Xencor Inc Q4 FY2022 Earnings Call

Good afternoon, thank you for standing by, and welcome to the Xencor's Fourth Quarter and Year-End 2022 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 be advised that this call is being recorded at the company's request. Now, I'd like to turn the call to your speaker today, Charles Liles, Head of Corporate Communications and Investor Relations. Sir, 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 Kuch, Chief Financial Officer. After we make a few comments, we will then open up the call to 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 is 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, I'll pass the call over to Bassil.

Thanks, Charles, and good afternoon, everyone. We've used our array of modular approach and engineering tools to create our internal development portfolio in oncology and autoimmune disease. We use the breadth of this portfolio to take multiple simultaneous shots on goal in the clinic. Our intent is to use proof-of-concept data from our early-stage studies to guide which programs we advance, which we terminate, and which we partner, so that we can use our resources on programs with the greatest potential for success and make room in our portfolio for the next wave of XmAb bispecifics and engineered cytokines. In addition, we use revenues from our partnership portfolio to support our development. There's a few pipeline highlights from 2022. For vudalimab, we continued our Phase 2 study in metastatic castration-resistant prostate cancer, in combination with standard chemotherapy or PARP inhibitor, and we initiated a monotherapy Phase 2 in mCRPC and in gynecologic tumors, which are just some of the tumor types for PD-1 and CTLA-4 bispecifics have potential. In November, we reported encouraging single ascending dose data for XmAb564, a regulatory T cell targeted IL-2 for autoimmune disease, particularly the strong durability of T-reg expansion. Consequently, we've started the multiple ascending dose study in atopic dermatitis and psoriasis patients to explore extended dosing regimens. We hope to have the psoriasis arms of the study finished by early 2024. We've also started Phase 1 studies for two novel T-cell engaging bispecifics. The first is XmAb819, which targets CD3 and ENPP3, an antigen in renal cell carcinoma that was built with our 2+1 format for improved tumor selectivity. We believe 819 offers a new mechanism against barely explored targets with high unmet need in second and later line RCC. The second T-cell engager to start clinical studies is XmAb808, our first CD28 targeting bispecific. It co-stimulates T-cells while binding to the tumor target B7-H3, a widely expressed solid tumor antigen. Exciting early data for the CD28 bispecific has increased our already high enthusiasm to develop this new class of immunotherapies. We're continually building the next wave of drug candidates with our engineering tools to tackle newer hard-to-address biology. Two such programs are advancing this year led by the expected Phase 1 initiation for our third reduced potency cytokine, XmAb662, an engineered IL-12 followed by IND filing for XmAb541, a 2+1 CD3 bispecific targeting Claudin-6 for ovarian cancer. We have a well-balanced portfolio of late and early-stage programs in development that we can potentially advance to approval and ultimately, to the market if the data supports it. Our development pipeline gets strong support from our broad line portfolio, not just from the revenues it generates, but also from the resources of our co-development partners. Lastly, we are in the midst of completing our laboratory and office relocation to Pasadena, where our new facility can accommodate our expanded R&D efforts and help keep us at the cutting edge of protein engineering. With that, I'll turn the call over to Allen Yang, our Chief Medical Officer, who will review recent updates from a few of our ongoing clinical studies for wholly-owned programs.

Thanks, Bassil. Vudalimab is our most advanced dual checkpoint inhibitor. We've designed the class of bispecifics to bind T-cells that express both targets, in this case, PD-1 and CTLA-4, with the intent to limit the exposure of the molecule, control and improve tolerability, and yet still activate the cells that are the most effective against tumors. Two ongoing Phase 2 studies are looking for clinical signals that would prompt us to invest in registrational studies. At the SITC meeting in November, we reported the first data coming from our first Phase 2 study in combination with chemotherapy in patients with late-line metastatic castration-resistant prostate cancer, a population with very high unmet needs. Given the changing treatment landscape in prostate cancer, we designed the study to address several groups of prostate cancer patients, including aggressive variant, PARP actionable, PARP inhibitor relapsed and microsatellite unstable groups, and a biomarker-negative group. Each arm is designed to use vudalimab in combination with a standard therapy if warranted. For chemotherapy-eligible subjects, we originally designed the study to use a taxane-platinum doublet, based on previous reported studies that showed a high response rate in order to maximize potential efficacy. In the first patients, we have seen multiple PSA 50 drops in three of eight patients, and one of these eight patients had a durable partial response. We also saw toxicity related to the intensive chemotherapy combination, but without a consistent type of adverse event among all patients. We modified the chemotherapy dosing regimens while keeping vudalimab dosing as planned, and we are re-enrolling into the chemotherapy combination cohorts of the study. The second Phase 2 study is evaluating vudalimab monotherapy in additional high-risk populations of prostate cancer as we continue searching for defined subpopulations that we could advance quickly towards registration. This study is also enrolling patients with gynecological tumors, where we have also seen good activity. Lastly, this study introduces a flat dosing for a more convenient schedule. As we continue to enroll these patients, we see a lot of potential in the program, as emerging data across the class provides us signs for broad utility across additional solid tumor types. Secondly, XmAb808 represents a new class of bispecific antibody targeting the CD28 pathway, and Xencor is among the first companies to enter the clinic with a molecule in this space. Clinical data beginning to emerge have shown dramatically enhanced activity of a checkpoint inhibitor in prostate cancer, while previously, checkpoint inhibitors have had limited activity. We see that the targeted CD28 bispecific, in this case, PSMA, markedly increased the activity of a checkpoint inhibitor and serves as an important validation for the class. We find the data encouraging enough to accelerate our own progress in targeting B7-H3, an antigen heavily expressed in multiple tumor types, including prostate cancer, renal cancer, lung cancer, and many others. As B7-H3 is also expressed at low levels in some healthy tissues, we've incorporated our 2+1 bispecific technology into XmAb808 to potentially increase the therapeutic window, and we're moving with XmAb808 rapidly. The first patient in our Phase 1 dose escalation study was dosed last year, and following initial doses of XmAb808, we add pembrolizumab as combination therapy. We believe we are well-positioned in the CD28 bispecific space, especially as there becomes increasing recognition that this class holds tremendous opportunities. We hope to share more in the coming months. With that, I'll now hand over the call to John Desjarlais, our Chief Scientific Officer, to review two programs we plan to bring forward in clinical development this year: our IL-12 cytokine XmAb662 and Claudin-6 x CD3 bispecific XmAb541.

Thanks, Allen. The key to all of our cytokine programs, including XmAb662, is that we reduced the potency, dialing down the receptor binding affinity to smooth out the activity profile observed in wild-type cytokines, which are natively very high and, when administered systemically, can generate a lot of immune toxicities and get cleared quickly. Now, IL-12 is a different kind of cytokine compared to IL-15 and IL-2. Instead of expanding T-cells and NK cells, IL-12 promotes high levels of interferon-gamma secretion, which increases the cytotoxicity of T-cells and NK cells and makes tumor antigens more visible to the immune system. XmAb662 is a reduced potency IL-12 engineered with the XmAb bispecific Fc domain enhanced with our Xtend technology to extend the duration of action. In preclinical testing, this reduced potency Fc fusion compared to native IL-12 Fc fusion demonstrated an improved pharmacokinetic profile, with better exposure, a more gradual dose response, and a more sustained interferon-gamma response. Our IND application was recently submitted and allowed by the FDA, and we look forward to initiating a Phase 1 study in patients with advanced solid tumors. Lastly, XmAb541 is a CLDN6 by CD3 bispecific antibody built with our XmAb 2+1 format for improved tumor selectivity. We are developing the molecule for patients with ovarian cancer and are wrapping up IND enabling studies; we plan to submit an IND later this year. A quick refresher on the XmAb 2+1 format: we build a bispecific or multi-specific using two tumor binding arms and one T-Cell binding arm. This is the approach we used to address the frequent observation that tumor targets are also expressed in normal tissue. The therapy is intended to address solid tumors and off-target effects that can lead to high toxicity. But having two antigen binding domains allows us to maintain affinity for tumor antigens while favoring the molecules towards cells that express higher levels of the antigen as opposed to normal cells that show lower antigen expression, where it's harder to target. We believe XmAb 2+1 could be generally applicable to bispecific antibodies against solid tumor targets and hope to unlock opportunities for bringing more CD3 cytotoxic and CD28 co-stimulators into development. With that, I'd like to hand the call over to John Kuch, our CFO, to review our financial results. John?

Thank you, John. Xencor's broad portfolio of partnerships, collaborations, and licenses continues to generate strong cash flow to support our operations. In 2022, we received $198.7 million in royalties and milestone payments, which helped fund our investments in our portfolio of bispecific and cytokine drug candidates. Total proceeds received in 2022 offset a substantial amount of our operating expenses, and we ended 2022 with cash, cash equivalents, receivables and marketable debt securities of $613.5 million compared to $664.1 million at the end of 2021. Based on current operating plans, we expect to have enough cash to fund our research and development programs and operations through the end of 2025. We currently estimate we will end 2023 with between $425 million and $475 million in cash, cash equivalents, receivables, and marketable debt securities. I refer you to our press release this afternoon and our 2022 Form 10-K filing for further information about our recent financial results. With that, we'd now like to open the call for questions. Operator?

Thank you. Our first question will come from Mara Goldstein of Mizuho. Your line is open.

Great, thanks for taking the question. I wanted to ask a question on 564 and the program there. I'm trying to understand the benchmarks for success in atopic dermatitis and psoriasis for advancing that product forward.

Yes, thanks, Mara. Right now, we have two goals for this Phase 1b multiple ascending dose study. First and foremost is to establish a dosing regimen that we can move forward with, meaning one that's safe and one that gives us good coverage of the target, or rather good biomarker movement of the T-regs for the duration of our dosing interval. That's step one. I think those two indications are great for that, because, looking at the skin, you can easily see how the disease readouts are doing in parallel with your biomarkers. The second goal addresses your question about the benchmarks for success. In both indications, they're generally high. The benchmarks we'll key off of are how durable the effect is and how long of an effect we can achieve with the agent. Does it offer new biology by targeting T-regs that can extend response timing beyond the dosing duration seen with some competitor programs? We're looking to see if we can build a best-in-class dosing interval extending beyond every two weeks that many competing programs have settled into. I think those are the questions we want to address with this early study. After that, there are good benchmarks for CACC and EASI scores.

Okay. If I can just ask about vudalimab, the discussion around reengaging the trial now that you've finished modifying the protocol, can you talk a little bit about just the enrollment characteristics for that program?

How well it's rolling?

Yes, and what those dynamics have been? Yes - what those dynamics look like going forward? Do you think you'll go back to sort of baseline where you were?

I don't know. Allen, do you want to comment on that?

Yes. Just to clarify, Mara, we have two Phase 2s: a monotherapy Phase 2 that explores a new flat dosing and schedule, and that we have clinically defined an aggressive type of prostate cancer. The first Phase 2 actually molecularly defines different subgroups of prostate cancer. This data is available, but we have an aggressive variant subtype, a PARP actionable subtype, and a PARP inhibitor relapsed refractory group, and a microsatellite unstable group. What you're asking is how the enrollment is going. We've had to pause the chemotherapy groups, which includes three of the groups, but the other groups continue to enroll. Now we've opened up the other arms with chemotherapy, and we've modified the chemotherapy for two of those groups.

Thank you. One moment please for our next question. Our next question will come from Edward Tenthoff of Piper Sandler. Your line is open.

Great, thank you very much. I appreciate you taking the questions. I wanted to get a sense of how the profile of CD28 is differing from CD3. How do you see prioritizing one mechanism versus the other, if they make more sense?

There are multiple facets to that. John, why don't you take the point about refreshing on the differential biology of CD28 and CD3, and what we can do with that? Maybe I'll jump in on the second one.

Yes, thanks for the question, Ted. The way we think about CD3s versus CD28 is with CD3, it's basically more of an artificial immunity, where you're just taking advantage of any T-cell around to engage it through CD3 and recruit it to attack the tumor cells. With CD28, we're providing signal two that builds off an endogenous signal one, which comes from the neoantigen and T-cell recognition by the T-cells. Of course, when you're applying the CD28, to fully open up that signal one, you're generally going to combine it with PD-1 checkpoint blockade. We also see interesting opportunities for combining the CD3s with the CD28, and that's one reason we chose B7-H3 as our flagship CD28 program; it's expressed in so many different histologies, it could be a one-size-fits-all combination partner for our CD3s or other people's CD3s.

That's very helpful. Thank you.

Regarding how we view the different mechanisms of action and their specific indications, some of this depends on target availability. There is an opportunity to improve response for targets that have promising biology but didn't work out. For that situation, a combination of a CD28 with a checkpoint inhibitor could be very attractive; we've seen that from competitive programs in prostate cancer with some early promising data. For targets that you can see a good differential of expression between healthy and normal tissue, attacking that with a CD3 could make sense more, right? That's generally how we think about it as we explore the initial biology of the CD28 over the next year or two.

Great. Thanks, guys. Excited for more data this year.

Thank you. One moment please for our next question. Our next question will come from Dane Leone of Raymond James. Your line is open.

Hi, congrats on all the progress, and thank you for taking our questions. I wanted to get your take on maybe some of the earlier programs that you have emerging now. Firstly, maybe we'd like to hear your updated thoughts on the IL-12 approach? There seem to be a few more discontinuations from other programs, curious how you're differentiating to create a therapeutic index, essentially out of a difficult cytokine. And then on targeting with B7-H3 versus maybe another emerging approach of using B7-H4 would be interesting as well. Thank you.

Regarding IL-12, I think it comes down to our reduced potency design, which has given us significantly improved tolerability profiles versus wild-type cytokines for IL-15 and IL-2 programs. I think that's what we're banking on. John, if you want to touch briefly on the preclinical profile and non-human primate data we have for XmAb662 and how it differentiates us?

Yes, thanks for the question, Dane. We compared our wild-type IL-12 Fc fusion to our XmAb662, which is around 100-fold reduced potency. The problem with these cytokines is when they signal, they get cleared through the receptors quickly. In monkeys, the wild-type IL-12 Fc is gone in about one to two days. In contrast, XmAb662, due to its potency reduction, behaves more like an antibody, showing a half-life of 14 to 20 days; it's likely to extend even further. This aspect, combined with its superior tolerability, gives us a lot more flexibility to pinpoint the optimal dose and thereby establish a therapeutic index.

Regarding B7-H3 versus B7-H4, we focus on B7-H3's expression in multiple tumor types, along with a good differential across normal tissues, where it's absent or very seldom detectable. This makes B7-H3 attractive. While B7-H4 is starting to garner interest, there is very little data on it right now.

Do you view B7-H3 in a different light when using a CD28 approach as opposed to how you've used ADCs?

I think the immunotherapy approach is very different compared to delivering a direct cytotoxic, and so I don't know how much insight we can draw from that. However, there is clearly enough expression of the target in tumors to suggest that an ADC could provide activity; the mechanisms are just fundamentally different.

Excellent, thank you.

Thank you. One moment for our next question. Our next question will come from Etzer Darout of BMO Capital Markets. Your line is open.

Great, thanks for taking the questions. I wanted to know if you had any updates on AMG 509, the STEAP1 - 2+1 any updates here from Amgen on development and for XmAb808. For 808, regarding the combination trial with pembrolizumab, is that based on literature, examples, or preclinical data on the synergies, or is that something you're seeing in the clinic that sort of prompted the combination?

Regarding Amgen's AMG 509 program, they licensed all the tools and technologies from us to build it. The only information we can share is what they publicly announced—they expect to have initial data presentation in the second half of this year and are pursuing a broad Phase 1 program looking at both combinations and monotherapy. They are utilizing a subcutaneous formulation, in addition to the IV preparations, and are investing a lot of resources into it. We're encouraged by their efforts. For XmAb808, there’s a strong theoretical basis to combine a CD28 bispecific with either a checkpoint inhibitor or a CD3 bispecific. The CD28 provides an important signal to activate T-cells effectively. Therefore, combining pembrolizumab with our CD28 bispecific, targeting B7-H3, is based on very strong theoretical data that this combination can provide a significant advantage.

To add to that, some literature suggests that the dominant mechanism of action of PD-1 is to inhibit CD28 signaling. The idea is that the CD28 could provide its full effect only if PD-1 is blocked at the same time.

Great, thank you.

Thank you. One moment please for our next question. The next question will come from David Dai of SMBC. Your line is open.

Great, thanks for taking my questions and congrats on the progress. First, on vudalimab, we've observed some competitors' PD-1 and CTLA-4 combinations showing pretty intriguing data in metastatic prostate cancer at ASCO. How would we compare and contrast your vudalimab drug profile versus the competitor PD-1 and CTLA-4 antibodies?

There's a lot of movement in the PD-1 and CTLA-4 class right now based on very early studies. We’re encouraged about how that reflects on the potential for these dual checkpoints as we begin to sort out usage. I would start by saying that the relevant comparison is the monotherapy data from our Phase 1 expansion cohorts compared to what was presented at ASCO GU. I don’t know if Allen, would you touch on that?

Yes, Bassil, happy to. The data at ASCO GU validates the class in prostate cancer. It's difficult to compare our data with theirs; we reported a PSA response rate of about 20% in our heavily pretreated U.S. population. Their ASCO GU data reported a PSA response rate in the high 20% from a less pretreated population. This supports the idea of using these PD-1 and CTLA-4 combinations in prostate cancer. That's why we've initiated two Phase 2 programs and are aggressively pursuing a registration pathway.

That’s really helpful. And another question on plamotamab: I know you're currently developing a subcutaneous version. Can you talk more about the status of the subcutaneous formulation and when we might expect to see data from that program?

We initiated clinical studies to dose patients with the subcutaneous formulation last quarter, and that is a dose escalation study, helping us determine the subcutaneous regimen, including priming dose and step-up doses. Given everything we’ve learned from the IV formulation, this should expedite the process. This goes hand-in-hand with our collaboration with Janssen, who is involved in the entire B-cell collaboration, which also encompasses our CD28 bispecifics. We will provide data when appropriate, while keeping in mind that Janssen will need to be part of any disclosures.

Thank you. One moment for our next question. Our next question will come from Charles Zhu of Guggenheim Partners. Your line is open.

Hello everyone, and thanks for taking my question. I have one question that's essentially a follow-up to something that Etzer had asked, but regarding XmAb808... given that you have other pipeline assets in the clinic that have similar mechanisms such as vudalimab. How are you gauging the potential to co-develop with vudalimab versus using an external asset? How do you envision that moving forward?

We see that as a great idea and approach. We absolutely have it in our minds. As we escalate with 808, we aim to do this quickly and start from relatively low levels, since regulators are cautious with new immunotherapies. While escalating, we need to blend in the data we gather with our own pipeline agents like vudalimab or other CD3 bispecifics that could overlap with related expression patterns. For example, XmAb819 or MPP; we're determined to move quickly and derive insights from these developments.

Thank you. One moment for our next question. Our next question will come from Bill Maughan of Canaccord Genuity. Your line is open.

Hi, good afternoon and thanks. Looking at the cash guidance for this year and considering sotrovimab is still available in some ex-U.S. jurisdictions. How much of sotrovimab are you expecting this year in that guidance?

23.

Yes.

23.0. It's been coming down since Q1 after losing U.S. authorization, so now it’s just ex-U.S. Any revenue from here is a bonus. We have no expectations for future revenue.

Great. And similarly on your 2+1 T-cell engagers, understanding that the differentiated mechanism allows you to pursue CD28; do you see room to improve on more established targets like CD3, or do you see an opportunity to come in behind them and take market share with a better version?

Absolutely, we have all those considerations in mind and closely monitor any CD3 programs advancing into the clinic. It’s still early days in the CD3 world, with not much late-phase CD3 work outside of the malignancies, like CD20 and BCMA, which don't seem fruitful for our approach as those don’t target solid tumors directly. However, we’re evaluating fast-follower strategies with 2+1 carefully. The opportunity space is still emerging, so we haven't declared any yet.

Thank you. One moment for our next question. Our next question will come from Michael King of EF Hutton. Your line is open.

Hi, thanks guys. Can you hear me okay?

Yes.

I just wondered, in the cytokine space as it stands, I’m a fan of engineered cytokine potential, but do we know essentially what the correlates or clues are to clinical success? It’s nice to have interferon gamma levels up in response to IL-12, but can we really understand what that means? This is especially notable with some recent developments, both in IL-12 and in the IL-2 world.

There's no doubt we don't possess perfect knowledge about what it takes to succeed with cytokines, and this more or less applies to many drugs. While we know many previous approaches haven't been successful, we believe our specific approach towards reduced potency cytokines offers an opportunity for longer action and lower peak impact, leading to fewer tolerability issues while achieving profound biomarker shifts. So far, with two programs out of two, we have performed as expected. Are we out of the risk window? Absolutely not; however, we are optimistic that our IL-12 will share those beneficial properties regarding biomarkers and tolerability. We will also see if our preclinical results hold true in humans later this year. While we might not have all the answers, we believe it's a bet worth taking.

To build on that, the reason interferon-gamma is so critical is that it directly induces tumor-cidal effects by up-regulating Class I MHC, which T-cell receptors recognize to engage tumor cells effectively. Additionally, interferon-gamma up-regulates PD-L1, explaining why combining IL-12 with eosinophil inhibitors is beneficial.

Can I ask why you chose to develop an IL-2 agonist first rather than going toward an autoimmune direction instead?

We believe that pursuing Treg boosting in autoimmune diseases was a great hypothesis, but we already have our IL-15 that addresses similar pathways while being better suited as a natural precursor molecule for our engineering. Therefore, developing IL-2 would have been redundant, given the promising Phase 1 data we've seen from P306 so far.

Okay, I appreciate the answer. Thanks, guys.

Thank you. One moment for our next question. The next question will come from Brian Cheng of JPMorgan. Your line is open.

Hey Bassil, thanks for taking my question. Just going back to vudalimab, I'm curious if there’s any strategic shift in your development thinking for vudalimab since Astra is planning to start Phase 3 with their own bispecific later this year?

Yes, we're definitely aware of that data from Astra and find it promising. The similarity between our molecule, vudalimab, and Astra's framework is intriguing, particularly the similar designs and binding attributes. We're analyzing this carefully and hope to provide guidance soon. The willingness to combine with highly active chemotherapy regimens in frontline lung treatment, where the comparator is a chemo-PD-1 combination, presents strong synergies with our strategy around aggressive chemotherapy in prostate cancer. It’s certainly something we are keenly aware of!

Great! And regarding XmAb662, are there learnings from either interleukin approaches in the past that might inform the most promising solid tumor types for the IL-12 approach?

John, do you want to tackle that one?

Certainly! We expect XmAb662 to show substantial interferon-gamma output, thus targeting more immunogenic tumor types like melanoma should yield promising results, where checkpoint inhibitors commonly function. There are clear synergies with that approach. For tumor types that have struggled yet shown slight indications of activity with checkpoint inhibitors, enhancing their immunogenicity with IL-12 offers new opportunities.

Thank you, John. Good luck as you move forward.

Thank you. One moment for our next question. The next question will come from Peter Lawson of Barclays. Your line is open.

Thanks for taking my question. Can we get an update on your ENPP3 program, 819, and how progress is going? What are your expectations for initial data and the recommended Phase 2 dose?

We could barely hear you because of the low volume, but you were asking about 819.

Oh, apologies. Is it better now?

Yes, that is.

We wanted to clarify the progress on your 819 program for ENPP3, specifically when we can expect initial data or a recommended Phase 2 dose. Moreover, how should we compare this with the ENPP3 ADC program?

Regarding the update, we are about six or seven months into the Phase 1 dose escalation, and we’ve observed that investigators specializing in renal cell carcinoma have shown a very positive response towards the availability of CD3 as an option, collaborating immensely well. Patient accrual has progressed impressively. We cannot provide a timing update, but we will offer that as we advance cohorts and refine our regimen. We’re excited about how well the accrual is proceeding. The profile of a CD3 versus a CLDN6 by 2+1 versus an ADC ideally would be different, fundamentally, offering a profile that clinicians presently lack when it comes to alternatives to salvage chemotherapy. Do you have any further comments, Allen?

Renal cancer has been an immunoresponsive tumor, and we believe immunotherapy may provide an advantage. However, it's still early days. As Bassil mentioned, we have high interests from the investigators who are eager for this MOA in this disease category, which makes us very enthusiastic.

Thank you. One moment for our next question. Our next question will come from Gregory Renza with RBC Capital Markets. Your line is open.

It's Ishan on for Greg. Congratulations on the progress, and thank you for the question. Regarding the XmAb 2+1 design for 819 and AMG 509, how does this information influence the development path of the 2+1 class and, in turn, the future of plamotamab in 968? Thank you.

I'll let John provide a thoughtful response, but I want to clarify that 1+1 could have many applications if approached properly.

The efficacy of 1+1 has been impressive with plamotamab in B-cell oncology because it's clear when the B-cells are eradicated, including lymphoma B cells, which is an on-target-off-tumor toxicity that most can accept. However, in solid tumor spaces, we must be more judicious. The target and its expression in normal tissues dictate our approach, including the level of risk involved. We don't view using 2+1 as unfavorable and may indeed prefer it for solid tumor targets, with exceptions if warranted.

Thank you so much.

Thank you. One moment please for our next question. The next question will come from Jonathan Chang of SVB Securities. Your line is open.

Hi, this is Matt Kaufer for Jonathan. Thanks for taking my question. Regarding the PSMA CD28 data, it appears to have a concerning adverse event profile, particularly with immune-mediated responses. This makes me curious about how you assess the adverse event profile for this class, especially considering CD28 monotherapy strategies, and how you plan to address some of these effects.

We believe that the selection of co-target will be integral. Some AEs observed are atypical for PD-1 inhibitors. It’s key to note that the study combined CD28 with the PD-1 inhibitor, cemiplimab. Particularly, central nervous system and peripheral nerve involvement were observed in a few patients. This points to a hypothesis that immune responses are being activated against the target within the associated tissues. Compellingly, the sponsor noted those AEs occurred in responding patients. The early data showcase that CD28 can significantly enhance the immune system in 'cold' tumors. The trick is being prudent in choosing your target, so we’re excited about the pathway ahead!

Understood. Thank you.

Thank you. I see no further questions in the queue. I would now like to turn the conference back to Bassil Dahiyat for closing remarks.

Thanks, everyone, for joining us today, and we look forward to updating you throughout the year. Have a great evening.

This concludes today's conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.