On August 6, 2018 Xencor, Inc. (NASDAQ:XNCR), a clinical-stage biopharmaceutical company developing engineered monoclonal antibodies for the treatment of autoimmune disease, asthma and allergic diseases, and cancer, reported financial results for the second quarter ended June 30, 2018 and provided a review of recent business and clinical highlights (Press release, Xencor, AUG 6, 2018, View Source [SID1234528631]).
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"Our recent activities and upcoming milestones reflect our commitment to building a broad pipeline of antibodies for the treatment of autoimmune disorders and cancer," said Bassil Dahiyat, Ph.D., president and chief executive officer at Xencor. "In 2018, we are focused on advancing multiple oncology programs, all built from our XmAb bispecific technology, to potentially produce a new generation of targeted immunotherapies. In addition to initiating DUET-2, the first-in-human trial of our lead TME activator, we remain on track to announce Phase 1 data from our lead bispecific oncology candidate, XmAb14045, and to file IND applications for our next two TME activators by year-end. In parallel, we continue to advance our autoimmune disease candidate, XmAb5871, toward Phase 3 development."
Recent Business Highlights and Upcoming Clinical Plans
XmAb5871: XmAb5871 is a first-in-class monoclonal antibody that targets CD19 with its variable domain and uses Xencor’s XmAb immune inhibitor Fc domain to target FcyRIIb, a receptor that inhibits B-cell function.
·Initiation of Phase 3 trial in IgG4-RD expected in 2H18.
·Topline data from Phase 2 trial in SLE expected in 4Q18.
Bispecific Oncology Pipeline: Xencor’s initial bispecific antibody programs are tumor-targeted antibodies that contain both a tumor antigen binding domain and a cytotoxic T-cell binding domain (CD3). These bispecific antibodies activate T cells for highly potent and targeted killing of malignant cells. Their XmAb Fc domains confer long circulating half-lives, stability and ease of manufacture.
· Initial data from Phase 1 study of XmAb14045 for the treatment of AML and other CD123-expressing hematologic malignancies expected in 2018, pending alignment on timing with Novartis.
·Initial data from Phase 1 study of XmAb13676 for the treatment of B-cell malignancies expected in 2019, pending alignment on timing with Novartis.
·Initial data from Phase 1 study of XmAb18087 for the treatment of neuroendocrine tumors and gastrointestinal stromal tumors expected in 2019.
Xencor’s bispecific pipeline also includes a suite of TME activators that engage multiple targets, such as T-cell checkpoints or agonists.
In July 2018, Xencor dosed the first patient in DUET-2, a Phase 1 study of XmAb20717, a PD-1 x CTLA-4 dual checkpoint inhibitor. The trial is a multiple ascending dose study to determine the safety and tolerability, pharmacokinetics, pharmacodynamics, immunogenicity and preliminary anti-tumor activity of intravenous administration of XmAb20717 in patients with advanced solid tumors.
· IND filing for XmAb23104, a PD-1 x ICOS bispecific antibody for the treatment of multiple oncology indications, expected in 2018 and initiation of Phase 1 trial expected in 2019.
· IND filing for XmAb22841, a CTLA-4 x LAG-3 dual checkpoint inhibitor for the treatment of multiple oncology indications, expected in 2018 and initiation of Phase 1 trial expected in 2019.
·IND filing for XmAb24306, an IL15/IL15Rα-Fc bispecific antibody for the treatment of multiple oncology indications, expected in 2019.
XmAb7195: XmAb7195 is a first-in-class monoclonal antibody that targets IgE with its variable domain and uses Xencor’s XmAb immune inhibitor Fc domain to target FcyRIIb, resulting in three distinct mechanisms of action for reducing IgE. In a Phase 1b study, subcutaneously-administered XmAb7195 induced potent IgE reduction with improved tolerability. Xencor is currently seeking a development partner for XmAb7195.
Partnered XmAb Programs: Eight pharmaceutical companies and the National Institutes of Health are advancing novel drug candidates either discovered at Xencor or that rely on Xencor’s proprietary XmAb technology. Four such programs are currently undergoing clinical testing, including MOR208, which is in Phase 3 development as a combination agent for the treatment of relapsed or refractory diffuse large B-cell lymphoma. In addition, regulatory submissions have been filed in the U.S. and EU for Alexion’s ravulizumab (formerly ALXN1210) for the treatment of patients with paroxysmal nocturnal hemoglobinuria.
Corporate: In July 2018, Xencor announced the resignation of Edgardo Baracchini, Ph.D., Chief Business Officer, effective August 15, 2018. Xencor has initiated a search to appoint a new Chief Business Officer.
Second Quarter Ended June 30, 2018 Financial Results:
Effective January 1, 2018, Xencor adopted the new revenue recognition standard, Accounting Standard Codification 606 (ASC606). In addition to adopting the standard for 2018, revenue reported for the prior period ending June 30, 2017 has been revised to reflect the new standard.
Cash, cash equivalents and marketable securities totaled $555.4 million as of June 30, 2018, compared to $363.3 million at December 31, 2017. The increase reflects net proceeds of $245.5 million from Xencor’s sale of additional stock in March 2018, offset by cash used to fund operating activities in the six months ended June 30, 2018.
No revenues were reported for the three and six-month periods ended June 30, 2018, compared to $12.5 million and $16.0 million of income reported for the same periods in 2017. Revenues in the three and six-month periods ended June 30, 2017 were primary milestones received from the Company’s MorphoSys and CSL collaborations. Revenue reported for both periods was affected by the adoption of the new revenue recognition standard on January 1, 2018. Under historic revenue recognition methods, the Company would have recognized $0.6 million and $13.3 million of revenue for the three-month periods, and $7.5 million and $17.7 million of revenue for the six-month periods, ended June 30, 2018 and June 30, 2017, respectively.
Research and development expenditures for the second quarter ended June 30, 2018 were $23.3 million, compared to $16.9 million for the same period in 2017. Total research and development expenditures for the six-month period ended June 30, 2018 were $49.4 million, compared to $32.0 million for the same period in 2017. The increased research and development spending for the three and six months ended June 30, 2018 reflects additional spending on Xencor’s pipeline of bispecific oncology candidates.
General and administrative expenses for the second quarter ended June 30, 2018 were $5.0 million, compared to $4.1 million in the same period in 2017. Total general and administrative expenditures for the six-month period ended June 30, 2018 were $9.5 million, compared to $8.9 million for the same period in 2017. The increased spending on general and administration for the three and six months ended June 30, 2018 reflects additional facility costs resulting from the expansion of space under lease at Xencor’s Monrovia and San Diego locations and increased stock- based compensation charges.
Non-cash, share based compensation expense for the second quarter ended June 30, 2018 was $9.4 million, compared to $6.6 million for same period in 2017.
Net loss for the second quarter ended June 30, 2018 was $25.9 million, or $(0.46) on a fully diluted per share basis, compared to a net loss of $7.7 million, or $(0.17) on a fully diluted per share basis, for the same period in 2017. For the six months ended June 30, 2018, net loss was $55.4 million, or $(1.07) on a fully diluted per share basis, compared to a net loss of $23.2 million, or $(0.50) on a fully diluted per share basis, for the same period in 2017. The increased loss for the three and six months ended June 30, 2018 over the same periods in 2017 is primarily due to lower revenue and increased research and development spending in the 2018 periods.
The total shares outstanding were 55,821,310 as of June 30, 2018, compared to 46,854,762 as of June 30, 2017. The additional shares outstanding at June 30, 2018 reflect the 8,395,000 shares sold in Xencor’s March financing.
Financial Guidance:
Based on current operating plans, Xencor expects to have cash to fund research and development programs and operations into 2023. Xencor expects to end 2018 with approximately $500 million in cash, cash equivalents and marketable securities.
Conference Call and Webcast:
Xencor will host a conference call today at 4:30 p.m. ET (1:30 p.m. PT) to discuss these second quarter 2018 financial results and provide a corporate update.
The live call may be accessed by dialing (877) 359-9508 for domestic callers or (224) 357-2393 for international callers and referencing conference ID number 6399929. A live webcast of the conference call will be available online from the Investors section of the Company’s website at www.xencor.com. The webcast will be archived on the company’s website for 90 days.