Q2 2021 Xencor Inc Earnings Call

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Good afternoon, ladies and gentlemen, and thank you for standing by and welcome to the second quarter 2021, Zen core conference call at.

Operator: by and welcome to the second quarter 2021 Zencore conference call. At this time, all participants are named listen-only mode. After the speaker's 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'll introduce Charles Lyles.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. Please.

Please be advised that this call is being recorded at the company's request.

I would like to turn the call over to your speaker for today, Charles Liles head of corporate Communications and Investor Relations.

Charles Liles: Thank you and good afternoon. Earlier today, we issued a press release that outlines the topics we plan to discuss today. It's available at www.com. Today on our call, Basil Dachiat, President and Chief Executive Officer, will review recent business news and pipeline updates. John Dejolay, Chief Scientific Officer, will discuss our cytokine and CD28 programs, and John Cush, Chief Financial Officer, will review financial results. And then we'll open up the call for your questions, and Alan Yang, Chief Medical Officer, will join us then.

Thank you and good afternoon earlier today, we issued a press release, which outlines the topics we plan to discuss today.

It's available at Www Dot Zen core Dot com.

Today on our call Battle day, yet President and Chief Executive Officer will review recent business news and pipeline updates John Baker Lake Chief Scientific Officer will discuss our cytokines are CD 28 programs and John <unk>, Chief Financial Officer will review financial results and then we'll open up the call for your questions and Allen Yang Chief Medical Officer will join US then.

Charles Liles: Before we begin, I would like to remind you that during the course of this conference call, Zincor 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.

Before we begin I would like to remind you that during the course of this conference call <unk> 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 program. These forward looking statements are not historical facts.

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.

Charles Liles: 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 10K and quarterly report on Form 10Q. With that, let me pass the call over to Basil. Thanks, Charles, and good afternoon, everyone.

Annual report on form 10-K, and quarterly report on form 10-Q with that let me pass the call over to Basil Thanks, Charles and good afternoon, everyone.

Bassil I. Dahiyat: Zincor's approach to creating antibody and cytokan therapeutics uses our extensive protein engineering tools centered on our plug-and-playXMab-FC domains to create novel molecular structures, improve natural protein and antibody functions, and create new mechanisms of therapeutic action. This approach enables us to rapidly explore different targets in biology so we can select the most promising programs to take forward. We've been focusing our work on the expansion and use of our XMab bispecific platform to create antibodies that bind two or more different antigens simultaneously and also to engineer cytokines with structures and binding affinities optimized for therapeutic care. These plug-and-play tools are highlighted in our partnerships.

<unk> approach to creating antibody and cytokine therapeutics uses our extensive protein engineering tools centered on a plug and play ex <unk> FC domain to create novel molecular structures improved natural protein and antibody functions and create new mechanisms of therapeutic action.

This approach enables us to rapidly explore different targets in biology. So we can select the most promising programs to take forward.

We've been focusing our work on the expansion and use of our ex map bi specific platform to create antibodies that bind 2 or more different antigen simultaneously and also to engineered cytokines with structures and binding affinities optimized for therapeutic use.

This plug and play tools are highlighted in our partnerships. Currently we have 16 ongoing partnerships for ex map technology, which have resulted now in 3 marketed products. The most recent being veering glaxosmithkline anti Sars Covid 2 antibodies, the trove and map, which recently received emergency use off use authorization for patients with mild to moderate COVID-19.

Bassil I. Dahiyat: Currently, we have 16 ongoing partnerships for XMAP technology, which have resulted in three marketed products, the most recent being Veer and Glass-SmithKline's anti-SARs-CoV-2 antibody Citrova, which recently received emergency use authorization for patients with mild to moderate COVID-19. Our Extend FC technology was integrated into the antibody for the purpose of reducing the dose administered and potentially enhancing its lung tissue bioavail This partnership exemplifies our commitment to enabling the broad use of XMabFC technologies outside our core focus of oncology and autoimmune disease and demonstrates its applicability in vastly underserved areas like serious infections.

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Our extend FC technology was integrated into the antibody for the purpose of reducing the dose administered and potentially enhancing its lung tissue bioavailability.

This partnership exemplifies our commitment to enabling the broad use of ex Med FC technologies outside our core focus of oncology and autoimmune disease and demonstrates its applicability and vastly underserved areas like serious infectious diseases.

Bassil I. Dahiyat: In May, we also entered a similar licensing transaction with Bristol-Myers Squibb to incorporate extended anti-COVID antibodies that are currently in Phase 2 tests. Now, switching back to our internal programs, we're running nine phase one or phase two studies evaluating our own XMab bispecific antibodies inside the clinic. This way, we're taking multiple simultaneous shots on goal in the clinic. The proof of concept data we're generating is guiding which programs we independently advance, which we partner with, and which we will terminate. Further, we're continually feeding new molecules that we believe are differentiated into the clinic to keep our pipeline robust. So now, I'll touch on the program's recent update.

In May we also interest similar licensing transaction with Bristol Myers Squibb to incorporate extended anti Covid antibodies. That's currently in phase 2 testing.

Now switching back to our internal programs, we're running 9 phase 1 or phase 2 studies evaluating our own ex net bi specific antibodies and cytokines. This way, we're taking multiple simultaneous shots on goal in the clinic from the <unk>.

Proof of concept data, we're generating is guiding which programs, we independently advance, which we partner in which we will terminate.

Further we're continually feeding new molecules that we believe are differentiated into the clinic to keep our pipeline robust. So now I'll touch on the programs with recent updates.

Bassil I. Dahiyat: Very recently, we initiated a phase two study for XMab 717, our PD1 by CCHLA4 dual checkpoint bi-specific antibody, in patients with metastatic castration-resistant prostate cancer that we classify by molecular subtype as monotherapy or in combination, depending on the subtype. Now, we expect to present mature data from the ongoing Phase 1 studies expansion cohorts later this year, specifically in prostate cancer, renal cell carcinoma, and a Tabasca cohort of tumors without approved checkpoint therapy.

Very recently, we initiated a phase II study for ex Nap 707, our PD 1 by <unk> 4 dual checkpoint bispecific antibody it's.

It's in patients with metastatic castration resistant prostate cancer that we classify volume by molecular subtype as a monotherapy or in combination depending on the subtype.

Now we expect to present mature data from the ongoing phase 1 studies expansion cohorts later this year, specifically in prostate cancer renal cell carcinoma, and in a basket cohort of tumors without approved checkpoint therapies.

Bassil I. Dahiyat: We believe that metastatic prostate cancer is an indication with high unmet need and that is currently without much checkpoint inhibitor use. And we think it could benefit from a checkpoint inhibitor, particularly one with XMAP 717's dual targeting of PD1 and CCHLA4 and potentially differentiated tolerability profile. We're also planning new studies of XMab 717 and additional tumor types that will be guided on later. Now shifting to Plomodomab, our CD20 by CD3 by specific antibody, under our strategic clinical collaboration with Morphosis and Insight, we'll be investigating the chemotherapy-free triple combination of Plomotumab with tapacetamab and leadenolid in patients with certain lymphomas. Plomomob's T-cell redirection to tumors and tapacidimab's enhanced ADCC tumor killing combine distinct immune pathways for an antitumor effect, and we think the combination is a differentiated approach for treating patients with lymphoma.

We believe that metastatic prostate cancer is an indication with high unmet need and that currently is without much checkpoint inhibitor use and we think it could benefit from a checkpoint inhibitor, particularly 1 with ex amount of 770, <unk> dual targeting of PD, 1 and see Chile, 4 and potentially differentiated tolerability profile.

We're also planning new studies of ex <unk> 717 in additional tumor types that will guide on later.

Now shifting to promote a mab or CD 20 by CD 3 by specific antibody.

Under our strategic clinical collaboration with Morphosis and insight will be investigating the chemotherapy free triple combination of promoter Mab with tap is sent them out and let them Linda might in patients with certain lymphomas.

None of them have T cell redirection of tumors and tap the city maps enhanced ADC tumor, killing combine distinct immune pathways for anti tumor effect and we think the combination is a differentiated approach for treating patients with lymphoma.

Now we plan to initiate the first of these studies in patients with relapsed or refractory diffuse large b cell lymphoma, an aggressive type of NHL in late 'twenty, 1 or early 2022, once we finalize a recommended dose in our ongoing phase 1 study and complete operational preparation for the multinational trial.

We plan to present updated data from the ongoing phase 1 study later this year.

Now for tight due to map our CD 3 by specific antibody that targets S. Tier 2 we've initiated a phase II clinical study in patients with Merkel cell carcinoma, and small cell lung cancer, which are <unk> expressing tumor types known to be responsive to Immunotherapies. Later this year. The company plans to present updated data from the phase 1 expansion cohort in patients.

Bassil I. Dahiyat: Now, we plan to initiate the first of these studies in patients with relapse to refractory diffuse large B-cell lymphoma, an aggressive type of NHL, in late 21 or early 2022, once we finalize our recommended dose in our ongoing phase one study and complete operational preparation for the multinational trial. We plan to present updated data from the ongoing phase one study later this year. Now, for Tidutamab, our CD3 bioselective antibody that targets SSTR2, we've initiated a phase two clinical study in patients with Merkel cell carcinoma and small cell lung cancer, which are SSTR2 expressing tumor types known to be responsive to immunotherapy. Later this year, the company plans to present updated data from the Phase 1 expansion cohort in patients with neuroendrican tumors, including longer clinical follow-up and updated biomarker data. Last, I'll touch on XMAP 819.

With neuroendocrine tumors, including longer clinical follow up and updated biomarker data.

Last I'll touch on ex net 819 later this year, we anticipate submitting an IND for 809 R. E. N P. P..3 by CD 3 by specific for renal cell cancer, and <unk> and we're planning on initiating a phase 1 study in early 2022.

<unk> thousand 9 is engineered with reduced potency CD 3 binding as well as the multi valent 2 plus 1 by specific antibody format, which has 2 antigen binding domains to the tumor target providing for more selective binding to the high E. N. P. P..3 density expression on tumor cells compared to the lower density on normal cells.

This binding selectivity of the ex Pat pupils spun format extends the range of targets amenable to CD, 3 bi specifics, especially solid tumor targets recall, our partner Amgen's AMG 509 program targeting steep 1 in prostate cancer also uses.

Now I'll turn it over to John Dacey, our Le our share our CFO to discuss our rapidly expanding cytokine drug portfolio and CD 28 programs.

Thanks, Pavel we've been very busy using the full range of our protein engineering tools. The term native cytokines at the therapeutics. We currently have our first 2 cytokines mcclintock expect that 2 more will advance in the coming year, 1 internally in 1 of our partner Genentech are of course several other interesting cytokines are additional programs are likely to Paul.

Our native cytokines have evolved to create powerful immune responses by acting potently locally and rapidly, but when you use the systemic drugs. These properties to make them short acting at all from toxic or.

Bassil I. Dahiyat: Later this year, we anticipate submitting an IND for 819, our ENPP3 by CD3-B-specific for renal cell cancer, and we're planning on initiating a phase one study in early 2020. XMab 819 is engineered with reduced potency CD3 binding as well as a multivalent 2 plus 1 bi-specific antibody format, which has two antigen binding domains to the tumor target, providing for more selective binding to the high ENPP3 density expression on tumor cells compared to the lower density on normal cells. This binding selectivity of the XMap 2 plus 1 format extends the range of targets amenable to CD3 biospecifics, especially solid tumor targets.

Our cytokine engineering seeks to create longer duration therapeutic activity remained under the threshold for toxicity, but has limited their clinical use historically.

First we designed small changes in cytokines are lower its potency offered by 100 fold or more by reducing affinity towards the receptors.

It has created better tolerated slower acting and far more sustained immune stimulating activity from multiple cytokines in preclinical models. We further enhanced the stability and pharmacokinetics by using them to ex Mab Bispecific FC domain that incorporate our extend technology to further enhanced persistence.

Our first clinical program ex about 306 is our engineered IL 15 for oncology that is partnered with Genentech.

We engineer it for these properties, 1 NK cell and T cell activation for cancer therapy that potentially it's a broad range of other cancer therapies.

And 2 unlike IL 2 IL 15 avoids the intrinsic bias for T. Reg activation, which is undesirable of course for cancer therapy.

Ex map through 6 is currently in phase 1 dose escalation and advanced solid tumor patients both in monotherapy in combination with a piece of it doesn't map and we are currently assessing additional combination studies for the future. Our first immune receptor targeted IL 15 is currently in IND, enabling studies with our partner Genentech.

John R. Desjarlais: Recall, our partner Amgen's AMG-509 program targeting Steep 1 and prostate cancer also uses this. Now we'll turn it over to John Desjolet, our CSO, to discuss our rapidly expanding cytokine drug portfolio and CD28 programs. Thanks, Basil.

Our second cytokines from the clinic, because ex net 5.6 for our wholly owned <unk> FC fusion engineered to selectively activate regulatory T cells or T regs for the treatment of autoimmune disease.

John R. Desjarlais: We've been very busy using the full range of our protein engineering tools, which are native cytokines of the therapeutic. We currently have our first two cytokines in the clinic, and expect that two more will advance in the coming year, one internally and one at our partner, Genentech. There are, of course, several other interesting cytokines, so additional programs are likely to. Now, cytokines have evolved to create powerful immune responses by acting potently, locally, and rapidly.

We're conducting a phase 1 single ascending dose study to characterize the safety Tolerability and pharmacokinetics of subcutaneously delivered ex Nab 564 in healthy volunteers and the study will include an analysis of key biomarkers, including measures of T. Reg expansion.

The goal of an IL 2 therapy for autoimmune diseases to provide sustained low intensity activation of T regs, while avoiding the pro inflammatory systemic activation of effector T cells.

So a T regs selective IL 2 therapy with an expanded therapeutic window compared to historical 2 approaches.

Potential across many different autoimmune diseases and preclinical studies indicate this may be the case for ex amount 564.

As with our other engineered cytokines reduces potency to improved tolerability and duration of action and used our ex Mab heterodyne, Rick FC domain and extend technology to enhance its half life.

John R. Desjarlais: But when used systemically, these properties make them short-acting and often talky. Our cytokine engineering seeks to create longer duration therapeutic activity that remains under the threshold for toxicity that has limited their clinical use historically. First, we design small changes in the cytokine to lower its potency, often by 100-fold or more by reducing affinity to its receptor. This has created better, tolerated, slower acting, and far more sustained immune-stimulating activity for multiple cytokines and pre-clinical models.

Our newest cytokine program as a preclinical IL 12 program are all 12 cytokine program builds on our prior work with ex mouth realistic. The next net types explore.

So IL 12 is a potent pro inflammatory cytokines that promotes high levels of interferon gamma secretion.

Thereby increasing the immunogenicity of the tumor microenvironment.

Making tumor antigen more visible to the immune system.

It can also promote proliferation of T cells, and NK cells and increased cytotoxicity of both of those self index.

Well I'll talk in a strong anti tumor activity, but you know as seen in prior clinical studies with IL 12, and other cytokines. It was demonstrated to have a narrow therapeutic window limiting its utility. So we applied our cytokine engineering methods to IL 12 to generate again potency reduced longer acting and more tolerable drug candidates and we are.

John R. Desjarlais: We further enhance the stability in pharmacokinetics by fusing them to XMab Bicycetic domains that incorporate our extend technology to further enhance. Our first clinical program, XMAP 306, is our engineered IL15 for oncology that is partnered with Jenin. We engineer it for these properties.

Anticipating submitting an <unk> for the lead in 2022.

Now I'd like to take a moment to review our targeted CD 28 platform, which is a new class of T cell engaging <unk> designed to complement other mechanisms of T cell activation, such as checkpoint inhibition or CD 3 and gateway.

These weighted as a key immune co stimulatory receptor on T cells, but it has been difficult to the path to safely and effectively engage therapeutically.

John R. Desjarlais: One, NK cell and T cell activation for cancer therapy that potentially is a broad range of other cancer therapies. And two, unlike Isle 2, Isle 15 avoids the intrinsic bias for T-REC activation, which is undesirable, of course, for cancer therapy. Exmap 306 is currently in phase one dose escalation and advanced solid tumor patients, both in monotherapy and in combination with Tazelizumab, and we are currently assessing additional combination studies for the future.

But by targeting a CD 28 binding domain to a tumor by using a bispecific antibody, we could boost the activity of T cells in a tumor selective way to enhance T cell directed therapies are most advanced wholly owned lead CD 20 candidate ex map 8 O H B 7 H, 3 but 28 bispecific antibody for potentially broad polo to reuse.

Including in prostate cancer would be 73 is highly expressed.

That molecule is advancing through preclinical development and we plan to file an IND in 2022.

Second CD 20 programs the focus from a research collaboration are well under way with chance and where we have partnered and discovered a CD 20 by civic antibody against the prostate tumor targets.

Finally, we remain interested in PDL, 1 as another target for this platform.

All of these programs show the power of St gross platform to create candidates that access new biology.

We supply our clinical pipeline with differentiated molecules.

John R. Desjarlais: Our first immune receptor target at IL15 is currently in I&D enabling studies with our partner. Our second cytokone in the clinic is XMB564, our wholly owned IL2 FC Fusion engineered to selectively activate regulatory T-cells or T-Regs for the treatment of autoimmune disease. We're conducting a phase one single ascending dose study to characterize the safety and tolerability in pharmacokinetics of subcutaneously delivered XMab 564 and healthy volunteers, and the study will include an analysis of key biomarkers, including measures of T-RG experience.

Now with that I'll hand, the call over to John <unk>, Our Chief Financial Officer, who will review key highlights from our second quarter financials John.

John as.

As we have previously discussed a critical part of <unk> business is leveraging its protein engineering capabilities through partnerships and collaborations for its to ex Mab technologies and drug candidates to generate non dilutive sources of revenue.

We receive upfront payments milestones royalties and also equity interest in connection with certain partnerships.

Proceeds from these partnerships and collaborations with Suncor to maintain a strong financial position as we continue to advance our portfolio of clinical stage and research stage Bispecific antibody and cytokine programs.

Cash cash equivalents in marketable investment securities totaled $603.7 million as of June 32021, compared to $604 million at December 31, 2020.

John R. Desjarlais: The goal of an IL2 therapy for autoimmune disease is to provide sustained low-intensity activation of Tregs while avoiding the pro-inflammatory systemic activation of effector cells. Thus, a T-REG selective IL2 therapy with an expanded therapeutic window compared to historic IL2 approaches would have broad potential across many different autoimmune diseases.

Total proceeds from royalties milestone sale of an investment equity securities and a net increase in the value of marketable equity securities offset net spending of approximately $90.5 million in operations for the first 6 months of 2021.

Based on current operating plans, we expect to have cash to fund research and development programs and operations into 2024 and estimate we will end 2021 was between $475 million to $500 million in cash cash equivalents in marketable securities.

John R. Desjarlais: And pre-clinical studies indicate this may be the case for XMAP 564. As with our other engineered cytokines, we reduced its potency to improve tolerability and duration of action, and used our XMab-Hedderidimeric FC domain and extend technology to enhance its health. Our newest cytokine program is a pre-clinical AL-12 program. Our L-12 Sotokine program builds on our prior work with XMET 306 and XMap 565. Now, Isle 12 is a potent pro-inflammatory cytokine that promotes high levels and for gamma secretion, thereby increasing the immunogenicity of the tumor microenvironment and making tumor antigens more visible to the immune system. It can also promote proliferation of T cells and NK cells and increased cytotoxicity of both those cells.

Now I'll review, our 3 and 6 month financials.

Total revenue for the second quarter ended June 32021 to $67.4 million compared to $13.1 million from the same period in 2020 revenues in the second quarter include revenue from our Janssen Novartis genetic collaborations and royalty revenue from election, Dear and morphosis, while revenue for the second quarter in 2020 was primarily licensing revenue from <unk>.

<unk> and royalty revenue from Alexia.

Total revenue for the 6 months ended June 32021 was $101.4 million compared to $45.5 million for the same period of 2020.

Revenues for the 6 months ended June 32021 include revenue from our Janssen Novartis collaboration milestone revenue from our Phocis deer, and Novartis and royalty revenue from <unk> and morphosis compared revenues from the same period of 2020, which were primarily licensing revenue from Gilead named Moon milestone revenue from morphosis and royalty revenue.

From Alexia.

Research and development expenses for the second quarter were $49.5 million compared to $43.5 million at the same period in 2020.

John R. Desjarlais: Now, Isle 12 can have strong anti-t tumor affectivity, but, as seen in prior clinical studies with Isle 12 and other cytokines, it was demonstrated to have a narrow therapeutic window, limiting its utility. So we applied our cytokine engineering methods to IL-12 to generate, again, potency reduced, longer acting, and more tolerable drug candidates.

Total R&D expenses for 6 months ended June 32021, and $90.9 million compared to $77.4 million for the same period in 2020.

Increased R&D expenses for 3 and 6 months ended.

June 32021 over the same periods in 2020 were due to additional spending on certain development programs, including ex net of 104, our PD 1 by Iqos program ex now of $8.9 or <unk> 3 and other early stage development programs additional spending on ex net of 306, our IL 15 program.

John R. Desjarlais: And we anticipate submitting an I&D for the lead in 2020. Now, I'd like to take a moment to review our targeted CD28 platform, which is a new class of T-cell Engager designed to complement other mechanisms of T-cell activation, such as checkpoint inhibition or CD3-incaration. B28 is a key immune co-stimulatory receptor on T cells that has been difficult to pass to safely and effectively engage therapeutics

Partnering with genetic also contribute to increased R&D expenses during the first 6 months of 2021.

General and administrative expenses for the second quarter ended June 32021 were $8.9 million compared to $7.2 million in the same period of 2020 total G&A expenses for 6 months ended June 32021, $17.1 million compared to $14.4 million for the same period in 2020 increased G&A expenses for the second quarter and the first 6 months.

21 of her mouth for the same periods of 2020 were primarily due to increased G&A staffing and spending on professional fees.

John R. Desjarlais: But by targeting a CD28 binding to a tumor by using a specific antibody, we can boost the activity of T cells in a tumor-specific way to enhance T cell directed therapy there. Our most advanced, wholly-owned lead CD28 candidate is XMAP 808, a B7H3 by CD28 conjugated to a specific antibody for potentially broad cellular tumor use, including in prostate cancer, where B783 is highly. That molecule is advancing through preclinical development, and we plan to file an I&D application in 2020.

Other income for the second quarter ended June 32021 was $43.2 million compared to $2.6 million in the same period of 2020. Other income for the 6 months ended June 32021 was $56.3 million compared to $3.3 million in the same period 2020.

Other income for the second quarter and the first 6 months of 2021 includes a realized gain of $18.3 million on the sale of an investment equity security and a net increase in unrealized gains on the company's marketable equity securities.

Net income for the second quarter ended June 32021 was $52.2 million or <unk> 87 on a fully diluted per share basis compared to a net loss of $35 million or <unk> 61 sensitive fully diluted share basis for the same period of 2020.

For the 6 months ended June 32021, net income was 49.8 million from 8.2 cents on a fully diluted share basis compared to a net loss of $43.1 million or <unk> 76 on a fully diluted share per share basis for the same period in 2020.

John R. Desjarlais: A second CD28 program is the focus of our research collaboration well underway with Jansen, where we have partners to discover a CD28 biciceific antibody against a prostate tumor target. Finally, we remain interested in PDL1 as another target for this platform.

Net income reported for the 3 and 6 months ended June 32021, compared to the net loss for the comparable periods in 2020, but primarily due to higher collaboration milestone royalty revenues and increase in other income from 2021.

John J. Kuch: All these programs show the power of the ZenCourse platform to create candidates that access new biologies and to continually supply our clinical pipeline with differentiated. Now with that, I'll hand the call over to John Cush, our Chief Financial Officer, who will review key highlights from her second quarter financials.

Noncash share based compensation expense for 6 months period was $17.6 million compared to $14.7 million for same period 2020.

And total shares outstanding were $58.3 million as of June 32021.

Compared to $57.2 million as of June 32020.

That with now I would like to open the call for your questions operator.

Ladies and gentlemen, just as a reminder, if you'd like to ask a question. Please press star and then 1.

John J. Kuch: Thank you, John. As we have previously discussed, a critical part of ZENCOR's business is leveraging its protein engineering capabilities through partnerships and collaborations for its XMAP technologies and drug candidates to generate non-delusive sources of revenue. We receive upfront payments, milestones, royalties, and also equity interests in connection with certain partners. Proceeds from these partnerships and collaborations allow ZNCorp to maintain a strong financial position as we continue to advance our portfolio of clinical stage and research stage products by Pacific Antibody and Cytokine programs.

1 on your telephone keypad.

Your first question comes from the line of.

Penthouse with Piper Sandler.

Great. Thanks, guys.

Quick.

Moving a lot going on here.

Couple of questions of ordinary income.

<unk> program.

Team.

Any potential for updates there.

I think you said that you were higher all the Rfps for Inc.

This year.

2 items mixture for IL 12.

Is that all correct.

Thanks, Ted yes on the IMD timing, you're exactly right 809. This year, the IL 12, and ex net <unk> III by CD 28, those go into 'twenty 2 the latter 2.

And with regard to the IL 15 program ex Nab 3 O 6 we're currently.

John J. Kuch: Cash, cash equivalence, and marketable investment securities totaled $603.7 million as of June 30, 2021, compared to $604 million at December 31, 2020. Total proceeds from royalties, milestones, the sale of an investment equity security, and a net increase in the value of marketable equity securities offset net spending of approximately $90.5 million on operations for the first six months of 2021. Based on current operating plans, we expect to have cash to fund research and development programs and operations in 2024.

Collaborating with Genentech on <unk>.

We're hopeful we can have some data to share with that program relatively soon we're obviously still working with genentech on the timing of that.

But the program is advancing where as you know dose escalating both mono and combo and we're exploring.

Combination studies that we can start planning for.

Both with Genentech and ourselves.

As well so so stay tuned.

So I'm really excited to hear more about that and also from 770 in the back half. Thanks, guys. Thank you.

Your next question comes from the line of Jonathan Chang with SVP Leerink.

Inc.

Hi, guys. Thanks for taking my questions first question on 717, how do you see this program positions in the competitive landscape versus other PD, 1 C tariff or by specific from development.

So I guess, there's 2 aspects to how we answer that question first is the details of the mechanism of action. Our molecule is designed to have binding preferentially to those cells that have both antigens.

John J. Kuch: And estimate we will end 2021 with between $475 to $500 million in cash and cash equivalents. Now I'll review our three and six months. Total revenue for the second quarter ending June 30, 2021 is $67.4 million compared to $13.1 million for the same period in 2020. Revenues in the second quarter include revenue from Arjanson-Novirus-Genzhen collaborations and royalty revenue from Alexion, Fear, and Morphosis, while revenue for the second quarter of 2020 will be primarily licensing revenue from Gilead and royalty revenue from Alexiore. Total revenue for the six-month end of June 30, 2020, was $101.4 million compared to $45.5 million for the same period of 2020.

That is PD, 1 and <unk> 4 because of the way we tune the affinity to each energy and in particular, the <unk> affinity is rather modest so you need that opportunity of binding to hook on to double positive cells. The goal was to have something thats more selective for the relevant T cells and potentially has a differentiated tolerability profile, we think from around 1.

Hundred patients or so in our safety database, so far we might be seeing.

Somewhat differentiated tolerability profile that doesn't have some of the very characteristic and profound.

<unk> related IR aes, along the colitis and pneumonitis line.

More data will have to be gathered to really nail that down the only other program. We know of with that same ammo way approach of a selective for double positive cells.

By specific would be a program that astrazeneca has it we've not seen any data from that that I believe that's it somewhere between phase 1 and 2 right now.

The second way, we want to position it is too to see if in particular, having a molecule that has the.

Kind of profile that we've seen so far and as binding both antigens and offers that Kelly force bump up along with the PD 1 to try that in the indications where PD ones are not already dominant and thats why we are focusing our efforts initially in castration resistant prostate cancer, and we'll be able to flesh out.

John J. Kuch: Revenues for the six months end of June 30, 2021, included revenue from Archanson, Novartis, Janata, collaborations, milestone revenue from Morphosis, Veer, and Novartis, and royalty revenue from Alexion, there, and Morphosis, compared revenues from the same period of 2020, which were primarily licensing revenue from Gilead and Amune, milestone revenue from Morphosis, and royalty revenue from, Research and Development Expendishes for the second quarter were 49.5 million compared to 43.5 million at the same period in 2020. Total R&D expenses for the six-month end of June 30, 2021, and 90.9 million compared to 77.4 million for the same period in 2020, increased R&D expenses for a three and six months and a, June 30, 2021, over the same periods in 2020 were due to additional spending on certain development programs, including XNab 104, our PD1 by ICOS program, XNV 819, our EMP3, CD3, and other early stage development programs.

The details of that strategy very shortly now that we're up and running.

And the trials the trials initiated the goal there is to to go into indications, where the MMA has some scientific basis as well as support from data in our phase 1, but where there is not a swamped commercial landscape in AR and.

In an already dense thicket and development and I think prostate cancer offers that kind of opportunity and that's why we're aggressively pursuing it we think we need to go where where others havent already heavily tried in the past.

Got it thank you.

And second question 4819 can you elaborate on day reduced potency CD 3 binding and compare this to other similar efforts in the competitive landscape.

Past that went on to John <unk>, our CSO, who can comment more specifically on the kind of affinity ranges in our logic on that.

Yeah, Thanks, Basel and thanks for the question Jonathan.

Basically I would say the <unk> not the only company actually moving in that direction I think a lot of companies kind of simultaneously started exploring this idea of reducing C. III potency as a way to mitigate.

You know cytokine release syndrome, and all the symptoms that go with that.

We found importantly, we can show us either in vitro, but also in various preclinical models that we can by reducing the <unk>. So we can actually preserve all of those cytotoxicity.

Conferred by the Bispecific antibodies, but greatly reduce the cytokines that are produced we see.

Several orders of magnitude reduced all 6 production monkeys, where we put these molecules than theyre tolerated at higher doses.

John J. Kuch: Additional spending on ECNab 306, our IL-15 program partnered with Genentec, also contributed to increased R.D. expenses during the first six months. General administrative expenses for the second quarter end of June 30, 2020, or 8.9 million compared to $7.2 million in the same period of 2020. Total GNA expenses for a six month end of June 30, 2020, $17.1 million compared to $14.4 million for the same period in 2020. Increased GNA expenses for the second quarter in the first six months of 2021, over months for the same periods of 2020, were primarily due to increased GNA staffing and spending

Or you know.

You can think about Meg per kg versus microgram per kilogram, you know something.

As widely different is that and of course, there are other benefits to being able to dose higher you get tend to get longer PK less target mediated drug gets disposition. So we think theres a lot of benefits to that.

Got it thank you.

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

Great. Thank you so interest thanks for taking the questions.

The CD CD 28 constructs when can we see the initial data around those and kind of the reason for picking CD 28 over I guess, CD, 3 and even reduce potency <unk> 3 and <unk>.

Other T cell engages.

Yes, so I'll take a stab at that so in terms of data. While we're just guiding that we're going to have that clinical trial started next year and so for data it'll be it'll be beyond that we can't we're not we can't speak specifically to something that's so far out now now just I'll make sure to emphasize this CD 28 is a T cell binding bi specific.

It's not as an alternative.

John J. Kuch: Other income for the second quarter ended June 30, 2021 was $43.2 million compared to $2.6 million in the same period of 2020. Other income for the six months ended June 30, 2020, was $56.3 million compared to $3.3 million in the same period of 2020. Other income for the second quarter and the first six months of 2021 includes a realized gain of $18.3 million on the sale of an investment equity security and a net increase in unrealized gains on the company's market-worlded equity security.

<unk> 3 engagement or other kinds of T cell targets. It's a pathway called the signal 2 that is used to bump up T cell activity, whether thats activity that might be being driven by T cell receptor binding and signaling which is which is really how PD ones work. So think of this as an <unk>.

<unk> agents that could in a tumor selective way boost potentially PD, 1 checkpoint inhibitor activity.

It's also weighted to augment CD 3 by specific activity, but again in a tumor selective way right. So it's a way to bump up things for other agents as long as well as potentially having its own monotherapy activity, but we don't view it as a as an alternative really.

Thank you and then.

Do you think that you have.

Interest rate construct you have with <unk> could actually drive responses by itself. What do you think it has to be combined with other.

John J. Kuch: Income for the second quarter and then June 30, 2021 was $52.2 million or 87 cents on a fully-grown per share basis compared to a net loss of $35 million or $0.61 on a fully-grown share basis for the same period in 2020. For the six months ending June 30, 2020, net income was 49.8 million, or 82 cents on a fully diluted share basis compared to a net loss of 43.1 million, or 76 cents on a fully diluted share basis for the same period in 2020.

Prostate antigens Youll have John do you want to tackle that I think we.

Yes, good question.

Yeah.

A possibility.

Obviously, we would hope to see single agent activity on the other hand, it's important to emphasize that PD 1.

It's been shown by numerous publications over the last couple of years that PD..1 main mechanism of action is actually to interfere with CD 28 signaling.

So a very very obvious combination therefore would be combining the ex Pat.

With PD, 1 blockade just to make sure that that brand new CD 28 suddenly you start it doesn't get shut off by the PD 1 signaling.

Yes, we're quite enthusiastic about attacking CD 28, because it's a challenging target to make work in this context, where you really truly have selective activation not over activation are super Super Agonism, and John's team has done an amazing job finding the right epitopes and building the right construct with the right affinity is quite quite engineering feat.

And we're really only aware of 1 company Thats ahead of us here and that will be regeneron and they seem to be putting a lot of effort into this pathway as well. We think this could be an exciting access and we're really happy to be exploring it.

John J. Kuch: The net income report for the three and six months and June 30, 2021, compared to the net loss report for the comparable periods in 2020, was primarily due to higher collaboration, milestone, royalty revenues, and increase in other income in 2020. Non-cash share-based compensation expense for a six-month period was $17.6 million compared to $14.7 million for the same period in 2020.

Next year.

Perfect. Thanks, so much thanks for taking the questions.

Your next question comes from the line of Sara.

Garo <unk> with Guggenheim.

Great. Thanks for taking the question. This is Paul on for <unk>.

Just wondering do you have any guidance currently on initial dose escalation data for your 2 earlier stage tumor microenvironment programs for.

For 1 in 1 of 4 I think you sort of mentioned being about a year behind 717 for just hoping to see if theres an update coming.

We don't have an update planned for this year, we'll guide more on that later.

Operator: Total shares outstanding were 58.3 million days at June 30, 2020, compared to $57.2 million as of June 30, 2020. With that, we now would like to open the call to your questions. Great, thanks guys. I love the quick, concise, immediate update. There is a lot going on here.

Okay, well in that case I was hoping to get maybe your updated views on opportunity for 841, especially coming out of after this year with some data for a likely Matt that sort of validated mechanism in melanoma.

And maybe your thoughts on expectations for initial read out anything incrementally concerned about the mechanism.

Overall thoughts there thanks.

So men.

This is a <unk> 4 by lag 3 so we're trying to combine both activities.

And we've explored it we've been exploring it in dose escalation and plan expansion cohorts that are actually.

Ted: A couple of questions I have made, just checking in on the Roche program, IL15, any potential for updates there. And I think you said that you would file the IMP for 819 this year and then potentially two IMDs next year for IL12 and 808. Is that all correct? Thanks, Ted. Yes, on the I&D timing, you're exactly right, 819 this year; the IL12 and XMB808 are B7H3 by CD28. Those go into 22, those latter two.

Starting imminently.

And I think the goal there is to see whether in either and we've disclosed this before either in monotherapy setting or in combination with a PD 1 inhibitor and were using <unk> in a clinical collaboration with Merck.

Whether those those settings of the post PD, 1 patients because thats the monotherapy co.

Cohort those patients are going to all be post PD, 1 and the indications we're going after for the most part as well as we're looking there and we're looking in combo with <unk> because we think this could be hopefully the agent of choice, giving you. The most bang for the Buck in 1 molecule to.

Checkpoints, you can inhibit and hopefully in a way that again uses our selectivity design to hone to the right cell populations and reduce the IRR AE profiles that people see a lot with <unk>.

Bassil I. Dahiyat: And with regard to the IL15 program XMab 306, we're currently collaborating with Genentech on, you know, we're hopeful we can have some data to share with that program relatively soon. We're obviously still working with Genentech on the timing of that. But the program is advancing. We're, as you know, dose escalating both mono and combo, and we're exploring combination studies that we can start planning for both with Genentech and ourselves, as well. So stay tuned. It's awesome. I'm really excited to hear more about that and also from 717 in the back app. Thanks, guys.

We don't know this heading we're going to let the day to guide us, but that's how we've set up the phase 1 and we're getting we're.

We're getting to the point, where we're starting to really explore explored.

Explore the efficacy in expansion cohorts.

Great. Thanks, a lot.

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

Hi, guys. Thanks for taking my questions I had 1 maybe for John.

You talked about.

CD 28 strategy can you maybe talk a little bit about how you're maybe in the context of the competitive landscape. How you guys are addressing to the 28.

Versus others, and then I guess more broadly.

You alluded to a complementary mechanism how do you kind of think about.

Operator: Our next question comes from the line of Jonathan.

Operator: comes from the line of Jonathan Chang with SVP Lear Link.

The collaboration with <unk>.

And then our J&J and how that might play into your other efforts in prostate cancer.

Jonathan Chang: Hi guys, thanks for taking my questions. First question on 717: how do you see this program positioned in the competitive landscape versus other PD1, CTLA, full of BIS specifics in development?

Yes, maybe I'll take the 1 on Jansen first and then John you can jump in on.

Our strategy, how we fit in how we think we differentiate.

So the the Janssen.

Our collaboration is for a prostate cancer target that isn't is closed.

Can be used to target. This CD 28, Modi and a bi specific antibody that we're creating with them.

Bassil I. Dahiyat: So I guess there are two aspects to how we answer that question. First, the details of the mechanism of action.

And then they'll develop we have attractive deal terms, we can take a 20%.

Stake in the the cost of the program after a clinical proof of concept and get a substantially enhanced royalty into the double digits and teens.

Bassil I. Dahiyat: Our molecule is designed to bind preferentially to those cells that have both antigens, that is, PD1 and CCHLA4, because of the way we tune the affinity to each antigen. In particular, the CCHLA4 affinity is rather modest, so you need that cooperative binding to hook on to double positive cells. The goal was to have something that's more selective for the relevant T cells and potentially has a differentiated tolerability profile. We think, you know, from around the 100 patients or so on our safety database, so far, we might be seeing a somewhat differentiated tolerability profile that doesn't have some of the very characteristic and profound, related IRAEs along the colitis and immunitis line. Of course, more data will have to be gathered to really nail that down.

The logic there for Janssen is they have a robust portfolio of prostate cancer agents, including CD 3 bi specifics they've talked about including checkpoint efforts and they think of CD 28 signaled 2 could be a hugely important consequential part of that and so we're delighted to be working with somebody who shares our vision for the science.

That is a tumor specific antigen this prostate specific antigen for prostate cancer.

And I think maybe John can jump into how we are using both antigen selection as well as our platforms developments for the CD 28 to separate ourselves from others.

Yeah, Yeah. Thanks for the question Arlinda.

But others you know.

Mostly I'm, assuming you mean, our colleagues at regeneron.

Who travels I've mentioned, a little bit of ahead of us.

I'd say 1 key aspect is we have a we've again built like we always do a plug and play platform. So we have a highly stable.

Bassil I. Dahiyat: The only other program we know of with that same M-O-A approach of a selective for double positive cells by specific would be a program that AstraZeneca has that we've not seen any data from yet, and I believe that it's somewhere between phase one and two right now. The second way we want to position it is to see if, in particular, having a molecule that has the kind of profile that we've seen so far and is binding both antigens and offers that CCHLA4 bump up along with the PD1 is enough to try that in indications where PD1s are not already dominant.

CD 28 single chain up fee that came out of our phage libraries.

But heavily vetted we have.

A whole affinity suite for those and that's something that we can we can plug in the whole affinity suite with any particular tumor antigen.

And I think the other key distinction is just looking at the targets that we've selected so.

From the outset I always wanted something that would be sort of a 1 size fits all across a lot of histology.

And that let us pretty quickly to be 73.

Knowing its properties with a broad and very bright expression across a lot of different pathologies turns out. It's also very bright on almost every epithelium tumor cell lines that we worked with Paul It was very convenient for in terms of proof of concept.

Bassil I. Dahiyat: And that's why we're focusing our efforts initially on castration-resistant prostate cancer, and we'll be able to flesh out the details of that strategy very shortly now that we're up and running and the trials are initiated. The goal there is to go into indications where the MOA has some scientific basis as well as support from data in our phase one, but where there's not a swamped commercial landscape and an already dense thicket in development. And I think prostate cancer offers that kind of opportunity, and that's why we're aggressively pursuing it. We think we need to go where others haven't already heavily trod on the path.

Yes.

I think it comes down to that other targets. We're looking at include.

PDL, 1 that I mentioned again, another broadly expressed tumor antigen.

So it comes down to that I think the plug and play platform in the selection of broad targets versus very indication specific targets.

Some of our competitors are exploring.

Yes.

Okay, great. Thank you.

Your next question comes from the line of Tom Shrader with B T I D.

Hi, This is Kelly on for Tom Thanks for the update and thanks for taking our questions maybe.

Jonathan Chang: Got it. Thank you.

Maybe 1 on the IL 12, and IL 15 program.

Jonathan Chang: And second question for 819; can you elaborate on the reduced potency?

The biology of difference for these 2 molecules they both seem to activate NK and T cells.

Bassil I. Dahiyat: You know, I'll pass that one on to John Day Hurley, our CSO, who can comment more specifically on the kind of affinity ranges in our logic for that. Yeah, thanks, Basil. And thanks for the question, Jonathan.

And does any reason data and change the way you think about the opportunity and like I guess, you mentioned that previously.

Ultra clean Dag delivery of IL 12 is powerful in melanoma, but.

John R. Desjarlais: So, you know, basically, Zincor is not the only company actually moving in this direction. I think a lot of companies kind of simultaneously started exploring this idea of reducing CD3 potency as a way to mitigate, you know, cytokine release syndrome and, you know, all the symptoms that go with that. We found, importantly, you know, we could show this either in vitro or in various preclinical models that, by reducing the C3 binding points, we can actually preserve all those cytotoxicity conferred by the Bicivic antibodies but greatly reduce the cytokines that are produced. We see, you know, several organs

Can't deliver it systemically does that intriguing.

I'll, let John Atlas.

Those issues are the ones that literally drove his entire design philosophy.

Yeah. So let me start in terms of the different biology.

It could certainly be confusing.

They all activate NK cells and T cells.

But the way I think of it as cytokines like IL, 2 and IL 15.

They're they're they're sort of they're their day job is to lead to expansion of those cell populations, so you're making more T cells, making more NK cells at the same time, they can actually promote higher cytotoxicity levels.

In contrast, IL 12 day job is basically to make those cells not so much proliferate them as much although we've seen that but really to make them more cytotoxic and in particular.

They'll make them create a lot of interferon gamma which of course, you know all kinds of dividends in terms of immuno oncology.

Operator: Your next question comes from the line by Peter Lawson with Bark. Great, thank you so much, thanks for taking the questions.

Including a direct anti tumor effects.

Peter Richard Lawson: On the CD28 construct, when will we see the initial data around that and kind of the reason for picking CD28 over, I guess, CD3 and even the reduced potency CD3 and other TSN Engage? Yeah, so I'll take a stab at that. So in terms of data, well, we're just guiding that we're going to have the clinical trials started next year, and so for data, it'll be beyond that. You know, we can't speak specifically to something that's so far out.

From a game is famous for but also paying their free for up regulating class 1 MHC and.

Increases the overall immunogenicity in the tumor setting.

And then with respect to the opportunity.

1 of the Holy Grails of I O is actually have a systemic IL 12 right.

Doing its tumoral injection always has its limitations.

As 1 of my colleagues just pointed out to be intra tumoral injection that's basically.

It's a subcutaneous injection near the tumor.

And so you can still when you're putting a highly potent IL 12 into a tumor youre still getting systemic exposure ultimately.

Peter Richard Lawson: Now, I'll make sure to emphasize that this CD-28 is a T-cell binding biospecific and is not an alternative to CD3 engagement or other kinds of T-cell targets. It's a pathway called Signal 2 that is used to bump up T-cell activity, whether that's activity that might be being driven by T-cell receptor binding and signaling, which is really how PD1s work. So think of this as an agent that could, in a tumor-selective way, boost potentially PD-1 checkpoint inhibitor activity.

So we've taken the approach, which seems to have worked out well pre clinically and with our IL 15 program.

Reducing the potency and that allows you to have a much more.

Slower onset of these activities that you want to promote like the FERC gamma is the other aspects of IL 12. So we believe we can we can actually get away with systemic administration at least that seems to be the case pre clinically, but obviously humans could be a different story and we'd have to we'd have to develop our other careful dose.

Peter Richard Lawson: It's also a way to augment CD3 by specific activity, but again, in a tumor-specific way. So it's a way to bump up things for other agents, as long as, as well as potentially having its own monotherapeutic activity, but we don't view it as an alternative. Thank you. And then, do you think the B7H3 construct you have with CD20 could actually drive responses by itself, or do you think it has to be combined with other prostate antigens?

Alicia plant in humans.

Got it yeah that makes sense and part of the IL..2 program can you tell us how differentiated it is from the other approaches are those are being evaluated in the clinic either suppression of CDA T cells.

T cells are differentiation and U T regs to TGF beta and IL 2 thank you.

I'm talking about do you want me to take that 1.

Yeah. Yeah, you can go ahead and I think yes sure you are the expert.

Yeah.

The key differentiation is a lot of it comes in the design of the molecule.

John R. Desjarlais: John, do you want to tackle that? I think we've already answered that question. Yeah, it's certainly a possibility when we, you know, obviously we would hope to see single agent activity. On the other hand, it's important to emphasize that PD1, as has been shown by numerous publications over the last couple of years, its main mechanism of action is actually to interfere with CD28 signals. And so, you know, a very, you know, very obvious combination would be combining the X-Bapt 808 with PD1 blockade just to make sure that that brand new CD28 signal you start doesn't get shut off by the PD1 system.

Our format as a monovalent IL 2 versus you know several of our competitors have bivalent IL 2 we avoided the bivalent IL 2 because it's that would almost interfere with our whole potency reduction concept 1 of the 1 of the main reasons to reduce potency is to reduce internalization in that.

It can actually be increased when you have a bivalent modality.

And we've also.

Technology.

Yes, that's right and have the extend technology and I think we're a little more careful at least.

Looking at our own in vitro selectivity data where were more careful on the selectivity and we think we have 1 of the best T Reg cell activity profiles.

Your next question comes from the line of Gregory <unk> with RBC capital markets.

John R. Desjarlais: Yeah, and we're quite enthusiastic about attacking CD-28 because it's a challenging target to make work in this context where you really truly have selective activation, not over-activation or super-agggotism. And John's team has done an amazing job finding the right epitopes and building the right constructs with the right affinities. It's quite an engineering feat. And we're really only aware of one company that's ahead of us here, that would be a regeneron, and they seem to be putting a lot of effort into this pathway as well.

Hi, This is moving along for Greg. Thank you for taking my question and I was wondering as he had multiple commercial success with their partner program at what point would you consider further monetizing pipeline success again, and how do you think about accessing royalty to florida or investing or pipeline.

Thank you.

Yeah. So we're always assessing the markets that that is the royalty market view on the value of our revenue streams and and comparing that against how we look at it and we think it's always an option and opportunity. We think it's a great part of the flexibility we built into our business plan.

John R. Desjarlais: We think this could be an exciting axis, and we're really happy to be exploring it next year. Perfect. Thank you so much. Thanks for taking the questions. Your next question comes from the line, Darrow.

Versus the steady income stream and that our assessment of how that income stream might grow might might missile line at times with the royalty companies and if it does 1 day then maybe there's an opportunity that we see we can do better that way I don't think of it as sort of an imperative I think it's just a ready opportunity there.

Operator: Great, thanks for taking the question. This is Paul on behalf of Edser. Just wondering, do you have any guidance currently on initial dose escalation data for your two earlier stage tumor microenvironment programs, 841 and 104? I think you sort of mentioned being about a year behind 717, so just hoping to see if there's an update coming.

Great. Thank you very much.

Your next question comes from the line of the issue with Bamberg.

Yeah.

Hi.

Thank you very much for taking my question I have 2 the first 1 I wanted to ask about a plant.

Multi model the.

Citigroup 80, 20 by specific antibody.

Bassil I. Dahiyat: We don't have an update plan for this year; we'll guide you more on that later.

You mentioned about sharing more phase 1 data later this year could you remind us what the phase 1 trial the design of phase 1 trial and I guess, what we should be looking for in terms of derisking.

Bassil I. Dahiyat: Okay, well, in that case, I was hoping to get maybe your updated views on opportunity for 841 and, especially, coming out of ASCO this year with some data for a lag 3 Mab that sort of validated the mechanism in melanoma. So maybe your thoughts on expectations for initial readout, anything incremental we could learn about the mechanism, and overall thoughts there. Thanks.

Sure.

The phase III trial, Youre going to start and the second question is around the the cytokines.

Our portfolio I think and now here is.

It seems that you are putting more resources in developing our Morris modifying the cytokines.

I guess, what what would you like to do in terms of give up Inc.

Bassil I. Dahiyat: Right, so remember, this is a CCHLA4 by Lag 3, so we're trying to combine both activities, and we've explored it, we've been exploring in dose escalation and plan expansion cohorts that are actually, I think, starting imminently. And I think the goal there is to see whether in either, we've disclosed this before, either in monotherapy setting or in combination with a PD1 inhibitor, and we're using Pembralizumab in a clinical collaboration with Merck, whether those settings of the post-PD1 patient, because that's the monotherapy cohort, those patients are going to all be post-PD-1 and the indications we're going after for the most part, as well as we're looking there, and we're looking in combo with Pembro because we think this could be, hopefully, the agent of choice giving you the most bang for the buck and one molecule of two checkpoints you can inhibit, and hopefully in a way that, again, uses our selectivity design to hone to the right cell populations and reduce the IRAE profiles that people see a lot with IPI.

More cytokines, particularly in the Audi American patients given cytokines are quite important he got here yet.

Very much.

Yeah I'll answer the first question I'm, sorry, I'll answer the second question about our cytokine portfolio sort of strategy. Overall, then I'll, let Allen Yang our Chief Medical Officer take the 1 about Plano so.

From the cytokines portfolio, we are applying more resources because we've seen from the data that we've gathered so far on our earlier programs. There are IL 15, or <unk> for T regs.

This general strategy of reducing potency to the appropriate level and you've got to really do the experiments to find out what that might be to get that therapeutic profile that you want the duration of action that the increase in cell and subpopulations that you want and the Tolerability profile that strategy you seem to have general legs, and pre clinically and now we've seen.

It again, and again and again with different programs like IL 12.

We're exploring IL 18, now we've looked at some other cytokines so I think.

Theres, an enormous playground, there and I think for now we're going to focus on buttressing our portfolio in the oncology space, we thought that that the outlier. There was the T. Reg hypothesis for IL 2 was just too good and clear indirect of an opportunity for our platform.

Bassil I. Dahiyat: So, you know, we don't know the setting we're going to let the data guide us, but that's how we've set up phase one, and we're getting to the point where we're starting to really explore the efficacy and expansion cohort. Great, thanks a lot. Next question, line from our Linda Lee with Campbell. Okay, thanks for taking my questions. I had one, maybe, for John.

Pass up for now and so I think we're going to continue focusing on oncology.

Do scientific and research exploration all over the place and for now just have the the IL 2 be the 1 that we're planning.

For now and in the autumn inside so that's in the clinic now we're excited about it.

The next clinical program would probably the 1 after that would be oncology.

Operator: You talked about the CD28 strategy. Can you maybe talk a little bit about how you're maybe in the context of the competitive landscape, how you guys are addressing CD28 versus others? And then, I guess, more broadly, Baville, you alluded to a complementary mechanism. How do you kind of think about the collaboration with Jans and then with J&J and how that might play into your strategy? Yeah, maybe I'll take the one on Jansen first, and then, John, you can jump in on our strategy, how we fit, and how we think we differentiate.

Then Alan do you want to address the question about the phase 1 and how that plays into phase III for planet.

Sure Basil thanks, Thanks, Jason for the question. So the question was what to expect.

From our phase 1 data so.

I think the last time, we publicly released data on our phase 1 program was at Ash 2 years ago actually 2 previous ashes and we were still in dose escalation and so the team has spent a lot of time really optimizing the dose and schedule and so more recently, we've been sort of developing a more convenient and.

The dose and schedule for patients at.

At the time, we released data we'd lose data on something like a.

Bassil I. Dahiyat: So the Jansen collaboration is for a prostate cancer target that isn't as closed, to be used to target this CD-28 modi in a bi-specific antibody that we're creating with them and that they'll develop, and we have attractive deal terms; we can take a 20% stake in the cost of the program after clinical proof of concept and get a substantially enhanced royalty into the double digits and teens. The logic there for Janssen is they have a robust portfolio of prostate cancer agents, including CD3 bispecifics they've talked about, including checkpoints, and they think a CD28 signal 2 could be a hugely important and consequential part of that.

Responses at over 80 milligram microgram per kilogram and the response rate was roughly over 40%. We've now moved well beyond that in our dose escalation and so we'll be looking at data at much higher doses and that was in diffuse large b cell lymphoma. So we will have continued data in diffuse large b cell lymphoma, and probably some into lymphomas as well.

So that will be the phase 1 data.

The second question was what to expect.

In the phase II study, so we've announced that we're committed to a phase II study, we think its very exciting its a chemo free study where we.

Combining <unk> with <unk> and Lenalidomide.

So we think that Theres 2 complementary mechanism of actions and targets of CD 19, with ADC and CD 20, with the T cell engagement excuse me.

So we believe that that is actually a very exciting and novel mechanism of action and will differentiate us from the competitors.

Great. Thank you very much.

Bassil I. Dahiyat: And so we're delighted to be working with somebody who shares our vision for the science. Note that this is a tumor-specific antigen, this prostate-specific antigen, for prostate-cate. And I think, you know, maybe John can jump into how we're using both antigen selection as well as our platform's developments for the CD28 to separate ourselves from others. Yeah, yeah. Thanks for the question, Linda.

And ladies and gentlemen that concludes our Q&A session I'd like to turn the call over to pass all day out for any closing remarks. Thanks.

Thanks, very much and a big thank you to the team at Zen core that's been tireless in cubic our whole suite of programs moving forward and finally I'd like to thank everybody very much for joining US today, we look forward to updating you again over the coming months and have a terrific evening.

Yeah.

Thank you for your participation in today's call. This does conclude today's conference call you may now disconnect.

John R. Desjarlais: You know, and by others, I'm assuming you mean our colleagues at Regeneron, who, as Vazel mentioned, are a little bit ahead of us. You know, I'd say one key aspect is we have a, you know, we've again built, like we always do, a plug-and-play platform, so we have a highly stable anti-CD-28 single-chain FB that came out of our phag It's been heavily vetted.

Okay.

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Thanks, John.

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No.

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John R. Desjarlais: We have a whole affinity suite for those, and that's something that we can plug into the whole affinity suite with any particular tumor antigen. And I think the other key distinction, you know, is just looking at the targets that we've selected. So, you know, from the outset, you know, I always wanted something that would be sort of a one-size-fits-all across a lot of histologies. And that led us pretty quickly to B-7-83, you know, knowing it's proper.

John R. Desjarlais: of broad and very bright, you know, expression across a lot of different histologies. Turns out, it's also very bright in almost every epithelial tumor cell line that we work with. So it was very convenient in terms of proof of concept. You know, I think it comes down to that. And, you know, other targets we're looking at include, you know, like PDL1 that I mentioned. Again, another broadly expressed tumor antigen. So it comes down to that. I think the plug-and-play platform and the slow. of broad targets versus very indication-specific targets like some of our competitors are. Great, thank you, next question. Shrader with BTI. Hi, this is Kavari for Tom.

Operator: Thanks for the updates, and thanks for taking our questions. Maybe one on the IL-12 and IL-15 programs. Is the biology different for these two molecules? They both seem to activate NK and CDAT cells. And does any recent data change the way you think about the opportunity, as you mentioned previously? We have also seen direct delivery of IL-12 is powerful in melanoma, but you can't deliver it systemically. Does that intrigue you? I'll let John take that one.

John R. Desjarlais: Those issues are the ones that literally drove his entire design philosophy. Yeah, so let me start with the different biologies. You know, it could certainly be confusing because, you know, they all activate NK cells in TC. But the way I think of it is cytokines like IL-1 and IL-15, their, their sort of day job is to lead to the expansion of those cell populations. So you're making more T-cells and making more NK cells.

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John R. Desjarlais: At the same time, they can actually promote, you know, higher cytotoxicity levels. In contrast, IL12's day job is basically to make those cells not so much proliferate them as much. I mean, although we've seen that, but really, to make them. more cytotoxic and, in particular, make them secrete a lot of interferon gamma, which of course pays all kinds of dividends in terms of immunology, including direct anti-tumor effects that interferon gamma is famous for, but also famously for upregulating class 1 MHC and increasing the overall immunogenicity in the tumor setting.

John R. Desjarlais: And then with respect to the opportunity, you know, one of the holy grails of I.O. is to actually have a systemic IL12, right? I mean, doing intraturial injection always has its limitations. As one of my colleagues has pointed out to me, intratumeral injection is basically a subcutaneous injection near the tumor.

John R. Desjarlais: So you can still, when you're putting a highly potentile 12 into a tumor, you're still getting systemic exposure ultimately. And so we've taken the approach, which seems to have worked out well preclinically and with our Al 15 program, of reducing the potency. And that allows you to have a much slower onset of these activities that you want to promote, like the interferent gamma and the other aspects of IELPy.

John R. Desjarlais: So we believe we can actually get away with systemic administration, at least that seems to be the case pre-clinically, but obviously, you know, humans could be a different story, and we have to develop a very careful dose escalation plan. Got it. Yeah, that makes sense. And for the IL2 program, can you tell us how differentiated it is from the other approaches being evaluated in the clinic, either suppression of CDH T cells, specific CDAT cells, or differentiation of induced Tregs through TGF beta and IL2? Thank you. Bousy do you want me to take that one?

John R. Desjarlais: Yeah, you can go ahead, I think, yeah, sure, you're the FECD. Yeah, I mean, the key differentiation comes in the design of the molecule. You know, our format is a monovalent IL2 versus, you know, several competitors have bi-valent IL-2. We avoided bivalent aisle 2 because that would almost interfere with our whole potency reduction concept.

John R. Desjarlais: One of the main reasons to reduce potency is to reduce internalization, and that can actually be increased when you have a bivalent modality. We've also... And technology. Yeah, that's right, it has the extend technology, and I think we're a little more careful, at least when looking at our own in vitro selectivity data, we're more careful about the selectivity, and we think we have one of the best T-Regg selectivity profiles. Our next question comes from the line of Gregory Renza with RBC, Capital. Hi, this is Ian Long for Greg.

John R. Desjarlais: Thank you for taking my question. I was wondering, as you had multiple commercial success with your partner programs, at what point would you consider further monetizing pipeline success again, and how do you think about accessing royalties to further invest in your pipeline?

Bassil I. Dahiyat: Thank you. Yeah, so we're always assessing the markets, that is, the royalty market view on the value of our revenue streams, and comparing that against how we look at it. And, you know, we think it's always an option and an opportunity. We think it's a great part of the flexibility we've built into our business plan versus the steady income stream. And then, you know, our assessment of how that income stream might grow might misalign at times with the royalty companies.

Bassil I. Dahiyat: and if it does one day, then maybe there's an opportunity that we see we can do better that way. I don't think of it as sort of an imperative. I think it's just a ready opportunity there.

Operator: Great. Thank you very much. Your next question comes from the line of Z-Shu with Berenberg.

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Operator: Hi. Thank you very much for taking my question. I have two. The first one I want to ask is

Zhiqiang Shu: about a plenotmath, the city 3, 30, by specific antibody. You mentioned sharing more phase one data later this year. Could you remind us about the phase one trial, the design of the phase one trial, and I guess what we should be looking for in terms of de-risking the phase two trial you're going to start? And the second question is around the Sada-Kine.

Zhiqiang Shu: a portfolio. I think now you are putting more resources into developing more modifying assignments. I guess, what would you like to do in terms of developing more satirase, particularly in the audience, given that ascotines are quite important. Thanks very much.

Bassil I. Dahiyat: Yeah, I'll answer the first question, sorry, I'll answer the second question about our cytokine portfolio sort of strategy overall, then I'll let Alan Yang, our chief medical officer, take the one about Plamo. From the cytokine portfolio, we are applying more resources because we've seen from the data that we've gathered so far on our earliest programs there, our IL-15 and our IL2 for T-Regs, that this general strategy of reducing potency to the appropriate level, and you've got to really do the experiments to find out what that might be, to get that therapeutic profile that you want, the duration of action, the increase in And preclinically, we've seen it again and again and again with different programs like IL-12. We're exploring IL-18 now. We've looked at some other cytokines. So I think, you know, there's an enormous playground there.

Allen S. Yang: And I think for now we're going to focus on buttressing our portfolio in the oncology space. We thought that the outlier there, the T-Rag hypothesis for IL2, was just too good and clear and direct of an opportunity for our platform to pass up for now. And so I think we're going to continue focusing on oncology while we, you know, we do scientific and research exploration all over the place and, for now, just have the aisle to be the one that we're planning for now on the autoimmune side.

Allen S. Yang: So that's in the clinic now. We're excited about it. The next clinical program, probably the one after that, would be on. Then, Alan, do you want to address the question about phase one and how that plays in phase two for Plama? Sure, Basil, thanks, thanks to you for the question. So the question was, you know, what to expect from our phase one data. So, you know, I think the last time we publicly released data on our phase one program was at Ash two years ago, actually, two previous Ashes, and we were still in dose escalation.

Allen S. Yang: The team has spent a lot of time really optimizing the dose and schedule, and so more recently, we've been sort of developing a more convenient dose and schedule for patients. At the time we released data, we released data on something like responses at over 80 micrograms for kilogram, and the response rate was roughly over 40%. We've now moved well beyond that in our dose escalation.

Allen S. Yang: And so we'll be looking at data at much higher doses, and that was in diffuse large B cell lymphoma. So we'll have continued data on diffuse large B cell lymphoma and probably some indolent lymphomas as well.

Allen S. Yang: So that will be the phase one data. I think the second question was what to expect in the phase two study. So we've announced that we're committed to a phase two study. We think it's very exciting. It's a chemo-free study, well, we're combining Plymob with Tafacidimab and Lennelanidamide. So we think that there are two complementary mechanisms of action and targets of CD19 with ADCC and CD20 with T-Sel engagement. Excuse me. So we believe that that is actually very exciting and

Allen S. Yang: A very exciting and novel mechanism of action that will differentiate us from the competitors. Great, thank you very much.

Operator: Ladies and gentlemen, that concludes our Q&A session. I'd like to turn the call over to Basil Diab for any closing remarks. Thank you very much.

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Bassil I. Dahiyat: And a big thank you to the team at Zen Corps that's been tireless in keeping our whole suite of programs moving forward. And finally, I'd like to thank everybody very much for joining us today. We look forward to updating you again over the coming months. This does conclude today's conference call. You may now hang up.

Operator: You know, Bhopal, and I'm gonna go. I'm gonnaer Thank you, Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you Thee, and thank you. Thank you. Thank you, and so on the Thank you.

Narrator: Thee Thank you. Thank you. Thank you. Thank you. Thank you. Thank you, and Thank you.

Narrator: Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.