Xencor, Inc.

Thank you for joining this session. My name is Alex Stranahan. I cover SMID Biotech at Bank of America, and I'm the analyst covering Zencore. And it's my pleasure to introduce Basil DeHyatt, President and CEO of Zencore, and Dane Leone, Chief Strategy Officer. Guys, thanks for being here. Hey, thanks so much for having us. Looking forward to the discussion. So, you know, maybe, Basil, like, just at a high level, what gets you most excited about the company? And, you know, which asset is your favorite?

Well, I think that the tempo of data that we have starting the second half of this year with our XF819, you know, phase one sort of second readout where we hope to have our recommended phase three dose, a clear pivotal plan, and robust efficacy and tolerability data in our target dose range, that is, you know, coming on really soon. So I'm very excited about that. And that's really the beginning of a flow of data that we're going to have our second oncology solid tumor, bispecific XMAP541 in gynecologic and GCT, and then followed in the new year in 2027 by our first bispecific TL1A-containing molecule, XMAP412. We expect to have healthy volunteer PKPD and safety and immunogenicity data for that one. And then shortly after that, in the second half of 2027, the full phase TB readout of our ultra-long-acting tumor anti-CL1A antibody, XMAP942. So the transformation that we undertook a couple of years ago of reorienting the company around high engineering concept but validated biological concept drugs and disciplined clinical development is really going to play out. So that's what I'm most excited about is that the way the drumbeat that's been a little slow in coming is really going to hit a rapid tempo this next year. A real... clinical data that's really going to move the needle. And, you know, it's going to allow us to make really critical decisions about which programs to lean into and deeply invest in to reach our true goal, which is to be a commercial stage company, which ones that might benefit from strategic partners or other sources of resources and capital. So all those decisions are coming, so I'm really, really on the edge of my seat as we approach this.

Great. Well, maybe we can start at a high level. You've built several clinical stage programs from your engineering platform. It's been differentiated. It remains differentiated, in my view. And you have several active partnerships as well. I guess, has focus shifted at all towards building your wholly owned assets and pushing those towards commercial stage, or is the partnering model sort of still central?

The partnering model underpins and shares that common technological base that we have. I think the mindset has shifted in the investment community and to the pharmas that we speak to that, oh, okay, Zencore is really putting its chips down and has very viable clinical assets that are going to give me interpretable near-term clinical data to make go decisions and investment decisions. That, I think, is something that has been a change over the last couple of years And it's a welcome one. It puts the burden on us. It's a challenge. You know, that base of partnerships and the revenues that it brings in and the validation certainly helps. But I'd say that shift has been very, I think, pronounced in people's minds. And it means it's a show-me story. I'm very happy about that. Okay, then show me the clinical data that's going to get you to Phase III in RCC with a differentiated agent. Show me the best-in-class TL1A antibody data. Deliver. We're happy to give it a shot.

Yeah, and we've got plenty of, you know, catalysts to look forward to. I guess maybe starting on XMAP819, this is your ENPP3 by CD3 in Clear Cell. It showed some pretty impressive 25% response rate, 70% disease control in very heavily pretreated patients, manageable CRS, which is, you know, has dampened activity for others in the class, Okay, so what sort of dose expansion data do you need by a year end to sort of justify moving the asset forward?

Yeah, so let me take the start with the setup on the data, and then Dane can really dive into what that means for us for our pivotal phase thinking, which has a few options. So for us, we designed this molecule to selectively engage high-expressing ENPP3-expressing tumor cells and avoid – hitting and killing with this very potent CD3 T cell mechanism, lower expressing normal tissue. And we think the data set from last fall, it's a triple meeting, really demonstrated that we weren't seeing critical organ toxicities. Really, it was CRS, which is on class for CD3s. It was some rash, which is on mechanism for killing ENPP3 positive cells. There are basophils and mast cells, basically allergy-driving cells in your blood that that have that target, and so you hit those, you get some rest. But really, the AEs really clear up as you get to the end of the month through that priming regimen, that immune-boosting phase, and then you're at a place where it's really a well-tolerated regimen with, again, no major organ toxicities that we observed at all, and that promising efficacy profile. That was the beginning of getting to our active dose range. What we spent the last seven or eight months doing has been now taking dose levels within that range Enrolling expansion cohorts. We've completed enrollment in the first one. We're enrolling rapidly the second one. And we're really doing a lot of experiments on the side because we have a very, very high interest from investigators and patients. Making sure we're optimizing our priming regimen and things like that to where the end of this year we'll have robust data sets of expansion cohorts at at least a couple of doses. with their priming regimen set that we can say we believe this is the right one for recommended phase three dose. And depending on the degree of response rate we see and the kind of early durability signals we see, you know, we think that could position us in particular for very high-emitting subsets like multiple TKI pre-exposed patients or prior hip to alpha exposed patients, that might afford a more rapid path to approval potentially. So it depends on the data, but, you know, the setup is great, and we're going to really deliver robust and much larger data package than that first glimmer last year. You know, that's the sort of setup for what's next.

Yeah, sure. I mean, you know, from our view as an organization, as a management team, 819, we're all in on what we see as a very favorable probability of technical success with this program and the ability for it to potentially be the first commercial stage product for Zencore as an organization. And to do that, we've taken the proof of concept data that we presented at the ENA meeting in October last year to trigger the dose expansions that we need to characterize and do the proper phase one work to satisfy project optimists and work with the health authorities to have an end of phase one meeting that can then really, to Basil's point, elucidate the best and most rapid path forward to late stage development or through late stage development. But that's only a part of the story, right? Because let's say we go with the monotherapy registration enabling study post-DIO, post-TKI that affords us a flexible kind of second, third line label much like Belzodifan has in the U.S. today that's helping propel that drug to be a billion-dollar drug. But we're thinking more broadly than that already. We're starting a pre-TKI study post-IOIO or classically ipinevo, which is about a third of the frontline patients in advanced clear cell renal cell carcinoma. If that proof-of-concept sub-study works out for us, that would then catalyze another study that could then allow us to capture the totality of the second line And an anecdote there is really where cabozantinib is used today, which is a multibillion-dollar drug largely used in the second line. So we think that the TAMP for 819 in clear cell and renal cell is going to grow rapidly, and we'll start thinking about frontline opportunities as these second, third-line opportunities start to mature along the clinical development pathway. But this is a target oncology agent, right? And EMPP3 is implicated in a number of different tumor types. And that's why we started screening and are now dosing patients across non-small cell lung cancer, colorectal cancer, and papillary renal cell carcinoma that are EMPP3 positive because we want to pursue that real target oncology development pathway efficiently and rapidly to say, Okay, we have primary indications that really make sense where you don't have to screen patients. We're not pre-selecting in clear cell renal cell carcinoma because the age scores are so high and consistent across patients with that histology. In these other tumor types where we would pre-screen, we almost look at like a potential basket of very large market opportunities that could ultimately lead to a tumor agnostic label, follow the path of other successful programs like in HER2. So we're very excited about this. We think we are novel first in class with a really differentiated agent. And we have the internal expertise of TESOL Engager Development through partnerships like Amgen and others and Astellas that give us a lot of insight of how to do this properly and successfully that we're applying to our wholly owned programs. So we're very excited about 819.

Yeah, no, that's great. I guess in terms of how you step through the de-risking and, you know, the later line and the frontline TKI-naive patients are the ones that have progressed on IO, and then the broader opportunity set for ENPP3-driven tumors. Is it sequential? It almost sounds like you're approaching this in parallel in terms of the initial de-risking, but then how, once you get that data in hand, how do you sort of pick and choose?

I think that the clear cell opportunity is the one we focused on initially because we We didn't have to prescreen on the target antigen. We could move rapidly. We could be assured that nearly all the patients, and it's at least 90% of them, have the target so we could elucidate the biology, come up with a dosing regimen, and particularly a priming regimen that we knew was reflective of an EMPP3-rich tumor environment. So we wanted to make sure we could check that developability and safety box in the most rapid and robust way. And that, of course, naturally means clear cell opportunities further ahead. We could be starting a pivotal next year if all goes well. That's our plan. The other ones are just going to be getting the to efficacy proof of concept, we hope by next year. We didn't have to re-dose escalate. We could go with the active dose that was tolerable, you know, in this target dose range. So they would then really have kind of independent, depending on their own, you know, commercial and regulatory pathways, development paths. And so we would follow the signal where the data takes us. I mean, in late-line colorectal cancer, there are potentially more rapid ways to approval, right? We would see. But Clear Cell is ahead, you know, to be clear.

Parallel is the right word, and that's very contemporary for successful development in clinical oncology, is as soon as you have that real signal in, you know, the first setting, right, which you can prosecute, in this case Clear Cell for us, and you've looked across the board at the emergent data set you have internally to say, okay, we've more heavily pretreated patients seen clinical efficacy on par with the marketed drugs available in the second and third line, that's worth investment. That's where we should be putting our dollars to invest and accelerate this program to make sure we cement ourselves as the leaders of this molecular target.

And I guess there's also learnings you could probably apply from the dose escalation to other tumor types, right? Yeah. Do you anticipate having a higher starting dose?

We're starting at the active doses. We're starting at the doses that we've expanded at. RD1 is being used. Yes, there was no need to do that. Luckily, in oncology, you don't have to rewind and start all over again, usually. We're very happy with that. We expect to have clarity. Is it working? Is it not working? Much more rapidly.

Maybe thinking about your CLAWDIN6 For RAM2, this is XMAB541. Early responses across – this is for germ cell and gynecologic tumors. Some, you know, distinct competitive dynamics across germ cell and ovarian. But, again, how does the early data sort of shape your thinking around which indication becomes sort of – Right.

It set up the experiment, really. So the experiment that we're doing this year is we have this early data. We were able to accomplish our escalation more rapidly because we've learned a lot about how to escalate solid tumor CD3s, about CRS, about toxicity profiles, to where right now we're doing the real experiment at, you know, in the right dose range for both germ cell and gynecologic tumors, essentially separately, right? They're going to have their own different efficacy profiles, and they have their own sort of competitive landscapes. You know, GCT, rare, but for the people that fail on high-dose chemo, very high in that need. And so that's one dynamic, but rare. Very – and no competition. And a very competitive landscape in a varying – different modalities like ADCs and, you know, a rising bar of efficacy. And so there's a sort of a divergence of the two. So we're going to have independent data at target dose range in a robust enough number of patients to decide, do we have the efficacy that merits one or the other going forward? And we would be able to, by the end of the year, that should all be brought together in a way that we can clearly articulate, here's the go-forward strategy. Or are we going to be disciplined with our capital and not further invest in monotherapy?

And maybe to that point, how are you sort of thinking about combos? I think you may have had an update, if I'm remembering correctly, in the 1Q press release around combos. Right.

Yeah, sure. So we're very excited about what's called an AND gate CD28-CD3 T cell engager combination. We think that's going to be a real potential emergent class of how to more effectively agonize T cells against tumor cells, And there have been a lot of early experiments of trying to combine CD28 with PD1. or the same antigen target as CD3, we think empirically those have not worked, right? We view good antigen targets that are different but co-expressed on the tumor cells specifically as a potential future. And from the work that we presented at AACR this year around what's eczema 808 or B7H3 CD28, it shows really good co-expression on tumor cells of B7H3 in CLADEN6, Since we had monotherapy proof-of-concept activity with 5401, but we have to do all these expansion cohorts to verify a monotherapy development pathway one way or the other, we know, unfortunately, for regulatory requirements, we have to start at what's called Mabel for the CD28 dose and combination. So it's going to take time to dose escalate to cohorts where the Hexamab 808 arm is going to really be clinically active, we think. even though we can start at a clinically active dose of 5-4-1. So we wanted to start this now, not wait, because we do think there could be differential efficacy that's worth investigating, and it didn't really make sense to delay because we have to do that dose escalation. So you'll hear us talk about this more, but the ACR poster we thought was really a good starting point and lays out the investment case to do this, even though it's going to take a bit of time to do something differentiated.

Okay. We've seen some companies layer on a CD28 on top of a CD3 going after the same target. I imagine there you kind of soak up all the binding that you could with one or the other. Maybe if you could speak around the rationale for going after the different.

Yeah, the real primary driver is you want to be able to narrow the cells that you're killing to just the right ones. And if you have strong expression of of, say, B7H3 and cloudin-6 on your tumor cells, the expression of those two targets on healthy cells is not necessarily correlated. In fact, when we check, they're not. So the AND gate, it must be cloudin-6 and B7H3, narrows the cells you're killing, so it makes it a more selective anti-tumor agent, which hopefully avoids off-tumor toxicity. That's the genesis, really, of the idea. Now, on the point that you're going to block up all the target, typically with CD3s, not always, typically with CD3s, the doses are relatively low that you need to get the T cells going. You're typically not fully occupying them. So that can be a problem, depending on the details, often not. That wasn't even in our thought process. We were like, Why don't we make this more selective, right? Because CD3s can sometimes fall down. We saw this in Roche's program years ago in colorectal cancer on healthy tissue tox. So it's really a safety in.

Yeah, it's meant to broaden the therapeutic index of a CD3. Yeah. And that's why you need to do the AND gate. If you're doing the same AND in target, by definition, you're not broadening the therapeutic index. You're doubling down on your toxicity. You're doubling down on everything. And so that's only if, for whatever reason... you've gotten to the maximal dose that you've gotten with the CD3 aspect and can't push that agonism forward, but you have no toxicity and then just need to punch through the agonism with the CD28. Okay. That's rarely and almost never the case, though.

Yeah. Yeah. No, that makes a lot of sense. And I guess maybe in the meantime, as your dose escalates in B7H3, you can – test additional combination partners, PARP inhibitors?

We haven't yet initiated any of that work, but it's very much in mind. I think we want to establish a baseline of monotherapy activity for something that isn't a truly synergistic, known synergistic mechanism before we engage in that kind of thing. But it's definitely on the mind because I think that that's what the long path in ovarian cancer would entail as you look at the landscape.

And there's a philosophy we have, too, especially in oncology, we want monotherapy agents and let's be owned both of those agents ourselves for a combination. When you move into earlier line after successful monotherapy development and that earlier line requires combination therapy, like would is obviously plausible for eight one nine to move in the front line. That's fine. But developing a fully only combo agent, right. It is not that attractive to us.

Yeah. I mean, that's the benefit of the flexibility of the platform.

Yes.

Being able to pair the CD3, CD28.

We view CD28 as a lifecycle play and evolution of what CD3s can be ultimately and want to continue to be leaders there just as we have with CD3s. Just early days. And we have partnerships on the CD28 side, so we're learning a lot as we go to be as smart and effective as we can in the clinic.

Yeah. Great. Great. I want to shift gears to your TL1A program. Some pretty exciting recent updates and upcoming updates. And we're kind of between updates and we're thinking about the future for TL1A and your next-gen option. I guess, you know, you've shown some pretty encouraging long half-life for XMAV942. That's your TL1A program. Durable target suppression on a single dose and healthy volunteers. You've got phase two B enrolling across three different doses. What should we sort of be looking forward to by year end this year

sort of establish, you know, either a best-in-class profile or better understand sort of how... Yeah, the real readout for XVEB942 in the phase 2B study is going to be second half of 27. Yeah, when we have our primary endpoint at the 12-week induction for clinical remission. That's the gold standard in ulcerative colitis development, and our goal there is to, you know, think about where the first-generation TL1As are in that, and, you know, the you know, close behind in the IL-23s in that 20-ish percent, maybe low 20% placebo-adjusted response rate or remission rate. So for us, we want to have something that can be – that can exceed that, you know, 5% to 10% to show that there's a way to break through this ceiling with optimized exposure, with a very high-potency molecule, 10-peak of molar affinity, with a very long half-life, 74 days, that lets us go to two, three-month maintenance. So that kind of best-in-class usability profile, if the heightened exposure and potency that we get from our optimized induction regimen, as well as the very durable half-life and maintenance, if that can help us break through that ceiling. So late 27 is going to be really the driver for us understanding – how this molecule could be developed, how attractive it's going to be for Phase III development. And at the same time, a variety of peer companies are doing studies in a range of indications for TL1A that we don't have any need to invest our money in exploring whether it works in rheumatoid arthritis or in NASH or whatever. They're doing the experiment for us. And so we'll be ready with a go-forward Phase III dose well characterized in that time frame, just as the Phase IIIs are reading out for the first gens.

Okay. And the thought process there is that if you see, you know, say one profile in, say, IBD, in terms of the differentiation versus, you know, Roche, AbbVie, others, that would be applicable to other indications.

Well, the efficacy differentiation based on that optimized exposure, certainly it's not been as validated in other indications as it has in IBD. But I think that plus the best-in-class, dosing profile, I think would make it a compelling entrant into, you know, what's really going to be one of the few branded biologic markets remaining, or biologic drug classes remaining in the early 2030s. 23s are going to be out, TNF's already out, integrins are out, so good place to be if we have a best-in-class profile.

Okay. And, you know, I guess what does best-in-class sort of look like to you? Is this the longer half-life, you know, superior target engagement? Less frequent posting.

Yeah, I mean, it's a totality statement based on the market research we've done in understanding how you have, you know, not best in class, but best in market, right? The concept here is 942 could come in well early into the branded period for the entire TL1A class. And the question we had asked when we were doing our market research was, what would it take to have a profile or a target product profile that would be able to convert new scripts when we go to market? in IBD. And, you know, there were a couple things. One, have you maxed out the exposure response, right? And that was what we present at DDW, that with our phase 2B dosing regimen, which is very reasonable in terms of the actual amount of drug being given in both the IV induction and the subcutaneous, single subcutaneous maintenance dose, that we have greater than target, 90% target inhibition and greater than 90% of the patients, which is you know, almost double what we modeled for the first-gen class at their pivotal dose regimens that they're actually using in their pivotal studies. And so we think we have a very clear argument there. And so to Basil's point, let's see where this goes. Can this give us an extra five to ten points on clinical remission at the induction period? We would hope so, right? And that is obviously the first and foremost most compelling thing on an FDA label or an EMA label, right, is what your efficacy looks like. Secondarily to that is obviously clinical convenience. The first-generation class are hamstrung by being stuck at at-best Q4-week maintenance-level dosing. You know, we have real-world evidence, and from Rizankizumab, for example, an IL-23 class, wasn't the first to market on IBD, but it's fully dominating at Q8-week dosing, right? And so I think when you have people believing you have the best efficacy with the best clinical convenience, you will convert and win those new scripts, right? even into one to two to three years in the branded period of a biologic class. So we're very confident that the design of the Zena2C, the Phase 2B study, to answer these questions definitively one way or another, and that's what will win that program additional investment once we see those results. But we shouldn't overlook that 412 program, which is our novel biospecific and the genesis of a potential biospecific platform for autoimmune, inflammatory, and allergic disease? Do you want to take them through that?

Yeah, the challenge in autoimmune disease is these agents are given chronically. They have clear need for simplicity and durability to give these attractive dosing profiles. You know, to recapitulate, not to recapitulate what Dan said, but It's a much harder challenge than an oncology to design by specifics to fit the bill. So when we set out to make our TL1A IL-23, we knew we wanted to maximize the inhibition of both targets because both targets clearly benefit from higher exposure. We've seen this in TL1A for Tuscany 2B. We've seen this in a myriad of studies for IL-23s. More drug is always better. So we wanted to dial up the potency, but we also wanted to have it in a format that that could be readily administered in a convenient, subcutaneous, modest volume shot, right? So that means you have to formulate a lot of it into that tube. So the answer to that was rather than make the fastest thing we could make, which we could have had in the clinic probably nine months ago, we decided to make something that was a very, very high-potency molecule. In order to achieve that potency in a format that avoids a lot of the liabilities of tetrameric or sort of Frankenstein-looking molecules where there's a whole bunch of binding domains slapped on, in order to avoid those stability, half-life, and immunogenicity liabilities, we made something that looks like a regular antibody, and we had to get potency that was sub-pecumolar, so femtomolar potency. You can't do that with a lot of the common tools for making antibody-looking bispecifics, you know, one-plus-one formats by common light chains, or like like Camelid domains or SCFEs, you don't have enough sequence diversity to play with. So we built a new structure and a new format for making native light stability pairings of distinct light and heavy chains on each side of the antibody, but very simply by throwing them into the same manufacturing. We call it a Zenlock technology. That lets us optimize each site independently, use all the best tools you can to get those very hard-to-achieve subpicomolar affinities and get us in a small, simple molecule that inhibitory potency that can be delivered in a simple sub-Q injection. That's a tall order for the not quite as optimized format. So we're very excited about 412. And also how this positions us for all the other programs in autoimmune and allergic diseases that have these same really stringent requirements for efficacy and for patient experience. And so we've got another program preclinically. Now that we've made this modular toolkit, we're going to play the Zencore theme again of make a bunch of modular ones, find the best ones to develop, and then maybe partner the others. So it's very exciting.

XMAP 412 will be in the clinic in the third quarter, and we'll have first in human results in the first half of 27. So that will be another powerful driver of the TL1A pipeline portfolio we have.

Right, right. And I guess just in the last 30 seconds or so, you know, how do you see the platform? You know, you mentioned, you know, sort of the protein engineering piece. How does that – even to sort of the next leg. We didn't even talk about the autoimmune sort of B-cell depletors as well.

Yeah, I'll just say we tried to make molecules bespoke for those applications. Taking B-cell depletors into autoimmune disease means you have to have high tolerability and high safety, right? It means CRS cannot be an impediment. You can't have – I mean, the reason why CAR-Ts are challenged is preconditioning, high CRS, toxicity. You have to have things that are easy to get for rheumatologists. We think we made molecules that thread that potency needle and give you really durable B-cell suppression, using a lot of the tricks of the trade we've learned over the years, making, you know, bispecifics for ourselves and for others.

Yeah. Great. Well, with that, I think we're going to have to leave it there. So, Basil, Dan, thank you so much for the great conversation. Thank you, Alex. Thanks for being here.

Thanks for inviting us.

Thank you.