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spk13: Good day and thank you for standing by. Welcome to the third quarter 2021 CENCOR conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Charles Lyles, Head of Corporate Communications and Investor Relations. Please go ahead.
spk03: Thank you, and good afternoon. Earlier today, we issued a press release which outlines the topics we plan to discuss today. The press release is available at www.zencore.com. With me on the call today are Basil Dahyat, President and Chief Executive Officer, Alan Yang, Chief Medical Officer, John Desjarlais, Chief Scientific Officer, and John Cush, Chief Financial Officer. After the remarks, we'll open up the call for your questions. Before we begin, I would like to remind you that during the course of this conference call, Zencore Management may make forward-looking statements, including statements regarding the company's future financial and operating results, future market conditions, the plans and objectives of management, future operations, the company's 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 our current expectations and beliefs and are based on information currently available to us. The outcome 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 factor section of our most recently filed annual report on Form 10-K and quarterly report on Form 10-Q. With that, let me pass the call over to Basil. Thanks, Charles, and good afternoon, everyone.
spk14: We've used our array of modular protein engineering tools to create our internal development portfolio in oncology and autoimmune disease that currently includes six bispecific antibodies, either in phase one or phase two studies, and two cytokines in phase one. Our portfolio approach allows us to take multiple simultaneous shots on goal in the clinic, and the proof of concept data we generate guides which programs we advance, which we terminate, or which we partner. Today we've announced data from the first of our cytokine programs, XMAP306, a reduced-potency, long-acting IL-15 FC fusion protein in co-development with Genentech, which Alan will touch on momentarily. But first, a quick update on our collaborations. Last month, we entered a global collaboration and license agreement with Janssen to advance Plimodimab, our CD20 by CD3 bispecific antibody, and to create novel CD28 bispecific antibodies against malignant B cells to combine with Plimodimab and potentially other CD3 bispecifics in lymphoma. The HSR waiting period expired last week, and the agreement is closed. We're delighted to expand our ongoing CD28 work with the Janssen team and to plan Pomodamab development together. We believe collaborating with Janssen is the best way to broaden and accelerate our efforts in lymphoma and to maximize the opportunity for Pomodamab to bring benefit to patients in a very promising and crowded field. Just a few other updates across our partners' programs, which incorporate our plug-and-play XMAP FC domains. Now, in August, tafacitimab, which was created and initially developed by us, was granted conditional marketing authorization by the European Commission in combination with lenalidomide for the treatment of adult patients with relapsed or refractory to huge large B-cell lymphoma who were not eligible for autologous stem cell transplantation. In the EU, tafacitimab is marketed by Insight as Minjuvi, while in the U.S. it's co-marketed by Insight and Morphosis as Monjuvi. We're also pleased that our partners, VR and GSK, continue to receive emergency or temporary authorizations for citrovimab, their investigational SARS-CoV-2 antibody that incorporates our Xtend technology in countries across the globe for the treatment of mild to moderate COVID-19 in high-risk adults and pediatric patients. So with these two products, Monjuvi and citrovimab, along with Altamiris from the Alexion unit of AstraZeneca, our partnerships have resulted now in three marketed XMAP medicines, which are available to treat patients with a range of serious illnesses. Now, with that, we'll turn to Alan Yang, our chief medical officer, who will review our recent clinical highlights and upcoming plans.
spk05: Alan? Thanks, Basil. Today we'll be touching on recent updates across several clinical stage programs, starting with XMAP306. Today we announced encouraging initial dose escalation data from our first clinical stage cytokine, XMAP306, which is co-developed in collaboration with Genentech, a member of the Roche group. Exceptional NK cell expansion of 40 to 100-fold increases compared to baseline has been observed and with good tolerability to date. As we continue to escalate, we are now observing signs of effector T cell proliferation in the periphery. XMAP306 safety profile, biological activity, and preliminary signs of antitumor activity at this early stage provide initial validation of our reduced potency approach to engineering XMAP cytokine therapeutics. and we are considering new trials to study combinations with a range of NK and T-cell recruiting therapies. Shifting to Plomodemab, as you probably saw, we announced that an abstract was accepted for presentation at the American Society of Hematology annual meeting in December. In a few weeks, we'll present updated clinical results from the Phase I study in patients with non-Hodgkin's lymphoma. We identified a dose regimen, 50 milligrams flat dosing every two weeks, after step-up dosing that is much higher than we have previously reported by weight-based dosing, and due to our new step-up schedule, is generally well-tolerated with encouraging monotherapy activity. We believe that the best opportunities for patients require a focus on studying unique combinations of plimodemab with chemotherapy-free partners, and we are working to initiate our randomized phase two combination study with tafacitumab and lenalidomide, a highly active regimen now approved in relapsed lymphoma with a label in second line and later. Flamodimab CD20-targeted T-cell redirection of tumors and tafacitimab CD19-targeted enhanced ADCC tumor killing combine distinct immune pathways and tumor-associated antigens. And we think the combination is a differentiated approach for treating patients with lymphoma. The study should be initiated in late 2021 or early 2022. Going forward alongside Janssen, We look forward to investigating additional mechanisms that avoid the downsides of systemic chemotherapy, such as novel CD28 bispecifics that are anticipated under our collaboration. Moving on to Vudalamab, which was formerly known as XMAS717, we have started dosing patients in a phase two study of the PD1-CTLA4 dual checkpoint bispecific antibody. The study is enrolling patients with metastatic castrate-resistant prostate cancer that we classify by molecular subtype as a monotherapy or in combination, depending on the subtype. This is an indication with a high unmet need and is currently without much checkpoint inhibitor use beyond MSI high tumors. But earlier studies suggest that PD-1 and CTLA-4 inhibition has promise in prostate cancer. Therefore, dual targeting of PD-1 and CTLA-4 with a potentially differentiated tolerability profile could meet an important unmet clinical need. At the same time, we're initiating a second Phase II study in patients with advanced pelvic tumors, including gynecological malignancies, which represent another opportunity for dual targeting of PD-1 and CTLA-4 to address an unmet need. In addition, this study includes a cohort of clinically defined high-risk metastatic castrate-resistant prostate cancer, which will allow us to study Lidalamab monotherapy in a specific population of aggressive prostate cancer independent of molecular profiling data. Later this week at CITSE, we will present mature data from the ongoing Phase I studies expansion cohorts with a focus on patients with prostate cancer, renal cancer, and a basket cohort of tumors without approved checkpoint therapies. These cohorts are those for where the data were still immature at CITSE 2020. Next, Tidutimab is our CD3 bispecific that targets SSTR2, and last week we presented additional follow-up from the Phase I study in patients with neuroendocrine tumors. The poster is available on our website. Results from the study indicate that Tidutimab was generally well-tolerated with a low incidence and severity of cytokine release syndrome, and it induced meaningful T-cell activation in a challenging disease setting. We've begun dosing patients in the Phase II study in patients with Merkel cell carcinoma and small cell lung cancer, which are SSTR2-expressing tumors, types known to be responsive to immunotherapies. Finally, as we noted in our press release, we do not intend to devote additional internal resources to furthering the development of vivacodamab, the CD123 by CD3 bispecific antibody. In addition, Novartis is terminating its rights to vivacodamab which will be effective early next year. This decision reflects our broad portfolio development strategy, which requires us to make difficult decisions like these, so we can dedicate resources to our most promising programs and allow room for exciting new drug candidates to be tested in the clinic. So moving on to those, I'd like to turn the call over to John Desjardins, our CSO. John?
spk06: Thanks, Alan. We've dedicated a lot of effort and research years to using the full range of our protein engineering tools to turn native cytokines into therapeutics. Our approach seeks to create drug candidates with a long duration of therapeutic activity that remain under the threshold for toxicities that has limited the clinical use of cytokines historically. First, we make small changes in the cytokine to selectively reduce binding affinity to its receptors, and that lowers its potency. This alone creates a better tolerated, longer acting, and far more sustained immune stimulating activity in clinical models. We take a further step to enhance stability in pharmacokinetics by fusing the cytokine to an XMAP bifacific FC domain, which includes our XTEN mutations, to further enhance persistence. We're beginning to see clinical data that is now validating our approach, as reviewed by Alan with XMAP306. And our second cytokine program, designed with the same principles as XMAP564, our wholly-owned IL-2 FC fusion engineered to selectively activate regulatory T-cells, or Tregs, for the treatment of autoimmune disease. The phase one study for XMAV564 is ongoing. And our next cytokine program scheduled to enter the clinic is XMAV662, our preclinical IL-12 FC program. IL-12 is a potent pro-inflammatory cytokine that promotes high levels of interferon gamma secretion from T cells and NK cells, increasing their cytotoxicity and the immunogenicity of the tumor microenvironment by making tumor antigens more visible to the immune system. It's previously been demonstrated that IL-12 can have strong antitumor activity, but as has been the case across therapeutic cytokine development historically, it has a narrow therapeutic index that limits its utility. We believe that XMAP662, which was designed with our cytokine engineering methodology to lower the potency and to prolong the duration of action, could be a significant advancement towards an IL-12 that could be therapeutically dosed. We anticipate submitting an IND for XMAB662 in 2022. Shifting to our antibody work, we have two biocevic antibody candidates that we anticipate will advance to the clinic before that, XMAB819 and XMAB808. Later this year, we anticipate submitting the IND for XMAB819, our EMPP3 by CD3 biocevic for renal cell cancer. That's our first internal program engineered with reduced-potency CD3 binding combined with a multivalent 2 plus 1 biocevic antibody format. Using two antigen binding domains to the tumor target provides for more selective binding to cells with high ENPP3 density, like tumor cells, compared to lower density that may be found on normal cells. We believe the XMAP 2 plus 1 format opens up a wide range of potential solid tumor targets to T cell redirection. For example, we've incorporated a 2 plus 1 format into our most advanced, wholly owned LEAD CD28 biocevic candidate, XMAP-808, which targets B7H3. We intend to develop the candidate for potentially broad solartumine use, including in prostate cancer, where B7H3 is highly expressed. We anticipate a 2022 IND submission for XMAP-808. Finally, I'd just like to mention that we're presenting four preclinical programs at CIDC this week. XMAP-662, the IL-12 program we discussed. Second one, our PD-L1 by CD28 biosynthetic antibody program. posted on our TGF beta platform, and our initial disclosure of an NK cell engager platform. These programs show the power of our platform to create XMAP drug candidates that access new biologies and continually supply our clinical pipeline with differentiated molecules. With that, I'd like to hand the call over to John Cush, our CFO, to review our third quarter financials.
spk08: John? Thank you, John. A critical part of our business is leveraging our protein engineering capabilities through partnerships and collaborations for XMAP drug candidates and technologies, which generate multiple revenue streams. As Basil mentioned, there are now three marketed products that have been developed with an XMAP technology that we earn royalties. Additionally, our second Janssen collaboration will generate a significant upfront payment, potential milestones and royalties, and the opportunity to share development costs for our promoter MAP program with our partner Janssen. Revenues from these and other partnerships allow us to maintain a strong balance sheet to support our broad portfolio of bispecific antibody and cytokine programs. Cash, cash equivalents, receivables, and market world debt securities totaled $537.9 million at September 30, 2021, compared to $610.2 million at December 31, 2020. The decrease reflects cash used to fund 2021 operating activities, offset by proceeds from royalties, milestone payments, and the sale of an investment security. The September 30 balance excludes payments due to us under our second Janssen collaboration, which includes a $100 million upfront payment and a $25 million payment for the sale of Zancor common stock, which we expect to receive before year-end. Based on current operating plans, we expect to have cash to fund research and development programs and operations into 2025. And we currently estimate we'll end 2021 with between $575 to $625 million in cash, cash equivalents, receivables, and marketable debt securities. Now I'll review our third quarter nine-month financials. Total revenue for the third quarter end of September 30, 2021 was $19.7 million compared to $35.4 million for the same period in 2020. Revenues in the third quarter were primarily related to revenue earned on the company's first chance collaboration and royalty revenue, compared to revenues from the same period in 2020, which was primarily a milestone payment for Morphosis. Total revenue for the nine months ended September 30, 2021 was $121.1 million, compared to $80.8 million for the same period in 2020. Revenues for the nine months were primarily earned from research collaborations with Janssen, Genentech, and Novartis, milestone revenue for Morphosis, and royalty revenue, compared to the same period in 2020, which was primarily milestone revenue for morphosis and licensing revenue from Gilead and EMU. Research and development expenses for the third quarter were $50.6 million, compared to $44.5 million for the same period in 2020. Total R&D expenses for the nine-month period were $141.5 million, compared to $121.9 million for the same period in 2020. Increased R&D expenses for the third quarter nine-month period over the same amounts for the same periods in 2020 were primarily due to additional spending on our IL-15 drug candidate programs and other early-stage programs. Additional spending on XMAV819, our EMPP3 by CD3 candidate, also contributed to increased R&D expenses during the third quarter. General administrative expenses for the third quarter were $10.4 million compared to $7.6 million for the same period of 2020. Total G&A expenses for the nine-month period were $27.5 million compared to $22.1 million for the same period 2020. Increased G&A expense for the third quarter nine-month period over miles for the same period 2020 were primarily due to increased G&A staffing, spending on professional services, and facility costs. Total other income for the third quarter was $1.1 million compared to $4.2 million in the same period in 2020. Other income for the nine-month period was $57.5 million compared to $7.5 million in the same period in 2020. Other income for the nine-month period includes realized gains on the sale of an investment equity security and an increase in unrealized gains on the company's marketable equity investments. Net loss for the third quarter is $40.2 million or $0.69 on a fully diluted per share basis compared to net loss of $12.6 million or $0.22 on a fully diluted per share basis for the same period in 2020. The increased net loss report for the third quarter compared to the same period in 2020 is primarily due to lower milestone revenue and higher operating expenses in 2021. For the nine-month period ended, net income was $9.6 million or $0.16 on a fully diluted per share basis compared to net loss of $55.6 million or $0.97 on a fully diluted per share basis for the same period in 2020. Net income report for the nine-month period compared to net loss report for the same period 2020 was primarily due to higher collaboration revenues and realized and unrealized gains from equity investment securities in 2021 compared to 2020. Non-cash stock-based compensation expense for the nine-month period was $26.6 million compared to $23.1 million for the same period in 2020. And total shares outstanding were $58.5 million as of September 30, 2021, compared to $57.4 million as of September 30, 2020. With that, we'd now like to open up the call for your questions. Operator?
spk13: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the found key. Please stand by while we compile the Q&A roster. We have our first question from the line of . Your line is now open.
spk09: Great. Thank you very much. data, can you share a little bit more in terms of where you and Genentech or Ocean tend to take this? And also remind us, do you guys have the ability to do studies on your own? Thank you.
spk14: Yeah, thanks, Ted. So I'll start with the second piece. We do have the ability to do studies on our own under the contract with Genentech. Obviously, we have to meet certain conditions, like the agents we're going to combine it with have to make sense. We have to go through the kind of process with Genentech to make sure everybody is aware and understands what we're doing. But yes, we do have the ability to do studies on our own, both with compounds in our portfolio as well as with molecules that we don't control. Now, as to where we're going, we can't speak to Genentech's plans exactly. They do lead to collaboration for things that happen within the collaboration, so distinct from the trials we are going to run ourselves. But we do know they have a lot of engagement and expertise and a lot of potential combination partners in their own portfolio. Now, as to the things that we're interested in, we can't disclose specifics yet, and there's a number of possibilities across both NK cell therapies and T cell therapies we could combine with. So, NK cells are critical for the ADCC function of molecules like Rituxan, Mongibi, Herbitux, of course, daratumumab in myeloma. There's an excellent mechanistic rationale for an agent that boosts NK cell number and activates them or drives them to be more mature, like an IL-15 ought to. So, we think that's a direction to go as the NK cell angle. And then on T cell-directed therapies, of course, we're already combining within the collaboration with the tezolizumab, their PD-L1 inhibitor. And, you know, we can certainly imagine our own programs like Vidalimab potentially benefiting and even our CD3 bispecifics as well. So there's a lot on that, lots to consider. We're going to guide when we have specifics, but I think we view it as what's the best NK cell approaches to leverage and what's the best T cell approaches to leverage with this kind of agent if the results we're starting to see in the Phase I continue to bear fruit.
spk09: Yep, fair enough. I'm looking forward to all the data at 15S. Thanks. Thank you.
spk13: Our next question comes from the line of Mara Goldstein of MISUHO. Your line is now open.
spk00: Great, thanks. Just continuing within, I suppose, on that line of questioning with Ted's question, I'm just curious about – So you've reached the point in which you have reached a therapeutically active dose. And so I'm curious as to how you would have us think about benchmarking results seen to date relative to other agents in the space. You know, what, I guess, should we think about from a quantitative perspective that would allow us to see the potential activity that you're seeing so far?
spk14: Right. So I think there's two pieces to that, how we think about that. Within this, as we continue to escalate, by the way, we're not done escalating, just to be clear. Correct. While you maintain, if you can maintain a tolerability profile that's acceptable, and we feel good about the tolerability profile we've seen to date, what you want to look at are the effector cell populations and the amplification that you're doing of them, how that's sustained, how you can maintain them. That would be NK cells and T cells, so particularly CD8 T cells you want to look for. That's one metric, the levels, the durability. You can start getting into details of subtypes. The other metric is when you get into combination studies, what kind of efficacy you see. Now, at this early of a stage, we think that You want to look at the magnitude of increases of NKs as we're, you know, we're clearly very active for NK cells. We're starting to see the T cells proliferation signals. And we think that the initial anti-tumor activity we're seeing, you know, unconfirmed responses, monotherapy, and in combo with Atizo, those small numbers and still unconfirmed just indicate there's immunological activity happening at the tumor site, which is what you want to see. So I think you know, the presence of that is encouraging. So that's one piece to benchmark. And then you can't really extrapolate beyond there. Just do you see something happening in the tumor? And then the magnitude and durability of the effector cell populations like NKs and Ts.
spk00: Okay. All right. Thanks. I appreciate it.
spk13: Our next question comes from the line of David Mirren-Garten of Wedbush Securities. Your line is now open.
spk07: Well, continuing on the NK cell therapy and enhancement question theme here, I was curious if you had any thoughts or ways to benchmark the activity or the enhancement of NK cell activity in patients compared to engineered NK cells, you know, especially, of course, ones that have the IL-15 engineered to essentially be constitutively active in those cell therapies. I'm obviously curious about that. Thanks.
spk14: So I know John wants to have a few things to say about that, John DeGioia, our CSO. I think you have two parameters. Count, how many cells are there, and are they of the right subtype? Are they active?
spk06: Yeah, I'm trying to remember. Remember I did that back-of-the-envelope calculation, and I was comparing to one of the NK therapies, because they state you know, how many NKs they actually, you know, engraft into the human. And I think we're at about 100-fold higher. So basically you could think of the NKs as sort of the myeloid plate, and then they replace the NKs that were there with their engineered NKs. We're taking the NKs that exist and expanding those 100-fold higher.
spk14: And so that's like about 100-fold more cells than you see with the allogeneic approaches that have been reported to date from, again, our back of the envelope. So it's a lot more cells, and we're certainly seeing the mature phenotypes, which, you know, have characteristic markers like CD16 on them. So that would imply that they're active and can do the job. Beyond that, it's going to be how do things go as we start doing the clinical trials in combination.
spk07: And you touched on this before, but I wanted to be a little bit more explicit with Genentech. Do you need Genentech to sign off on you guys doing a study with this and an NK cell engager, for example, or can you pursue that without their say-so?
spk14: We can pursue studies with any third-party agents that we want as long as we don't create undue safety risks or exhaust drug supply, or we can't duplicate something going on within the collaboration. For example, we couldn't do our own study in a combo with a tesolism. We simply can't do that. But outside of that, as long as we check basic governance boxes and we're responsible, then we have a lot of flexibility.
spk07: Cool. Okay. Thank you.
spk13: Our next question comes from the line of Kaveri Pullman of BTIG. Your line is now open.
spk12: Yeah, good afternoon. Thanks for the updates and thanks for taking my questions. My first question is regarding Uvadalimab. Your last readout showed a couple of responses in patients pre-created with EP and PD-1 combinations. Do you know what's driving the response there? Is it that the higher doses allow you to push the buttons harder safely?
spk14: Oh, gosh, I'll let Alan take that one, but this is delving into the realms of the unknown.
spk05: Yeah, so I think what you're asking is why we're seeing responses with vedelumab, formerly 717, in patients who had previously been treated with other checkpoint inhibitors, either PD-1 or ipilimumab in combination. The answer is, you know, we don't know for certain, but what we do know is that, you know, the way that the molecule was designed was to favor PD-1 binding and to diminish the CTLA-4 binding. So, in other words, you only get CTLA-4 being employed after PD-1 binds. And we believe that that minimizes the toxicity but encourages the dual activity. So, one of the things is we think that it could be more tolerable and you can get more doses in, or more specifically, you could be recruiting T cells that are both PD-1 and CTLA-4 expressing, so the ones that are enriched in the tumor. And so that dual targeting in a single molecule may have a molecular advantage over giving the agents independently. I don't know if you want to add anything, John? No, I think you covered it.
spk06: I mean, yeah, you're potentially zeroing in on the most tumor-reactive T cell population.
spk12: Got it. Thanks. And to do the MAP study, How much do you think that the recent data is an indication of the limitation of the approach? Because you have a very cold tumor, but you're dragging T cells there. Do you think that tells us that the approach is unlikely to be useful in really cold tumors? You need some neoantigens or perhaps some priming cytokines like IL-12?
spk14: That's an interesting question. I think the one thing I will say is that we are seeing the biomarkers we reported for the Tadutimab study were in the periphery, so a lot of increased T cells in the periphery, a lot of activation of them in the periphery. You know, you raise a good point. We don't know what's happening. There's very limited biopsy data in the tumor. Could that be enhanced by other therapies that change how the T cells behave, have them home or migrate, have them be more pro-immunogenic? Quite possibly. I mean, that's part of the driver of us going to small cell lung cancer and myrtle cell carcinoma, which are hotter tumors for immune therapy. Your question there that we don't have a perfect answer for is why we have reagents that we're building to make our next programs come along.
spk06: Yeah, I'd also like to add, you know, we mentioned our XMAP 808 program, our B7H3 by CD28 biocephic. I mean, one of the whole points of interrogating these CD28-bias civic antibodies is they could potentiate CD3s particularly in the cold tumor setting because CD28 causes a much stronger proliferative signal.
spk05: And I would add along those lines, you know, there's been a lot of investigator interest in combining Tidutimab with either a PD1 within our portfolio or, you know, later on with the CD28. And I think there's a lot of interesting science there. immediately we're going to test small cell lung cancer and Merkel cell cancer. That phase two has started enrolling and will address an important scientific question that you're asking, is it the seed or the soil hypothesis, which is an ongoing debate on oncology. But, you know, clearly Amgen has seen responses with their AMG-757, so we're very excited about our phase two. And if we see responses, you know, I think that will add a lot of information for the field.
spk12: That's helpful. Thank you.
spk14: Sure.
spk13: Our next question comes from the line of Charles Zhu of Guggenheim Securities. Your line is now open.
spk04: Hey, guys. Thanks for taking my questions. Congrats on the early XMAP306 data. You obviously have considerable expansion of the NK cells with this drug. And on that note, I was also kind of wondering, you know, to what extent are the peripheral effector T cells potentially driving any early signs of efficacy you're observing? And any potential color you can also provide around things like peripheral versus intratumoral presence of these cells? Thanks.
spk14: Yeah, I don't believe we have data on intratumoral biomarkers or cells yet. I think maybe, John, if you want to go to the mechanistic mystery of T cells in the periphery, then, and what do they do?
spk06: Yeah. You know, it is a big mystery. I mean, I don't think anybody knows if you need a particular level of T cell expansion in the periphery to promote anti-tumor activity. Really, the big question is what's going on in the tumor. Again, we don't have any data on that yet. And there's a lot of hypotheses for why you would see, you know, more activity in the tumor T cells than the peripheral. In particular, we had shown early on in preclinical data that when you stimulate a T cell, say through CD3 engagement or TCR engagement, it actually upregulates the IL-2 receptors, which of course are the same receptors that IL-15 works through. So you can imagine those intratumoral T cells actually being more responsive to IL-15 than the peripheral T cells.
spk14: Yeah, but I guess to really get at the point of what might be going on in the tumor, if you can observe a tumor shrinkage, whether in combination with a checkpoint inhibitor like a tezolizumab or even in monotherapy, I think that's, in a sense, a marker of what's happening in the tumor immunologically, right? Because these are immune therapies. These are in very advanced solid tumor patients who've exhausted all prior therapies. So many of them would have seen checkpoint inhibitors in the past and progressed on those or not responded to those. So I think that's an important piece of the puzzle when you put it together with the biomarker data you're seeing and the kind of kind of increases in cell counts in the periphery. We don't know exactly what's going on in the tumor yet. We're eager to see that biopsy data as it starts coming in, but obviously much harder to get than the blood cells.
spk04: Got it, got it. Thanks for that, Culler. And maybe just one more big picture question from me on this front. So you have multiple different approaches of engaging, multiple and distinct approaches of engaging the immune system through multiple different means, whether it's recruiting T cells, recruiting NK cells, and now it looks like you're also going to be able to, you know, make them proliferate as well. And, you know, a lot of your combination partnership strategies seems to have been more external facing, I guess. You know, to what extent are really more internal combinations on your mind, and what are your thoughts around potentially realizing this energy of something like, you know, an NK cell and tumor-specific NK cell engager with an NK cell expert? toxicity as well?
spk14: Regarding the toxicity question, it's hard to say, of course. We do know that, you know, NK cell mediated agents like the classic antibodies, rituxan or gaziva or now dartumumab, tend to be fairly well tolerated with regard to their immune stimulation, right? Immune-related reactions, infusion-related reactions are what they see. you know, I think from a potential of internal combination, that's really why we're making these agents for combination. Of course, the nearer-term opportunity might be with marketed agents, but we want to be able to create an internal pipeline that has the best combination partners, say, with the best checkpoint inhibitor. We hope we can establish Fudalamab as an important option because it has a differentiated profile for both PD-1 and C-4 inhibition. We think our CD28 inhibitor Biospecifics as well as the cytokines we're trying are giving us those tools to figure it out. It's an experiment to figure out which combinations. You know, and I think, you know, when we mentioned Monjuvia's potential combination partner for NK cell expansion, you know, recall we created that molecule and we still have a pretty important economic stake. So while not internal, it is important to us. And we are, I think, talking about some of our NK cell engaging novel molecules at CIPSE this week. So that's really the big drive for it, where the short-term piece is to do the combinations with external parties.
spk04: Got it. Thanks.
spk13: Our next question comes from the line of Gregory Renza of RBC Capital Markets. Your line is now open.
spk11: Hi. This is Yingwan for Greg. Thank you for taking our questions, and congrats on the progress. Maybe first question on 808. Can you remind us of the rationale of selecting B7H3 as your first target for the CD28 platform, you know, versus the more tumor-specific approach? And how does your design methodology give you confidence in the safety profile that could avoid, you know, some of the concerns from the past programs? Thank you. Yeah.
spk06: Yeah, sure. I mean, you know, really it was a pragmatic decision selecting B7H3. You know, first of all, it's a very broadly – and, you know, high-density expression of B73 across multiple solid tumor histologies. I kind of wanted a one-size-fits-all solution that could, you know, could potentially couple it with PD-1 inhibitors or other checkpoint inhibitors, as well as CD3 biocivics. And, you know, the justification for going with a fairly broad tumor-expressed antigen was that CD28 engagement by itself, you know, and we'd shown this in, you know, all of our preclinical studies, doesn't, you know, it's not expected to do anything unless there's also a signal one coming from a TCR, you know, recognition of a tumor cell or in combination with a CD3 biocemic. We'd also thought, you know, some of the drug conjugate programs that are out there seem to be safely targeting such a broadly expressed antigen. So all of those things, you know, put together led us to that as our first target. But of course, we are considering more tumor-specific markers as well.
spk11: Great. Thank you. And then maybe just another one on the IL-2 program. When should we expect to learn initial data from that program, and what's your development strategy ultimately, you know, considering the recent pharma interest as well as your strategy with other autoimmune programs?
spk14: So for 564, we hope to have initial data from the A single ascending dose in healthy volunteers next year, that trial is ongoing. In terms of development strategy, we see this new modality that's in early phase development at a number of parties, Treg expansion, Treg stimulation, as really an unproven therapeutic hypothesis. We think that as that validation happens in phase two, we want to have our irons in two fires. One of those is in... smaller indications, perhaps rare or at least uncommon indications that have a high unmet need that you can try this new mechanism in, and one is in larger indications with perhaps other established therapeutic mechanisms of action, but where you can rapidly understand whether you're actually impacting disease because you have clear endpoints and clear markers. So you really want to have both of those pieces of ground covered. something that you could be really pioneering in to maybe accelerate development opportunities and create your own little bailiwick and then really answer the scientific question crisply and cleanly, not one or the other, but both.
spk13: Great. Thank you. Our next question comes from the line of Peter Lawson of Barclays. Your line is now open.
spk02: Hey, thanks for taking the questions. Thanks for the update as well on three or six just Just around that, the responses you've seen for 306, do you think they correlate with the CD16 isotype or the high affinity CD16 on NK cells? Just your thoughts there. And then what kind of CD8 T cell expansion do you think you'd want to see, if that's a relevant question here?
spk14: Yeah, we have no idea whether there's what the phenotype is of CD16, whether it's the high affinity valine 158 or the lower affinity phenylalanine. And it's not clear what the underlying mechanisms are that are driving response. You know, even though you, again, are seeing just the beginnings of T cell proliferation markers in the periphery, that doesn't tell us what's happening with the T cells in the tumors. The NK cells, I think NK cells are very much underappreciated, by the way, across all the different oncology indications because they're part of driving immune responses more broadly than just maybe the obvious ADCC function, but we don't have any correlation or understanding beyond that. And what number of T cell increase do you need to see in the periphery? I think we talked about that earlier. There is no clarity there, right? I think you'd certainly want to see activation markers just to let you know that your molecule is doing the things it ought to do. And we're certainly seeing activation and proliferation markers of T cells in addition to this, you know, really encouraging and dramatic NK cell expansion that can play in a lot of different ways. But mechanistic understandings, I think we're still a ways off.
spk02: And does that T cell, sorry, does the NK cell expansion correlate with activity or that's too kind of simplistic?
spk14: Too few patients and too few data points now to understand that. Whether it correlates with activity, I couldn't tell you. I do think that within the realm of ADCC-driven antibodies, like, for example, Rituxan, there's growing literature validating that NK cell counts in patients, high NK versus low NKs, correlates with response or likelihood of benefit, I think, not even response, actual clinical benefit like OS. So that's pretty clearly established. More NKs are better for ADCC antibodies. In particular, Rituxan has been well documented, and I think suggestions of that for a number of other antibodies. For T-cell mediated therapies like checkpoint inhibitors, nobody knows the role of NKs. But there's a lot of opportunity, we think, in NK cell-driven therapies. The current generation, we think there's going to be a lot more on the horizon in the future, in particular now that you're starting to have tools like these cytokines to make more NKs when you want them.
spk06: There's also a school of thought that with a lot of patients under a lot of different checkpoint therapies and various T cell therapies that NK cell tools are going to be more important over time. as the MHC status of those patients changes due to selective pressure.
spk02: Gotcha. Thank you. And then the reason Novartis or yourself kind of moved away from your CD123 construct is, any details there would be great. And then is that a target you'd pursue with your CD28 construct as well?
spk14: So I'll answer the first one then John can talk about the CD28 construct concept. So the landscape in AML has gotten I think a lot more challenging as venetoclax has become more and more entrenched with an earlier line and now moving to a later line. So that's changed the landscape and made it more challenging and the opportunity I think shrunk. But also CD123 is a difficult target with a very narrow therapeutic window and and, you know, challenges in PK and dosing frequency. And so in spite of the very encouraging early complete remissions that we've had and, you know, continuing additional activity we've seen, all those pieces make the product profile and the competitive landscape tough, really frankly tough for us to want to pursue, and our partner Novartis agree. There's certainly investigator interest in niches, and we're very supportive of trying to help patients when sophisticated investigators think there could be a role for the agent in trials. Maybe the CD28 combination with CD123, intriguing, but... Yeah, but again, due to the competitive landscape, I'm not sure that's where we want to put our effort.
spk06: Gotcha.
spk02: Okay. Thanks so much. Thanks for the updates. Thank you.
spk13: Our next question comes from the line of Arlinda Lee of Canaccord Genuity. Your line is now open.
spk01: Hey, guys, it's Ben on for our Linda. Thanks for taking my question. Congrats, related congrats on your Janssen partnership. I just wanted to dovetail on the most recent comments you made about CD28. Does the Janssen partnership give you flexibility to pursue collaborations with other partners in CD28 combinations, and is there an appetite for it?
spk14: The Jensen collaboration is very narrow to within B-cell malignancy. So B-cell malignancy targets combined with CD28, and it's got a time bound on it, whereas targets that we don't advance to certain development stages within the two-year collaboration period, you know, that's it. So we like to control things. So it would be a very limited number of just B-cell targets. And we could go and partner with whomever. I think now that we've gotten the ball rolling with XNAB 808, which is a broad tumor marker, and now that we've got, you know, Janssen is pushing hard in prostate cancer and is going to really work with us on Clomodimab and really accelerate that program with the CD28s, we think that it might not be, now's the time to sort of pull in and focus on internal work for CD28 and not really look at partnering around the CD28 platform now and wait until we've really built up a data set and understand its full potential and value after we've been in the clinic for a while.
spk01: Okay, that makes a lot of sense. Regarding the Johnson partnership itself, can you give us an idea of what the next near term milestones will be after you get the stock purchased on this quarter?
spk14: Let's see, that would be, I mean, of course, as part of the collaboration, we're going to start our tapasidimab lenalidomide trial either late this year or early next year. And we would expect to get the subcutaneous formulation of Plumodimab in the clinic in 2022 as well. We're well on our way manufacturing it and having a formulation we think is quite promising to use in humans next year. And then, you know, with the earlier collaboration, our collaboration around prostate cancer with the CD28bispecific, the next milestones, we can't guide exactly on timing because it's up to them, but would be taking a candidate into full development, into IND enabling development, which we've been making rapid progress on that collaboration. It's been less than a year now, and we've gotten a long way.
spk01: Great. That's very helpful. Thank you very much.
spk13: Our next question comes from the line of Alethea Young of Gander Fitzgerald. Your line is now open.
spk10: Hi. Thanks for taking my question, and congrats on all the progress this quarter. This is Nainon for Alethea. We were curious if you could speak more on your CD20 program with Jensen and how it differentiates in the competitive landscape, and also if you think at ASH, if you'll get high enough doses that we may be able to make Any conclusions around efficacy?
spk14: Thanks. So I guess on the first one, on the differentiation, you know, I think we believe we have now with a good monotherapy step up and up to a much higher dose we had before now at 50 milligrams. You know, we're very encouraged by both the tolerability profile there as well as the efficacy we're seeing in admittedly a relatively small number of patients at that dose. But I think the real differentiation is about the development strategy. Alan, do you want to speak to that?
spk05: Yeah, I think biologically it will be hard to distinguish these antibodies from each other, but the development strategy is key here. So, you know, we've sort of gone for this chemotherapy-free sort of strategy, combining with tafacitimab and lenalidomide, the CD19 versus CD20 targeting, the ADCC versus the T-cell engaging, and the potential that lenalidomide could potentiate both. On the other front, you know, another chemo-free strategy would be combining with a B-cell CD28-directed modality, and that's our partnership with Janssen as well. So we think that the molecules look fairly similar early on, and the data to date, I think we have good activity, and we've seen good activity. We'll be reporting additional activity. I think we've done a lot of time sort of figuring out our dose and schedule to optimize a much higher dose than previously reported with a very good step-up strategy, which minimizes CRS. And so, we're excited into moving to the next phase, which is our randomized phase two in combination with tapacitimab and lenalidomide.
spk14: And to be clear, that additional data will be presented at ASH with Still a small, but we think it's a growing number of patients, giving us a clearer picture where we are on efficacy and safety with this new step-up regimen.
spk13: Thank you. There are no further questions at this time. I'm now turning the call back to Basil Dayet, President and Chief Executive Officer. Thank you.
spk14: Thank you very much, Operator, and thanks, everybody, for joining us today. We look forward to updating you guys again over the coming weeks, and have a terrific evening. Bye-bye.
spk13: This concludes today's conference call. Thank you for participating. You may now disconnect.
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