Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Xencor Fourth Quarter and Full Year 2021 Conference call. At this time, all participants are in a listen-only mode. After the speakers? presentation, there will be a question-and-answer session. Please advise that this call is being recorded at the company's request. Now I would like to turn the call over to your speaker today, Charles Liles, Head of Corporate Communications and Investor Relations. Thank you. Please go ahead.

Thank you, and good afternoon. Earlier today, we issued a press release, which outlines the topics we plan to discuss today. The press release is available at www.xencor.com. With me on the call are Bassil Dahiyat, President and Chief Executive Officer, Allen Yang, Chief Medical Officer, John Desjarlais, Chief Scientific Officer and John Kusch, Chief Financial Officer. After remarks, we'll open up the call for your questions. Before we begin, I would like to remind you that during the course of this conference call, 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, future operations, the company's partnering efforts, capital requirements, future product offerings and research and development programs. These forward-looking statements are not historical facts, but rather are based on our current expectations and beliefs and are based on information currently available to us. The outcome of the events described in these forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to, those factors contained in the Risk Factors section of our most recently filed annual report on Form 10-K. With that, let me pass the call over to Bassil.

Thanks, Charles, and good afternoon, everyone. Today, we released our earnings results and now in a bit of a change from past calls, we'll only make a few brief comments before spending the majority of today's call on questions. We've used our array of modular protein engineering tools to create our internal development portfolio in oncology and autoimmune disease. And we use the breadth of this portfolio to take multiple simultaneous shots on growing the clinic. The proof-of-concept data we generate guides which programs we advance, which we terminate or which we partner. We focused our efforts in 2021 making key portfolio advancement decisions, specifically initiating Phase II studies for vudalimab, our selective PD-1 x CTLA-4 bispecific antibody in prostate cancer and gynecologic tumors based on promising Phase I data. We entered a collaboration with Janssen for the development of plamotamab, our CD20 x CD3 bispecific antibody to add their expertise and resources to the program and enable novel combination trials in a highly competitive therapeutic area. We terminated development of vibecotamab, our CD123 x CD3 due to a challenging clinical profile in a changing treatment landscape. Of course, we're continually applying our engineering tools to build drug candidates to tackle new or hard to address biologies. And several of our early-stage programs are advancing into clinical studies and reporting data this year, led by our reduced potency cytokines in our 2+1 CD3 and CD28 T cell engagers. Our goal is a well-balanced portfolio of late and early-stage programs in development that we can potentially advance to approval and ultimately the market if the data supports that. Now supporting our development work is the growing partnership portfolio, including three marketed products producing royalties for us, such as sotrovimab, the VIR GSK antibody for treating COVID-19. We also have a broad clinical pipeline with our partners, such as the exciting new 2+1 CD3 T cell engager, AMG 509 that we created for prostate cancer with our partner, Amgen, in which they released early but very promising data for this month. Our own XmAb 819 shares the same 2+1 format and we'll start a clinical trial in renal cell carcinoma this year. Now I'll turn to Allen Yang, our Chief Medical Officer, who will review a few recent highlights of our clinical programs and upcoming plans. Allen?

Thanks, Bassil. Today, we'll review two of our wholly owned programs, vudalimab and XmAb564. First, we are wrapping up our Phase I study with vudalimab. At SITC, we reported data from insuring expansion cohorts, primarily metastatic castrate-resistant prostate cancer, renal cell carcinoma and a basket of other potential indications. We observed a consistently tolerable profile, predominantly immune-related adverse events, including rash, pruritus and liver enzyme elevations, but we have observed a low incidence of adverse events like colitis and pneumonitis that have been typical with historical combinations of PD-1 and CTLA-4 antibodies, which supports our hypothesis that vudalimab is selective for binding double-positive cells. And importantly, this could be -- make it easier to use in patients. For a more complete discussion of the results, I would point you to our press release last fall and the posts are available on our website. Though within the analysis, we want to highlight our prostate cancer cohort. Prostate cancer is a heterogeneous disease, and we enrolled mostly late-line patients. Eight patients had [indiscernible] disease that is some kind of metastatic lesion in a visceral organ or lymph node that could be measured by RECIST for response. And four, we were able to evaluate response, and two of these four had durable impressive six and nine-month partial responses, and it has encouraged us to advance vudalimab in prostate cancer. The first Phase II study, which started last fall is in patients with metastatic castrate-resistant prostate cancer who are post-androgen deprivation therapy and post first-line chemo. We are using standard genotyping profiling to find actual risk phenotypes, which would guide us to either a chemotherapy regimen or PARP inhibitor, and vudalimab is dosed on top of that. Patients with no actual mutations will receive vudalimab monotherapy. Later this year, we'll present early initial data…

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

[Operator Instructions]. Your first question comes from the line of Jonathan Chang from SVB Leerink.

Congrats on the productive year. First question on vudalimab. Can you discuss reasons for confidence in the safety profile of the drug and its potential in combination treatment?

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

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

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

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

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

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

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

Your next question comes from the line of Kaveri Pohlman from BTIG.

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

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

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

It's empiric based on the -- what's being treated. So patients with prostate cancer that have homologous recombinant deficient, the PARP inhibitor is sort of the standard of care. And so we want to demonstrate that we can add on to that and see if we can synergize with that therapy. But it's mainly empirically driven. That's all the combinations.

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

Your next question comes from the line of Gregory Renza from RBC Capital Markets.

Hi, this is [indiscernible] on for Greg. Congrats on the progress. Maybe just first question on vudalimab. I was wondering as we expect to see some initial data from that trial this year, how would you characterize the benchmark for each molecular subtype 2b clinically competitive? And what will the go, no-go decision making process look like when you have some data from the trial?

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

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

Great. And then just one more, if I may, on plamotamab. I think Roche Genentech is investigating their CD23 in combo with Polivy. What are your thoughts on that combination approach and potential impact on the positioning opportunity for plamotamab?

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

19.47 Yes, I have to agree Bassil that polatuzumab is an ADC like chemotherapy and the convenience for them is that they own that and can combine them. But I'm actually more excited about some of our potential combination opportunities. I think tafasitamab, lenalidomide and plamotamab scientifically makes more sense. And there's a much better scientific rationale for synergy, right?

Your next question comes from the line of Mara Goldstein from Mizuho. Great.

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

Sure. Allen, do you want to take that?

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

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

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

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

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

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

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

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

Got it. That makes sense. And if I may ask one more, shifting gears a little bit on to XmAb564, the IL-2. I guess what's your thinking around near-term clinical development of this particular asset? And how should we think about the potential patient populations that may benefit most from your T reg targeted approach?

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

Yes. Go ahead. No, I was just elaborating and just scientifically or medically, I guess, what are perhaps some of the indications that T reg expansion might work better or better or worse for inflammatory diseases?

Yes. I mean there's a number of autoimmune diseases. There's -- the literature is right with publications showing imbalance of T reg versus effector T cells and various autoimmune diseases, including diseases like lupus, but also a number of more niche indications, as Bassil mentioned. So -- but ultimately, I mean, it's -- T regs are a pretty important way of achieving homeostatic immune balance, and it could be incredibly widely employed if it's actually effective.

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

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

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

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

I was thinking about your -- the Amgen data early this month. And I guess I had a couple of follow-ups. Can you remind me what happened with -- I think Amgen also had rights to your CD38 is that returned? Is that moving forward? And then maybe secondarily, can you talk about how many other targets they can be going after? And then -- and how that progress is moving along? And then thirdly, can you talk about other 2:1 formatted things that you might have in the works?

Sure, I'll take that first set on the Amgen collaboration part quickly. They don't have any more targets they can choose out of the collaboration. The time frame to choose targets ended a couple of years ago. The CD38 program that was returned to us is now in an investigator-sponsored trial that we're collaborating with in hematologic malignancies, and we're -- that one is moving along, but they have no other target rights, and there aren't going to be any more programs from that collaboration. They have, at this point, just the steep 1 AMG 509 program. Now for the other 2+1's, maybe I'll let John start talking about that.

Yes. I mean we -- I think we've publicly -- we've even had posters on multiple of our other 2+1's that we've created. So claudin-6, CD3, that's a 2+1. Of course, we have our 819 program, the ENPP3 by CD3. And, I think maybe glypican 3, CD3 that we publicly disclosed. So we were -- of course, Arlinda, we're working to generate a whole pipeline, but there's a few of them that have been disclosed and you kind of get the sense of where we're going with that. And recall, we also have our Atreca collaboration. We're working closely with them to see what comes out of that in terms of new targets.

Yes. So I think for us, we see that that initial bit of validation from the AMG 509 program for this 2+1 format in particular, its ability to really attach strongly to a tumor antigen and a Ford CD3 activation in a way that is tolerable and at least in this instance, in solid tumors really gives us a lot of confidence to really double down on solid tumor targets for CD3s and using the selectivity we can potentially achieve here as the backbone. So we're excited to start 819 in the clinic imminently in renal cell carcinoma.

Your next question comes from the line of Peter Lawson from Barclays.

Just I guess another question on vudalimab. The second half readout, I appreciate all the detail around kind of safety and early in the response cycle. As we think about responses, should we be thinking about PSA 50 reductions? Or is it -- do you think we can potentially see shrinkage of tumors? And then kind of how difficult are these patients to treat? Is it kind of like bony disease that we should be thinking about?

Do you want to take that?

Yes, sure.

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

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

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

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

Nothing that -- Possibly the only one I can think of would be possible sales milestone from Alexion. Sales ramps up, we do have a $20 million sales milestone, which we expect possibly 2022, if not 2022, 2023. The rest of them are all development. Obviously, we're excited if Amgen advance this program, but we don't have any time line as to their next steps.

Got you. But none of those are in the guidance, we shouldn't be thinking about any of that in the guidance?

I'm sorry, what was that?

Are any of those in your kind of cash year-end guidance?

Yes, the Alexion would be. Alexion would be, but like I said, the Amgen, we have to just -- we don't have any more information than what they've disclosed publicly.

Got you. And then just finally, on the B7-H3, what tumor types are you hoping to enroll in that study?

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

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

So I have a question for vudalimab. So Phase II data is expected in the second half of this year. So besides the genetic subsides, can you also share with us any biomarker strategies that you're exploring to further identify particular biomarkers that will support the benefits of vudalimab combinations in mCRPC. And then could you also just comment on the cadence of data release? Would you expect to report the data at a medical meeting? Or would it be a press release?

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

Your next question comes from the line of Etzer Darout from BMO Capital Markets.

Great. Congrats on the progress here. The first one is really more a point of clarification for me. The plamotamab combos with Monjuvi and lenalidomide would that be with the sub q or the IV formulation as you sort of open up these sites here? And then a second unrelated question, back to sort of guidance, just was wondering whether or not you expect any meaningful step-up in R&D spend associated with plamotamab combo with Monjuvi specifically? Or just kind of a regular way as you kind of advance these multiple programs into the clinic?

So maybe, Allen, do you want to take the --

Yes, I'll take the first one. So it will be IV, not the sub q form.

Got it.

On the spending, do you want to take that one, John?

Yes. As far as the spending we have in the next two to three years anticipates these trials basically early look into the potential, but we do not have large multinational 200-patient type trials budgeted at this time. So it does include the cost for the initial run-in for these, but we've not, at this time, budgeted larger trials.

Your next question comes from the line of Zhiqiang Shu from Berenberg.

Great. I want to ask about the new program you're going to put in the clinic 19. I guess what gives you the confidence of this program in RCC. Any valid targets that you want to highlight here? And I guess broadly for this program to succeed in the indication, any thoughts around combination approaches later on? That's the first question.

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

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

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

Great. That's helpful. Maybe the third question for me, is asked to ether Bassil or John, in terms of capital allocation. Now you have $600 million in the bank, it's very comfortable in today's market. I guess how would you think about spending the money? Obviously, you have a lot of programs, a lot of 2+1 format disengages in preclinical stage, but also you do have [indiscernible] assets like vudalimab. How would you think about either to push the [indiscernible] to the finish line or kind of pushing more preclinical assets into the clinic? I appreciate any color there.

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

Your next question comes from the line of [indiscernible] from Raymond James.

This is Colin on for Dan. Congrats on the pipeline progress so far. On 306, can you kind of guide when we could see kind of a comprehensive data from the Phase I trial, maybe a presentation or publication? And on the combo trials for 306, you mentioned that you're interested in NK cells and T cell mediated. But kind of curious if you can squeeze any additional color, what color is left there on any potential guidance on the combo trials? And then lastly, on 564, what are you looking for in the Phase I healthy volunteer trial that could kind of shape the MAD trial initiating?

Yes. So first, on the 306, it's really -- has to be an agreement between Genentech and us when we present. I think a natural point would be when the Phase 1 is done and we go to a medical conference. Though the Phase I we are hopeful is wrapping up soon, I can't imagine we?d have a publication-ready given Genentech time frames for that thing this year. So I'm hopeful for next year, but I can't even guide on that, we'll give you guidance on when. But it will be when the Phase I wrapped up, and that's going to be a discussion with Genentech. On the combo trials, I really can't offer any more color until we announce them, unfortunately. I do think that the NK cell boosts we saw were remarkable, were notable for their magnitude, their durability, the kind of control that, that suggests we can have by varying dose and varying schedule. So that's that there. For 564 on the SAD, what can we get out of that healthy volunteers in this IL-2 T reg space to guide the MAD. Well, I think the key there is the durability of our T reg expansion and how that helps us select the dosing frequency in the MAD, right? Longer is better. And I know that our competitors seem to be settling in on every other week, and we're going to be looking hard at how well we do in frequency. I mean that's the biggest impact on the MID.

Your next question comes from the line of Mike King from H.C. Wainwright.

Just a financial question at first. I just wanted to see if you guys would be willing to give more color on the spend out to 2025, what the drivers of the burn, I don't know if you?d be willing to talk about the different components of spend on particular programs?

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

Okay. Sorry. I wanted to also explore 564 a little bit more. Can you just talk about the -- have you compared the Moller activity against a native IL-2? Because we've talked a lot about your competitors. And Nektar has basically been dosing at similar levels to what the tolerable levels of native IL-2 are at. So is there any difference between 564 and native IL-2 or the Nektar 358 program?

In fact. So as we learned with our XMAT 306 program, the IL-15, this class of cytokines, IL-2 and IL-15 and to a large extent, most of the cytokines, when they signal, they get internalized. And so there's an inverse relationship between their potency and their exposure. And so we found out that basically the way to make -- turn these cytokines into really good drugs is to actually reduce their potency dramatically. So 564 is posed or reduced by about at least 100 fold compared to native IL-2. However, it actually lasts at least a hundredfold longer in terms of exposure. So you've got it sitting around a lot longer. It makes it a more tolerable drug. And it can do its job longer than the native can.

Okay. And I know we recently launched on you guys, but you have a tremendous amount of scientific data to process. So remind me if there -- well, two questions I would have. I guess, one is the selectivity for the alpha receptor on the T reg versus the T effector cell, number one. And number two, I don't believe there's any modifications that would keep it away from endothelial cells in the periphery, but I guess your response to that would be your D2 so you shouldn't have the same kind of -- not cytokine release syndrome, but you wouldn't have the -- Yes, in the periphery. But could you just go into that in a little bit more detail?

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

There are no further questions at this time. I'll turn the call back to Bassil Dahiyat.

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

This concludes today's conference call. Thank you for participating. You may now disconnect.