Xencor, Inc. (XNCR) Earnings Call Transcript & Summary

Great. Thank you so much. Good afternoon and good morning depending on where you are in the world. Welcome to Barclays Global Healthcare Conference. My name is Peter Lawson. I'm one of the biotech equity analysts at Barclays. I just want to thank everybody for taking time out of the day today. If you've got questions, do ping me at [email protected] or get me on Bloomberg. It gives me great pleasure to introduce the management team from Xencor. And we have Bassil Dahiyat with us, CEO. We've also got Charles from IR with us as well.

And just to start the ball rolling with questions. I've been asking most of my companies this, just the -- where you view Xencor's kind of point of differentiation in the oncology space and kind of the core competencies of the company?

Core competency of Xencor is protein engineering. That's what we've been doing since our founding. We've spent a lot of time building a very modular platform for engineering, specifically antibodies, but more recently, expanding that to include other non-antibody proteins, particularly cytokine molecules. Core differentiation -- part of our core differentiation is the protein engineering expertise in and of itself. The other part of it is the modular toolkit we've built up, so we can rapidly create clinical quality candidates out of molecules preclinically and vet and test a wide range of different biologies. Our XmAb technology is both protein engineering as a capability as well as a whole suite of domains of antibodies called Fc domains that we've manipulated to give differing properties. So those could be accentuated half-life. Those could be heightened ADCC or cytotoxic function as well as manipulation of the structural assembly of the Fc domain to create heterodimeric molecules, which are essentially bispecific antibodies or higher order antibodies. And we use those tools together to build our drug candidates. And I think that's really the core differentiation. But ultimately, it's all going to come down to how we use these tools for the biology. And so we strive to make all of our tools really plug-and-play, not just in the research sense, but in the development sense. Standard manufacturing approaches, very highly stable molecules that can be formulated and delivered in exactly the same way as regular antibodies. And so that lets us explore the biology really rigorously.

Maybe plamotamab, your CD20 x CD3, kind of a competitive landscape in a sense. You've got this kind of combination strategy that seems to be -- help that, drive that kind of differentiation. Just wondering if you could talk through the kind of the rationale there and what you plan to combine with and where as you can see that molecule going?

Absolutely. First of all, I forgot and I should say, thank you so much, Peter, for inviting us in for Barclays, for having us at the conference. We are in really great discussions. And I'm sorry, a phone is ringing in my office, Polycom, that's not supposed to ring. I'm sure it's spam. I don't know if you can hear that or if it's okay?

We can't hear it.

Perfect. So to go to plamotamab and our strategy for that program. So it's a CD20 x CD3 bispecific antibody. This class of molecule and plamotamab included have shown really promising single-agent activity in relapsing/refractory lymphoma, particularly aggressive lymphoma, diffuse large B-cell lymphoma. And overall product profile, it seems quite promising. But as you point out, it's a competitive space. There's other parties that are either ahead of us or alongside of us that have all come into this biology using differing approaches for bispecific antibodies. Our belief is that we can differentiate ourselves in this highly competitive landscape by building a development program that tries to go where we believe the field of lymphoma therapy wants to be in the future. And that is a world where you have highly active regimens that are absent chemotherapy agents, and therefore, can avoid there both short-term tolerability and toxicity issues as well as the long-term impacts they can have with new malignancies or long-term damage to various organs depending on the agent. And so how do we get to that chemotherapy-free world with CD20 x CD3. So using that as a highly active motive, we decided to go after what is the most active regimen in relapsing/refractory lymphoma right now, and a particular one that's chemo free, and that was the genesis of our collaboration with MorphoSys and Incyte to combine plamotamab with Monjuvi and lenalidomide as a regimen that's chemo free, highly active and 2 highly complementary modalities. CD19 targeting with tafasitamab, CD 20 with plamotamab and then cytotoxic activity for tafasitamab coming from ADCC function, sort of a natural antibody function, but heightened because of the design of the molecule. And then T cell-mediated cytotoxicity from plamotamab. So that regimen, I think, has a lot of scientific rationale behind it and can get us to this chemotherapy-free world. So we're going to be starting in the second half of this year, we believe, a study. It's going to have a safety run-in component. It will be the first time in people that we're combining these 3 agents and then a randomized component. We'll give the details of that later this year. But a randomized component that if the data bears out could potentially be registrational for that triplet combination. And then we have another -- other trials started -- rather planned after the start of that when we could move into earlier line DLBCL as well as going in adding patients in follicular lymphoma, relapsed follicular. So that's our overall strategy, how we believe we can carve a space for ourselves in lymphoma.

And then when could we see data? I guess, it may be a bit more complex because there's kind of multiple parties here. But when do you think is the next data readout for...

Yes. So we plan to have data in 2021 from our monotherapy Phase I study of plamotamab, and I haven't guided specifically on that, but our hope is to have all the data wrapped up from the Phase I study's dose escalation portion. We'll also be able to give a lot of detail on the specifics of our expansion cohort plan there. So running in the background behind this combination strategy Phase II that we hope to start with MorphoSys soon, we'll be expanding additional indications beyond the predominantly DLBCL population we've enrolled in our dose escalation phase.

And do you know, I guess, the dose you want to start with or is that -- you still kind of titrating through that for the combination?

We believe we're very near the end of our dose regimen definition phase of the Phase I, and that's why we anticipate reporting data on that later this year. It involves priming dose and step-ups. We've done a large amount of optimization of that throughout our dose escalation, and we feel like we're very nearly there.

Okay. Can you remind us about the priming dose, the reason why you need that?

Yes. So all of these CD3-targeting bispecifics, CD20 x CD3s included, it causes activation of T cells that can lead to cytokine release syndrome. This is a dose-dependent phenomenon. And most particularly, though, it is a phenomenon that attenuates upon subsequent exposures or doses of your CD3 bispecific agents. So the T cells clearly get conditioned to be less sensitized to dump out cytokines and cause the toxicities associated with the cytokine. So the idea being if you can prime them with a low enough dose -- a low dose that gets them activated a bit, but -- but not such a high dose that you're really driving toxicity, the T cells will be conditioned and in your subsequent doses, you can avoid much of the CRS. And that's an approach that's borne out, I know for us, in other of our programs, there are CD3s. I know our competitors in the CD20 x CD3 space use these priming dose approaches. And in particular, for CD20 as a target, because it is such a restricted target on B cells and doesn't have widespread expression on a lot of other tissues, the T cells aren't being activated all over the place in the presence of the bispecific. Because it's so restricted, that's one of the easier targets to mitigate CRS for. So all those pieces come together.

The response rate you'd want to see eventually in DLBCL, I guess, it's kind of additive to the MorphoSys drug. That's the kind of bar that we should be looking at?

In relapsed/refractory, yes, that's right. That molecule has a specific slice of the relapsed/refractory DLBCL population based on the trial they ran for accelerated approval. I know they've got confirmatory trials ongoing, and they are hoping to get an even broader label within relapsed/refractory. Right now, I think they're in the transplant intolerant population, which is a very large segment of that relapsing/refractory group. So the bar -- there, I think, generally, the highest bar we've seen in the relapsed/refractory population would be that bar Monjuvi-lenalidomide set of around a 40% CR rate, but also now fairly extended progression-free survival. You're into -- you're between 1 year and 1.5 years there.

Maybe pivot because we've only got 25 minutes, I'm sure we can probably speak for the whole hour. 717, so I guess your initial play into prostate as well. Just kind of if we could talk through that, how has that molecule, so your PD-1 X CTLA-4, how that's different from competition, including the AstraZeneca's PD-1?

Right. So XmAb717 is our bispecific molecule that targets within the same molecule inhibition of PD-1 and CTLA-4. It's different from nearly all of the other agents is that it was engineered to preferentially bind, and therefore, hopefully de-repress T cells that have both PD-1 and CTLA-4 on their surface. So most of the other molecules were designed, so that essentially, they would bind cells that have PD-1 on the surface and block the PD-1 cell that have CTLA-4 on the surface and block CTLA-4. And we wanted to have a more selective agent because we wanted to hopefully avoid a lot of the toxicities that have limited the use of the -- of CTLA-4 blockade in combo with PD-1 or at least reduce the duration of therapy. And we also hope that going after the cells that are more prevalent in the tumor microenvironment, those would be these double positive cells, certainly, those are the ones -- cells that recognize the tumor get checkpoint upregulated, and so they get repressed. We wanted to focus on those. And so we engineered the molecule that selectively bind based on its moderate binding affinity of each of the 2 arms in the molecule to the targets, PD-1 and CTLA-4. And again, that's different from most of the other bispecifics, have 2 arms binding a PD-1 and a CTLA-4. So it's inherently not as -- doesn't have the same potential for selectivity. Now you mentioned AstraZeneca molecule. That's the 1 design that we know of that's similar to ours. We don't know a lot of detail about that program, and so we really can't speak to -- speak to the differentiation there.

Perfect. It's an interesting play, like kind of safety element around CTLA-4. When we kind of think about the tumors you should be moving into, I guess, where you're seeing activity in CTLA-4? Is that the right path to be thinking through?

That certainly was what prompted us to set up our expansion cohorts after our dose escalation in tumor types where there was a reasonable hypothesis for CTLA-4 blockade, giving you something extra beyond what PD-1 blockade does. So melanoma, non-small cell lung cancer, where we've seen enhanced activity from nivo/ipi combos, for example. Renal cell carcinoma, same thing, and then we went after prostate cancer, where we had really immature data just from less than half of our patients reaching follow-up -- first follow-up back at SITC in November when we reported data. And then a basket of indications where PD-1s aren't approved, but there was data supporting the use of CTLA-4 or PD-1, giving you some activity in small studies. And that basket cohorts ended up being primarily gynecologic tumors, just as you sort of see where the need is. Those were all 20-patient cohorts that were pretty immature, the prostate, renal cell carcinoma and this basket cohort were pretty immature at SITC. We're going to give more mature data later this year on those. And it's a combination of places where CTLA-4 blockade has had a glimmer of hope. And in fact, we saw in some small studies that were done, for example, nivo versus nivo/ipi in later-line prostate cancer, you do seem to get a bump from having the dual blockade, right, though, not terrific activity. That coupled with the fact that they're -- that tumor is not dominated already by well-established checkpoint containing regimens provides us the sort of window we think that's necessary for us to want to commit to more trials, right? So the little activity data that we did have at SITC, we had multiple PSA reductions. We had already an unconfirmed PR in a pretty late-line prostate cancer population, and that was less than half our patients that even reached assessment. So that -- we said, look, that plus the sort of open development opportunity there and unmet need, let's push forward, and we've already designed and should be starting a little bit later this year a study in a later-line prostate cancer population for 717. And depending on the molecular subtype, we'll either go monotherapy or if there's something known to give you some kind of leverage in a particular molecular subtype, whether it's chemo or a small molecule, we'd combine with that. And so we're already pushing forward there, and we'll have more mature data later this year to show from that expansion cohort.

Yes. How much data do you think we can get later this year, the more mature data?

Well, we've finished enrolling the full 20 patients and we'll have had certainly follow-up activity assessments on all of those. I can't say how much follow-up we will have for them, but it should be a fairly mature data set for that cohort as well as for the basket cohort of tumors of different type and then we'll have finished the RCC cohort, which is only half enrolled at SITC.

Okay. Perfect. I guess, I'd love to pick your brains on, I guess, the B7-H3, it has kind of become an interesting target. I don't think it's named yet the molecule. But just if you could talk about your approach there, particular indications you're going after?

Sure, sure. So we have a program that is a B7-H3-targeting CD28 bispecific. So to start with B7-H3, we think it's a great tumor marker. It's expressed pretty brightly on a number of different tumor types. I will say the brightest is on prostate cancer. So we like that synergy with our 717 program. So it's a great tumor target. It's pretty clean, relatively speaking, versus healthy tissues, but it's across a lot of different tumors. That was what got us interested in that. I think we've got a lot of people interested in it over the years. So we're focusing on its role as a tumor marker rather than it's hypothetical, poorly characterized role maybe as an immune molecule, which we don't know much about really even to this point. Why we put our -- use it as the first target for our CD28 platform goes to what CD28 blockade we hope will do clinically. So that CD28 is rather -- binding not blockade. CD28 is the signal to that boost T cell activity to become cytotoxic supporting the signal 1 from the T cell receptor that is binding some epitope, say, on a tumor cell. In fact, a CTLA-4 blockade, ipi is essentially freeing up CD28 to activate the T cell, because usually, CTLA-4 shuts down that CD28, ipi gets rid of the CTLA-4 and the CD28 can do something. We're trying to turn on that CD28, but in a tumor selective way. And that second signal, we -- well, at least preclinically is well known to potentiate both checkpoint blockade to be more active as well as CD3 bispecific antibody activity to be more active. But to be able to do it in that tumor-specific way using a B7-H3, we hope can give us our cake and let us eat it too, where we can have a multi-tumor marker, but in a tumor present specific way, turn on whether it's a checkpoint or a particular CD3. So we don't have to redesign our CD28 signal 2 stimulator for every indication that we go after. We hope to have that in the clinic next year. We're in development with the first -- with our lead. We'll give more information on that a little bit later in the year. And that modality CD28, I think, is starting to attract interest. We did a partnership with Janssen in December. We announced it in November for a different target, an unnamed prostate cancer target in CD28 bispecific, a discovery deal, because I think they see the potential of how that could move the needle for them, whether they're using a checkpoint or a CD3.

Yes. Very interesting. And the targets, I think, you are going after is -- maybe you can talk about the expression you're seeing, you've already kind of mentioned prostate kind of lights up. Where would you like to pivot it?

Well, so for B7-H3, I think it's a matter of what the other agent is that we're using it in conjunction with. So prostate is, of course, place we're pushing XmAb717. If the data continues to mature nicely, I could see a lot of synergies there with our 717 program in prostate. I think, again, it's expressed on a myriad of other tumor types. I think from various competitive programs that have been tried over the years, you see it in breast cancer. You see it in, I believe, renal cell. You see it in a large number of them. And so I think the key there is going to be, what's the combination agent we want to put it with, where there's the most potential for getting it going. You want something where there's already a molecule that shows something interesting. Whether it's a checkpoint or a CD3, right?

Do you think it has mono-agent activity as the bispecifics...

Right. From preclinical data, it would suggest that there could be some, but we're not counting on it because it is unlikely, we believe, from how signal 2 does its job that monotherapy activity would necessarily be nearly as strong as what it can do in conjunction with another therapy. So I don't think that's going to be a real driver for how we view it. Though it's possible from the design because, of course, there's always T cells you've got that are held back from killing whatever it is they want to kill because they're not getting enough of a boost from signal 2. The question is, how prevalent is that in cancer patients, and we'll find out. But again, that's not the thrust of the molecule, it's monotherapy activity.

Got you.

Or really of the whole CD28 class of bispecifics, again, we have now our Janssen partners moving forward, we believe our first one to be in the clinic from our platform is going to be our B7-H3. Other companies are starting to move on as well.

Your IL-15 program. When could we see -- I find it really intriguing what you potentially do with IL-15. So just maybe you can walk through when you think we could see data? I know it's probably a little bit more complex because there's a partner here?

Yes. So our IL-15 molecule, XmAb306 is partnered with Genentech. It's a 55-45 worldwide development and profit and loss split. Right now, the Phase I study is ongoing. It started just a year ago now -- a year ago this month. As a monotherapy escalation, we've already then added to that combination escalation with atezolizumab. So that was always baked into the plan. And then when we get to a go-forward dose, we're going to expand into a number of different indications. And it's a molecule that we hope because of how we designed it with reduced potency, extended duration of action, we hope could give us best-in-class profile for amplification of NK and T cells, but with manageable tolerability. And that could be obviously synergized with many different therapies. For us, in terms of data timing, the real answer is we have to coordinate with Genentech. We're working on a publication plan. I don't know. We can't promise anything right now. That said, as we progress various aspects of the program, things like new trial starts and things like that, we will, of course, disclose those, because those are things that have their own disclosure schedule, right? For example, starting the combination arm with atezo or the second-generation molecule for that collaboration, an immune cell-targeted IL-15 built off of our platform, undisclosed target, but that's one that's entered development already -- preclinical development. So that's how we're going to certainly get some information out there. And then when our publication plan is defined with Genentech, we'll be happy to talk about that and the timing.

Got you. And so the -- you're kind of going through a dose escalation of the IL-15, and then you layer in atezo or...

That's right. That's right. So you dose escalate the IL-15, and it's typical in a lot of these designs, you get to a certain point. You then add a separate arm of stuff where you're dose escalating with your standard dose of atezo added, you keep going up with the IL-15 there as you go monotherapy. So you can fully characterize the safety profile and tolerability profile of the molecule mono and in conjunction with the other therapy. And then, of course, these are in advanced solid tumor patients. So you'll see what you'll see in terms of activity, if there's any.

We've kind of around that 25-minute mark. So...

Excellent.

I just wanted -- thank you, Bassil. It's always a pleasure speaking to you. There's tons of pipeline conversations to have. And I just wanted to thank you for joining us at Barclays Global Healthcare Conference.

Thank you so much, Peter, for the opportunity to speak and for the really exciting and involved dialogue. Take care.

Thanks, take care.