Xencor, Inc.

Hello everyone, this is the operator. Today's conference call is due to begin shortly. Until such time, your line will remain on music hold. Please continue to stand by. We thank you for your patience. Once again, today's conference call is due to begin shortly. Until such time, your line will remain on music hold. Please continue to stand by. We thank you for your patience. Thank you. Good afternoon, ladies and gentlemen, and thank you for standing by. And welcome to CENTCORE fourth quarter and full year 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please advise that this call is being recorded at the company's request. Now, I would like to turn the call over to your speaker today, Charles Lyles, Head of Corporate Communications and Investor Relations. Thank you. Please go ahead.

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 are Basil Dahiet, President and Chief Executive Officer, Alan Yang, Chief Medical Officer, John Desjardins, Chief Scientific Officer, and John Cush, Chief Financial Officer. After 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. With that, let me pass the call over to Basil.

Thanks, Charles, and good afternoon, everyone. Today we released our earnings results, and now, in a bit of a change from past calls, we'll only make a few brief comments before spending the majority of today's call on questions. We've used our array of modular protein engineering tools to create our internal development portfolio in oncology and autoimmune disease, and we used the breadth of this portfolio to take multiple simultaneous shots on goal in the clinic. The proof of concept data we generate guides which programs we advance, which we terminate, or which we partner. We focused our efforts in 2021 making key portfolio advancement decisions, specifically initiating Phase II studies for Vudalamab, our selected PD-1, CTLA-4 bispecific antibody, and prostate cancer and gynecologic tumors based on promising Phase I data. We entered a collaboration with Janssen for the development of Pomodimab, our CD20 by CD3 bispecific antibody, to add their expertise and resources to the program and enable novel combination trials in a highly competitive therapeutic area. We terminated development of vibocodamab, our CD123 by CD3, due to a challenging clinical profile and a changing treatment landscape. Of course, we're continually applying our engineering tools to build drug candidates that tackle new or hard-to-address biologies. And several of our early-stage programs are advancing into clinical studies and reporting data this year, led by our reduced-potency cytokines and our 2 plus 1 CD3 and CD28 T-cell engagers. Our goal is a well-balanced portfolio of late and early stage programs in development that we can potentially advance to approval and ultimately the market if the data supports that. Now, supporting our development work is the growing partnership portfolio, including three market products producing royalties for us, such as Citrobimab, the Veer GSK antibody for treating COVID-19. We also have a broad clinical pipeline with our partners, such as the exciting new 2 plus 1 CD3 T cell engager, AMG509, that we created for prostate cancer with our partner Amgen, in which they released early but very promising data for this month. Our own XMAP819 shares the same 2 plus 1 format and will start a clinical trial in renal cell carcinoma this year. Now we'll turn to Alan Yang, our chief medical officer, who will review a few recent highlights of our clinical programs and upcoming plans. Alan?

Thanks, Basil. Today we'll review two of our wholly owned programs, Vudalamab and XMAP564. First, we're wrapping up our phase one study with Vudalamab. At CITSE, we reported data from maturing expansion cords, primarily metastatic castrate-resistant prostate cancer, renal cell carcinoma, and a basket of other potential indications. We observed a consistently tolerable profile, predominantly immune-related adverse events, including rash, pruritus, and liver enzyme elevations. But we have observed a low incidence of adverse events like colitis and pneumonitis that have been typical with historical combinations of PD-1 and CTLA-4 antibodies. which supports our hypothesis that budalimab is selective for binding double positive cells, and importantly, this could make it easier to use in patients. For more complete discussion of the results, I would point you to our press release last fall, and the posts are available on our website. Though, within the analysis, we wanted to highlight our prostate cancer cohort. Prostate cancer is a heterogeneous disease, and we enrolled mostly late-line patients. Eight patients had measurable disease, that is some kind of metastatic lesion in a visceral organ or lymph node that could be measured by resist for response. In four, we were able to evaluate response, and two of these four had durable, impressive six- and nine-month partial responses. and it has encouraged us to advance Vudalamab in prostate cancer. The first Phase II study, which started last fall, is in patients with metastatic castrate-resistant prostate cancer who are post-androgen deprivation therapy and post-first-line chemo. We are using standard genotyping profiling to find actionable risk phenotypes, which would guide us to either a chemotherapy regimen or PARP inhibitor, and Vudalamab is dosed on top of that. Patients with no actual mutations will receive Udalimab monotherapy. Later this year, we'll present early initial data from the study. We will only have a few months of on-treatment data for a portion of patients, but it will allow us to get a first look at the safety of Udalimab in combination with other therapeutic agents that can have significant toxicities of their own. Historically, combination therapy with PD-1 CTLA-4 dual blockade has been challenging, and we hope that Budalamab can improve on that. Of course, we will share whatever efficacy data we have collected at the time. Ultimately, we hope that this study defines combination strategies and subsets of patients with high unmet need that could define a simpler development path than previously available for prostate cancer. We are also initiating a second Phase II study evaluating Budalamab monotherapy in a differently defined slice of prostate cancer. That is a clinically defined, high-risk, metastatic, castrate-resistant prostate cancer, where we saw two out of four partial responses in the phase one. In addition, this study will examine select gynecological tumors as well. We do not anticipate data from this second study in 2022. Next, our wholly-owned cytokine, XMAP564, a reduced-potency IL-2 that we are developing an autoimmune disease. In contrast to cytokines being developed in oncology, it's engineered toward the IL-2 alpha receptor, CD25, which is overrepresented on regulatory T cells compared to other T cells. And we've also reduced the affinity for the beta gamma receptor. While the Treg hypothesis is just that, a hypothesis, that more regulatory T cells can result in clinical benefit for autoimmune disease, it was a perfect fit for our cytokine platform and represents an enormous opportunity to enable new treatment modalities based on Tregs. Currently, we're conducting a single ascending dose study in healthy volunteers, and this year we'll present our first data from that trial consisting of T cell and other biomarkers, safety and pharmacokinetic data. all critical information determining our potential product profile. We also plan to initiate, in parallel, a multiple ascending dose study in select patient populations. Now, as we wrap up, we wanted to briefly mention three other studies we are planning to initiate in 2022. First, the potentially registration-enabling Phase II study, evaluating plimodumab in combination with tapacitumab and lenalidomide in patients with relapse or refractory diffuse large B-cell lymphoma. Second, as Basil mentioned, the Phase I study evaluating XMAP819 in patients with renal cell carcinoma in the first half of this year. And third, following the submission of an IND, the Phase I study of the B7H3 by CD28 bispecific XMAP808 in patients with advanced solid tumors in the second half of this year. Now with that, I'd like to hand the call over to John Cush, our CFO, to review our financial results. John?

Thank you, Alan. Zencore's broad portfolio of partnerships, collaborations, and licenses continue to generate strong cash flows in 2021. During the year, we received over $200 million in upfront payments, milestone payments, and royalties, which helps offset our growing investment in our pipeline as bi-civic and cytokine candidates. A breakdown of 2021 proceeds was $80 million in royalties, including $52 million from our VEER partnership. $100 million upfront payment related to our second Janssen collaboration, and $20 million milestone payments. These proceeds strengthen our balance sheet, and we ended 2021 with cash, cash equivalents, receivables, and marketable debt securities of $664.1 million compared to $610.2 million at the end of 2020. We estimate that we'll end 2022 with between $500 and $550 million in cash, cash equivalents, receivables, and marketable debt securities. And based on current operating plans, We expect to have cash to fund research and development programs and operations through the end of 2025. I refer you to our press release this afternoon and our SEC filings for further information about our recent financial results. With that, we'd now like to open up the call for your questions. Operator?

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question or if your question has been answered, press the pound or hash key. Your first question comes from the line of Jonathan Chang from SVB Learing. Your line is now open.

Hi, guys. Thanks for taking my questions, and congrats on the productive year. First question on Vudalamab. Can you discuss reasons for confidence in the safety profile of the drug and its potential in combination treatment?

Sure, I'll let Alan take that. I think it's basically just from what we've observed.

Yeah, if you look at the data from the phase one study that we presented at CITSE and you look at the AE profile, you know, traditionally with PD-1, CTLA-4 combinations, you'd expect a lot of discontinuations, about a third of patients discontinue the product. We did not have those problems, and it's primary to colitis and GI symptoms, and we don't have that problem. The GI toxicity rate was around 10%. If you look at the AE profile, the most common immune-related adverse event in about a third of patients was rash, which is, you know, a milder AE. So we believe that even though we're targeting both PD-1 and CTLA-4, it's a highly tolerable profile compared to the two drugs independently.

Understood. And second question, on your cash guidance, can you provide some color around what assumptions are being made in terms of receiving potential milestone payments and royalties from partners?

Yeah, well, I'll let John take that, but I think the word of the day here is that we're very conservative in future revenue flows when we do our planning.

Thank you, Basil. Yes, Jonathan, as you know, we're very conservative as far as forecasting milestones, only near-term milestones that we have visibility from our partners. With respect to royalties, we look to, again, the guidance that's provided by our partners. So, for example, GSK has provided some guidance as far as potential sales of Sotropamab in 2022, which I believe are somewhere in line with 2021. So we're going to forecast comparable levels, maybe a little bit discounted, So generally, that's how we look at things, and we do not forecast any new revenue. So when we think about the year on cash position, we do include some potential revenue, but again, it's conservative, and it assumes certain spending levels based on starting certain clinical programs.

Understood. And I'll just sneak in one last one. On XMAP 306, are you able to provide any additional color on the test? tumor types and combination strategies of interest? Thank you.

No more than what we've said in the past, which is that we think there's a lot of potential in both NK cell mediated therapies for combination as well as T cell mediated therapies. Of course, Genentech's already running the Tocentric combination in the dose escalation, and we're looking forward to them starting the expansion cohorts with Tocentric soon. I think NK cell-mediated therapies are very promising, and, I mean, the top of the list of NK cell-mediated therapies are all traditional antibodies that people have been using for now a number of years. You know, the Rituxans, Interceptins, and Dartumumabs of the world are all things that are possible. What we have, we're making plans now, we'll be very specific when we kick off those trials, which we do hope to be able to announce all of that this year.

Got it. Thanks for taking my questions. Thank you.

Your next question comes from the line of Kaveri Polman from VTIG. Your line is now open.

Yeah, good afternoon. Thank you for taking my questions, and thanks for the update. My first question is related to 306, the cytokine program again, and its applicability in combination with NK cell therapies. So there was a recent publication in Blood Journal that showed that Exogenous IL-15 administration led to faster NK cell therapy rejection in AML patients compared to patients who received low dose IL-2 with the cell therapy. Just wanted to know your, get your thoughts there. Is it more like a different biology or just a dosing play?

Well, I think the complexities that happen when you give a cell graft to a patient, It makes it hard to understand even how the growth factors like IL-15 or IL-2 are working. I think you continually see these kinds of challenges with cell therapies, whether they're auto-transplants or allotransplants. The power of an exogenous cytokine therapy when you're not basing your efficacy on a cell that you're infusing but rather on another drug is that you can count on the intrinsic biology of the natural NK cells that are in there. And it's a whole different game. So I don't know that that paper really reads very much on the approaches that we're taking, which is combining 306 with other drugs, rather than the challenges and unknowns of experimental cell therapies.

Got it. And can you talk about your rationale for combining Videlumab with PARP inhibitors? Is there a biology there, or it's just data-driven?

It's empiric based on what's being treated. So patients with prostate cancer that have homologous recombinant deficient, the PARP inhibitor is sort of the standard of care. And so we want to demonstrate that we can add on to that and see if we can synergize with that therapy. But it's mainly empirically driven. That's all the combinations. I don't know, John.

I mean, there is a concept out there that, you know, if you're repair deficient, you give a PARP inhibitor, you might generate more neoantigens. That's true. Right? And have more of a T cell response to build on.

Got it. Thank you. Your next question comes from the line of Gregory Renza from RBC Capital Markets. Your line is now open.

Hi, this is Yingluan for Greg. Thank you for taking our questions and congrats on the progress. Maybe just first question on Vidalimab. I was wondering, as we expect to see some initial data from the trial this year, how would you characterize the benchmark for each molecular subtype to be clinically competitive? And what will the go, no-go decision-making process look like when you have some data from the trial?

Yeah. But before I hand this to Alan to talk about benchmarks, I will say that the data we're going to have this year is going to be a pretty early slice. It's going to be only partially enrolled, of course, and pretty early on in follow-up for all of the, most of those, or all of those folks, I should say. So we're going to get a very clear read, I think, from a small number of patients on some of the combination therapy safety. As for the benchmarks, that'll have to wait for the full trial data, which is not going to be this year. So I'll just preface it with that. We're not going to have really a good efficacy read this year, but maybe you can go to the benchmarks, Alan.

Yeah, I think if you look at the expectations in castrate-resistant prostate cancer for checkpoint inhibitors in general, the benchmark is fairly low. So if you look at the Keynote 199 study, The response rate in chemorefractory patients, which will probably be most of the patients that we see, is probably about 5% or less, depending on what their expression of PD-1 was. And if you look at the Checkmate, I forget the number of the Checkmate study, I want to say 650 or something, which looked at nivalumab and ipilimumab in combination, depending on the population you looked at, the response rate was probably approaching 10%, right? So the expectation of checkpoint inhibitors in prostate cancer is fairly low. And so we think there's clearly synergy when you compare those two studies, but the expectation was low. Now, when you looked at our study, granted it's still a small number of patients, we're seeing a higher response rate, but the numbers are too small. And so We think we will add to chemotherapy as well as PARP inhibitors, as well as other therapies, or excuse me, monotherapy in certain populations. But I think anything above that should be pretty exciting. It depends on the population. Like the marker negative group with chemotherapy, we would expect a higher response rate, but chemotherapy is not that effective.

Great, thank you. And then just one more, if I may, on Pomodamab. I think Rose Genentech is investigating their CD2053 in combo with Polivi. What are your thoughts on that combination approach and, you know, potential impact on the positioning opportunity for Pomodamab?

Yeah, I mean, Polivi is, of course, being combined with it also in combo with other things. It's not just those two things. And really, as a targeted chemotherapeutic agent, I think it shares some of the same challenges in treatment that traditional chemo has, and that's why we're going to a chemo-free approach in our combination studies. I think we're trying to get to where the field wants to go And I don't know that that changes the landscape for us dramatically in our thinking. It's really another chemo.

Yeah, I have to agree, Basil, that, you know, polituzumab, you know, is an ADC like chemotherapy. And, you know, the convenience for them is that they own that and can combine them. but I'm actually more excited about some of our potential combination opportunities. You know, I think tafacitamab, lenalidomide, and pomodamab scientifically makes more sense, and there's a much better scientific rationale for synergy, right?

Great. Thank you very much. Your next question comes from the line of Mara Goldstein from Mizuho. Your line is now open.

Great, thanks very much for taking the question. So if I can just ask another Vidalimab question, and that really is coming off of some of the data that came out at ASCO-GU, particularly around the Propel study and looking at combinations with PARP inhibitors. Can you maybe just help us understand sort of positioning of Vidalimab from a combination perspective? At this point, looking at where the standard of care may be going. That's my first question. And then I did have a second question on Plumodimab, which we can come back to.

Sure. Alan, you want to take that? Yeah. I just want to remind everybody that it's still early in our phase two. I think clearly the trend in prostate cancer is to sort of molecularly define prostate cancer, and we have several buckets of aggressive molecularly defined prostate you know, the homologous recombinant deficient, the MSI unstable group, as well as those that are biomarker negative. You know, and I think, you know, PARP inhibitors are going to be used. I think chemotherapy will still have a role as well, docetaxel and other agents. And so the question is, checkpoint inhibitors have limited activity. Can we add on to those therapies? In fact, the first question that we hope to address hopefully later this year, that we can slightly combine, you know, a PD-1 CTLA-4 targeting agent with other therapies. This has traditionally been very difficult. It's been tried in melanoma, and I think the AE profiles were very discouraging. So we're excited if we can put these together, and I think if we are successful, then that will sort of change the different sort of subtypes of prostate cancer and how you treat them in earlier stages of disease, still within the castrate-resistant population.

Okay, and then if I could just ask on Clomodemab, in looking at a combination trial with lenalidomide and cafecinumab, I'm just curious as to what your thoughts are around enrollment, just given the, I think, some of the challenges that that Tafacitimab has had in terms of picking up traction on the market, and if you can speak to that.

Yeah, I'd say we are very aware that enrollment in relapsed refractory DLBCL is very challenging because of the intense competition for many, many agents. And, you know, the TAFA having a bit of a slow pickup in their commercialization I don't think that's our primary worry. I think it's just the competitive landscape among clinical trials sort of fighting for that same patient. I think that the unique scientific approach, the chemo-free approach, and the mechanistic rationale is actually quite exciting for the physician community that we're talking to. That said, part of the reason why we think the Janssen partnership last fall or last winter for us was such a important move for Plamo is that they have the kind of resources that I think it's going to take to really put the pedal to the metal in a really challenging development competition environment.

Yeah. And I would just add, Basil, that our investigators are very excited about the scientific strategy of the combination. And then currently, we're still enrolling our phase one study in the expansion cohorts in diffuse large B-cell lymphoma, and that cohort is enrolling rather well, and that's only in two regions, the United States and France, and we plan to go global with this study, so I'm confident that we can execute.

All right. Thank you. I appreciate it. Sure.

Your next question comes from the line of Charles Zhu from Guggenheim. Your line is now open.

Hey everyone, congrats on the progress and thanks for taking the questions. If I may ask my first question though, just one more on the Vudalamab. I guess, you know, regarding your upcoming data or I guess in context of your trial, what sorts of prostate cancer subpopulations do you think are potentially most interesting and also how should we think about that in context of the broader landscape that continues to shift with things like ADT intensifications or new therapies like radioligands, you name it. How applicable will the data you generate in the coming days might be to a potential patient population perhaps a few years down the road? Thanks.

Yeah, I think the big picture answer on that is we're going to find out how well we work with things like chemo and PARP inhibitors that are certainly going to have an important role in the future landscape. And we're going to do that in a way that's correlated to the molecular subtype that's determined from the standard genotyping that's happening now in MCRPC post-chemo. So we think we'll be well positioned to make decisions, but this trial is about making decisions and understanding which way we can go scientifically, and as that landscape changes, we're fully anticipating adjusting to it.

Yeah, I think exactly. So I think the benchmarks you're talking about are the COSMIC study by Exelixis, you know, depending on, you know, whether you believe the sort of site review or the central review, the response rate was less than 20%. For the radioisotope from Novartis, you're talking about the response rate, if you look back in the most recent study, was approaching 30%, I believe. And so those are high bars. Now, if you talk about what subsets were interested in our studies, I don't think we've publicly disclosed what the molecular phenotyping is, but we are doing two different studies And we are looking at aggressive phenotypes. So the aggressive phenotype, either molecularly defined or clinically defined. And we believe that from our phase one data, the early exciting data, is that we had two patients with very aggressive disease that had good responses. And so we think that that could be a population for us as well. But again, I think our data is still early. We want to cast a wider net. And that's why we're doing this phase two. And then we can focus in based on the data we see later on.

Got it. That makes sense. Thanks for that detail and color. And if I may ask one more, shifting gears a little bit, on to XMAB564, the IL-2. I guess, what's your thinking around near-term clinical development of this particular asset? And how should we think about the potential patient populations that may benefit most from your Treg targeted approach? Thanks.

Yeah, I think the early clinical development is, of course, first establish the pharmacodynamic profile, tolerability profile of the agent. That's single ascending dose, and also the multiple ascending dose will help with that. But the SAD data that we're going to have this year should really give us a quick early read on, are we being selective? Are we amplifying Tregs in that selective way to a magnitude that's at least benchmarked against competition, but that's also promising? And critically, is durability of that effect important? Because this is autoimmune disease and frequency of dosing can be a hugely important thing and of course good tolerability. So with that SAD data going into the MAD we're looking for two things. We're looking for one, a clear way to look at if you're causing disease modifying activity. Because this whole hypothesis that enhancing Treg number and function is going to treat disease is still just a hypothesis. Some exciting early glimmers of data from some programs, and of course the old computing programs that we've seen, but also the old low-dose IL-2 data supports that. So we want to have, with our molecule, in indications where we can clearly see or not see disease activity because of well-benchmarked endpoints, we want to look at that in our MAD study. And as for selecting indications, we think that It's going to be a big exploration, but we want to go after ones that have both clear development paths, albeit competitive ones potentially, large indications, as well as we're identifying some small indications that we can maybe go with a niche approach. So that's a very strategic type question without a lot of science in it. Did you have a more scientific aspect to what you were getting at? I can let Al or John weigh in.

Yeah.

Go ahead.

Go ahead.

Oh, yeah, no, I was just elaborating, and just scientifically or medically, I guess, what are perhaps some of the indications that Treg expansion might work better or worse for inflammatory diseases? Thanks.

Yeah, I mean, there's a number of autoimmune diseases. You know, the literature is rife with publications showing imbalance of Treg versus effector T cells in various autoimmune diseases, including diseases like lupus, but also a number of more niche indications, as Basil mentioned. But ultimately, I mean, Tregs are a pretty important way of achieving homeostatic immune balance, and it could be incredibly widely employed if it's actually effective.

Yeah, and from an operational standpoint, I would just sort of reiterate that You know, we know that it's a competitive space, and I think that's why we're doing our SAD and our MAD in parallel. And some of the thinking that went into the disease selection for MAD was not only about a good model system where we can figure out the multiple ascending dose and our schedule, but also one that we could execute quickly on and sort of have an advantage and proof of concept as well.

Got it. Great. And I guess just one more on this one. How are you thinking about this asset as it fits into your portfolio? And are you thinking about in-house development, out-licensing, or maybe some sort of a partnership? Thanks.

Right now, this is an asset that we think has extremely high scientific promise. And like all the other assets we put into the clinic, we hope that we can – do the full development path and market it ourselves one day. And deviations from that hoped-for path are always driven by data, and it could end up anywhere. But our goal, no, is not to partner. Our goal is to make drugs.

Got it. Thanks for taking all the questions.

Your next question comes from the line of Arlinda Lee from Canaccord. Your line is now open.

Hi, guys. Thanks for taking my questions, and congrats on the progress. I was thinking about your... the amgen data that earlier this from earlier this month and i guess i had a couple of follow-ups um can you remind me what happened with um i think amgen also had a rights to your cd38 that returned is that moving forward and then maybe secondarily can you talk about how many other targets they can be going after and then and how that progress is moving along and then Thirdly, can you talk about other two-to-one formatted things that you might have in the works? Thank you.

Sure. I'll take that first set on the Amgen collaboration part quickly. They don't have any more targets they can choose out of the collaboration. The timeframe to choose targets ended a couple years ago. The CD38 program that was returned to us is now in an investigator-sponsored trial that we're collaborating with in hematologic malignancies, and that one's moving along. But they have no other target rights, and there aren't going to be any more programs from that collaboration. They have, at this point, just the steep one AMG509 program. Now, for the other two plus ones, maybe I'll let John start talking about that.

Yeah, I mean, I think we've even had posters on multiple of our other 2-plus-1s that we've created. So CloudN6 CD3, that's a 2-plus-1. Of course, we have our 819 program, the EMPP3 by CD3. And... I think maybe a glyphocan-3 CD3 that we publicly disclosed. So, you know, we're, of course, Arlinda, we're working to generate a whole pipeline, but there's a few of them that have been disclosed, and you kind of get the sense of where we're going with that. And recall, we also have our TRECA collaboration. We're, you know, working closely with them to see, you know, what comes out of that in terms of new targets.

Yeah, so I think for us, we see that that initial bit of validation from the AMG509 program for this 2 plus 1 format, in particular, its ability to really attach strongly to tumor antigen and afford CD3 activation in a way that is tolerable, at least in this instance, in solid tumors, really gives us a lot of confidence to really double down on solid tumor targets for CD3s and using the selectivity we can potentially achieve here as the backbone. So we're excited to start 819 in the clinic imminently in renal cell carcinoma.

Great. Thank you. Your next question comes from the line of Peter Lawson from Barclays. Your line is now open.

Hey, thanks so much for taking the questions. Just, I guess, another question on Udallamab. For this second half readout, I appreciate all the detail around kind of safety and early in the response cycle. As we think about responses, should we be thinking about PSA 50 reductions, or is it do you think we can potentially see shrinkage of tumors? And then kind of how difficult are these patients to treat? Is it kind of like bony disease that we should be thinking about?

You want me to take that? I think it depends on the molecular subtype, Peter. I think for some patients, depending on molecular subtype, they'll have more Bony lesions or occult metastases, and you would want to look at PSA. Some of the more aggressive phenotypes will have lymph node metastases or even visceral liver or lung metastases, and I've seen brain metastases. And so those you would try to look for traditional tumor shrinkage, but I think it depends on the subgroup. Again, the way that the study was designed, there's different molecular subtypes, and you can imagine some of the subtypes, like PMSI, microsatellite unstable will be very difficult to enroll, so we may not have a lot of data. We do have a bucket for those that don't qualify for any of those groups, and that group will probably be early data, but it will be a mix of different genetic phenotypes. But that group is also in combination with chemotherapy, so we'll see how that looks. Okay, thank you.

How many patients do you think we could see? I don't know if you mentioned that before.

We're guiding to probably on the order of a dozen or two at that point.

Perfect, thank you. And then maybe a question for John just around, you've touched upon guidance being conservative. kind of near-term milestones that we should be thinking about in the 2022 number?

Nothing that other than possibly the only one I can think of would be possible sales milestone from Alexion. You know, the sales ramps up. We do have a $20 million sales milestone, which we expect possibly 22, if not 22, 23. The rest of them are all development. Obviously, we're excited if Amgen advances this program, but we don't have any timeline as to their next steps.

Gotcha. But none of those are in the guidance. We shouldn't be thinking about any of that in the guidance.

I'm sorry, what was that?

Any of those in your cash year-end guidance?

Yeah, the Alexion would be. The Alexion would be. Like I said, the Amgen, we have to just We don't have any more information than what they've disclosed publicly.

Gotcha. Thank you. And then just finally on the B7H3, what tumor types are you hoping to enroll in that study?

So we're not disclosing that yet, but I will say that, and it'll probably be a mix, I will say that we're obviously keenly interested strategically in prostate cancer. Our Vidalimab program, our collaboration with Janssen, which gives us access to a number of their clinical stage studies, and commercial stage prostate cancer agents. But I think what we also want to do is we want to be thoughtful about the different mechanisms we can potentially benefit here, both checkpoint inhibition as well as CD3 bispecifics. And so we're going to be guided by sort of the availability of quality of combo agents as much as by the theory on which tumor types.

Great. Okay. Thanks so much for the details.

Your next question comes from the line of David Dai from SMBC. Your line is now open.

Yeah, hi, thanks for taking my questions. So I have a question for Vidaliumab. So Phase II data is expected in the second half of this year. So besides the genetic subsides, can you also share with us any biomarker strategies that you're exploring to further identify predictive biomarkers that would support the benefits of Vidaliumab combinations in MCRPC And then could you also just comment on the cadence of data release? Would you expect to report the data at a medical meeting, or would it be a press release? Thanks.

I'll answer the second one. Our goal is at a medical meeting, but, of course, it's still well before abstract submission timeline, so we consider that an aspirational goal. We're hopeful, optimistic we can get there, but we'll see. On the other one about predictive biomarkers, I mean, you can get into the science of it. We're going to be looking at a lot of immune oncology-type biomarkers outside I am not certain that we are really gunning for predictability here. We're going to use the existing bucketing of the clinical gene types and even the clinical definition of high risk. Biomarkers are, I think, something to strive for but not count on in your development program in immuno-oncology. Thank you so much.

Your next question comes from the line of Edzer Daraout from BMO Capital Markets. Your line is now open.

Great. Thanks for taking the question and congrats on the progress here. The first one is really more a point of clarification for me. The Plomodemab combos with Monjuvia and lenalidomide. Would that be with the sub-Q or the IV formulation as you sort of open up these sites here? And then A second unrelated question, back to sort of guidance, just was wondering whether or not you expect any meaningful step-up in R&D spend associated with Plomodobab combo with Monjuvi specifically or just kind of, you know, the regular way as you kind of advance these multiple programs into the clinic? Thank you. So maybe, Alan, you want to take these?

Yeah, I'll take the first one. So it will be IV, not the sub-Q form. Got it.

On the spending, you want to take that one, John? Yeah, as far as the spending, the spending we have in the next two to three years anticipates these trials. Basically, early look into the potential, but we do not have large, multinational, 200-patient type trials budgeted at this time. So it does include the cost for the initial run-in for these, but we've not at this time budgeted larger trials. Got it.

Awesome. Thank you.

Your next question comes from the line of Zhixiang Zhu from Barenburg. Your line is now open.

Great. Thank you. Good afternoon. I want to ask about the new program you're going to put in the clinic, A19. I guess what gives you the confidence of this program in RCC? Any valid targets that you want to highlight here? And I guess broadly for this program to succeed in the indication, any thoughts around combination approaches later on? That's the first question.

That was two questions. That wasn't your first question. So I'll let John take the one on confidence, maybe the mechanistic and the historical confidence.

Yeah, sure. So, you know, there was historically, there was, in fact, an Astellas Agensis ENPP3 drug conjugate program And we had also independently identified the target really just from bioinformatic analyses of, you know, different targets that are overexpressed in various cancers. And EMPP3 emerged as one that is like very nicely selectively overexpressed in renal cell carcinoma to some extent in papillary as well, but we're going to focus on clear cell. Other than that, you know, we've also done immunohistochemistry analyses. We see, you know, really nice bright staining in riddle cell carcinoma. We've also talked to various academics that are working with RCC cells, and they say ENPP3 is one of the cleanest markers of that tumor population. So that's what's driving most of our confidence in this is that, you know, it was sort of safely targeted with a drug conjugate coupled with the overall expression pattern and high expression in kidney cancer.

And I would just add from a clinical perspective, you know, I think now there's clear proof of concept data that these T-cell engagers work in solid tumors. There was AMG-757 in small cell lung cancer as well as AMG-509 as early data. And so I think we're clearly going to work in solid tumors as well. I would remind people that in renal cell cancer, it is responsive to immunotherapy. Checkpoint inhibitors are the standard of care and frontline. In the second part, in terms of combinations, I think we have to wait to see the data. I think for kidney cancer, combinations is sort of the game with a checkpoint inhibitor and a TKI. for frontline, but, you know, we still need early data. You know, T-cell engagers do have CRS, but I think they're more manageable in solid tumors, so we'll have to see how good that data is. And then whether we combine with something that accentuates the T-cell engager or just empirically has activity, like a TKI, has to be seen until we see the Phase I data.

Great. That's helpful. The third question for me, as to in terms of capital allocation, now you have $600 million in the bank. It's very comfortable in today's market. I guess, how would you think about spending the money? Obviously, you have a lot of programs, a lot of two-plus-one format, these are engagers in pretty close stage, but also you do have mid-stage assets like the dual amount. How would you think about, you know, either to push the mid-stage to the finish line or kind of pushing more preclinical assets into the clinic? I appreciate any color here.

We look at the data. If we think the data that we see so far in a clinical program merits us putting down the money to go forward all the way to the finish line ourselves to try to get an approval ourselves, we'll do it. We'll continually feed programs into the phase one, you know, exploratory phase and see whether they merit further advancement. And we're going to judge every program against what exists in our portfolio at that time. But it's all going to be data-driven. And we do want to be thoughtful about making sure we have something that we really truly believe has a competitive profile before we put all our chips down. So, for example, Vudalamab, the phase two studies we're doing now are actually fairly contained and modest in scale relative to something that would be registration, because we're still looking for how we now fit in the complex prostate cancer accommodation treatment landscape. So we're going to be data-driven. We're not at the point of committing to registrational studies, but when we do, we'll tell you. And I would also say that, you know, we're very careful and thoughtful about managing our cash, because money is never easy to come by, even in the so-called easy times.

Great. Thanks very much.

Your next question comes from the line of Dawen Hu from Raymond James. Your line is now open.

Hey, guys. This is Dawen on for Dane. Thanks for taking our question and congrats on the pipeline progress so far. On 306, can you kind of guide, you know, when we could see kind of a comprehensive data from the Phase 1 trial, maybe a presentation or publication? And on the combo trials for 306, you know, you mentioned that you're interested in NK cells and T cell mediated, but kind of curious if you can squeeze any additional colors, what colors left there on any potential guidance on the combo trials. And then lastly on 564, kind of what are you looking for in the phase one healthy volunteer trial that could kind of shape the MAD trial initiating? Thanks.

Yes, so first on the 306, it really has to be agreement between Genentech and us when we present. I think a natural point would be when the phase one is done and we go to a medical conference. Though the phase one we are hopeful is wrapping up soon, I can't imagine we'd have a publication ready given Genentech's timeframes for that thing this year. So I'm hopeful for next year, but I can't even guide on that. We'll give you guidance on when. But it would be when the phase one is wrapped up and that's going to be a discussion with Genentech. You know, on the combo trials, I really can't offer any more color until we announce them, unfortunately. I do think that the NK cell boosts we saw were remarkable, were notable for their magnitude, the durability, the kind of control that that suggests we can have by varying dose and varying schedule. So that's that there. For 564 on the SAD, what can we get out of that Healthy Volunteers program? in this IL-2 Treg space to guide the MAD? Well, I think the key there is the durability of our Treg expansion and how that helps us select the dosing frequency in the MAD. Right? Longer is better. And I know that our competitors seem to be settling in on every other week, and we're going to be looking hard at how well we do in frequency. I mean, that's the biggest impact on the MAD.

Your next question comes from the line of Mike King from HC Wainwright. Your line is now open.

Hey, good afternoon, guys. Thanks for taking the questions. Just a financial question at first. I just wanted to see if you guys would be willing to give more color on the spend out to 2025 with the driver's I don't know if you'd be willing to talk about the different components of spend, you know, on the particular programs.

No, because we budget pretty carefully. I'd rather not carefully. We always budget carefully. We budget pretty specifically in the near timeframe, the next year or two, when we have clarity on what the clinical trial is going to be. And then we keep placeholders for next stage trials, depending on which program we decide to promote. I think that's as much as we can say in terms of granularity.

Okay. Sorry. On vacation with the fam and they just came back to the room. I wanted to also explore 564 a little bit more. Can you just talk about the – have you compared the molar activity against a native IL-2? Because, you know, we've talked a lot about your competitors and – Nectar has basically been dosing at similar levels to what the tolerable levels of native IL-2 are at. So is there any difference between 564 and native IL-2 or the Nectar 358 program?

There's a marked difference, in fact. So, you know, as we learned with our XMAP306 program, the IL-15, this class of cytokines, IL-2 and IL-15, and to a large extent most of the cytokines, When they signal, they get internalized. And so there's an inverse relationship between their potency and their exposure. So we found out that basically the way to turn these cytokines into really good drugs is to actually reduce their potency dramatically. So 5, 6, 4 is potency reduced by about at least 100-fold compared to native IL-2. However, it actually lasts. you know, at least 100-fold longer in terms of exposure. So you've got it sitting around a lot longer. It makes it a more tolerable drug, and it can do its job longer than the native can.

Okay. And I know we recently launched on you guys, but you have a tremendous amount of scientific data to process. So remind me if there is, well, two questions I would have, I guess, is one is the selectivity for the alpha receptor on the Treg versus the T-effector cell. number one. And number two, I don't believe there's any modifications that would keep it away from endothelial cells in the periphery, but I guess your response to that would be you're detuned, so you shouldn't have the same kind of, you know, not cytokine release syndrome, but you wouldn't have the peripheral edema in the periphery. But could you just go into that a little bit more detail?

Yeah, yeah. So we basically did, we We engineer it so it has a slightly higher affinity for CD25. We want it to be CD25 biased in its activity. And so most of the potency reduction comes from the IL-2 receptor beta reduction. So that, again, that helps with the selectivity. You know, based on what we've seen in our own assays and, you know, looking at making other people's molecules, characterizing them, we're, you know, pretty much top of the class in terms of Treg selectivity versus effector T cells. And so, you know, we think overall we've got a great profile in terms of Treg selectivity as well as the, you know, the potency tuning and the long half-life.

Okay. Great, guys. Thanks so much for taking the questions.

Hey, thanks. It's great to have you covering us after all these years of knowing each other, Mike. It's a pleasure.

If there are no further questions at this time, I'll turn the call back to Basil Dayak.

Thank you very much, and thank you, everyone, for joining us today. We look forward to updating you more over the course of the year, and have a wonderful evening.

This concludes today's conference call. Thank you for participating.