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

Hi, everyone. It's Andy Singer. Welcome to day 2 of the Credit Suisse Annual Healthcare Conference, virtual, of course, this year. Delighted to be joined by Bassil Dahiyat who is the, as you know, Founder and Chief Executive of Xencor. It's a company that I've known for a long, long time. They've had tremendous success in getting products to patients, pushing the science and really building out the platform into a lot of new and exciting areas beyond the early days in Fc engineering and to bispecifics, engineered cytokines and a lot of other really exciting areas. So Bassil will take you through the presentation for about 20, 25 minutes, and then we'll have some Q&A. So Bassil, over to you.

Thanks very much, Andy. It's great to be here at CS and to see you virtually today. I'm going to share my screen now. Hopefully, that works. You're seeing slides. Is that correct? Great. So I'll talk about Xencor today, our pipeline, touch on the platform, but really focus on the strategy about how we use our technology platform to build a pipeline that we can aggressively pursue and continue to expand and to cultivate. So this is our forward-looking statement slide. You can always reference our filings with the SEC. So what Xencor does is -- and since our founding is we use protein engineering tools that we've developed and approaches that we take to engineer both antibodies and other proteins in the immune system. We've built a large suite of technologies and have a particular area that we feel we're a leader in, which is the engineering of Fc domains of antibodies, which allows us to do all sorts of tricks with both antibody and non-antibody proteins. So we've got this rich intellectual property storehouse that we've created around not just Fc domains but around lots of different engineered proteins. And with that, we've developed our own internal pipeline where we're really focusing the company's energies and efforts. We've currently got -- there's currently 8 XmAb bispecific antibodies in Phase I or Phase II now between Xencor and partners. There's 2 of our cytokines, our engineered, reduced potency cytokines in Phase I clinical studies, a lots going on preclinically. And we've got a broad portfolio of partnerships, including 3 marketed drugs that we either created or have built critical differentiating aspects of with our engineering tools. And we use these partnerships as a way to drive -- strengthen our capital base, balance sheet and broaden the utility of the technology beyond to areas where we maybe don't have the resources to focus on while we build our own internal pipeline in oncology and in autoimmune disease. So here's how we see the value pieces building up. It's all based on our rich technology portfolio and intellectual property and protein engineering and antibody engineering. And it provides a strong financial foundation, both from ongoing revenue streams as well as the potential for finding uses of our tools that are outside of our core scope. Here, again, 3 marketed products now, 16 current partnerships, we closed the quarter with $538 million in cash, and that doesn't reflect the $125 million that's coming in this quarter from our recently announced Janssen collaboration for our plamotamab CD20 x CD3 products. So we're going to end the year with around $600 million in cash. So that's the core base. And on top of that, we have our very active clinical stage portfolio now where internally, we've got 6 bispecific antibodies and 2 cytokines, and it's about executing and advancing to create that near- and midterm value. We've got encouraging data from Phase I for our vudalimab program, PD-1 x CTLA-4; for plamotamab, like I mentioned before, that's now part of our Janssen collaboration; and for tidutamab, our somatostatin receptor 2 targeting CD3 bispecific. And those are all advancing into -- either have advanced or advancing into Phase II. And in the meantime, beneath that, there's new programs coming, and we look at that as the top level of value creation. So as we curate this pipeline in the clinic and advance the winners and drop the losers, we're building future waves of pipeline growth and value growth. For example, with our cytokines, we've recently, just yesterday, during our earnings call, released the first initial preliminary data from our IL-15, our first engineered cytokine. We are putting a lot of resources into this class of molecules where we think we have an engineering approach that could give our molecules an edge. And we've got lots of new innovation in bispecifics. We have 2 bispecific antibodies getting into the clinic next year, novel targets and novel mechanisms. So that's how we stage it. It's all about building a broad pipeline and curating it based on this broad tech base. So what can you do with this kind of technology? And just the basic concept is if you have a toolkit that lets you engineer the various widgets of an antibody and you've got a broad range of different Fc domains that you can put them on, actually, whether it's an antibody or a non-antibody protein like a cytokine, you can build an array of structures with a broad range of different properties, whether it's a highly extended activity version of Soliris, that's now the market drug, Ultomiris, our highly active cytotoxic antibody like Monjuvi for lymphoma, or these different structures we can create on this very robust life bispecific base. So you've got all these ways to create the differential structures you want. And we've got the different Fc domains that can give you the different properties, and we can mix and match all these tools. The key for our Fc domain engineering is it's very, very parsimonious. It's similar to nature. We keep it close because that Fc domain is a fantastic scaffold that's evolved to create long-lasting stable proteins that can display a lot of function, the broad range of antibodies that we have circulating in us. So we use that to make drugs, whether it's our extended -- half-life extend Fc domain or our bispecific Fc domain that lets us create all these new structures. Now of course, in recent years, we've really focused on bispecifics because there's so much biology that we can access now with a toolkit that lets us bring different target and different functionalities together. And that's, I think, been reflected across the industry where 10 years ago, bispecific antibodies were almost a little experimental toy. The first agent is just advancing to the clinic. And now it's lots of companies, several now approved products and many more coming. So here's our pipeline. Note the color code purple matches the Fc domain of bispecific, and that's really where we're focusing our internal efforts. We do have our vudalimab and tidutamab programs in Phase II, and I'll touch on those, as well as plamotamab should be starting Phase II, our CD20 x CD3, within the next few months, perhaps by the end of this year or early in the new year. And beneath that, other programs that are still pre-proof of concept but starting to accrue data, and we recently, like I said, yesterday, announced initial data from our first cytokine XmAb306, where we think there's a lot of potential with engineering approaches like ours to open the floodgates on how cytokines can be used in therapies. And then still the growing move up from the bottom. Note that we did eliminate one program from our active clinical pipeline, our vibecotamab program, our CD123 x CD3, that was a program that -- in AML that showed initial early promise. And we realized that both the profile we were getting for the product as well as potential products as well as the competitive landscape shifted, and we and our partner Novartis terminated it. And that's really, frankly, good stewardship. We want to do that with more programs that don't meet the bar that we want to set. Lots of different activities. I'm not going to go through this slide. We, of course, post our slides online, but a lot of different things that we've been pushing forward this year and into next year, a couple that I'll highlight here. We did initiate Phase I for a second cytokine, XmAb564, an engineered regulatory T cell stimulator for autoimmune disease. And we're very excited by the approval -- or rather, I should say, emergency use authorization of sotrovimab, the highly active COVID-19 antibody by our partners Vir and GSK that's now selling around the world. And we have a royalty that we recorded a significant amount of initial revenue from last quarter. So I'll just -- a few highlights, but a lot of other things we're going to be doing like multiple IND filings for our renal cell carcinoma program before the end of this year and in the new year for our first CD28 bispecific, an exciting class. So here's the 3 marketed products. Ultomiris, in a wide range of autoimmune diseases with our half-life extension; as well as sotrovimab, a molecule that's showed dramatic enhancement of survival and reduced hospitalization in COVID patients. Both generating royalties for us; as well as Monjuvi approved with our cytotoxic Fc in lymphoma by our partners MorphoSys and Insight. So these are the ways we're generating longer-term revenue streams coming out of this pretty broad partner pipeline that also generates milestones. And these are all programs that, for the most part, we don't commit resources to. So this is very low opportunity cost, and we're very careful what we do license. We don't give anybody broad rights. We really try to limit it to things that we're not going to do ourselves, what we made a choice about. So lots of different potential here for the future, and we really just wait and see how our partners are going to go. But we really -- we also feel like it's important to try to expand the access to the tools we make to hopefully allow others to make better drugs, too. So now I'm going to jump into really getting into our bispecific Fc domain and go through the programs we're advancing with it. So this is the basic idea. We've engineered a very stable modular scaffold that you can decorate with different pieces on the different sides. And by the way, you can decorate on the bottom as well as the top. This diagram here is just simplified for people to consume easily. And you can just plug and play and pop different antibody pieces from different donors, if you will, onto these structures. And we build all of our own antibodies. We make novel antibodies with all the various toolkits that are out there, engineer them and humanize them, affinity optimize them, pan for them in phage or in mice. And we have these scaffolds that make it easy to make them drug-like, easy to manufacture, long half-life, and we can do that with our cytokines, too. Just pop them on. So that's the idea. Now how do we implement it? Well, there's 3 different classes that we've been advancing recently using this toolkit. Our T cell engagers. So, so far in the clinic, CD3s to bring cytotoxic T cells against different tumor targets like CD20, like a plamotamab program, but coming next year, our CD28 bispecifics, which we're really excited about is the way to co-stimulate T cells in a very selective way. We've got our dual checkpoint or costim inhibitor molecules, so trying to take what people do with checkpoint inhibitors, binding 1 target at a time and can take the 2. So vudalimab is our CTLA-4 -- or PD-1 x CTLA-4 bispecific, and I'll go into how we use this bispecific structure to try to create higher selectivity, not just try to be 2 different antibodies in 1 molecule, but really to do something biologically potentially beneficial for patients. So we have other members of the class here. And then, most recently, our cytokines, where you can use this scaffold to create either targeted [ antibodies ] or highly stable and long-acting molecules. So first, I'll touch briefly on this new -- the T cell engagers. So you've got your T cell here. And in nature, it's standing next to an antigen-presenting cell. And you've got CD3 here by the side, and you've got a T-cell receptor. A new area we're going into with this kind of T cell costimulation is our CD28 bispecifics, where you've got -- instead of just binding CD3 and trying to light up that T cell, you're trying to take advantage of this so-called signal 2 that's used to drive T cells and is necessary to have them really kill that now we're relying on in nature to provide, whether it's with a checkpoint inhibitor driving the T cell or a CD3, but we can target it in a very tumor-specific way to drive this enhanced interaction. And we've designed it with very low affinity and very specific engineering of how we bind the CD28 to give us the ability to overcome pretty historic limitations on attacking CD28. So that's a new area that we're going to really start talking a lot about next year as we get into the clinic and as our partner Janssen gets into the clinic with their assets. But I thought I'd highlight the new science there. So next, I'm going to jump into our cytokines. So here's the basic idea for how Xencor tries to engineer cytokines highly active potent immune-signaling molecules into potential drugs. The challenge with native cytokines is they have very high potency, and they last a very short time. In fact, when they stick to their target cells with really high potency, they get cleared out. So that's how the body regulates them. It gets rid of them quickly. To overcome that and create something that has long action and better tolerability like you want in a drug, so you don't go into this toxic zone by dosing something that usually in your bodies only in little tiny pops from immune cells, we engineer them to have dramatically lower affinity for their receptors and, hence, dramatically lower potency, but still keep them active. And we can also dial in selectivities to their different receptors because most of these cytokines bind lots of different cells. And we can create something with a much lower, slower profile that lasts a lot longer and hopefully is better tolerated in patients. Certainly, our preclinical data supports that we can do this. And we take this reduced affinity cytokine that has this lower, slower profile with hopefully less toxicity, diffuse it to our XmAb Fc domains, which can give it this modularity, further extended half-life quite a lot more and enables attaching all sorts of other targeting entities, et cetera. So the hope here is to overcome cytokines naturally short half-life and high toxicity, and then we can systematically engineer a broad portfolio of cytokine therapies and hopefully open the potential of this whole class of molecules. Now this is a snapshot of our portfolio as it exists today. Our XmAb 306 program, which is an IL-15 that we've reduced its potency of, that engages cytotoxic natural killer in T cells. It's in Phase I dose escalation now. And we paired that with one of its receptor sub-domains to create better stability, and that is a great use of our heterodimer or bispecific Fc domain. Also in the clinic is XmAb564, our regulatory T cell selective IL-2, again, dramatically lowered potency, but this one engineered to specifically go after T regs. That's in single-ascending dose in healthy volunteers now. And then entering the clinic we hope next year, certainly, IND filed next year is our IL-12 where you've got 2 different subunits that we have to bring together with our bispecific Fc to go after priming NKs and T cells to secrete a lot of interferon gamma and create an immune-stimulated environment in the tumor. And then we've got our earlier and preclinical, our targeted agents where you use half-antibody, half-cytokine structures. So all of these are designed with this reduced potency approach to try to make them more tolerable and still maintain excellent activity. So here's 306, our IL-15, and this is just a bunch of data from nonhuman primates, where you can see: in blue is 306 versus a natural IL-2 fused to an Fc. You can see here looking at a measure of capillary leak, the natural IL-2 drives a lot more capillary leak than our 306. Our 306 lasts a lot longer, and it gives you a lot longer it boosts in T cells, CD8 T cells as well as NK cells. So that's the hypothesis. It's in Phase I in both monotherapy and in combination with atezolizumab that's Genentech eccentric in advanced solid tumors. And we just announced data yesterday, initial data, preliminary data from the ongoing Phase I. I'll note that we are co-developing with Genentech. We have a 45% worldwide profit-and-loss split with them and an option to co-promote in the U.S. So here's that initial data disclosure we've done just yesterday. We saw, we believe, very promising NK cell amplifications of 40- to 100-fold that were sustained for weeks throughout dosing and in a generally well-tolerated molecule, both monotherapy and in combo with atezolizumab, no dose-limiting toxicities or serious adverse events observed so far. We're continuing to escalate both monotherapy and combo. This expansion of NK cells was across all different NK cell subtypes, including a lot of mature NK cells. So we're very encouraged by that kind of biomarker. We have seen to date unconfirmed responses that are ongoing in multiple tumor types, including 1 patient that was treated with monotherapy XmAb306. Not that this is an efficacy study, but we view potential responses, and these are still unconfirmed. We hope to see follow-up skins later and see how that plays out, but that's an indication that something immune activating is happening around the tumor, I think, goes to the mechanism of the molecule. We have started to see T cell activation. Note that IL-15s are less potent for T cells than they are for NK, so it's not surprising. T cells might not come up until higher doses, and we're seeing movement in our activation markers for cell proliferation for T cells. And we have a multi-day half-life consistent with preclinical data. So right now, we're continuing to escalate. We're very encouraged by the initial data, hoping to advance this Phase I, while we plan for combination studies with both NK cell and T cell molecules -- T cell-mediated immune molecules like cytotoxic antibodies, like monoclonal antibodies like [ igG ], for example, or checkpoint inhibitors like atezolizumab. But that's all still in the planning phases, and we'll guide more on that next year, we hope. So now I'll jump to the second slide, XmAb564, and I'll keep it short. Same kind of design, lower potency, but this time, make it selective for regulatory T cells. It's an ongoing Phase I single-ascending dose in healthy volunteers. We hope to have data from this next year. It is subcutaneous delivery because it is targeted for autoimmune disease. And we're, of course, looking at the markers we want to see go up, which we hope regulatory T cells go up and not affect our T cells. So similar design, we hope it leverages the kind of performance that we saw with 306. And our IL-12, again, similar design, won't be in the -- IND won't be filed until next year. This is to drive immune cell activation and create a more immune microenvironment by having a lot of interferon gamma secretion in the tumor. And you can see excellent half-life in non-human primates and strong activity. So great preclinical data, and we'll get that in the clinic as soon as we can. That's our or cytokines right now. Now I'll touch on the antibodies, and then wrap up, so we can have time for questions. So if you look at the sort of concept of what T cells are doing in the immune microenvironment, here's our cytokine XmAb306. And then we've got our vudalimab program, which I'll touch on in some detail in the next slide, currently in Phase II in prostate cancer, with another Phase II slated to start in gynecologic tumors -- oops, typo there, and a particular clinically defined subset of metastatic castration-resistant prostate cancer with a lot of unmet need. We also have with no data we disclosed yet in Phase I ongoing our CTLA-4 x LAG-3 bispecific and PD-1 x ICOS bispecific. Now all of these molecules share design that tries to leverage something potentially beneficial off of the bispecific approach, and that is to try to make more selective T cell checkpoint inhibition happen by focusing your molecule on the cells that express both tumor markers -- or rather both checkpoints on them, rather than just all the T cells in the body, they have one or the other. We can leverage our bispecific design to dial down the potency on both arms. So you need both targets there to get enough grabbing of the antibody onto the targets onto the T cell. And hopefully, that biases you to double-positive for CTLA-4 and PD-1 T cells, like those that are known to be enriched for the tumor microenvironment, and here are some literature references on that. We use a high avidity approach here. So that's the approach we've taken with all of these molecules to try to do something that might be beneficial and hopefully create a more selective activation of T cells that might have tolerability or might have efficacy advantages. So here's a one-slide snapshot on vudalimab. We just had abstract published, and we'll have updated data later in the week for SITC for the cohorts in our expansion of our Phase I that weren't mature last year at SITC for our prostate cancer, our basket cohort of non-PD-1-approved indications, mostly GYN tumors and our RCC. We did start -- sorry, this is just looking at last year's data, and we saw responses in multiple tumor types in the various checkpoint-approved indications, all people with prior checkpoint exposure. We did see a response in prostate cancer then even that early, and we've updated that now. The abstract came out today. We had 2 of 7 patients with measurable tumors have durable and sustained PRs. It was generally well-tolerated. And we believe -- and most of the adverse events were immune-related rash and transaminase elevations and potentially has a different iRAE profile than the combination of a PD-1 and the CTLA-4 inhibitor. We're encouraged by that. Of course, you need larger patient cohorts to see if that potentially improved tolerability plays out. And so we're advancing now in our prostate cancer in Phase II that we just started where we're looking at patients stratified by molecular subtype and using combination small molecule therapy based on that subtype. It's a standard stratification for patients with high-risk metastatic castration-resistant prostate cancer. So we're following the standard of care and adding on top or going monotherapy for patients that don't have an approved small molecule agent. And then we expect to start the second Phase II later this year, early in 2020 (sic) [ 2022 ], and we'll have more data on Friday when the poster is published at SITC. So here's the agent. The selective design seems to be doing something. We're trying it in an indication, prostate cancer, whether there's potential here for dual targeter, but there's not highly dense competition from checkpoint inhibitors. So there's a path forward into development, we believe. Now I'll go to the CD3s and look at the new formats that we're using in our CD3 checkpoint -- or CD3 bispecifics. So right now, there are 6 clinical programs between ourselves and partners that use this 1+1 format. And then you can use the avidity tuning of a 2+1 format where you can use lower affinity binding, but with multiple domains to focus your binding on tumor cells rather than normal cells. And we believe this could expand the range of targets for CD3 bispecifics to bring that cytotoxic killing power to solid tumors, where really, so far, there's not been as much CD3 bispecific successes we've seen in liquid tumors like lymphoma or myeloma. So we have to customize this for every agent, and the good thing is that we're protein engineers, and that's what we like doing. So here's a look at our most advanced CD3 bispecific plamotamab. This is data from last -- a couple of years ago. ASH abstract published last week, and we'll have updated data even from the abstract next month at ASH. But plamotamab is a CD20 x CD3 where we saw clinical activity at doses as low as 80 micrograms per kilogram. We're now in our -- at our 50-milligram flat dose, so dramatically higher than the data presented here in doses. We've got a step-up regimen that now goes to every other week as opposed to every week here that's generally well-tolerated. We believe we have a good handle on managing CRS events. And we have combination Phase II studies starting imminently in the next couple of months with our partner MorphoSys and Insight combining plamo, an anti-CD20, with tafasitamab, or Monjuvi, an anti-CD19, to hit 2 targets and potentially avoid antigen loss resistance; and looking at CD3 T cell killing combined with natural killer cell killing from a cytotoxic Fc. So a chemotherapy-free but potentially highly active regimen based on a very active regimen approved in Phase II-related lymphoma that the tafasitamab-lenalidomide combo. That's starting soon. And going along with our chemo-free approach, we just announced a collaboration with Janssen a few weeks ago, where we have partnered with them to co-develop plamotamab. And so we are starting -- and Xencor is running the tafasitamab-lenalidomide combination. And Janssen and we are going to develop the subcu formulation. That clinical trial will start next year, could have advantages not just in convenience but potentially tolerability as well. And we're building together CD28 bispecifics against B cell targets. So here's that mechanism again, but now can we enhance the function of plamotamab, but in a tumor-selective way to keep it tolerable by having a CD28 costim signal on the T cell and hitting another B cell antigen or maybe the same B cell antigen. So we're going to have a 2-year research collaboration to do that and start combining the CD28 bispecifics we hope to create with plamo. We believe the economics of the deal were very favorable. We received $100 million upfront, $25 million equity investment, royalties that go into the low 20s and milestones and low double -- up to low double-digit royalty for the CD28s that we can opt in to go higher if we co-fund 15% of development. And we are co-funding 15% of plamotamab development, with an option to co-detail in the U.S. So we believe that this gives us a very strong committed partner that's very good in hematologic malignancy development and commercialization, so we can compete in this very crowded but very promising space of CD20 xCD3s. And really, it's about how we can create chemo-free regimens. We believe that's where the field of lymphoma wants to be. It's how you're going to differentiate. We don't think that monotherapy approaches are going to be able to compete with the multitude of combinations that our competitors are trying and that we're trying and that we and our partners, Janssen, believe that non-chemotherapy-containing approaches are where physicians want to take lymphoma. Much like has happened in CLL and to the great benefit of patients. So that's where we're -- we're advancing in, again, our Phase II with tafa, starts in the next few months. We just had a quick update on our SSTR2 CD3 antibody tidutamab at NANETS, where we showed in very heavily pretreated patients sustained T cell proliferation and activation, no objective responses in neuroendocrine tumors, which is a very nonresponsive tumor, and it's about seeing how long you can take patients out and how much you can benefit them. But really, the focus here for this program is we've started a Phase Ib/II in small cell lung cancer and Merkel cell carcinoma, high somatostatin receptor 2 expressing tumors that are responsive to immunotherapies. And those are now accruing patients, and we're hoping to have data on that. We'll guide on timing on that later. But that's where this program is headed. And again, so what's coming down the pike next year is our renal cell carcinoma CD3, that 2+1 format. Should IND is going to go in this year, we'll have it in the clinic next year. Also in the clinic next year, a little behind, is our first CD28 internally, a pan tumor marker B7-H3 that we hope to use to supplement both checkpoint therapy and CD3 therapy across a range of tumors. That's a wholly owned Xencor asset, not part of our Janssen collaboration. That's all. I'll end here with the multiple levels of value creation and what our challenges are in terms of continuing to execute clinically and continuing to build out the technologies. So with that, I'll stop and maybe open it to questions if we have any.

All right. Great. Thank you so much Bassil. And just a friendly reminder to investors, feel free to send in their questions. In the meantime, Bassil, I'll ask a few of my own. The first is just more of a business strategy question. Investors looking at your pipeline will see a lot of extremely well-validated targets, right, commercially, from a development and competitive, CD20, CD19, PD-1, PD-L1, CTLA-4, so on and so forth. So help us understand how you think about biology risk, target risk. Do you want to go after novel, less well-validated targets? Or is it, "Hey, let's go after targets where we really understand the biology and create a best-in-class protein therapeutic."?

We want to mix, and I think we have a mix. When we believe there's a potential for best-in-class because of our engineering, we will go after. When we started our CD20, CD3 program, that was what we had in mind. Of course, other people had the same idea, and you've got a competitive class now. Ditto, we thought a scientific approach that we took for PD-1 x CTLA-4 blockade, in combination with this more selective design could create a differentiated profile. Obviously, a challenging area to development in and very dense competition there as well, and so we knew that going in. I would say on the novel target side, of course, our IL-15 program, I mean, cytokines, though, they've been around a long time, those are, I would argue, still looking for those first-in-class winners. And so I hope that we can stay at the forefront of that field. So we do want a mix because I think either one could give us what we really want in our strategy is to find that program, maybe multiple, but at least one, where the mid-stage clinical data makes it clear we can get this drug -- drug candidate potentially approved, so we can build out on that and launch our own drugs 1 day. That's what we want. We want to have those shots on goals, so we can make that choice and have that choice be a smart one. And in the meantime, when we don't feel we can take that go-it-alone approach, we will try to find a partner to leverage the value in the asset like with plamotamab or we will stop the program like with our vibecotamab study with CD123. So it's all about using the tools we have to find that one we could take all the way ourselves and grow into a fully integrated company. And whether it's a novel approach like an IL-15 or try to be a best-in-class approach like a CD20 x CD3, we will see. I will note that the targets going into the clinic next for us are all novel. And I think, in general, we're going to start swinging in that way more and more because of the exciting biology that can be had. Our ENPP3 x CD3 for renal cell carcinoma has been tried in early clinical development with antibody drug conjugates. Glimmers of a signal, but challenges with that platform for that target, our B7-H3 target getting some buzz now, but still quite early. And I think we would be maybe the first immune-stimulating B7-H3 using the CD28 approach. So we do think that newer targets and less validated targets is probably the way of the future. But in the meantime, there's still a lot of rose to hoe with what we've got.

And you anticipated my next question, which is any predictions as to what's the program or programs that might become that asset that you take all the way through to -- through the clinic?

Right. We've tried to engineer all of our new programs to be ones that could be that asset, right, whether it's potentially active agent in a tumor type like RCC, where there's a need to come in behind that frontline or maybe supplement frontline with a completely different modality, cytotoxic modality like a bispecific CD3, that could be it, right, in a narrow indication that you could push fast. It could be a cytokine like our IL-12 where you could be the partner of choice for immune therapies or it could be a different part of choice like B7-H3 x CD28. So we're trying to structure our pipeline to give us those shots at having something we could take all the way. And that does, I think, mean biased now towards more and more novel targets, novel biology.

Great. And can we just double-click on a few minutes that we have remaining on a couple of the programs? Explain to investors a little more deeply as to why you think a combined PD-1 x CTLA-4 would be potentially -- what would be the advantages over combining the currently available separate therapies?

Yes. So right now, you've got a number of indications where clearly, PD-1 and CTLA-4, given as 2 different antibodies, can give you benefit over PD-1 alone, whether that's in frontline renal cell carcinoma where it's probably the most active regimen, but toxicities limit its use potentially, and that's why there's competition with PD-1s in combo with VEGF-TKIs. You've got to see that in melanoma. So there's first potential. And you even see that with very small studies in places like prostate cancer where PD-1 x CTLA-4 combinations gave response rates that look promising, certainly much better than PD-1 alone where it didn't seem viable. But again, toxicities could be a potential limit there. We've got an agent that by being more selective for a narrower set of T cells, T cells that express both PD-1 and CTLA-4 at the same time, could create a different profile. Because right now, if you give 2 different antibodies, one against PD-1, one against CTLA-4, you're going to stick to all the CTLA-4-positive antibodies, all the PD-1-positive antibodies. By being narrower, we hope to go after the T cells that matter, we hope. Again, it's a hypothesis. And so create an active agent. And the initial data indicates that we might be on to something there with this tolerability profile, an AE profile, that seems different, right? Whether we get the activity we want early days, we see some promise, but we've got to prove it.

Yes. Great. And then just switching to CD20 x CD3. Obviously, a super exciting area, multiple programs. How do you see that market evolving? Do you see it as a winner take all? Or do you see it more like PD-1 where you've got multiple agents, essentially sharing the market without a lot of competitive or clinical differentiation, I think, is probably fair to say from an extensive scientific...

I think it's going to come down to which regimens going fastest and which ones start to dominate a space because a CD20 x CD3 in the right combo regimen in frontline, let's say, maybe that's chemo, I'm betting not, but maybe that's a chemo combo, like Rituxan with chemo is dominated for a long time and benefited a lot of patients, those regimens are going to be what dominate. And then in second line and later, there's going to be dominant regimens. And then whether we see difference, there's opportunity now to be the dominant regimen in cell follicular versus DLBCL because development is done differently. So I think it's going to tend towards a more -- a broader multiple-player landscape than what we saw with Rituxan, which just came in early and was the only game in town and just took over the whole -- all the histologies and all the lines of therapy.

Right. And longer term, do you see the potential for bispecifics or other formats really replacing the first- and second-generation CD20 antibodies or potentially even the ex vivo CAR T approaches, for example, in, say, the second line deals you have?

We certainly hope so, right? I mean we see the CD20 x CD3s with dramatically higher single-agent activity in lymphoma than you see with the CD20 -- traditional CD20 antibody. That's why the flurry and intensity from all these companies like Xencor and a lot of the big pharmas to go into that space. They think you can finally displace Rituxan because you've got tolerability profiles that are quite good, along with better single-agent activity. Go. How the cell therapies managed to overcome some of the logistical challenges and scale-up challenges and the difficulties in how they're going to engineer in the future these improvements and become a more practical therapy for such broad use, in particular, in patients that are typically getting outpatient therapy, right, in lymphoma, that's going to be a challenge, I think. And I think you're talking to Xencor. We've made our bets on antibodies. We still feel really good about those bets.

Great. And just time for 1 last question. Really interesting concept combining Monjuvi. Obviously, a great drug and really benefit for patients in that land combo. So can you talk a little bit about the biologic rationale combining a CD20 x Cd3 bispecific with an enhanced Fc CD19? And what might concern you? Or what do you think might be the challenges of combining both these 2 modalities as well as CD20 and CD19 in 1 rational...

Right. Well, the first is by hitting 2 targets at once, you can potentially overcome the issue of antigen loss, which you do see with T cell approaches, right? So whether it's CAR T cell therapies or CD3 bispecifics, you do see antigen loss, and we've observed, and our competitors have observed it, as a breakthrough, as a resistance mechanism, right? The cells losing antigens. You have 2 antigens. That's a lot harder to lose, right? And I'll note that CD20 loss from Monjuvi has really never been observed that I've seen and, in fact, CD20 loss for Rituxan. So this modality of using NK cells through the Fc domain to kill doesn't seem to induce as much antigen loss for reasons we don't understand. So you've got that dual target. Then you've got 2 different killing mechanisms, T cells, and NK cells, from the 2 different antibodies. Orthogonal killing mechanisms is usually what makes a regimen good. That's why Rituxan plus CHOP chemo, right, seems to benefit. So I think the scientific rationale is excellent. What we don't know is how these 2 antibodies are going to fare together. And of course, you've got a third agent that really potentiates tafasitamab, which is lenalidomide, which has sustained immune-stimulating activity. And we're going to watch out very carefully because, of course, combining immune stimulation with immune stimulating agents means you have to be thoughtful about it. So that's the unknown that we're going to tackle. We've got safety evaluation periods built in early on in the Phase II to make sure we've got everything right on the doses.

Okay. Great. Well, that's the end of our 40 minutes together. So thanks so much, Bassil, for the...

Thank you, Andy. Great to see you again.

Thank you. And we'll look forward to multiple clinical updates, including SITC and ASH and into '22. So thanks again for joining.

Thank you. Bye-bye.