Good afternoon, ladies and gentlemen and thank you for standing by and welcome to the Xencor’s First Quarter 2022 Conference Call. [Operator Instructions] Please be advised 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. 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 Kuch, Chief Financial Officer; and John Desjarlais, Chief Scientific Officer, who will join us when we open up the call for your questions after prepared remarks. 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 and quarterly report on Form 10-Q. With that, let me pass the call over to Bassil.

Thanks, Charles and good afternoon everyone. Continuing with the approach we took last quarter, we’re going to make a few brief comments before spending the majority of today’s call on questions. So as I like to usually open with, we’ve used our array of modular approach and engineering tools to create a broad internal development portfolio in oncology and autoimmune diseases, which allows us to take multiple simultaneous shots on goal in the clinic. Our intent remains to use proof-of-concept data from these early-stage studies to guide which programs we advance, which we terminate and which we partner so that we’re most efficiently using our cash and our employees’ time. In a moment, Allen is going to review our advancing clinical programs and upcoming plans. But first, today, we announced our plan to terminate internal development of two Phase 1 programs, XmAb841 and tidutamab, which focuses our resources on those clinical programs of ours with the greatest potential for success and makes room in our portfolio for the next wave of XmAb bispecifics and engineered cytokines. For tidutamab, our SSTR2 x CD3 bispecific antibody and XmAb841, our CTLA-4 x LAG-3 bispecific antibody, after reviewing the data generated to date, we believe that neither program has a competitive enough clinical profile in their respective areas, particularly when compared to the programs we are currently advancing. So we’re going to keep supporting patients currently enrolled in the study, including by continuing to provide study drug. Now a core piece of our strategy is leveraging our plug-and-play XmAb Fc domain through licensing transactions, especially in therapeutic areas outside of our core focus on oncology and autoimmune disease. We wanted to highlight the recent FDA approval for Alexion AstraZeneca’s ULTOMIRIS for adult patients with generalized myasthenia gravis, its third approval in the U.S. ULTOMIRIS, of course, incorporates our Xtend Fc domain for longer half-life. We also bolstered a cash position with over $70 million in royalty revenue this quarter for the COVID antibody sotrovimab, which incorporates the same Xtend Fc domain from our partners, VIR and GSK. Though because of the rapidly shifting COVID variants that keep emerging, we expect this revenue to drop very substantially next quarter and beyond. Now looking at our partnerships for the XmAb bispecific Fc demand in our T-cell engager toolkit, last quarter, we highlighted encouraging early clinical data from Amgen’s AMG 509 program in prostate cancer, which, in addition to being an XmAb bispecific, uses the XmAb 2+1 multi-valent format for T cell engagement. Now within the past quarter, Astellas’ ASP 2138, an XmAb CLDN18.2 by CD3 bispecific antibody, has advanced in the clinical development for patients with gastric gastroesophageal and pancreatic cancers. And we look forward to following this program, too. Now, I am going to turn it over to Allen Yang, our Chief Medical Officer, who is going to briefly review our clinical programs and upcoming plans.

Thanks, Bassil. So starting with our CD3 bispecifics and plamotamab, our CD20 by CD3 bispecific antibody that we are codeveloping with Janssen, we announced that the first patient has been dosed in a potentially registration-enabling Phase 2 study, where it is being evaluated in combination with tafasitamab plus lenalidomide in patients with relapsed or refractory diffuse large B-cell lymphoma. Note, we are conducting this particular study ourselves and our partners, MorphoSys and Insight, are providing tafasitamab. The study has two parts. The first of which is a safety run-in followed by a planned randomization between the triple combination of tafasitamab, lenalidomide with or without plamotamab. Later this year, we plan to present data from the expansion cohorts in the ongoing Phase 1 IV monotherapy study. In addition, we also plan to introduce subcutaneous dosing into this study. Also, for our CD3 platform, soon, we anticipate dosing the first patient in a Phase 1 study evaluating our ENPP3 targeting CD3 bispecific antibody, XmAb-819 in patients with renal cell carcinoma. We’re particularly excited about 819, which utilizes the multivalent XmAb 2+1 format. In preclinical studies, we have shown this format preferentially kills tumor cells with high target antigen expression relative to normal cells, which may be of particular benefit against solid tumors. Moving on to our tumor microenvironment activator bispecifics, our most advanced is vudalimab, which targets PD-1 and CTLA-4 double-positive lymphocytes. We are conducting 2 Phase 2 studies, the first of which is enrolling patients with metastatic castrate-resistant prostate cancer. In this study, vudalimab is being evaluated as a monotherapy or in combination regimen with standard of care, depending on the tumor’s molecular subtype. We’re also initiating a second study in patients with certain gynecological malignancies or clinically defined high-risk metastatic castrate-resistant prostate cancer. And we’re supporting additional signal-seeking investigator-sponsored studies…

Thank you, Allen. Xencor’s broad Fc technologies and the multiple partnerships that we have entered continue to provide us with opportunities to generate cash flows that strengthen our balance sheet and allow us to invest in our pipeline of bispecific antibody and engineered cytokine candidates. In the first quarter, we received $83.7 million of revenue from these partnerships. A breakdown of the proceeds includes $78.7 million in royalties and $5 million in expected milestone payments. We would like to point out that approximately $70 million of the royalty revenue was from our Vir partnership and relates to sales of sotrovimab. And given GSK’s recent comments about anticipated sotrovimab sales for the remainder of 2022, we expect that future royalty revenue on net sales of sotrovimab will be substantially lower than first quarter amounts. As noted, we continue to maintain a strong balance sheet. As of March 31, our cash, cash equivalents, receivables and marketable securities totaled $683.6 million, which is an increase over December 31 amounts of $664.1 million. We currently estimate ending 2022 with between $500 million and $550 million in cash, cash equivalents, receivables and marketable debt securities. Based on our current operating plans, we would expect to have cash to fund R&D programs and operations through the end of 2025. I will refer to you to our press release this afternoon and our SEC filings for a further review of our financial results. With that, we’d now like to open up the call for your questions. Operator?

Thank you. [Operator Instructions] Your first question comes from the line of Jonathan Chang from SVB Securities. Your line is now open.

Hi, guys. Thanks for taking my questions. First question on XmAb104, can you help set investor expectations for the upcoming data at ASCO?

Sure, I’ll start with that. Thanks for the question on 104. It’s going to cover our dose escalation portion of the study, and the study is currently in expansion. So it’s going to go to the dose escalation of that agent where we’re looking to see what kind of safe doses we could achieve. We know that there is been a history of ICOS agents that have had challenges there. And part of the whole goal of our design is by providing selective checkpoint inhibition and co-stimulation we can provide a different kind of profile. And then, of course, whatever efficacy we can offer. It’s in advanced solid tumor patients as is typical in these studies.

Got it. And second question on tidutamab and XmAb841. Are you able to provide any more color on what you saw or didn’t see in those studies that led to the decision to discontinue those programs?

Yes. I’ll open it and then I can let Allen jump in. What we really are trying to do with our strategy that we’ve been executing now for several years is put a number of programs that have promising biology into Phase 1 and uses data to judge which ones could have the characteristics that we could develop and potentially create our own drug with or a partner in a way that we think is very valuable. And so we are always looking at the efficacy versus the competitive landscape, which is always shifting. And so this was done in the context of that and judging whether our resources could be better spent on other of our programs whose competitive profiles are more attractive. So it’s about safety and efficacy in a particular context. I would say – I’ll pass it over to Allen now. But in general, the efficacy bar for both of those settings is fairly high and that tend to be what drove our thinking.

Yes, Jonathan, I’d like to say, predominantly, the things to consider were actually outside the program. So if you look at XmAb841, Opdualag, the BMS LAG3 was approved. It was a pretty involved development program just for relapsed/refractory – or excuse me, for melanoma. And so when you look at XmAb841, comparing it to our internal pipeline, we just thought we would deprioritize it. There are better things to invest in, in our internal pipeline. Likewise, for tidutamab, I think the key thing that changes Amgen has AMG 757 in small cell lung cancer, which is showing good clinical activity and a good safety profile. And then looking at our internal pipeline, again, we just can’t compare what we want to invest in. So I think we decided to terminate that program as well.

I’ll note that there is investigator-initiated studies that we expect for at least one, if not both of those. And we will certainly support those with drug supply and see if patients can benefit and if good experiments can be done. But from an internal investment perspective, it’s really about where we get the most bang for the buck.

Understood. Makes sense. And just last question from me. Can you discuss the rationale for the XmAb306 for daratumumab combination in multiple myeloma?

Sure. Why don’t we let John Desjarlais, our CSO, take that one. He is calling in remote. John, are you there?

Yes, yes. Happy to take that. Yes. Thanks, Jonathan. I think what it comes down to is DARZALEX seems to have a pretty strong NK-mediated activity against myeloma. But there is another wrinkle in it because there is some – a small amount of CD38 on the NK cells that actually takes a hit on the NK cells as well. And so the hypothesis is that with our ability with 306 to massively expand the NK cells, there might be additional synergy there on both fronts, right? Just having more NK cells to do the job, but also being able to replenish any of the NK cells that DARZALEX takes out.

Understood. Thanks for taking the questions.

Thank you.

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

Hi, this is Supawat for Mara Goldstein. I have a question on the cytotype program. Basically, I’m curious to hear your thoughts on the Cis-targeting approach for Cytokine therapeutics. Now you just show the data on LAG3 IL-15 bispecific at AACR. And whether you have enough evidence to say that this approach is potentially safer and more effective could be incorporated into your clinical program in the near future.

I’ll touch on the – how we’re thinking about it from a development pipeline standpoint. It’s in our – what we call our early development considerations. We’re advancing a number of the activities we would need, and we’ve not yet publicly guided on expectations for timing of that being in the clinic. As to the scientific rationale, I think it’s fantastically strong and John can go over that in a second. But really until you’re in the clinic with these brand – completely brand new MOAs, you really don’t know much.

Yes. I’ll add to that, yes, on the Cis-targeting, the basic idea is we started with an IL-15 like XmAb306, which is vastly potency reduced. And then when we format into that arm in to a single-chain IL-15 Fc fusion and then target at LAG3. It’s a little bit further reduced. And so basically, when we use that Cis avidity effect, the LAG-3 targeting on those LAG-3-positive T cells, effectively restricts its activity only to that LAG-3-positive T cell population. And the hypothesis, which is supported by all kinds of literature, including very recent papers from Steve Rosenberg’s lab as that LAG-3 is a very good marker of neoantigen-reactive CD8-positive T cells. And so if we could just selectively zero in on that particular population, that really could potentially open up a very strong therapeutic index for cytokine.

Got it. And if you may just sneak one in on the 306 combinations. Any additional color you could provide on that front in terms of indications or potential combination partners? Any chance that you could – you would explore combination with NK or T cell therapy? Thank you.

So just recall that molecule XmAb306, our engineered potency IL-15 is in a co-development collaboration with Genentech. It’s a 55-45 worldwide split, and both companies have the right to initiate studies. We plan on initiating studies and we’re in the stage of sort of really ramping one up right now to get going. We will disclose details about that later. But I think both T cell and NK cell mechanisms are important to explore in both. We fully expect Genentech to expand beyond what they are already doing with atezolizumab combos and now dara combos, and you’ll hear more from Xencor. As for the cell therapies, of course, that’s an issue where we and Genentech have to have a basic meeting of the minds on what programs were – are going to be advanced by the two companies. And so that’s one where I think we’re going to have to guide on that later on specifics. I think there is a great potential for these exogenous IL-15 and exogenous cytokine approaches with cell therapy scientifically. I just don’t think we can talk about any kind of concrete plans yet.

Got it. Got it. Thank you so much.

Your next question comes from the line of Dane Leone from Raymond James. Your line is now open.

Hi, thank you and congrats on all the progress. Maybe I will use my question and focus on the expected initial data on vudalimab in the back part of the year. So we saw interesting data in mCRPC, I think last year, if I remember certainly correctly. And it seemed like you guys established the premise that for what had been previously tested with, I think, PD-1, CTLA-4 and the similar patient population, you’re achieving similar results, albeit maybe with less toxicity. What are you going to be looking for from this initial data from the Phase 2 study? And then specifically, you can get in terms of like the scale and scope of that dataset? I think it would be helpful to set expectations. Thank you.

Yes. I’ll – before I pass this to Allen, I’ll say, recall we started the study just very late last year. So by data cutoff for second half, and it was last year’s SITC we had the mCRPC data. By that cut off, we should probably have about, I don’t know, 7 or 8 months of accrual. And so it will be on the order of a few handfuls of patients that we can show. And I think really key here is like you alluded to, that safety efficacy balance. Because recall, this study is in combo with chemo and potentially parts based on molecular subtypes, so can we start building on this as a backbone.

Yes. Bassil, not much to add. I’d just say that a lot of our work is sort of based on previous work from pembro and nivo. I think the early data showed that there was a benefit combining PD-1 with CTLA-4, but it’s challenging to do that. And so we’re very encouraged by our early data in our Phase 1, which we reported at SITC, where we have a moderate response rate, even though it was a small number of patients. But moving forward, I think the tolerability allowed us to sort of design a really novel study where we look at different molecular subgroups and then combined with the standard of care, right. So you’ll see that data with a combination of 717 with aggressive chemotherapy or a PARP inhibitor or monotherapy in different subgroups and that will hopefully bridge us to designing a registration-enabling study.

Yes. Being able to go on top of chemo would, I think, be a big edge here relative to the limitations you might have faced otherwise. And so it should be with a few handfuls of patients to get a read – start to get a handle on safety, see if there is any acute issues that arise. And of course, we will show whatever efficacy data we have by that point. So I think it will be a solid but pretty early look. And note, we are committed to prostate cancer. We’re starting our second study, which is monotherapy in a clinically defined high-risk population as well, along with some gynecologic tumors in a different basket in that same Phase 2.

Yes. And just to add a little bit more color on that. Remember, the BMS program when they looked at the check mate, I believe, it was the 650 study in combination of nivo and ipi, the combo was better. But in terms of their registration Phase 3, they are going with nivo plus chemotherapy just docetaxel a single agent without the ipi. So it sort of speaks to the challenges of combining PD-1 with CTLA-4, and that’s what we’re looking at. Maybe we can do it better.

Sorry, can I just clarify one thing with you guys? Are all three arms of the study monotherapy plus PARP plus chemo, are those – for parallel?

No. So we will have – so I’m trying to remember how much we’ve disclosed on clinicaltrials.gov, but we will have a trial in progress poster. And if there is five arms, I think three of them have chemo, one of them has a PARP inhibitor and one of them is monotherapy depending on the arm.

Yes. Depending on the molecular subtype that’s identified, and they are all in arm in parallel. Correct, yes.

So you’re expecting a handful of patients from like each of the different arms of the study?

Well, so one of the arms, which is monotherapy, is the MSI, so the microsatellite instable. So that’s going to be pretty rare. So I don’t know how many patients we will get in there. But some of the ones that are more easier to enroll in, like the biomarker negative group, it sort of – the ones that don’t fit into the other, should enroll a little bit more aggressively. So it depends on the arm and how rare it is.

Okay. Understood. Thank you.

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

Good afternoon, everyone. And thanks for taking my questions. First one, as a follow-up to one of the earlier questions that was asked perhaps. With respect to terminating bispecific checkpoint inhibitors due to uncompetitive or early clinical data, have your internal benchmarks for these kinds of go, no-go decisions remain constant as you’ve brought specific checkpoints through early-stage studies. And by extension, should we expect that the XmAb104 dose escalation dataset coming up could be comparable to the sort of readout we saw from, let’s say, the initial vudalimab data? Thanks.

So have our metrics remained the same? Well, in the sense that we’re always looking at how the competitive landscape is changing, so that concept is constant. But as a competitive landscape gets more difficult and as the bar rises, our bar for data is going to rise. We also look at what indications you might be in and how the drug is going to be used. Recall that XmAb841 CTLA-4 LAG3 bispecific was intended for use in combination with pembro or nivo, intended to use for combination with PD-1. And so you’re always positioning it as a combo agent, and so it has a different set of comparators, right? You’d be comparing that to nivo/ipi to nivo/relatlimab to pembro chemo as opposed to a monotherapy or a PD-1 containing agent like, say, our XmAb104. I would say that we have not had expansion cohorts accrue enough to show data at ASCO for XmAb104. So it’s going to have just the escalation portion. And I recall at our – actually, I take it back. Our first data look at XmAb717 was just escalation with very little expansion. So it’s going to look similar to that, maybe just a smidge less

Got it.

In terms of the number of patients, the doses, and so therefore, how much you’ll be able to glean from it.

Got it. Great, thanks. That makes sense. And maybe just one quick follow-up. So regarding vudalimab in prostate cancer and has a follow-up to another previous question, so it sounds like you will have an early look across multiple cohorts, but the study itself will obviously continue to accrue patients and data beyond the near-term disclosure. Perhaps can you also provide a little bit more color around your thinking on how much patient data do you generally need to accumulate before making potential go/no-go decisions for registrational studies in prostate cancer. Thanks.

For go, no go?

Well, I think it depends on how good the data is and what the subgroup is. So remember, like if you look at what Exelixis did in there, I think it’s the COSMIC-021 study. They had a couple of hundred patients of data, right, but they are looking at it as a big group for their cabo combination with atezo. I think for us, we’re sort of breaking it down into sort of molecular subgroups. So there is aggressive variance, there is a biomarker negative. There is PARP – sort of PARP-responsive and the MSI unstable. So if we go for a subgroup, we could probably use a lot less data. But if we go for a larger study going across all castrate-resistant prostate cancer, we will probably need more data to be confident in defining.

No, we define each of these subgroups based on what we thought the rarity of the tumor was, and the ones that are the aggressive subtypes are 20 patients per arm within this Phase 2 for each subtype. And we think that would be adequate to make a go, no-go.

Got it. Great. Thanks for taking my questions.

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

Great. Thanks for taking my question. So I have another one on XmAb104. I guess, on sort of the early plans here for expansion. If you could speak to any tumor types that look interesting at this point or could potentially be explored? And then I guess, secondly, we’re going to see some data from other PD-1 CTLA-4 agents at ASCO. Maybe how we should think about any molecular differentiation or any potential read-throughs from a mechanistic standpoint that you would be looking to at these datasets? Thank you.

So Etzer, just to be clear, you had one question about XmAb104 tumor types that we might or might not be interested. And the other one about molecular differentiation of our PD-1 CTLA-4 XmAb717 or vudalimab. Is that right?

That’s correct.

Okay, great. On the XmAb104, we really can’t comment on the tumor types until after we show our data at ASCO. And there will be information there that will make it clear what tumor types we’re going after and our expansion cohorts. We will define it.

Yes. The expansion cohorts will be listed in our presentation.

With rationale. So, that’s coming. As to the other one, molecular differentiation for other PD-1 and CTLA-4 at ASCO, our molecule is, I think only one other molecule that we are aware of has a similar design, which is this, is designed to create a molecule that really needs both targets on the T-cell to engage, right. Rather than most of the designs where you have got a bivalent binding to both PD-1 and CTLA-4, you are going to have high activity binding to each, ours are relatively low activity, if you only have a PD-1 positive cell and very little activity with a CTLA-4 positive only cell, but good activity with both. The only other program we are aware of is AstraZeneca’s which just released some initial data, we recall at AACR. So, that molecular differentiation is we think at the root of our potentially differentiated safety profile. And so I think that’s how we view our real competition.

Was the question around 717 or 104?

717.

Okay. Sorry.

That’s how we view our real competition. Because, again, how are you going to combine with potentially really toxic chemo regimens like we are exploring in vudalimab Phase 2. I think that’s the way we are going to be able to use this kind of agent competitively.

Great. Thank you.

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

Hi. This is Xinyu Liu on for Greg. Thank you for taking our questions and congrats on the progress. Maybe first just a follow-up question on 104. Could you just expand a little bit on your earlier mention of that historical challenges of ICOS programs, where you think 104 could potentially show differentiation?

Sure. So, hey, John, did you want to handle that one, or should we go for it here?

Yes, I think I need that question repeated though, I am sorry.

Yes, sure. Just wondering if you could expand a little bit on the historical challenges of ICOS targeting programs where you think 104 could show differentiation?

Oh, yes. Yes. No, that’s basically – I mean, Bassil alluded to this earlier, right. So, this is – we know all the historical challenges of the ICOS programs. And this molecule was kind of magical when we put these two different sites together. This came out of an empirical screen of combining various PD-1 with various other co-stimulatory targets. And then all of our preclinical in vitro assays, the 104 was just strongest in terms of activation of T cells. That included in vitro as well as our vivo mouse studies, where we just saw ranging hot activity on the T-cells. So, I will confess, we don’t completely understand why this thing is different, but it was intriguing enough that we thought it was worth pursuing clinically. So, it’s a different beast than those other ICOS combinations.

Yes. So, it’s a very different beast and that also encouraged us that perhaps the central problem that the other – that the ICOS targeting normal monospecific bivalent antibodies have with toxicity, right. They seem to be pretty toxic, and they were hard to use. The vastly different profile we have with our molecule, for example, it has no effect or function in the Fc, so we wouldn’t expect it to deplete ICOS positive cells. We are hopeful that, that allows us to have a differentiated profile that may be toxicity limited the efficacy because they couldn’t get to enough dose, perhaps of the historical molecules. So, very different design. Hopefully, can overcome that toxicity limitation and see the activity there. That’s what we are – that’s what the rationale was for the program.

Great. Thank you. And then maybe just another one on plamotamab, when should we expect to see some initial data from the triplet study and also on the monotherapy, just wondering if we could hear a little bit about your latest thinking around opportunity there and path forward. And lastly, just on the subcu formulation, how that will be phased into the expansion study? Thanks.

We are not guiding on our first data from the triplet plamo, tafasitamab and lenalidomide study. It just started. We will guide on expectations for first data later note that it is a safety running at two doses, followed by ultimately the randomized phase if we go forward. So, we will have some interim data, but we will guide on timing for that at another point. You want to comment on how we are going to phase in the subcu and what the monotherapy, the rationale for continuing and the expansion is?

Yes. So, a couple of things. So, the first thing about the landscape, we are following that very closely. And I think one of the things is that CAR-T is definitely moving into second line, right. The data is very strong there. And so the landscape is changing. And one of the things I want to point out is that what is considered relapsed/refractory diffuse large B-cell lymphoma has changed. And so what we are noticing in our studies is we are seeing a lot of CAR-T refractory patients coming into our studies, especially in the diffuse large B-cell lymphoma group. But we are still encouraged by our data. So, in terms of subcu, I think everybody suspects that using subcu will sort of change the therapeutic index, offer a better safety profile, allow you to escalate faster and even higher in dose. And so as we introduce subcu later this year, we are going to see how good it is and then make decisions on our current studies, which are currently IV, do we convert them over to subcu. But again, I think we need to see the early data first. But I think everyone is encouraged with that. And in terms of our monotherapy data, we are planning to release additional monotherapy data from our IV study in our Phase 1, that’s in diffuse large B-cell lymphoma and follicular lymphoma. This will be IV. I think that data, again, looks good. It could – the study is designed in which way the data quality is good enough for registration, but would it be worth it since other companies are probably going to file IV sort of single-arm data in the near future.

We don’t think monotherapy ultimately is the long-term play or even, frankly, the medium-term play in CD20, CD3 is trying to get into the B-lymphoma landscape. Monotherapy data simply is, I think not going to compete against the myriad of combinations that are proceeding. Some of which have already shown glimmers of good activity from early studies, whether it’s chemo combos. We are very excited by our chemo-free regimen. So, the monotherapy opportunity as much as anything is continuing the studies is not about thinking that there is a great opportunity there, but more about establishing that baseline of data and bringing forward enough data to make sure we can demonstrate the rationale for our further studies.

Exactly right.

That’s very helpful. Thank you very much.

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

Great. Thanks very much for taking my question. So, two from me. First, on the discontinuation of tidutamab, I guess the SSTR2 risk target in neuroendocrine tumors. Have you shown some activity there, what was the reason for discontinuing in that particular indication. Has it – does it have anything to do with the commercial opportunity or is it really because you learn something about CD T-cell engaged in solid tumors. And second question is a quick one. Can you help us understand the IL-2 program you are developing, with update there? And when should we be able to see the data? Thanks.

So, on the tidutamab stop in neuroendocrine tumors or NET, I think it was as much as anything, not so much the commercial opportunity per se, but rather the very, very long clinical trials you would have to do to achieve them where historically in NETs. And I think tidutamab would face that as well here, either long PFS and OS studies that are long to accrue in very long time endpoints, out past 2 years in many cases. So, we looked at the timeline for how that might go and it didn’t seem like something that made sense. And even in NETs there is a shift in landscape. So, that was really the driver for not wanting to pursue NET. And then Allen mentioned for why the challenge in small cell lung cancer, potentially great opportunity, didn’t make sense anymore based on what we were seeing. Could you repeat your question about our IL-2. I didn’t catch that?

Yes. Just to kind of – can you update us with the status right now? When should we be able to see the data?

Yes. So, the status of the study is we are currently in the Phase 1 single ascending dose study in healthy volunteers. And we expect to have data from that study later this year that is essentially going to be your trifecta of safety tolerability, the biomarker data. You are looking for regulatory T-cells to go up and for T-effectors to not go up really. And how long that lasts, right, the durability of it. That trio of biomarker data, duration and tolerability is going to tell us how – really how we stack up, I think against that same sort of correlated – similar data that was released after SAD studies by some of the competition. And it will also allow us to really be well set up to start our multiple ascending dose trial, which we are currently in preparation for and will also start this year and we will give the details about that later.

Great. And just a quick follow-up on the tidutamab, since you mentioned it’s sort of long trial duration. Are you thinking maybe potentially a license in these two programs as you did for some others you discontinued? Thanks very much.

We are always open to finding ways for molecules we make to potentially benefit patients and accrue value to the company. So, I would say everything is on the table. I am not going to guide to that. I would say it’s not a high priority for us for these two programs to find partnerships where I think we have got other fish to fry, but never say never.

Great. That’s helpful. Thank you.

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

This is Jay on for Peter. Thanks for taking the question. Just to follow-up a little bit more on the discontinuation. For your CTLA-4/LAG-3, is there anything in that Phase 1 data that you had developed so far that pointed to you being more negative on the approach of a CTLA-4/LAG-3, or do you think it was just more based on the molecule you had and would you want to revisit making another CTLA-4/LAG-3? And then just also a little bit on the vudalimab, just in light of the discontinuation, what is it that you are actually looking from that second half data that would point to that you want to go forward? And then further, do you think that this will be a substantial enough update in the second half for you to make that decision?

First on the vudalimab, it’s not going to be enough data for the go/no-go. It’s going to be an initial look at safety and whatever efficacy we can see from that few handfuls of patients across these different molecular subtypes. The tolerability in combination with aggressive chemo is, I think a very important thing to look at. It really shows the potential, but we don’t anticipate efficacy go/no-go at – in this year’s update, will have been less than 1 year into since the study start. Obviously, safety data can give you a go/no-go at any time, whether you like it or not, but we are optimistic that we can provide an update and fully expect to continue to trial after that update. But it will give people a read on what is really the potential for this new way of targeting this pair of receptors. Going back to the CTLA-4/LAG-3, is that the molecule or the target pair is essentially what you asked. I will say, I don’t know if anybody can address that, given that I think there is only one of these that’s ever been in the clinic, and it was ours. I can say that we don’t plan on going back and making another one because, as much as anything, I think the landscape of competition has moved. And it’s very different from what we all expected to be 3 years or 4 years ago because you never know what it’s going to be. So, we would not plan on making a new one, but I don’t think that reads on whether it’s the target pair or the specific molecular design choices we made. I wish I could answer that.

Thank you for taking the question. Congrats on the quarter.

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

Great. And thanks for taking my questions. So, one question on vudalimab, we saw in SITC data that there were some modest level of movement to rash and pruritus, around 31% to 36%. So, could you share with us the physician feedback on the tolerability profile, especially in the context of the combination either in the different prostate cancers.

So, just to make sure we heard your question right, you were commenting that the most common AE we presented at SITC for vudalimab, last year’s SITC was rash at around 30%, and you are wondering how that might work – what might happen with chemo in terms of synergistic talks? Is that what you are asking?

That’s correct. Yes, that’s correct. Would you expect to see a sort of higher tolerability or safety issues when you combine with – with different combinations?

So yes, let me just sort of generally talk about the tolerability of 717, which we are very impressed with. I mean remember, when you give a PD-1 CTLA-4 combination with the two drugs independent like nivo and ipi, a third of patients develop colitis and have to discontinue. So much so that they usually just give the nivo, and then they give the ipi for a short period of time, four courses, I think is the latest thinking right now. So, when we looked at our data from SITC, we had a GI sort of diarrhea rate around 10%, which is very tolerable, much lower. And rash was the most common AE. And for oncology patients, rash is not a huge – it’s not an important toxicity. It’s not going to cause you to discontinue. Now, whether you would expect to see synergy with chemotherapy for that toxicity profile, probably not, I mean it’s still early. But if you think about it, rashes are often treated with low doses of methotrexate, depending on the type of rash, so for autoimmune diseases and so on and so forth – psoriasis. And so that’s the old days. So, I don’t think we will see synergy in terms of toxicity, but we don’t know it’s still early. I think that was your question, right, David?

That’s right. Thanks so much for the answer. And then another question on 104, maybe just help me understand some of your biomarker strategies to identify the responding tumor types for the program?

I think our strategy for identifying the responding tumor types is really about response. It’s about resist response. I think we have to be stringent about that. we have obviously characterized the biomarkers because understanding the mechanism help you glean insights into dose selection, the rationale for maybe if you see some kind of activity or toxicity in certain patients. But no, it’s about the kind of tumor response you see, not really the biomarkers.

Got it. Thanks so much.

Your next question comes from the line of David Nierengarten from Wedbush Securities. Your line is now open.

Thanks for taking the question. Maybe I will just switch to – for a second. Speaking of competitive profiles, it’s a pretty competitive space. What do you think you need to hit with the triple combination in terms of a response rate to consider advancing the program further?

Yes. I think that it’s still really hard to say from most of the studies because I think there is only one study we have seen a significant number reported. It was just top line from the recent AbbVie release where they had about a 60% OR and a 40% CR rate for that, our relapsed/refractory DLBCL population. I think that sort of sets the minimum bar, honestly, for us because it’s a similar population. And so how much you can go from there? We know that tafasitamab and lenalidomide starts with about a 40% CR rate and about a 60% OR.

Yes. And I think there is a couple of things. So, the L-MIND study is probably a good benchmark of what we would expect to see with just tafa and lena itself. And granted the landscape is changing a little bit. But what’s nice is, remember, we will have this run in. So, if we think the study may be underpowered, we can adjust the size or change strategy in the second part of the study.

And maybe a quick follow-up, I mean not to give too many hypotheticals, but is pushing those patients to CR more important to you, or is it kind of generally the overall response rate. That’s more important for you when you assess the prospects?

Yes. It’s a good question. I think that’s more of a qualitative answer. I think CR is always important, right. So, I think you will get responses. But when you look at the competitive landscape, I think the power of the CAR-T has been, that they have been able to push patients into CR that are durable, right. And the question is, can bispecifics do something similar to that, right.

Yes. And that’s why we think the potential for additive or maybe synergistic activity with a CD19 targeting NK-cell recruiting high ADCC antibody is something that just adds another avenue that avoids the toxic chemo that maybe let’s just move that needle, right.

Got it. Thanks.

Thank you. There are no further questions at this time. I would now like to turn the call over back to Bassil Dahiyat.

Thanks very much for joining us today, everybody and we look forward to updating you again in the near future. Bye-bye.

This concludes today’s conference call. You may now disconnect. Thank you.