one that makes sense and retaining some portion of that commercial marketplace for ourselves. That's how we view partnerships now in the context of having lupus data that suggests there's potential going forward in that disease.
We wouldn't split indications that if I suggested that, I'm sorry for the confusion.
No, no, no. I mean, sorry, you didn't suggest. I was just wondering, so you would contemplate that the partner would likely carry most of the freight for the SLE?
Yes, yes, yes, yes. That's right. On the issue of read through from lupus to other diseases like RGG4, RD, Paul, you want to comment on that?
Well, we're seeing I mean, we've seen a positive trend now in rheumatoid arthritis and IgG4RD and lupus. So we think this is a very active molecule in the autoimmune space. It's hard to try and correlate response in one to a specific disease, but we think it has potential broad applications.
Got it. And then Bessel, maybe then back on 7,195 that I misspoke about it first. I know you've been talking for a number of quarters about potential partnering. Any progress there? Anything to share?
And then maybe
It's been challenging. I'll be clear. It's been challenging. The landscape in asthma and liver disease has shifted a lot in the last couple of years with the advent of a number of other agents at biologics as well. And that's been difficult.
We're still we still see that there's value in the asset, but it's been a hard slog.
I mean, are people looking then at more direct cytokine blockers than as cleaner perhaps as it were and?
I don't know about cleaner. I think the most simple mechanism for blocking allergic responses is still blockade of IgE, which is at that at the base of how that response then expands from it's at the base of going from allergic recognition to actually the cascade of inflammatory consequences. I think it's been a combination of new agents, those new agents having, I would say challenging launches or maybe not quite as explosive as was hoped. And just overall landscape is getting a little more crowded and it seems a little tougher commercially.
Yes. Okay. All right. Thanks very much.
Thank you. Our next question is from David Nierengarten with Wedbush Securities. Your line is open.
Hey, thanks for taking the question. I just had a quick couple. Maybe to follow-up on an earlier question, to be clear, have you continued dosing at higher levels for 45? Or are you working on different dose schedules? Or are you just straight up continuing the dose escalation?
I would say yes to both.
Okay, fair enough. Yes, higher doses maybe different schedule. Okay, And then the second yes, okay, cool. And then the second one, yes, I think you had prior guidance for starting the 4 RGG4RD Phase 3 this half and you're just talking about early 2019. Is there any reason for pushing it out a little bit?
Is it getting sites on board or anything else we should know about? Thanks.
I think currently we're in the midst of working through the process with FDA and finalizing trial specifics. So this is the 1st randomized study in IgG4RD and we're trying to be very thoughtful with trial design to best support establishment of clinical benefit at the end of the trial.
Okay. Thanks.
Thank
you. Our next question is from Tom Shrader with BTIG. Your line is open.
Hello. Thank you for taking the questions. I just wanted to get
a little bit of a
sense of the SLE data. Is there anything you could have seen that would have made you say, no, this is the one? Or was it always just sort of a quick way to get a read on inhibition of B cells? Just your thoughts there. And along those lines, did you have a good sense of what really good data would look like based on kind of a novel trial design?
So just to be clear, when you say that this is the one that if this trial design, I wasn't clear on that first part.
I mean, what would it have taken for you to say this we're going to fund Phase 3 here or was that never on the table?
Well, that was never on the table that we would fund Phase 3 ourselves because the combination of the safety data you'd need, the infrastructure you'd need to do the trials that would be that would have to be large enough in order to power things properly. I think I'll let Paul speak to what our thoughts were, what a meaningful effect would be and how that drove the powering of the study and then what we did see.
Yes. We picked what we thought would be a clinically meaningful effect in terms of response over placebo like you do in most trials. We didn't quite hit it on this trial, but we think this is a positive trend. Most people we've talked to all think this is a true signal. The trial design itself, this is not a registrational trial design.
This is a trial design that really stresses the act or puts stress on showing a positive response because you're in fact inducing a situation where these patients are going to relapse, because you've taken them off their background immunosuppressants. You've cooled them down initially with the corticosteroids and then they will all eventually have a flare. And so we put the drug in that situation and we've shown that we're able to we set a certain landmark in time have a greater proportion that didn't flare and those that did, we have much longer time to that event occurring. So we see this as very positive.
Okay. And if I can on the DUET trial, is it really response data that matters? Or do you think demonstration that you can push doses or get to dose levels or inhibition levels that can't be gotten to with the individual antibodies. Are you going to look for that kind of stuff or are we really looking for response data here?
Yes. So you're talking about the XmAb20717 study with the DUET-two study, which is our PD-one CTLA-four. And I think what you're getting at is, people have tried and have been forced to try a lot of different dose level combinations because of toxicities that emerge in particular probably from CTLA-four blockade, right.
Right.
So I think it is very important to see how high we can escalate dose at the selectivity we built into the molecule to favor binding and therefore in a blockade of the 2 targets on the double positive cells to see if that changes therapeutic window. I think that is an important metric, but I think we do want to tie that maybe with that higher therapeutic window into some kind of response activity. I think we got to be careful in the very small number of patients we'll have in our first few data our first data readout to try to not do direct head to head numerical comparisons. But I think response data activity of the molecule being demonstrated early is important for us to have confidence going forward. But you hit on a good point.
Can we open up that therapeutic window and will that allow us the possibility of having a higher response later in studies when we have more patients.
Thank you. And that does conclude our Q and A session for today. I'd like to turn the call back over to Zankar for any further remarks.
Thanks very much, operator, and thank you all for joining today's call. We look forward to updating you again soon as we conclude 2018 and enter 2019 with several data readouts and new clinical trial initiations on Horizon. Thank you again.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a great day.