Good afternoon, ladies and gentlemen, and thank you for standing by and welcome to the Second Quarter 2020 Xencor Conference Call. [Operator Instructions] After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Now I would like to turn the call to your speaker today, Charles Liles, Head of Investor Relations.

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.xencor.com. Today on our call, Bassil Dahiyat, President and Chief Executive Officer, will provide updates regarding COVID-19 and our partnership; Allen Yang, Chief Medical Officer will review recently presented clinical data; John Desjarlais, Chief Scientific Officer, who will provide updates from pre-clinical development; and John Kuch, Chief Financial Officer, will review financial results. And then we will open up the call for your questions. Before we begin, I would like to remind you that during the course of this conference call, Xencor 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 for future operations, the company’s partnering efforts, capital requirements, future product offerings, research and development programs and the impacts of the COVID-19 pandemic on these topics. 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 Factors 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 Bassil.

Thanks, Charles, and good afternoon everyone. Xencor’s approach to creating antibody and cytokines therapeutics is centered around our XmAb protein engineering platform by making small changes to an antibody structure, specifically in its Fc domain, we can improve its natural functions and performance and create new mechanisms of therapeutic action. The plug-and-play nature of our suite of XmAb Fc domains allows us to engineer nearly any antibody to have improved activity longer half-life or bispecific structure. This flexibility and portability enables us to take multiple shots on goal simultaneously in the clinic, generate proof of concept data to guide which programs will independently advance, which will partner and which will terminate. we are focusing our R&D on the expansion and use of our XmAb bispecific platform to create antibodies applying two or more different targets simultaneously and also to engineered cytokines with structures optimized for particular therapeutic use. Now, we are currently running six Phase 1 clinical studies evaluating such XmAb bispecific antibodies. Now before I update on some of our partnerships, we want to provide a brief update on the impact of the COVID-19 pandemic on our operations. The pandemic did not significantly disrupt patient enrollment to Xencor six ongoing clinical trials during the second quarter. However, our steady initiations for plamotamab as we previously disclosed have been delayed as many clinical sites have delayed the trial start-up process. We had modestly slowed enrollment in the CD3 bispecific antibody studies attributable to COVID-19 and no effect on our studies for the three tumor microenvironment activator molecules. Now as is still the case today as it was three months ago. Unfortunately, the situation is very fluid and we will continue to update it as soon as appropriate. Now within the company, we have implemented a number of measures to protect…

Yes. Thanks, Bassil. Yes, Xencor’s XmAb bispecific Fc domains were specifically created to enable the rapid design and simplified development of bispecific antibodies can bind two or more different targets. First-in-class that we have developed or CD3 bispecific antibodies that contain one antitumor binding domain and one CD3 binding domain. Engagement of CD3 on T-cells promotes recruitment and activation of T-cells against the tumor cells. The activating receptor on T-cells doesn’t have to be limited to CD3 though, for example, we are also investigating bispecific antibodies that target CD28, a key co-stimulatory receptor on T-cells. Importantly, we designed these CD28 engagers to activate only when the tumor cells with the goal of avoiding the super agonists that led to the disastrous clinical experience of other companies targeting CD28 nearly 15-years ago. More near-term, however we have developed the mix valency format or XmAb 2+1 bispecific antibody with two domains to find the tumor target and a single domain to find CD3. These antibodies may preferentially kill tumor cells with high target expression and may potentially avoid low expressing normal cells taking advantage of a property called avidity. We believe these properties will be particularly important for many solid tumor targets. We presented pre-clinical data for three internally developed 2+1 bispecific at the second session of the ACR meeting in late June. Pre-clinical model show strong selected tumor killing from 2+1 programs that target PSMA, mesothelin and ENPP3, the last of which is an under explored tumor antigen over expressed on renal cell carcinomas. These targets, although they tend to be strongly expressed on prostate cancer, ovarian cancer and kidney cancer respectively can also have some normal tissue expression, suggesting their good applications for this new format. The ENPP3 program XmAb30819 is the most advanced disease. Pre-clinical data indicate that XmAb30819 by it is preferentially the tumor cells, compared to normal cells and effectively recruit T-cell to kill tumor cells selectively. It demonstrates strong reversal tumor growth and tumor xenograft models and it was well tolerated with expected pharmacodynamics and an antibody like half-life and non-human primates. We are planning to file an IND for XmAb30819 in 2021. Finally, last month we formalized the collaboration with Atreca to research develop and commercialize CD3 engaging bispecific antibodies to novel targets. Atreca’s unique discovery platform confluence our protein engineering capabilities by providing novel tumor selective antibodies and targets to couple with our CD3 bispecific platform. Up to two joint programs will be mutually selected for further development and commercialization, but each partner sharing cost and profits equally. These company will lead one of the joint programs. The agreement also allows for each partner to pursue up two programs independently. This collaboration offers both Xencor and Atreca with several opportunities to advance novel first-in-class CD3 bispecific antibodies for the potential treatment of patients with cancer. With that Allen Yang will review our clinical portfolio. Alan?

Thanks, John. In May, we provided initial dose escalation data from our ongoing Phase 1 study evaluating XmAb2717 in patients with advanced solid tumors. XmAb2717 is a dual-PD1 CTLA-4 checkpoint inhibiting bispecific antibody. we are still in the antibodies affinities for PD1 and CTLA-4 for selective engagement of T-cells expressing both targets, which distinguishes it from combination therapy and most specific - bispecific checkpoint inhibitors. T-cells that have multiple checkpoint expression are typically found more in the tumor microenvironment than in the periphery. All of our tumor microenvironment activators as we call them seek to more effectively reactivate these tumor reactive T-cells than existing therapies. This design is meant to drive improved tolerability at higher doses, compared to the dosing of separate anti-CTLA-4 and anti-PD1 antibodies for example, which has delivered better responses at the cost of tolerability. In our first six dose escalation cohorts, we observed that XmAb2717 to be generally well-tolerated in heavily pre-treated patients. Consistent with our hypothesis of inhibiting both PD1 and CTLA-4, we observed a robust dose-dependent increases in biomarkers of T-cell activation and pharmacodynamic activity consistent with blockade of both receptors. It was also encouraging to observe cases of clinical activity as we moved into the higher dose cohorts, which we detailed in the press release in May. Based on these data we opened expansion cohorts in several tumor types at 10 milligram per kilogram, as well as additional dose escalation cohorts starting at 15 milligrams per kilogram as we did not reach the maximum tolerated dose, expansion cohorts for patients with melanoma and advanced non-small cell lung cancer are fully enrolled. We look forward to sharing continued progress from the 2717 program, as well as our other tumor microenvironment targeting bispecific antibody programs in Phase 1 studies. XmAb23104 targets PD1 and the co-stimulatory…

Thank you, Allen. Xencor continues to maintain a strong financial position, which enables us to support our portfolio of clinical, research stage bispecific antibody and cytokine drug programs. Our diversified portfolio of partnerships and collaborations continued with Novartis with upfront payments, milestones and royalties, important sources of non-dilutive capital. But the FDA approval of MorphoSys Monjuvi last Friday, we will receive a $25 million milestone payment, which were recognized as revenue in the third quarter. As a reminder, we are also eligible to receive royalties on worldwide net sales in the high-single to low double-digit percent range and additional development, regulatory and sales milestone payments. At June 30, 2020, our cash, cash equivalents, marketable and equity securities totaled $587.4 million, compared to $601.3 million at December 31, 2019. The decrease reflects cash used to fund operating activities in the first six months of 2020, offset by upfront payments, milestone payments and royalties from our partnership and licensing arrangements. For the second quarter of 2020, revenues were $13.1 million, compared to $19.5 million for the same period in 2019. These revenues include royalty revenue from Alexion and licensing revenue from Gilead, compared to the same period in 2019, but revenue was primarily reflect research collaboration revenue from the Genentech and Astellas, the milestone revenue from Alexion. For the first six months 2020, revenues were $45.5 million, compared to $131.4 million for the same period in 2019. Our revenues in 2020 include royalty revenue from Alexion, milestone revenue from MorphoSys and licensing revenue from our Gilead and Aimmune immune collaborations, compared to licensing collaboration revenue earned from Genentech and Astellas in 2019. Research and development expenditures for the second quarter of 2020 were $43.5 million, compared to $33.3 million for the same period in 2019. And for the first six months of…

Thank you [Operator Instructions] Our first question is from Ted Tenthoff with Piper Sandler. Please go ahead.

Great, thank you very much. Can you hear me, OK?

Yes, audible.

Awesome. So, congratulations on the [indiscernible] give us a sense of what the royalties are? And whether there are other future milestones beyond the - improve a milestone for other indications and things like that? Thank you so much.

Sure. Thanks and I hope you are staying safe set out with that tropical storm in New York, along with all the other New Yorkers. So the royalties are high-single to low-double digit and their tiered, that is the most detail we are allowed to share at this point, they are worldwide royalty, so you consider worldwide sales regardless of whether the company is selling it is Insight or MorphoSys and of course, Insight as ex-US commercial rights. There are significant milestones for both development in other indications within oncology, as well as non-oncology, though there is no development going on for that at the moment, so there is other oncology development regulatory milestones and there are sales milestones. John, do you want to give a little bit of granularity on the magnitude of those?

Yes, the sales milestones are $50 million and the other development regulatory or anywhere in the $50 million, $75 million range.

Yes, depending on which ones we -.

[Multiple Speakers] the additional indications, yes.

Great. Well, thank you so much and congrats, it is another good example of the model working.

Thank you so much and we are very excited about the Monjuvi approval.

Thank you. Our next question comes from Alethia Young with Cantor Fitzgerald.

Hey, guys. And this is [indiscernible] on for Alethia here. Thanks for taking the call. I guess the first one is on to Tidutamab, I know you are going to present some data earlier this year. So just wondering, can you just talk about what types of data that we might see like in how many patients? And then can you just frame for us what is the general, sort of, response rate seeing with the standard of care? And then, second I wanted to ask about this Atreca collaboration. Can you just talk about what until you guys doing this deal. Thank you.

Sure. So for Tidutamab the data that we are going to present later this year is for the neuroendocrine tumor population that is within the Phase 1, so just that population. Where SSTR2 is a sort of definitive marker. For the type of data, it is going to be our dose escalation data for that trial, which is in advance stage NET that patients and that data would be our course our safety data. So this was a high-risk potential, high return program, because we know that SSTR2 expressed heavily on the tumors in NET are also expressed under neuroendocrine tissues and we believe there are to be a therapeutic window that we could design against and so we are testing of that hypothesis now with the CD3 antibody. So the type of data would be of course safety data, so that is going to be important thing to look at, it is going to be what dose we have gotten up to in this population. And of course any efficacy data and biomarker data that we get out of the patients. And note that the standard-of-care in this tumor type typically has around a 10%-ish response rate, it is a very low response rate, because these tumors don’t generally regress, these usually sort of halted in their tracks and their functionality is reduced. Allen, were there any points that I missed there about this kind of population?

Yes, Tidutamab the dose escalation cohorts and we may have some expansion data at the time of the meeting, but again not that many patients at this point.

Yes, we are talking maybe a couple of dozen.

Yes.

And then now you want to me to switch to the discuss the Atreca collaboration as for why I think it is because we have a platform that lets us create antibodies that are really tuned for a particular target in use, we can dial the potencies up or down, we can make it more selective for high expressing cells and for low expressing cells all depending on the nature of the target. And the key ingredient for that kind of approach is of course really exciting targets and we think finding new targets is an important endeavor, we thought working with one of the best companies out there that can find new target antibody pairs and made a lot of strategic sense. And so that is the rationale, we want to take this toolkit we have built and applied against the broadest range of biologies we can get to and there is technologies out there for finding new targets in antibody pairs against them that we don’t have, right? We have to then find the best out there, were there any technical points on that you wanted to add, John? Or is that adequately describes it.

Yes, I mean, I would just add that, you know, that we really admired the Atreca platform, the idea of taking checkpoint response of patients and mining their B-cell ruptures for new antibody responses that emerged. Presumably, as part of the response to the tumor and then the first thing they do is then check those antibodies, see if they react with other patients’ tumors and putting all that story together just seemed like a perfect fit for what we are trying to do with Xencor, and again a way to access novel targets.

Yes.

Thank you.

Alright. Thank you.

And our next question comes from Jonathan Chang with SVB Leerink. Please go ahead.

Hi guys, thanks for taking my questions. First question, what is your latest thoughts on plamotamab development strategy? And when could we see the next data update from that program?

Well, our latest thoughts are that this molecule we have now, we are seeing very promising activity is a highly active agent in late-line lymphoma DLBCL in particular is the largest population and it generally well tolerated. We have dosing regimen that were nearly done optimizing. And so we have this kind of agent and it is a very competitive space and we think that the central value proposition for this class is going to be how you run the clinicals hub and what other agents you combine it with and we think there is many agents with orthogonal killing mechanisms of the tumor cells that are a great combo approach. Because as we have seen from Rituxan’s history and the real power and breadth of use and movement across all different lines of therapies, because it is been using combination very effectively. And I think the tolerability profile and activity profile we have seen so far for plamotamab support that kind of development effort, of course, with a much higher level of baseline activities and you see with Rituxan. We don’t want to dismiss the potential of monotherapy approaches, in particular, in niche populations to advance more rapidly and that is certainly can be value creating and moving forward. But I think what we don’t want to do is abandon that combination approach, and we should be announcing later this year, the specific trials that we plan to initiate around combinations, as well as monotherapy.

And just when could we see data [Multiple Speakers].

I’m sorry. Yes, sorry two questions. we are not guiding to any data - specific data readouts yet for plamotamab, we are being mindful of potential though they haven’t impacted us much yet COVID impacts, and so we will guide on that a little bit later on what our next date disclosures would be.

Got it. And just second question, could you provide any additional color around the AEs observed with AMG 424? And what could potential next steps for the program be? Thank you.

Right. I think for the moment, we are going to stick to the Amgen public disclosures, they were AEs that were very likely CD38 mediated, certainly CD38 targeting with both marketed drugs like our Tidutamab as well as numerous development programs have shown that there is a - there is pretty characteristic adverse events for targeting CD38 within antibody, I mean, hematologic adverse events as one would expect. So we are not going specifically into the details of the AMG 424 for the most, because we have only recently within the last few weeks gotten all the deeper data and we are still sifting through it. But I think that there is, as we are initially assessing potentially path forward for that molecule and a way to get CD38 targeting with a CD3 killing mechanism advanced. And there is a wide range of tumor types of course hematologic tumor types that express CD38 in addition to myeloma were Amgen has been developing. Okay, and...

I’m going to move on to the next questions Mr. Chang, I hope that answer your question. Our next question is from Mara Goldstein with Mizuho. Please go ahead.

Great. Thanks for taking the question. Just a couple, and the first is on XmAb20717, the PD1 CTLA-4 bispecific. Can you just talk a little bit about what the - you would consider the bar for success for that agent given what we know in the broadly speaking in the checkpoint field right now? And I’m also curious as to XmAb30819 and the perceived advantages of using bispecific as opposed to some of the development we have already seen with that target via AVG?

Sure. For 20717, I would say the bar for success depends on which of the two different indication types or classes that we are pursuing. For example, in our expansion cohorts Dose-E. How is PD1 treated patients in an indication where there is ample PD1 use and approved PD1 agents in those expansion cohorts. And then there is the indications where there is no PD1 approved, and there is not a lot of PD1 use, but there is like participants in particular, why CTLA-4 engagement as well could boost active or different there. I think in the post-PD1 patients, generally speaking, anything close to 20% response rate in patients that have failed PD1 therapy and say a non-small cell lung or in a melanoma would be really great. Allen, do you want to comment on both anything further on the post-PD1, sort of, PD1 improving indications and then maybe comment on the no PD1 approved indications in our [Technical Difficulty].

So I think, as Bassil said, it is a complicated question, Mara, I mean you have to look at the patients and so that data we will have to look at very closely and you have that chance to look at that when we present that data. But if you think about melanoma many patients are just treated with PD1 and some are treated actually with the combination and depending on what their prior response was, your expectation for what the response would be in that refractory population. Remember the Phase 1 is being conducted in the United States. So all the melanoma and non-small cell lung cancer patients have seen checkpoint inhibitors. Now in non-small cell lung cancer, you are probably going to use only a PD1, but it is usually given in combination with chemotherapy. Now for patients where there have been checkpoint activity and our naive you’d expect on higher response rate, but most of the patients in the Phase 1 have seen prior checkpoint either pembro or both nivo, ipi or PD1 CTLA-4 combination. And in terms of percentage it will probably be low in this refractory population as a baseline. But again, there is not a lot of good data and I think rather than looking at the percentage as an absolute you probably want to look at individual patients, see what they have gotten before what their response was how long it lasted and then see what the response was to this particular agent.

And then there was also the discussion around non-PD1 approved indications, Allen.

Yes, so I think that dependent, there are a limited number of non-PD1 indications or there is activity. It seems like there is a lot of clinical activity, but you would expect it to be higher, and depending on the indication you would probably seek to seek responses may be at 30% to 50%.

But of course that is in PD1 - that is an indications where PD1 therapy is known to work - work flow indications where they are not necessarily -.

Yes, that is exactly right, Bassil, it is known to work, but then there is not been treated, because these are US patients, because there is no indication for that amount. In other words, there is a small clinical study that shows activity. But then there is not an approval in that indication yet and those patients are into the study right now.

Okay. And then for CD3 target?

For the 30819, why a CD3 bispecific versus an ADC. I think this goes through this 2+1 design and the advantage I think could have John, if you want to touch on that?

Yes, I mean, so first of all, one of the reasons we like the target was because of the data that was generated with the drug conjugate, although you probably already figured out that they had sort of dose-limiting ocular toxicities that the standard class effect with the conjugate. So we thought that was made the target look pretty good as to why CD3 would be better, there is reasons beyond not having that sort of flash that toxicity. One is that renal cell carcinoma tends to have more T-cells and just about any other solid tumor. So we have got a lot of effect our self to draw from, in terms of meeting the activity. And then second of all, you might imagine, like other people are talking about this as well, is that once you are engaging CD3 T-cells, some of those you are also helping to promote and endogenous T-cell response, right. Because you are expanding T-cells by activating them, you are mobilizing cytokines and chemokines. And so there are additional dividends to be - to engage in T-cells in terms of sort of long-term activity potentially even developing a memory response against the cancer.

Okay and I probably split. If I could just ask a point of clarification on the financial arrangements for Monjuvi. Do you still - payments on those indications that Insight would undertake on its own?

Yes, it is irrelevant who the party is.

Okay, thank you. I really appreciate it.

Thank you, Mara. And stay safe there in New York.

Thank you.

Thank you. Our next question comes from Etzer Darout with Guggenheim Securities. Please go ahead.

Hey, good afternoon, this is [indiscernible] on for Etzer. Thanks for taking our questions. I guess, I have a more specific follow-up to the previous question on plamotamab. So in light of the recent months you have the approval. Have you explored potential for combining Monjuvi with plamotamab or explode, look forward to any potential synergies with anti-CD19 in DLBCL in general? And then the second question, I’m wondering if you could comment on - if there has been sort of any increased conversation or interest in your CD20 program from a deal perspective sort of on the heels of the recent Genmab agreement. Thanks.

Sure. So I will take that, so for the idea of combining plamotamab or CD123 with anti-CD19 antibody like Monjuvi. No, certainly it is an interesting hypothesis, now we are not commenting specifically on any of our combination studies just yet. we are going to need that little bit later in the year. But in general, we believe that you want to have different mechanisms of action for killing tumor cells working together. We don’t really see the need to further boost in this particular context - further boost the T-cell function to kill the B-cells that plamotamab is doing enough of that, in some indications with different CD3 antibody, you might want to have say a PD1 inhibitor to boost T-cell function. Now what’s complementary to a CD20, well CD19 is a different target and you’ve got different killing mechanisms, I would say an ADCC driven antibody like Monjuvi. So it is a reasonable hypothesis. We also think that there is a variety of targeted small molecule agents that could be really interesting hypotheses but, but it is an interesting point you raise. Now regarding CD20, deal conversations we can’t really guide on business development activities, because we believe this activities can ever be predicted perfectly, because there is always another party involved. I will say that the value of a CD20, CD3 as a very important part of what’s going to happen in B-cell lymphoma and potentially as a backbone therapy that would be part of displacing Rituxan after all these years. I think that is widely appreciated is what I will say. And we think that we could certainly build a lot of value in our program, which we are very excited by the data build a lot of value in our program, as we continue to advance it on our own and further flesh out the plans, though that is a program where a partnership might play a complementary role, right. And sometimes you do that to expand the scope or scale the development or find good combination partners, but we have got on that when the time is right, when we actually have a deal to announce.

Great, thanks very much.

Thank you. Our next question comes from Arlinda Lee with Canaccord. Please go ahead.

Hey guys, thanks for taking my questions. Maybe just wanted to follow-up on plamotamab a little bit more, and enter the clinic in 2017. Can you maybe talk about the scope of the data that you plan to present whenever you do provide an update. And then just some house keeping things, I think you also previously mentioned expectations for filing an IND for your IL-2 Fc, can you talk about maybe where that program stands right now? And then as well ideas on your CD123, CD3 14 of our five the additional Phase 1s that you are thinking about. Thanks.

Sure. So maybe the easy one, the short answer first file the IND for IL-2 Fc that is on track, it looks like it is going to be very early in the New Year, so that is moving forward. That is our IL-2 engineered to be selective to activate regulatory T-cells for potential use in autoimmune diseases. So it is not oncology program, but a really exciting molecule design. Fro plamotamab, the sort of scope of data that we would want to have at our next data release would be really the completion of the Phase 1, the establishment of our dosing regimen and schedule for us going forward. And of course whatever efficacy data continues to flow out of that, that Phase 1 would be what we would want to show the world. So, and of course the plans for what we were going to do with it can come before along with that data, there is, sort of, you are always working very hard to get everything pulled together for your next stage of clinical trials as you are wrapping up the ones you are working on. Now for the CD123 additional Phase 1, what you are sort of getting out what ideas, would you have on that is what you are seeing. So I would say there is different slices of AML, and I think in particular, we have to look at how the landscape in AML is changing chasing, I think the biggest change there the emergence of the [indiscernible] has an agent both in front line and this sort of elderly frail population, as an induction therapy and then of course, it is going to start, if you are being used more and more on the relapse setting. And I think it is going to have a label there soon probably. So we want to make sure we are mindful of that and I think that there is different places where a highly active T-cell engaging cells can be used and using that in the context of whether it is consolidation or whether it is in the right relapse setting is where we are looking, somebody again will specify more on that later, when we can, we are in partnership with Novartis, there we have to be mindful of disclosure requirements. Is that answer your question Arlinda?

Thanks very much, yes.

Thank you.

Thank you. Our next question comes from Gregory Renza with RBC Capital Markets. Please go ahead.

Hi. This is [indiscernible] on for Greg. Thank you for taking my questions. My first question is a follow-up to the previous question on AMG424. How should we think about the potential read-through from the discontinuation to the development of AMG509. Thank you.

I don’t think there is any read through as Amgen disclosed the toxicities were very likely CD38 mediated. If you kill CD38 positive cells things happen, their conclusion from the review of the data and we agree from our initial review of all the Phase 1 data is that, that is quite likely what the case was and so CD38 mediated toxicity does not read through to the AMG 509 program, which of course is targeting a prostate cancer antigens. There did not appear to be something fundamental about CD3 targeting in general or our constructs or XmAb bispecifics general at all to be read through from the AMG 424 or AE data.

Great, thank you. Just one more from me if I may, Can you talk about how your strategy for obexelimab has evolved and what your latest thinking is around the future of this program? Thank you.

Right. So, though, we are not investing in for the development internally we have been continuing to analyze the data from our lupus Phase 2 trial, which had a very, very robust and really cutting edge biomarker strategy around it. And we do expect to be disclosing some information around the biomarker work we have done there, which we should be able to talk about in the next couple of months, I believe. And I think that does they are on the strategy for the molecule, though, again, we are still committing to developing it external to Xencor.

Got it. Thank you again for taking my questions.

Thank you.

Thank you. Our next question comes from Tom Shrader with BTIG. Please go ahead.

Good afternoon. I had a question about the timeline of the Atreca deal, I mean, I agree, it is a pretty exciting screen to match with your format. Is this a true discovery deal or is it Atreca’s antibodies that they have already discovered and you are just constructing antibodies. Could we see something pretty quick here or is it sort of back to square one for their screening approach?

I would say, it is really about using the fruits of their screening work that is created antibodies where there is some functionality around them, but of course they are always updating that and adding new. So though as a discovery program, of course, you are not going to have anything into the clinic in a couple of years, but I think this is about exploiting all of the great foundational work they have done, while they continue to add to it. John, do you want to add anything on that?

No that is about right, I mean, they are coming to the table with an existing basket of antibodies. But they are certainly not slowing down their ongoing discovery activities. So there is - the well could be replenished as we go through the collaboration.

And there the benefit we bring is to be able to rapidly make drug candidate quality molecules where you can test how that antibody works and say a CD3 bispecific context and then if it works, you are immediately off to the races and development.

Great. And then I had a quick remedial question on the 2+1 format. Is there any sense of how powerful that is, I mean, I know a regular antibody, a tiny fraction actually goes to the target. Is there a sense of how much better this is? There is anybody’s imaging data, that we could look at it, and I think we have already one example where the format was compared to a conventional format if not right, the Roche, CD20 case, where really all that happened is talks got worse.

Well, I think that molecule still has interesting promise, but remember of course, I don’t know about a direct comparison, but Roche also had a CEA, so colorectal cancer target antigen in that kind of format with a CD3 bispecific. And they saw promising activity and really late line population. So a direct comparison. John, do you want to touch on where the real power is, whether it is in better avidity or better selectivity?

Yes, I mean that is just is to go through the cause, up again the idea is particularly in the solid tumor setting where you are not like and you target B-cells and it turns out that people can live better than we ever thought they could without any B-cells, right. So you can kill not only the malignant B-cells, but the cell of origin as well on the patient is just fine. In the solid tumor setting, that is probably not going to be the case for a lot of these targets, right, because they are expressed on an important organ. And so this is really about just trying to expand the therapeutic index between attacking tumor cells versus attacking normal cells. But, you know, to Bassil’s point about the CEA, the 2+1 and they have sort of led the way on this. We have been working on this concept for a while now, there has been some nice pre-clinical publications out. The Genentech group in the context of Her2 that really pretty nicely layout the concept with a lot of different comparative studies. So we do think there is a lot of promise for this format.

Okay, thank you.

Thanks, Tom.

Thank you. Our next question comes from Peter Lawson with Barclays.

Thanks, Bassil.

Peter? Are you there?

He looks like his line dropped, sir. I’m going to move onto the next question from Dane Leone with Raymond James. Please go ahead.

Right, thanks for the update and taking the questions. I just want to get a sense of the timeline that you might understand on seeing data for 24306?

Right, so Genentech is executing the clinical trial for XmAb24306, which is our IL-15 molecule for oncology. They started the Phase 1 study in Q1 of this year, I think given both where the study is advancing in dose escalation as well as Genentech, we have to agree with them on a data disclosure. So they have the right say when, as well as we do, so we have to both be in sync on that. I think it is unlikely we will have any data this year for sure, I mean, as to whether next year we will have to confirm with Genentech later in the year. So we really can’t give you anything more specific than that unfortunately.

Can you remind us how the economics of the partnership are?

Sure, of course, we signed a deal in February of 2019, it is a 55%-45%, were 45% is Xencor worldwide split of the profit and loss and we had $120 million upfront paid and there is $160 million in clinical stage milestones for the lead program 24306. And so in addition to splitting all development costs and then splitting the P&L 55%-45% Genentech will pay a 100% of all what are called launch cost. So pre-approval commercialization preparation activities. And important non-economic part of that deal, and so in addition to having a very large stake in the ultimate value of the asset, we also have the right to run combination studies with 24306 and both internal Xencor pipeline candidates, as well as candidates or molecules drug molecules of third-parties as long as directly compete with molecules in the collaboration, because combination is where an IL-15 is going to be used, it will boost the T-cells, boost the NK cells for other therapies action.

Okay, makes a ton of sense. Just one more question, maybe a macro question for you. As you have a lot of assets in the portfolio and kind of early stage development. Is there a way to give us a sense of maybe over the next 12-months, how many of those programs you would want to nominate into more later stage Phase 2 testing? Or how you want to approach for later stage development for some of these assets? And just kind of understanding how you internally expect the programs to advance as we head into 2021?

Yes, so over the next 12-months hopefully we will have more data, we can talk about publicly around XmAb20717, the PD-1 CTLA-4 inhibitor across both these or expansion cohorts of both sort of PD-1 experienced solid tumors as well as sort of non-PD-1 approved solid tumor indications. And that should help guide us on more specifics of, do we go in one basket of indications they post PD-1, do we go in the post-PD-1, we would going neither, do we go in both data we will have to drive, so I think we should have more clarity there, how that program is going to have to - is going to be able to proceed. And I think that as we provide the specifics as our plans are really coming together around plamotamab and CD20, CD3 that also significant clarity there for how we are thinking of later stage. I think in that case, we feel very comfortable that the data we have already strongly supports moving forward, at least in DLBCL and as we continue the studies and do more work we hopefully can bring other indications forward in the database. So I think those are the ones I think that will - we should have more clarity, on the others we are going to continue to generate further data.

Okay, great. Thank you very much.

Hey, thank you, Dane.

Thank you. [Operator Instructions] Our next question is from Shanshan Xu with Berenberg. Please go ahead.

Hi, good afternoon and thank you for taking the questions. I have a few here. First, is on the SSTR2 for NET. Just I guess can you overview what the treatment landscape particularly related to Lutathera. And do you think in your program, Lutathera to be competitive or to be approved? And then also on that program, what are the safety signals are you mostly concerning about? And then secondly on the IL-2 program, I know, it is early in the days, but I guess do you guys have an idea what indications you are potentially pursuing? And then are you looking for a partner for this program? Thank you.

Thank you. So I got four questions, let’s make sure we can run through them. For SSTR2 Lutathera, how does that play in the competitive context. we clearly are seeing patients that are non-post Lutathera, even Lutathera is indicated for them. So not everybody gets a radiotherapy, obviously, distribution issues of radioisotopes are clear. The safety signals we will be looking for ones where we know SSTR2 is expressed, that is expressed in gastric tissues, expressed in pancreatic AML cells, expressed some lungs. So we are going to look at all of those. Now for IL-2, we are not ready to guide on indications and we are an oncology focused company, so I think we will be willing to entertain partnerships earlier for the IL-2, but we are prepared to move it forward to get a meaningful inflections even post-biomarker Phase 1 data.

Okay. And then do you also have IL-2 for oncology in the works too or?

No, we do not. IL-15 program, we believe is a better starting point, we believe we have a very attractive hopefully best-in-class product profile for IL-15, which of course engages IL-2 beta gamma receptors downstream, but completely avoids the CD25 binding that you usually have to work to get rid of IL-2, so no.

Okay, great, thank you for the questions. Congrats on the progress.

Thank you.

Thank you. And our last question comes from Peter Lawson with Barclays. Please go ahead.

Hi, Bassil. Thank you, I’m back. Just CD20, CD3, it is crowded, but really exciting. And just how should we think about your positioning there, is it moving to different indications or do you think it is a question is driving up efficacy?

I know, I think it is about combination, so I think from the efficacy data we have and we see with our competitors like Roche and Regeneron, I think we have a pretty good feel for the efficacy falls, but there is class and I think there is a lot of commonality there. And I think it is going to be about working in the right combinations and of course if you see a signal as you explore in your various indications that you get coming into your trial, whereas CD20, CD3 might work, we are all discovering what niches these particular mechanism is actually my best suit or will of course chase that signal very rapidly. So I think there is certainly potential opportunities around indications or slices, whereas we learn things we can maybe get the jump on competitors. But I think the focus right now is how do you best combine and best position yourself both in this relapsed refractory setting and then ultimately to want to move into earlier line. It is going to be about, I think that more than anything.

And what do you think we could have, kind of, a complete picture around that when you are going to roll out the strategy?

Well, we still expect to be able to give lot further guidance on our strategy later this year.

Got you. Thank you. And then just on the CTLA-4 PD-1, when should we see the next data and is that patients stood in CLL?

Sure, so for CTLA-4, PD-1 within the next 12-months we should have at least an initial bolus of data out of our expansion cohorts of course, there is five cohorts, so can’t get all of them done at once, but we should have that initial bolus of data coming out within the next 12-months and all the further question on the CR patient, I will ask, Allen, do we have definitive knowledge about that patients anymore, that they have gone so far out -.

No, the patient has come off it is study for investigator choice and patient decision and so we know that they were in CR at the time of coming off study. But we don’t have additional data from that patient.

Great. Okay, thank you so much. Thanks for the additional color.

Thank you.

Thank you. Ladies and gentlemen, this concludes our Q&A session, I would like to turn the call back to Bassil Dahiyat for his final remarks.

Great, thank you very much, operator, and thank you everybody for joining us today. We hope our friends and colleagues on the East Coast and in New York are keeping safe from the tropical storm and that everybody takes care of themselves in the COVID pandemic. Have a great evening and look forward to updating you in the near future. Bye-bye.

And with that ladies and gentlemen, we thank you for participating in today’s conference. You may now disconnect. Have a wonderful day.