Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter and Year End Xencor Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Charles Liles, Head of Corporate Communications and Investor Relations. Please go ahead, sir.

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 a corporate overview and will review recent partnership news.; Allen Yang, Chief Medical Officer will review updates throughout our clinical portfolio; and John Kuch, Chief Financial Officer will review financial results. And then we'll open up the call for your questions and we’ll be joined by John Desjarlais, Chief Scientific Officer. 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 are 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. First some housekeeping, we have renamed our programs that do not yet have confirmed non-proprietary names. In general, where they were five digits, we have shortened to just the final three digits. For example, XmAb 20717 is now XmAb717. With that, let me pass the call over to Bassil.

Thanks, Charles, and good afternoon, everyone. Xencor's approach to creating antibody and cytokine therapeutics is based on our XmAb protein engineering platform. It’s built on our extensive protein engineering knowledge combined with our suite of XmAb Fc domains which we use to build novel molecular structures, improved natural protein and antibody functions and create new mechanisms of therapeutic action. The plug-and-play portability of our XmAb Fc domains and speed of our protein engineering capabilities enable us to rapidly explore different targets and biologies, so we can select the most promising programs to take forward. We are focusing our R&D on the expansion and use of our XmAb bispecific platform to create antibodies to bind two or more different antigens simultaneously and also to engineer cytokines with structures optimized for particular therapeutic use. We're currently running six Phase I clinical studies evaluating such XmAb bispecific antibodies. This way we are taking multiple simultaneous shots on goal in the clinic and the proof-of-concept data we generate will guide which programs we independently advance, which we partner and which we will terminate. Last quarter, we provided program updates for our sbispecific antibody program targeting CD20 and CD3 including plans for a potentially registrational Phase 2 trial we expect to start later this year. We presented interim Phase 1 data for XmAb717, our PD-1, CTLA-4 bispecific antibody, which showed activity in most full advanced solid tumors including prostate cancer and we announced that we are starting a multi-arm prostate cancer trial this year. We also presented updated data for Vibecotamab, a CD123 x CD3 bispecific antibody in AML where we identified a marker for patients more likely responded therapy, lower baseline leukemic disease burden. Now shifting to preclinical front, we expect to begin the Phase 1 clinical trial early this year for XmAb564, our…

Thanks, Bassil. Today we’ll provide a few brief clinical updates and we’ll be happy to address your questions in the Q&A session. Really leading to late 2019, we have been presenting early-stage clinical data across many of our bispecific antibody programs and the data have guided our decisions to advance several candidates into new studies scheduled for start from 2021. First plamotamab is our CD20 x CD3 bispecific antibody that we are advancing for patients with B-cell malignancies. And preliminary safety and antitumor activity from the Phase 1 dose escalation study in patients with relapsed or refractory non-Hodgkins lymphoma were presented at the ASH 2019. Initial data indicated that plamotamab was generally well-tolerated and demonstrate that encouraging clinical activity as a monotherapy. Across this competitive class of molecule, we have observed similar efficacy and toxicity profiles though some data sets have been smaller or more selective than others. We believe that the differentiation for CD20s will bear up through which combination strategy lets it’s strong, durable, efficacy and maximal tolerability for patients. So, this past November, we entered a clinical collaboration with MorphoSys and Incyte to investigate the chemotherapy free triple combination of plamotamab with tafasitamab and lenalidomide in patients with relapsed or refractory diffused large B-cell lymphoma. Plamotamab’s mechanism of action as a CD20-directed CD3 bispecific redirects T-cells to tumors and tafasitamab is a CD19-directed XmAb antibody that we engineered with our cytotoxic Fc domain and subsequently licensed to MorphoSys in 2010. These two antibodies combined powerful and distinct immune pathways and tafasitamab itself is easy to use, tolerable, and can generate prolonged durable responses. It’s the first agent approved for second-line diffused large B-cell lymphoma and it’s already received NCCN listing. MorphoSys and Incyte will provide tafasitamab for the studies which we will sponsor and fund. We anticipate…

Thanks, Allen. We are always looking to grow this pipeline with new programs and the next entry into the clinic is XmAb564. That’s our IL2 that we engineered to have a bias towards activating regulatory T-cells a promising mechanism to treat autoimmune diseases. It also has reduced potency to improve tolerability and duration of action to this normally toxic cytokine and is used to an XmAb heterodimeric Fc domain that has our Xtend technology for longer half life. Those could be our key elements that are designed for XmAb306 also and that’s our IL15 in oncology. We expect to start dose escalation in healthy volunteers shortly and study in addition to tolerability, changes in levels of regulatory T-cells and other immune cells. Following 564 is XmAb819, which is a bispecific agent against ENPP3 and CD3 and is designed to recruit cytotoxic T-cell against renal cell carcinoma and we expect to file the IND this year. It uses our two plus bispecific format, which has two antigen binding domains to the tumor target providing for more selective binding to the high ENPP3 density expression on tumor cells compared to the lower density on normal cells. The binding selectivity of the two plus one format extends the range of target’s amenable to CD3 bispecifics. For example, our partner AMG509 program in prostate cancer uses this format. Now, onto partnerships, a core part of our business is the complementary internal development portfolio with partners. These partnerships generate payments from the licensing of XmAb technologies, the clinical advancement of XmAb candidates, as well as royalties from sales of approved products. There were no COVID-19 impacts to partnering revenue during the fourth quarter but we’ll continue to monitor potential impacts, of course. Our many partnerships really highlight the plug-and-play nature of the suite of XmAb…

Thank you, Bassil. During 2020, our partnerships, collaborations and licensing arrangements continue to generate strong cash flow, with a $165 million upfront payments, milestone payments and royalties received. This helps offset the growing investment in our portfolio of clinical and early-stage drug candidates. We ended the year with cash, cash equivalents, and marketable securities totaling $604 million, compared to ending 2019 with $601.3 million. Based on current operating plans, we expect to have cash to fund research and development programs and operations into 2024 and estimate we will end 2021 with between $425 million and $475 million in cash and cash equivalents. Total revenues on a GAAP basis for the year ended December 31, 2020 were $122.7 million, compared to $156.7 million for the same period in 2019. Revenues earned in 2020 included royalties and milestones from MorphoSys related to approval of Monjuvi, and Alexion royalties and a sales-based milestone related to Ultomiris sales and several licenses of XmAb technologies and drug candidates, compared to 2019 revenue which is earned primarily from our Genentech and Astellas collaborations. Total research and development expenses in 2020 were $169.8 million for the year, compared to $118.6 million in 2019, and increase that’s primarily attributable to increased spending on Xencor’s bispecific antibody and cytokine candidate technologies. Specifically, on additional studies for our plamotamab and XmAb717 programs and our IL2 program XmAb564. General and administrative expenses were $29.7 million for the year, compared to $24.3 million in 2019 and the increase is primarily attributable to increased staffing, professional expenses, and spending on intellectual property. Non-cash stock-based compensation expense for the year was $31.6 million, compared to $31.9 million in 2019. Net loss for the year was $13.7 million or $0.24 on a fully diluted per share basis compared to net income of $26.9 million or $0.46 on a fully diluted share basis for 2019. The net loss reported for 2020 compared to net income reported for 2019 is primarily due to higher collaboration and licensing revenue reported for 2019 and higher research and development expenses and lower milestone revenue reported in 2020. With that, we’d now like to open up the call for your questions. Operator?

[Operator Instructions] Our first question comes from Ted Tenthoff with Piper Sandler. You may proceed with your question.

Great. Thank you very much and I am really excited about all the progress and everything going on at the company. I just wanted to get a sense of what you might be showing at AACR this year and I know it’s a little bit early to be calling at specific conferences with respect to clinical updates. But do you think that the 717 update might be at ASCO, what do you think you will be showing in there? Thanks.

Hi, Ted. I’ll take that one. This is Bassil. So, for AACR, I mean, we can’t disclose what we are going to be presenting until of course the abstract is published. We always try to use in various oncology conferences to highlight both our preclinical progress as we continue to expand our platforms, as well as clinical programs. We have guided for XmAb717 we’ll have data this year. We’ll get more specific and granular on timing as we get closer and to be clear the kind of information we are going to present should be the mature data from the expansion cohorts that weren’t – that were really quite immature at SITC last November those would be in particular to the prostate cancer cohort which is quite early, as well as the renal cell carcinoma cohort and then round it out to the basket cohort of other indications that are – where there is no PD1 approved. So, it will be that full dataset. We’ll be able to also guide much more specifically on our prostate cancer trial that will be starting this year, as well as other trials.

Okay. Great. Thanks guys. .

Thanks, Ted.

Thank you. Our next question comes from Mara Goldstein with Mizuho. You may proceed with your questions.

Yes. Thanks. So, just on the molecular subtypes in the CRPC study, can you maybe just kind of give us a little bit more granularity as to what that is? And just conceptually, what that looks like in terms of patients demographics and populations? And then, I am just curious about the private company transaction that was in the press release and when you’ll be in a position to disclose some more details on that and how that relates to just sort of strategy from BD perspective?

Maybe I’ll take the second one first. That’s a fairly easy one. Then I’ll let – touch on the molecular subtypes me and Allen, but on the private company, when we can announce more granularity. It’s really up to them. They are currently in stealth mode and working very hard to move the company to next steps. From a BD perspective, we had just a suite of different molecules, we’ve characterized clinically over the years, that use different Fc technologies to try to gain an advantage. And these all happen to be in autoimmune disease. They were all molecules we made a number of years ago that were never part of our plans developed clinically that really makes sense for this particular company to start pursuing. And so we help them get going by licensing on these assets. It’s again about non-core assets, things that aren’t core to our focus, on oncology, on bispecific antibodies and on cytokines that we want to see moving. And we’ve think taking equity in a company where we like the leadership team is a great way to see value from that. So, it’s again, it’s about from a BD strategy standpoint how to use the depth of our technology to non-core assets and create value and hopefully value for patients. Now on the molecular subtypes, without the trial hopefully we’ll be up and running in the coming months, we’ll be able to get into all the great details, but until that is certain we want to be cautious. But I’ll say and maybe lead into Allen that we are going to be talking about the CRPC setting and there is just a variety of places where there is either small molecules or chemos. So, Allen, do you want to comment on what we know about that fields and defer the specifics of our talents where we are certain?

Yes, Bassil. I think first of all, we are very excited about the early 717 data in prostate cancer and without giving details of the trial design that we’ve established, I can’t just talk about prostate cancer in general. So after we saw clinical activity, when you look at prostate cancer in general, it’s really breaking down by molecular subtypes. And remember, this is a Phase 1b. So, it can be given – 717 will either be given as a monotherapy or as a combination therapy. And so, if you think about what the proof of prostate cancer in terms of checkpoint inhibitors, for MSI high, people are using checkpoint inhibitors already as a monotherapy. In other subgroups like homologous recombination deficient prostate cancer PARP inhibitor or PARP inhibitor is now approved. And then there are other forms that are more aggressive that may be treated with chemotherapy more aggressively and there you might want to think about combo with chemotherapy. So, without saying much on the trial design, which we’ll disclose later in the year, that’s sort of how we are thinking about it.

Okay. And if I could just actually ask one question for John and it’s about Ultomiris and the sales-based royalty, rather sales-based milestone payment. Should we think about additional payments for 2021?

We don’t guide on those. We do have $20 million in sales-based milestones remaining on the agreement. But your model is probably better than ours predicting with the sales as you know.

Okay. Thank you.

Thanks, Mara.

Thank you. Our next question comes from Gregory Renza with RBC Capital Markets. You may proceed with your question.

Thank you. Hey, Bassil and team, thank you so much and congrats on all the progress. Bassil, maybe just taking a step back, and certainly a question that we received is, really what Xencor could look like in say three to five years, certainly a great deal going on a lot as you looked to lot of programs advancing, a suite of them actually and understanding the management of risk and opportunities. I am just curious how the current profile of so much going on would sort of translate to opportunities going forward as these programs advance and potentially derisk? Thank you.

Yes. So, the strategy, that’s a really question sense to our strategy. Thanks for asking. The strategy is about trying to find different molecules we can make that have differing scientific and business rich to put into the clinic that have a good hypothesis where they could help patients. And then letting the data guide us and as the data guides us, some programs we will outlicense or terminate for example, we outlicensed our XmAb7195 IgE reducing antibody where it didn’t make sense for us to pursue it anymore. We did that deal with Aimmune that now Nestle. And so, it’s about data driving decisions. We now have data for plamotamab and XmAb717 and it gives us a clarity on the next step of development and we hope to continue letting the data from those programs either drive them forward or resulting maybe on an outlicensing or even a cessationed it all depends on the data and having a rich pipeline behind it. So we don’t feel tied to any one program at the early stages of development. However, as we start moving into mid and later stages, we are starting to potentially registrational trial with Plamo, we’ll see how that goes. But as we start move into those stages, we will commit more and more resources to the programs that pull us and make sure we apply stringent filters to the earlier program and I think our profile will change if all goes well in the clinic to company that is really focused on getting mature assets through approval and ultimately to market by ourselves if all goes well. Always maintaining a rich early clinical base, but being pretty ruthless about calling that. So, I think that the early clinical data we hope our program base will always remain it will just start becoming only a piece of the puzzle as our later stage programs or program even emerge and really solidifies.

That’s great. Thank you so much for the color. I appreciate that.

Thank you. Our next question comes from Alethia Young with Cantor. You may proceed with your question.

Hey guys. Thanks for taking my questions. Congrats on all the progress. Just, I want to take a step back and kind of talk a little bit about the IL15 program. I know there is some others in this phase kind of the promise of that potential target and if you have any update with the Roche collaboration that’d be great. And my second question is just, as it relates to PD-1 CTLA-4 program just kind of wanting to get a broad picture of how enrollment timelines are going in light of some of the COVID volatility that we’ve seen. Thanks.

I am sorry. Which program was that you were asking about timelines?

CTLA-4 PD-1.

Got you. Okay, so for the first one, I’ll comment on our collaboration with Roche and maybe, John you can touch on the design philosophy we use that we hope differentiates us, but the collaboration with Roche is a 55:45 P&L split. We are sharing clinical development cost and hopefully profits. We share a decision making in the clinic and right now, they are executing the Phase 1 escalation study that get advanced from just to a monotherapy escalation to escalation in combo with atezolizumab last quarter. We can’t disclose data until we’ve agreed on a publication plan with Genentech which we are working on but we really can’t say when information would come out. I think we can say that as new studies emerge, or as we engage in different new steps of the existing study, we will of course announce those as it makes sense. But as for data publication plan we can’t. Maybe, John, you want to talk about how we fit in this space.

Yes, so – I mean, the – probably the most molecule that’s been out there, the longest is the ALT-803 that’s an IL-15 Fc infusion. There is also an earlier stage molecule that Pegylated IL15 from Nectar and we also compare results to the Nectar 214, which is a Pegylated IL2 that basically acts like an IL-15 because it acts to the same receptors. And the key distinction with XmAb306 is that we started with an IL15 Fc infusion using our Fc heterodimeric released stable molecule and then based on observations we had in terms of PK with that molecule as well as just understanding the way that these molecules work in terms of their mechanism of action, we kind of did the kind of – thing of actually dramatically reducing the potency of the molecule. So we took the wall type IL15 Fc fusion – took the potency down a couple orders of magnitude, the idea being that these things get cleared through the receptors when they interact with them. And so, what we found pre-clinically is that with that potency reduction, we actually got dramatically better half life for the molecule depot and because of the molecule lasted longer, we actually got better pharmacodynamics. So we got a higher peak of peripheral NK and T-cell expansion in cynomolgus monkeys, as well as a longer duration of that peak. And so, we hope and we think everything pretty well set up for that those kind of properties to translate well into humans.

Great. So, next question, do you want me to take?

Oh, I am sorry. I completely forgot that.

The question about enrollment and COVID on PD. I apologize. Sorry. Go ahead, Allen.

Yes. No problem. So, in terms of the PD-1 CTLA-4 or 717, we haven’t noticed really any sort of decline or delays in our enrollment. First of all, I’d like to thank the teams, all the teams at Xencor. They’ve been working really overdrive during the pandemic and COVID has interrupted hospital supply chains, hospital systems. But the teams quickly adapted to things like remote and virtual monitoring. And so, I think there is two factors here. Cancer is a large unmet need. If you have cancer, despite the pandemic, you need to be treated, we have an active molecule, which is also very important. And so, we noticed that the studies are enrolling well and to our schedule. So we haven’t noticed any delays in that program.

Thanks, Allen.

Thanks.

Thank you. Our next question comes from Jonathan Chang with SVB Leerink. You may proceed with your question.

Hi. Thanks for taking my questions. First question on B7-H3, how does your CD28 approach in program compared to other B7-H3 approaches and programs in development?

Sure. I mean, I can answer this generally, I guess, the hope here is to use B7-H3 a marker that’s expressed on many tumors and is particularly bright in places like prostate as a way to overcome T-cells maybe – or resistant to activation from things like checkpoint therapies or CD3. So, it’s not bringing a cytotoxic payload it’s bringing to stimulatory payload and hopefully that doing some of the targeted way can assure tumor-specific effect and avoid side-effects. I think the attractiveness of CD28 is really about its center out in the immune system and John, maybe you can comment on that.

Yes, so, the way that T-cells are activated are, they need multiple signals. So, signal one, it gets through the T-cell receptor interaction with that may see or artificially through a COVID-19-3 bispecific across the T-cell engager molecule. In this case, we are triggering signal 2. Right, the CD28 is – with signal 2. If you want to expand T-cells in vitro, you couple signal 1 and signal 2 with CD3 and CD2 on beads and expand T-cells. So we are just trying to make that happen in the tumor micro environment, specifically at the tumor cell T-cell interface. And since B7-H3 is brightly expressed at a lot of different tumors, we are trying to promote that interaction and that triggering a signal 2 right at that interface. Now, in contrast along the other programs that are out there, the nice thing about a CD28 bispecific, at least this is our philosophy is that, and we can show this signal 2 all by itself. It doesn’t actually encompass anything. And so, from a safety perspective we believe that broadly targeting – broadly expressed tumor sensitive data like B7-H3 should be safe and then we are going to couple that with either PD-1 Lockheed or a CD3 bispecific to promote the signal 1 that you are getting through the T-cell receptor.

Got it. Thank you. And just a final question, when could we see additional plamotamab clinical data?

We expect to have more plamotamab data later this year and we are wrapping up the dose regimen setting that’s hopefully are complete and we should have it at a – we hope at a medical conference right after that.

Got it. Thank you.

Thank you. Our next question comes from David Nierengarten with Wedbush. You may proceed with your question.

Hey. Just a quick follow-up on that updated clinical data for plamotamab that’s the monotherapy data presented and then, a couple questions on the combo studies with Incyte and MorphoSys. Do you plan on recording on data that here – or who is it under control of? And then, what are you thinking of as a bar for success comparing across clinical studies to the other CD3 CD20 bispecifics that are in development? Thanks.

Yes, so the plamo update will be from monotherapy and for the combination studies with Incyte and MorphoSys, we control the studies and obviously, there is a collaborative element to the data, but we’ve remained committed to presenting data when it’s meaningful and interpretable. We don’t – this is not a partnership, it is likely to hold that data back like a large company, some of our other partnerships that we had. The bar for success in relapsed refractory DLBCL, I think it’s great we have two highly active regimens coming together, the CD20 CD3 and the tafasitamab plus len, maybe Allen you can comment on how ORR and PFS play off of each other here?

Yes. So, let me back up and answer a couple questions. So, how we are going to put the molecules together and we are not going to disclose the study design, but I think the way you think about these is, there is actually three agents here. They have slightly different mechanism of actions. The lenalidomide likely synergizes the CD19. It probably will synergize the CD20, as well. And so, that’s one way to think about it. The other thing to think about is toxicity profiles, CRS mainly for the bispecific T-cell engagers and for the lenalidomide it’s really neuropathy and maybe some milo suppression. And so, could you put them together in a way to sort of minimize toxicity and increase the efficacy and that’s something that we are going to – we have been actively thinking about. And in terms of milestones, I think our sort of reference benchmark, it’s highly dependent on the disease population. Is this is second-line diffused large B-cell lymphoma? Is it third-line or after two other therapies, and then is it monotherapy or single agent. I think that data from monotherapy you are seeing good response rates, how durable they are is not clear and that’s why I think everybody is after sort of their monotherapy data is moving quickly to combinations. And different companies after ASH have declared what their combinations are and I sort of like our combination, because I think it’s really novel and it’s chemo free.

Got it. Thank you.

Thank you. Our next question comes from Arlinda Lee with Canaccord. You may proceed with your question. If your line is on mute, please unmute.

Hi guys. Congrats on the progress. I think I have some questions on some of your other IL combinations whether those are still – do you still think that you are going to have data on those and if you could provide an update on 104 and 841. Thanks.

Yes. So, you are talking about our XmAb104 and XmAb841 programs – the – respectively, PD-1 ICOS bispecific on tumor microenvironment activation in the CTLA-4 BILAG three bispecific. Those are both in dose escalation. They started dose escalation about a year after 717. So, there is a little bit behind. We are expecting to announce data when dose escalations completely have a package. We haven’t guided yet on that. I will point out that it was about two years from the start of the 717 trial to data and we are at about 18 or 19 months from those trials starting. So, without commuting to the specific data, I think we are starting to approach when we’ll be able to guide on new data from those.

Or data period from those.

Yes.

Okay. Great. Thank you.

Thank you. Our next question comes from Tom Shrader with BTIG. You may proceed with your question.

Hi this is Kaveri Pohlman for Tom. Thanks for taking our question. My first question is for CTLA-4. There are other approaches in the clinic that include Fc enhanced molecules. Can you share your thoughts on the role of factor Fc domain for this drug? And with the data expected for Fc active molecules this year, do you plan to develop your own Fc enhanced antibodies?

I’ll say that we don’t have any plans for developing an Fc enhanced anti CTLA-4 antibody. In fact, our molecule, our PD-1 CTLA-4 as well as our other one, our CTLA-4 LAG3 both have Fc receptor binding filings. There is no receptor function drive there and they rely on the co-target, whether it’s PD-1 or LAG 3 to give us selectivity and also to drive further activity by hitting another checkpoint. So, yes, we will be interested to look at other kinds of data that comes out from other programs and go from there, I think we are excited by having a dual checkpoint approach that I think drives down different pathways and trying to use enhanced receptor function for clustering or cytotoxicity. I mean, John, did I miss anything there?

Yes, I would just emphasize that the Fc enhanced approaches are largely built – mostly built off of mouse data, where a significant MOA for anti CTLA-4 through TREG depletion, TREGs are bright for CTLA-4. As the current consensus based on clinical biomarker data for ipilimumab is that it is not actually depleted with TREGs in humans. And so, we prefer the approach on our molecule, and of course, you wouldn’t want to do this with a PD-1 binding arm anyway of having silent effect function and no ability to promote depletion.

Got it. Got it. And just a last one, so, the search for tumor-specific targets is so extensive in the industry, what does MD Anderson brings that novel? Do you think you need deeper biology to get targets? Also, does the deal help you to move the programs to Phase 1 trials?

I’ll answer on the deal structure. And then, John can chime in on why he is excited about working with MD Anderson scientists. On the deal structure, for the discovery partnership, they pay for all of their discovery costs and all of their pre-clinical costs. We have an exclusive option to take rights to the program and we’ve agreed to contribute our technology, our XmAb technology and assist them if necessary making molecules. So, we would imagine the typical kind of deal would be efficient exciting pre-clinical data. We would take it over for clinical development. So I think a natural collaborator for that clinical development that you probably want to consider would be the MD Anderson folks.

Maybe, John on the – why there is so exciting, their data is so exciting.

Yes, I guess, the best way to put it is, I’d love to have relationships like we have at MD Anderson set up with every major research university because there is a lot of different ideas out there. But we prioritize for MD Anderson because it’s one of the top cancer institutes in the country, and so or in the world. And so, it’s a really great place to start. We are hoping to get new – fresh ideas from them. They’ve got a lot of discovery efforts ongoing at MD Anderson and that’s a very – like you said, it’s sort of keyed up for a further clinical relationship downstream. And I’ll also point out, we are definite – eager to find novel targets. We’ve announced our collaboration with Atreca for exactly the same reason.

Great. Thank you and congrats on the progress.

Thank you. Our next question comes from Etzer Darout with Guggenheim Securities. You may proceed with your question.

Great. Thanks for taking my questions and congrats on all the progress in 2020. I guess, the first one maybe a sort of a two plus one strategy question with the programs that move forward. Interesting data so far and it’s said adequately. But guess, where do you see the technology positioned versus other emerging technologies like conditional activation, masking et cetera in that enhancing tumor cell activity? And then a question, second question just wondered, if you could talk a little bit about what’s baked until the end of 2021 cash guidance and can we assume that it’s predominantly maybe a step up in R&D from the breadth of plamotamab activity that are planned for 2021? If you could help with those? Thank you.

Yes, maybe I’ll touch on the second question. Your question on what’s driving the standing in the 2021 cash guidance. It’s going to be increases in development programs not just plamotamab, which as you move to the next stage of trial, absolutely you are seen drive increased spending. It’s also increased spending around XmAb717 as we go into prostate cancer with its own trial and probably start additional studies and other indications, as well as additional spending in our XmAb306 collaboration with Genentech for IL15 as that program progresses. I think those are the primary driver of new R&D program spend and R&D program spend is absolutely the big driver of the cost growth. And on the two plus one, where does this technology positioned relative to these other approaches for sort of getting that more selective antibody activity. I would say, using avidity and that kind of binding property to get – to different target entities is kind of a very well proven phenomenon in antibody engineering. Going back to the days in the designs of herceptin and erbitux and I think these novel approaches, while extremely exciting and I think they have a lot of potential, really have yet to bear out that the selectivity is going to be there in real practice in vivo it’s going to play out. So, we are very excited to watch those. We are certainly open minded. We think that avidity approach not just has the advantages though of selectivity, but there is other ones. I mean, John, do you want to touch on the different tricks you can do with the two plus one format that’s by the way very stable and very straightforward and easy to make?

Yes, not only that, I mean, back to the original question, I would say that, what I like about the avidity tuning approach is I feel like, I can confidently translate from some in vitro assays in terms of binding selectivity as well as killing selectivity, bright versus dim, reagent cell lines. I feel like I get confidence to translate that information into – with other various pieces of information together like IIC data from human tumors and feel like that’s going to translate well. I do think, I’ve always felt like with the other conditional activation approaches, there are little bit more phase based. Hope – there is certainly data after that, yes, there are lot more, certain releases in tumor than in the periphery, but at the end of the day, you are crossing your fingers hoping that that all plays out well in terms of toxicity and therapeutic index.

Got it. Thank you. And thanks again and congrats on all the progress.

Thank you. Our next question comes from Dane Leone with Raymond James. You may proceed with your question.

Hi. Thanks guys. And congratulations on the updates. So, for me, I just want to go back. Can you clarify, is the IL15 program that 55:45 P&L split with Genentech, is that for the U.S. only? Or is that global?

That’s global.

Okay. So, that is global. Okay. Then, on – can you remind us on the Ultomiris and Monjuvi royalties, is that – are you lagged in terms of how those get paid out?

John, do you want to take, I mean, John Kuch?

We record the royalties as they record sales. So, for both of we have to estimate what the sales are to book our royalties unless – post ahead of us, so it’s real easy to pick it up. For purposes of Monjuvi, we have to estimate for the sales are with this case we pick it up off of the Incyte earnings release.

Okay.

Did that answers your question?

Yes. So, basically, it’s real-time. So it’s not on product basis. Okay. I think we are all just trying to figure out kind of where the blended royalty rates are coming and as the sales ramp. Okay. In terms of this year, it kind of bounced around on the subject that for what the updates are going to be. What the – going back to plamotamab for a minute on the monotherapy data, what’s going to be the focus of this update? I mean, I guess, what are you hoping to cheese out within the monotherapy setting at this point from the more mature dataset that’s going to be informative? And are you planning on taking the asset forward as a monotherapy from this study out? Or are you going to be more focused on the combination with Monjuvi?

Yes. So, the data update would be just to really wrap up the Phase 1 dose escalation and give a clear picture of regimen and what you can learn about tolerability and efficacy from these small escalation datasets. But it’s just really wrapped up and finished it and we expect to be fully rolling with our combination study with tafasitamab and lenalidomide and we do think combinations of the focus of the strategy, because that’s where you are going to have the regimens that have the most efficacy and that’s what’s going to win the day in lymphoma ultimately. We are going to continue monotherapy development and we plan to have multiple expansion cohorts in this Phase 1 while we go into combo with tafa Len in DLBCL, we’ll also continue monotherapy DLBCL in expansion cohorts and accrue a number of patients and that can track along in its own bucket and continue the development and the data looks really promising and exciting. We can – you could potentially go from – go with that data and advance to later development or even accrue a lot of patients and that dataset could be, if the data looks amazing registration would start. We’ll also look at other indications like follicular lymphoma and others.

Okay. That makes sense. In the prostate cancer cohort for this CTLA-4 PD-1, what – how large of a group is that? I just can’t remember what the dose expansion group was, in general…

This is separate, 20 patients in the Phase 1 expansion cohort in prostate.

Yes. So, what was the disposition of those patients generally at baseline? For what was like then – where were you generally at currently?

For prostate cancers?

Yes. That would be highly appreciated.

Yes, and – yes, go ahead.

Yes, so, we didn’t select for certain molecular subtypes in the expansion cohort. They were castrate resistant prostate cancer and so, they have to exhaust standard of care and so, most of them have seen chemotherapies. So this was really not a chemo naïve group. And so, they were a difficult group to treat.

Okay. And so, sorry, just to clarify your comments around the landscape in prostate, where do you think like the unmet need is that certain new therapies coming in? PSMA would be one of theme I guess.

Well, they are not in yet. Right, I would say that there is a big unmet need in post-chemo after fail salvage in castration resistant prostate cancer is a big unmet need still.

Okay. So, you are thinking about it broadly not more specifically to a subtype or…

Not unless the data guides us.

Okay. Sorry, I was just, like kind of trying to understand what you are talking about what the subtypes earlier, whether that was something you already have in mind to focus on or whether that was just…

Oh no, it’s multiple ones that we are going to explore to see which signals – if any signals emerge across subtypes if there is a particular one or other that’s great, right. Right now, we are agnostic.

Okay. So basically, you have this mix expansion cohort of 20 patients and then you are going to entirety at that cohort for molecular testing. Does that…

I am sorry. That we were unclear. So we have this expansion cohort of 20 patients, that’s mixed. We are going to report that data. Also, this year, we are going to start a completely new trial just in prostate cancer patients with multiple parallel cohorts of different molecular subtypes. It’s a whole other set of patients.

Okay. All right. Thank you. Forgive me with that one.

No worries, Dane.

I’ll stop from asking you guys. Thanks.

Take care.

Thank you. Our next question comes from Peter Lawson with Barclays. You may proceed with your question.

Hey, thanks for taking the question. So just a kind of a follow-up on Dane’s question just around kind of that molecular subtype you are looking for, is that kind of like PD-1 levels or PSA levels or like bracka scores, HRD scores, you are thinking through and I guess, it is across kind of some indications that is kind of like post-chemo, et cetera.

Well, I think, go ahead, Allen. I mean, I think, again, without having disclose the details which will be coming out soon enough, I suppose.

Yes, maybe the best way to think about this, Peter, and sorry for the confusion. We treated sort of an unselected cohort as an expansion and that was all comers that were castrate resistant prostate cancer and because of that, many of them got chemotherapy, because that’s a standard of care. The challenge is, moving forward, in prostate cancer is that, people are molecularly subtyping the disease and the question we have is like where could be effective and where would – where could we generate the most value for patients and it could be across all arms. So, from a logistics standpoint, you would want to have a clinical trial that anybody with prostate cancer who walk through that door that’s metastatic could qualify for the study. So castrate resistant prostate cancer. So, they come through the door and we would want to have an arm or a basket. Now, some of the baskets like recombinant deficiency, they would normally get a PARP inhibitor. So you want to include those patients somehow and then some other patients like MSI high would just be a monotherapy and then some of the other ones that have biomarkers may have more aggressive disease and you may need a chemotherapy and eventually, you would want to exclude everybody that comes through that door and just have an understanding of the activity of 717 each little basket molecularly. So, we are not really narrowing the indications at this point. We are sort of studying all the indications with the appropriate combination if needed based on the molecular subtype. Sorry, I wasn’t clear before.

No. That’s nothing. Thank you so much. And just a question around, I guess, the equity investment in emerging kind of stealth company, is that kind of a new thing that you are thinking through? And then, just the idea is about potentially selling royalties. I don’t know if you can, it just seems to be an increasing trend in the space.

Yes. So, on the equity piece, we get in these private companies, or even new public companies, we don’t think of them as investments, we think of it as stock in lieu of cash upfront payments for licensing of our technology or licensing of preclinical asset for example in these cases. So, it’s really when an entity wants to conserve its cash and when we think the company has promised and could grow in value in part based or maybe wholly based on the technology we are licensing, we like the equity piece in lieu of upfront payments. So it’s really just changing one element of a deal we are having. We have royalties and all of those in milestones built into those deals also. And it just broadens the pool of people that we can get our technology into the hands of. Now, on the selling of royalties, we are always assessing the options of how to maximize value in the different assets we have within their financial assets like royalties, our real programs and we are not – those are the kinds of things that so many different considerations. We really can’t say anything specific.

Okay. Perfect. Thanks for taking the questions.

Thank you.

Thank you. Our next question comes from Zhiqiang Shu with Berenberg. You may proceed with your question.

Thank you. Good afternoon everyone. Thanks for taking my questions. My first question is on plamotamab. The first-line DLBCL combination study, I know MorphoSys and Incyte is running their own frontline study, I guess, just want to hear your thoughts there, why you want to run your own frontline study? And why do you think potentially that can beat our top in the frontline DLBCL? And then, second question is the 564 program IL2. I guess, I want to hear your thoughts on why do you think your molecule potential is better than any other IL2 for autoimmune diseases out there? And I guess, for this year, do you see a venue for you to present some of the biomarker data or even some of that clinical data this year? Thank you.

So, on the frontline DLBCL, we think that, how these CD20, CD3 agents combine with other agents is really completely unknown now and the opportunity to create a chemotherapy-free regimen as opposed to using R-CHOP, with that opportunity we think is very compelling because of the drive and the interest in removing chemo from lymphoma therapy, toxicity concerns, long-term toxicity concerns. So we think just that strategic driver of having a chemo-free regimen potentially has very high activity is worth that shot to compete with the chemo containing R-CHOP regimen. And why is it better than R-CHOP. I think aside from being chemo-free, we will – we are going to be very interesting to seeing the synergies we have with an immune stimulant like lenalidomide, right. And with what happens with tafasitamab hitting CD19 versus the CD20. Now on – yes, Allen, do you want to add anything or is that sufficient. So I go to the IL2.

No, I guess, the only thing I could add is, I mean, if you look at the data from the tafasitamab, lenalidomide combination, the response rate in relapse refractory was approaching what original R-CHOP study in the frontline. So, there is this possibility that adding a CD20 instead of a CD bispecific instead of a CD20 antibody could sort of potentiate that. And again, it’s very early, but we are excited and it’s something that we were very keen on doing that. Sorry, Bassil. Back to you.

No, no. It’s great. And then, IL2, we believe that the lower the potency you can design into your cytokine and in this case, IL2. The better tolerability you’ll see and the longer duration of action and in particular when you feel so long acting Fc extend the pharmacodynamic effect. That hypothesis we’ve seen proven pre-clinically with both our IL15 and our IL2 and we believe that does create a potential for a best-in-class therapeutic profile on both the tolerability side, as well as the duration of action of boosting your target cells.. That’s the hypothesis. Again, pre-clinically it’s the exact same strategy with our IL15 XmAb306. We hope it plays out here as well. On data this year, we can guide on that and we would plan to what our initial data time is going to be as we start the trial, we’ll give further updates.

Great. Just to clarify for both for IL2 and IL15 programs, the Fc domains is being activated. Is that correct.

It’s got no Fc gamma receptor binding. That’s been completely ablated. And it has long half life from our Xtend technology.

Got it. Okay. Thank you very much.

Thank you.

Thank you. And I am not showing any further questions at this time. I would now like to turn the call back over to Bassil Dahiyat for any further remarks.

Thanks so much, and thank you, everybody for joining us today. Have a wonderful evening and we look forward to updating you more over the course of the year. Bye-bye.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.