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

My name is Peter Lawson, I'm one of the biotech analysts at Barclays. Welcome to Barclays Healthcare Conference in Miami and really pleased to have on the stage with us management from Xencor, and we've got Bassil Dahiyat, President and CEO, Founder; and Dane Leone, Senior Vice President of Corporate Strategy. And I'd love to run through kind of questions around your PD-1, CTLA-4 and then the RCC program and then move into prostate.

But I guess first question, I want of course, touch upon business development and finance as well for you, Dane. And the first question is around the PD-1 and CTLA-4 in prostate cancer, kind of when -- what we should expect to see this year and leading into next year with regards to monotherapy and combination therapy?

Sure. Maybe I'll touch on the data briefly that we just updated, make sure everybody is on the same page and Dane can comment on how that positions us. So first off, thank you so much for the invitation to participate in the conference. We're delighted to be here in Miami. It's always great to retouch with your investors. We had our earnings last month. And at that earnings, we announced an update of data from our monotherapy study of vudalimab or PD-1 CTLA-4 bispecific in very late-line prostate cancer patients. And I think that data update achieved 2 things. It demonstrated that vudalimab with it's essentially a unique bispecific structure for co-engaging both checkpoints, PD-1 and CTLA-4, demonstrated convincing evidence in small patient numbers, but nonetheless, convincing evidence of significant activity in late-line prostate cancer where prior checkpoint therapies have had a hard time. I think we've seen lots of data out of CheckMate 650 that couldn't deliver no matter how many different ways you tried combination therapy with 2 different antibodies, ipi and nivo in prostate cancer. So 25% RECIST response rate in very late-line patients, 100% with measurable disease, 25% PSA90 rate, and that depth of response is highly encouraging to us because that's what correlates to better outcomes ultimately in prostate cancer. So that was the top line of the efficacy data on the safety side. We saw irAEs consistent with our prior experience. We did have in that Cohort 1 Grade 5 autoimmune hepatitis, which is the first one we've seen in over 240 patients treated at that or equivalent dose levels with vudalimab, and we scanned our database, there's no signal for hepatitis that stands out, in fact, it seems a bit lower than combination, PD-1 CTLA-4 therapy reported for ipi/nivo on the product label. So that was the baseline of the data where our investigators are very enthusiastic for us to proceed forward. We had an ad board before the data release, where they said, yes, finish out this cohort. Give us another 15 or so patients, get 30 total and confirm this signal and then we've got an exciting agent. And then sort of how to put that in context, maybe Dane, if you want to jump in?

Yes. It's clearly a data set that's achieved something, that has not been achieved with any combination of ipi/nivo. And every algorithm has been attempted. And that's very compelling to investigators to continue the program as a monotherapy program in prostate cancer. When we look at the broader landscape, yes, the data set as it stands comparatively with heavily pretreated patients looks interesting and is very much aligned with some of the other novel agents in development. But what becomes probably more of a potential tailwind for IO down the road in prostate cancer is increasing adoptive use of Pluvicto even potentially in the pre-taxane setting and that -- there does seem to be growing clinical evidence that Pluvicto could sensitize the tumor microenvironment to IO therapy. And obviously, with vudalimab being a very strong IO agent, that creates a quite interesting development opportunity down the road should the data continue to play out in the cohorts that we continue to enroll.

Do you think you could -- just for that sensitization, do you think you could know the exposure of Pluvicto and then jump in with an IO agent. Is that a route?

So the early clinical studies that we've seen at Pluvicto and pembrolizumab specifically, have used different dosing algorithms. And maybe to your point, even Pluvicto, as an induction agent on 1 cycle, followed by almost a maintenance-type approach with pembrolizumab. The clinical evidence does seem to suggest that, that's doable. But I think I would broaden it out even more that given the non-orthogonal -- or the orthogonal talks to Pluvicto, there wouldn't really be compounding toxicity that you'd be worried about. Obviously, the classic toxicity is very much related to myelosuppression of Pluvicto, anemia specifically being one of those main concerns. With vudalimab, it's all irAEs, and that really would not be expected to be exacerbated by any close combination or sequencing of the 2 drugs.

Bassil, your comments around PSA90 linked to good outcomes. You see that for PSA50 as well. I know it seems to be many physicians we talked to are kind of on the fence about PSA50. So...

Yes. I think because the data is a bit equivocal, but the way I see that is if the data is equivocal on PSA50, that means you don't have an established correlation yet. Is it a great biochemical signal to understand if your drug is moving the needle? Absolutely. Nobody would deny that. But from the limited sort of correlative studies that have been done, I think one thing you can say is when you have really deep PSA responses in these patients with measurable disease, visceral external -- like lung, liver or nodal mets; these are the very sickest and highest risk, deep responses and RECIST responses indicate you've really moved the needle. So I think it's just important to recognize that there's uncertainty when you don't have that, not that you can prove or disprove it. I don't know if you want to add anything from the data you've seen, Dane.

Exactly to that point, you're solving for durability on radiographic progression-free survival when you have a patient with measurable disease at baseline that could be a little bit different if they do not have measurable disease, and it would be bone-only or something like that, then I think PSA50 is probably more of a marker of disease progression or disease control. But when you have a study like ours where 100% of the patients per protocol have measurable disease at baseline, you really are looking for deep response, PSA90, but hopefully PSA90 confirmatory of a natural RECIST response.

Got you. Perfect. And when you're using low-intensity chemo, why does that -- is that a good thing because does it help for quality of life? Does it impact efficacy?

Well, that's a separate trial. So this study was purely monotherapy vudalimab, which was why we were so energized by the depth of response we got from just monotherapy and why our investigators were excited. We have a second study that's exploring vudalimab in combination with chemo after looking at some high intensity platinum-containing regimens over a year ago. We shifted to really emphasizing just the taxane regimens, and we're right now dosing in combo with docetaxel. I think that's one where there's a twofold. One is maybe mechanistic benefit potentially as maybe you're alluding to and one is just positioning. If you want to comment on those, Dane. You're more versed with the docetaxel world than I.

Yes, the presence of docetaxel as a considered standard of care, first-line chemo agent for those metastatic castration-resistant prostate cancer patients. It is something that the clinical community hopes can be improved upon. And we've seen IO agents work with chemo in good ways in other tumor types. The hope is with Q3-week dosing that we're now using as more of a flat weight-based dosing in combination with docetaxel, you can see an improvement and that would be obviously very compelling, right? Some of the recently approved agents in prostate cancer in the metastatic setting, have not gone head-to-head with docetaxel. It's not necessarily required for an approval even in the pre-taxane setting, but the clinical community really would like a clear test of enhancing the standard of care beyond docetaxel. So that's why we're running the experiment.

Got it. When do we see that data, the combination data?

Our hope and guidance on our fourth quarter call was to have adequate cohorts enrolled and treated by year-end for both the monotherapy and the other study that combines with docetaxel. So hopefully, that would mean, maybe in the early part of next year, we would be able to evaluate that data and share it with the clinical community. And obviously, we'd share it with the investigator -- the investor community as well.

Got you. What do you need to see in that docetaxel combination to move forward?

In terms of like clinical outcomes?

Yes.

Yes, it's interesting. So you would want to see what could be considered an improvement on PSA response, given it could be a mixed population of measurable and non-measurable disease at baseline. The classic expectation would be docetaxel alone as that first line of taxane-based therapy could be somewhere around the 40% mark for a PSA50 reduction. If you have a combination of 2 agents, you would either hope that, that is higher or again, kind of going back to our other point, you'd see deeper response on PSA90 and/or for those that had measurable disease, a nice PR and RECIST response rate.

Got it. There was a patient with Grade 5 autoimmune hepatitis. Just if you can talk anything about the background of the patient. And what...

I'll jump in on that one. That patient was in clinical response, had a PSA90 and PR. So they had a RECIST response. And there was a great incentive to keep them on therapy because they exhausted all those lines of therapy, right? If you take them off this drug, they have no choices, they would try to find another protocol. They started manifesting other autoimmune irAEs, immune-related adverse events, diabetic ketoacidosis. They had lipase increase. They had hyperkalemia and they are basically half of our Grade 3 irAEs with that one patient. So they had those and then they started presenting with autoimmune hepatitis, had a very complex course. Obviously, these are older men. They have a complex set of comorbidities and were hospitalized and sadly expired. So a complex course where there was sort of forewarning of autoimmune disease manifesting as is consistent with checkpoint inhibitors and the desire to keep them on study because they're responding to therapy was what held them on and perhaps led to the cascading of events that led to the autoimmune hepatitis. Maybe commenting on the database survey we did of our safety database.

Yes. And I'll touch on it. There's -- to be clear, there's not a clear clinical protocol for these situations, right? And when you have a very late-line study and a patient is responding, the investigator most appropriately is trying to treat them through any AEs. But as discussed with our investigators at our ad board in January, yes, we have to probably be more stringent. And unfortunately, even if a patient is responding to be aware of what would be on target irAEs. But within that context, I think what gave the investigators confidence that this is a safe and tolerable drug. We have a pretty robust database of over 240 patients that have been treated at the relevant dose levels we're using in the study. And the rate of hepatic adverse events broadly defined for vudalimab is single -- mid-single digits and lower than what's actually used clinically with ipi/nivo for renal cell carcinoma. So unfortunate event to have happened and obviously very sad and we've had to work with investigators to make sure there's stringent controls on these situations, and it's clearly defined how to manage through them. But in terms of the overall safety profile of vudalimab, we're very confident.

Okay. Are there any amendments to the protocol around this?

No specific protocol changes, just a heightened awareness. I mean there's so much experience with irAEs that how you treat them is known; dose interruptions, dose reductions, steroid treatment, all the supportive care you need. I think it's more just the awareness that we need to be really thoughtful because these patients are very, very ill generally, and this is a clinical setting where the physicians are treating a broad spectrum of severity of prostate cancer. These people can be treating people with just oral androgen deprivation therapy and sending them home, and that's that. And these same physicians might be treating somebody with a very potent immune therapy. And so education of different physician types is always an important part of your trial, and I think that was part of this.

But in terms of the consistent review of patients that are going through the treatment process in any of these studies, you have emergent events, you discussed that with investigators. So in the future if a patient presented with diabetic ketoacidosis, okay, we might have to discontinue treatment because that could be a signal that other things could come down the line, even if they're responding, unfortunately.

Perfect. I'd love to move on to ENPP3, so in RCC. Why focus on that? And kind of how is dose escalation going?

Escalation is going well. That is XmAb819, which we consider really our lead program. It's our first T-cell engager internally, though there's collaborators we have with T-cell engagers that have shown very strong data designed with the same platform that we've used for XmAb819. ENPP3 is the target. It's in clear cell renal cell carcinoma as well as in other types. So clear cell renal cell is almost uniformly expressed at high levels. This target has exactly what you want for a T-cell engager target, a CD3 bispecific. It has quite high levels of expression on tumor cells, significantly lower expression on healthy tissue. It is essentially impossible to find a solid tumor antigen that is only on tumor cells and you certainly need to spare critical organs that might express low levels of a solid tumor antigen. This is consistent across all -- the whole history of using solid tumor antigens with antibodies. So the molecule has a nice spread, healthy tissue versus the really high levels on tumors. And we've been escalating now for about 18 months, and the goal there is to set the dosing regimen for a CD3 bispecific. You want to have a priming dose to calm down the T cell so that your cytokine release syndrome, which is the class effect of CD3s is manageable, right? And if you have a low priming dose, you can then step up to active doses in a much more safe manner. This is well established in the field. We've helped establish it. And we've been escalating now for 18 months, and we do hope to see characterization this year of our target dose levels where we're hoping to understand therapeutic window, efficacy and safety. So like I said, it's been going well. It's very high interest, had an ad board at ASCO GU that was more well attended than we had even anticipated. And there's a desire for this kind of agent in RCC where there isn't one. There isn't a cytotoxic antibody.

Interesting. Okay. When do we see data?

Do you want to?

Yes. So again, kind of guided for when we think we'd have a clinical decision point. So if we are able to execute on the plan to get into the target dose range by year-end, hopefully, not late thereafter, we would be able to have a discussion about dose expansion cohorts, what those would look like. And probably when we get to that point, we'd be able to have that discussion externally with investors on what the next steps of the program look like. And so that would presumably be more of a 2025.

2025. Okay. Perfect. So we'd see recommended Phase II dose? Or you have no recommended Phase II dose this year.

Or at the very least, I know what the dosing regimen that we have is adequate -- you might still -- there could still be adjustments potentially. Certainly, that's a goal, right? But to know how we're going to expand, that's how we're going to characterize the molecule in bigger numbers and how we're going to proceed with it in a complex landscape in RCC. That's going to depend on the data. And when we have that information, that's what Dane was saying is when we want to show data, have our dose and we're close to it and then proceed.

Yes. I think everyone has to be mindful in the world of Project Optimus. You can do dose expansion with 2 different doses, just to make sure that's super clear from a regulatory perspective.

That's why we want to hedge on. This is the RP2D because if you haven't satisfied Project Optimis requirements of enrolling the dozen to 15 patients and characterizing them well, but you just got to be thoughtful what you say publicly.

I appreciate that. [indiscernible] ENPP3 ADC, were there any learnings from that?

That was literally part of our decision process when we decided to pursue the target. We thought the expression profile of this high-tumor, low-healthy tissue was great. And then we saw that there is actually clinical activity with an antibody drug conjugate that confirms that the antigen truly is there in disease cells in patients and targeting it with something cytotoxic can make a difference in disease. So that was very encouraging. The toxicities were all class toxicities of the oral statin that was used in the linker MMAF. They had the keratopathies, ocular tox as well as some of the other toxicity that you see and they had abandoned the program.

Okay. Perfect. Just going back to that kind of priming dose and step-up dosing, is there a point in that dosing schedule where there's a worry of generating side effect profile that's...

It's always early. It's the early parts of your trial where you're wrestling with that because that's where you're defining your initial prime and step-up doses. Once you get through that, going higher than that is usually much less constrained by CRS and is often quite unbounded. CD20, CD3 is once you get through the priming and step-ups and that takes a while to define, you can jump up to your much higher doses very easily. Sometimes you have -- the target you're hitting can create non-CRS related [indiscernible] so then once you're past that early on priming and step-up dosing definition stage, then it just becomes more like a standard dose escalation, it's much easier.

And you're in that standard dose escalation point now.

No, we've characterized a lot of the priming and step-up. We think we feel fairly -- we have a fairly good understanding for this molecule with this ENPP3 target that we're going to now start really moving forward is why we're guiding to data in the short course?

Yes. And as we've disclosed some of the complexity here is, we did start subcutaneous dose escalation on a slight lag to the IV dose escalation we're doing. And we think it's prudent to understand both approaches and if there's a difference between them or an advantage to one before we make decision points to the next step.

Good. I'd love to talk about our B7-H3/CD28. Just when will we see initial data, [indiscernible] timing around that.

We've essentially guided a similar time frame as for XmAb819 because there's not this priming step-up dose even though we started the program in the clinic about 6 months after XmAb819. XmAb808, our CD28 bispecific is moving forward. So we do expect to be characterizing target ranges of dose levels this year and in the first half of next year should be -- I'll have a lot more clarity how we're going to proceed, which is when we would want to talk about what our plans are and talk about the data that supports those plans then.

So the first half of next year, you kind of essentially give guidance when you're going to give data where we actually see that data.

Our goal is to have data to share.

Got you. Okay. What should we be looking for in that data set, I guess, in context of the B7-H3 molecules that are already kind of in the clinic and...

I think the real key there is the CD28 side of that molecule. We want to prove that this completely new modality and platform can create a meaningful therapeutic effect. And what's been seen to date with CD28 bispecifics, there's been a tiny amount of data, but with different platforms. People have seen significant toxicity tied to the efficacy they've seen really amplified irAEs. We're hoping that our low potency design creates a little more room for therapeutic window. So we want to characterize that. And then we would be able to move forward and examine both CD3 combinations because there are CD3 bispecific in prostate cancer, one of the big indications for B7-H3 in development stage, but one of them xaluritamig, Amgen's molecule, that we made for them is very promising as well as continuing the combination work with checkpoints.

Are you still in monotherapy or you also...

Every patients receive both. We do a month of monotherapy for every patient and then you add, in our case for this Phase I, pembrolizumab as the checkpoint combination. So every patient receives mono in combo, a much more efficient way to escalate then separating it.

Good. Again in this indication, which there is a bias towards prostate, we know that pembro as monotherapy is effective. So our hope would be any signal we see is pretty clear in terms of the contribution margin from 808.

Good. Okay. Does that in any way kind of confound or confuse what a pivotal trial would look like? You'd have to have this kind of lead in.

No. The lead in is only so you can satisfy the requirement from the regulators to deliver some monotherapy safety data. We already have it baked into our clinical design as we go to later expansion cohorts and whatnot to just synchronize on day 1, both the checkpoint and 808. It's purely an artifact of how you need extra data in dose escalation.

And that's similar to the peer programs that have been run. So you get the day 28 safety package of the monotherapy with run in.

What's the bar for success in prostate? Do we kind of look across to your PD-1 and CTLA-4, do you do a bake off [indiscernible].

I mean Blue Sky World is we would have some combination, right? And the wholly owned combination with a really strong IO agent and CD28. That's obviously not now. But when we think about a CD28 co-stim with something like pembrolizumab. It's very context dependent of the patients that you have, are they measurable disease, nonmeasurable disease, bone-only? And what have they been previously treated with. So the hope, again, with any therapy in the metastatic castration-resistant prostate cancer setting, where you expect a lot of these patients to be post-docetaxel or post-taxane that you would see, again, in bone-only something that would be a nice PSA50, 40% if you want to use the benchmark there, but then deeper responses on top of that with PSA90 and RECIST for those patients that are valuable.

Thank you so much, end of the time.

Thank you very much, Peter.