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Xencor Inc (NASDAQ:XNCR)
Q1 2019 Earnings Call
May. 9, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Xencor Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). Please be advised, this call is being recorded at the Company's request. I would now like to introduce your host for today's conference, Charles Liles, Associate Director and Head of Corporate Communications and Investor Relations. You may begin.

Charles Liles -- Associate Director and Head of Corporate Communications & Investor Relations

Thank you, operator. Good afternoon. This is Charles Liles of Xencor. Welcome to our First Quarter 2019 Financial Results Conference Call. Earlier this afternoon, we issued a press release which outlines the topics we plan to discuss today. The release is available at www.xencor.com. Today on our call Bassil Dahiyat, President and Chief Executive Officer will discuss the Company's business highlights; Paul Foster, Senior Vice President and Chief Medical Officer will provide an update on Xencor's clinical programs; and John Kuch, Senior Vice President of Finance and Chief Financial Officer will review the financial results from the first quarter of 2019; then, we will open up the call for your questions.

Before we begin, I would like to remind you that during the course of this conference call, Xencor management may make forward-looking statements, including statements regarding the Company's future financial and operating results, future market conditions, the plans and objectives of the management for future operations, 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, let me pass the call over to Bassil.

Bassil I. Dahiyat -- President and Chief Executive Officer

Thanks, Charles, and good afternoon everyone. The core of Xencor's approach to creating antibody and protein therapeutics is our XmAb engineering platform. By making small changes to an antibody structure, specifically it's Fc domain, we can improve its natural functions and performance or create new mechanisms of therapeutic action. The plug-and-play nature of the small suite of XmAb Fc domains we've created allows us to engineer nearly any antibody to have improved potency, longer half-life or bispecific structure.

This flexibility and portability enables us to advance multiple programs simultaneously, and generate proof-of-concept data to guide which programs we will independently advance, which we will partner and which we would terminate.

Now the majority of our R&D over the last few years has been the expansion of our pipeline of bispecific antibody-drug candidates, bispecifics are a rapidly emerging area of biotherapeutic development, particularly in Oncology and we're committed to being at the forefront of this field.

Our XmAb heterodimer Fc domain provides a robust scaffold and enables us to rapidly generate new protein and antibody bispecific candidates. These candidates can be grouped into three distinct classes. The first and most advanced is the CD3 class. These are tumor targeted antibodies that contain both the tumor antigen binding domain and a cytotoxic T-cell binding domain, which is in the CD3 binding domain. They activate T-cells at the site of the tumor in order to potently kill them.

Now, our second group of bispecific antibodies are our tumor microenvironment activators. Rather than directly bridging a T-cell to a tumor cell, our TME activator seek to more effectively reactivate tumor reactive T-cells than existing therapies by engaging multiple T-cell targets simultaneously, such as checkpoints or agonists. This approach not only reduces the need for multiple antibodies typically used for combination therapy, but it also allows for more selective targeting of T-cells with multiple checkpoint expression, which are typically the ones overexpressed in the tumor microenvironment.

Finally, we're developing a suite of engineered cytokines, which are immune signaling proteins. We've built them on our XmAb bispecific FC domain. They contain both cytokine and cytokine receptors domains and aim to selectively expand and activate immune cells that can be recruited against tumors. Our first preclinical candidate is XmAb 24306. It's an IL-15/IL-15 receptor-alpha fused with a bispecific Fc domain. It's the lead program in our co-development collaboration with Genentech, which we announced in February and have previously discussed in detail.

Our heterodimer Fc domain and engineering of the IL-15's potency potentially provide superior tolerability, slower receptor mediated clearance and a prolonged half-life. 24306 is intended for development with a wide range of combination agents, and importantly, we can perform our own clinical trials with both our own pipeline assets and non-Genentech agents subject to some conditions.

We look forward to playing in number of these combination studies pending completion of the initial dose escalation study of 24306 and we expect to support Genentech's IND application in multiple oncology indications in the second half of this year. Partnerships like this will provide us with cash and helps fund the development of our own product candidates.

Now most of these partnerships require very limited resources and effort from us. For example, we licensed Xtend Fc technology to Alexion to create a complement inhibitor with improved half-life and dosing schedule. They received FDA approval and have launched the drug Ultomiris and we will receive a low-single-digit royalty on net sales.

Another partner MorphoSys licensed from us MOR208, an antibody now called tafasitamab, it is a CD19 antibody that we built and used our cytotoxic FC domain for high ADCC or high cytotoxic killing function. MorphoSys recently affirmed they intend to complete a BLA submission by the end of 2019. If approved, we would receive royalties in the high single-digit to low double-digit percent range.

In April, we announced our newest partnership; a small research collaboration with Astellas, where we're using our bispecific Fc platform to create drug candidate molecules against one undisclosed target pair specified by Astellas. We'll perform initial characterization of the molecules and Astellas will do all further development, regulatory and commercial activities and they have the exclusive worldwide license for the program.

We received $15 million upfront and are eligible for up to $240 million in milestone payments as well as high-single to low double-digit percent royalties on net sales. This agreement complements our work to advance our internal pipeline of bispecifics in oncology and we're happy to have Astellas as a partner.

With that, I'll hand the call over to Paul Foster to discuss our clinical efforts in greater detail.

Paul Foster -- Senior Vice President and Chief Medical Officer

Thank you, Bassil. XmAb14045 is our CD123 x CD3 bispecific antibody that's being developed in collaboration with our partner Novartis. It's being evaluated currently in an open label Phase I dose escalation study in patients with relapsed or refractory acute myeloid leukemia or other CD123-expressing hematologic malignancies.

Last month, the FDA lifted the partial clinical hold that have been placed on the Phase I study due to safety issues of cytokine release syndrome and pulmonary toxicity. The FDA's decision to lift the hold follow discussion and agreement on amendments to the study protocol, which included the addition of more guidance on the monitoring and the management of cytokine release syndrome.

We are currently working with the investigational sites to resume enrollment, based on the amended protocol and we expect to be fully enrolling at all these sites within the coming weeks. Recall that we presented initial data from 66 patients last year at ASH. We observed multiple complete remissions in a heavily pre-treated patient population, and since then, we've treated many more patients at active initial dose levels.

The highest prevalence and severity of cytokine release syndrome observed was generally on the first dose and it reduces in severity on subsequent doses. We're currently working to optimize the dosing regimen, and we're also working with our partner Novartis to plan the next phase of clinical development. Our other two clinical stage CD3 bispecific are XmAb13676 and 18087 and we are conducting Phase I dose escalation studies to assess safety, tolerability and preliminary anti-tumor activity of these antibodies. Initial dose escalation clinical and biomarker data are expected from these studies in the second half of 2019.

Moving onto our bispecific antibodies that aim to activate T-cells in the tumor microenvironment, we recently dosed the first patient in a Phase I clinical study of XmAb23104, which simultaneously targets the immune receptors PD-1 and ICOS for the treatment of patients with advanced solid tumors. As with all our bispecific TME activators, the hypothesis is that the multiple immune checkpoints in co-stimulatory receptors are more highly expressed on T-cells in the tumor microenvironment than on those in the periphery.

Through preferential targeting of cells that express combinations of these receptors like PD-1 and ICOS or CTLA-4 and LAG-3 for example, we hope to be able to drive a stronger anti-tumor response with monotherapy, with improved tolerability relative to combination therapy. The most validated combination of checkpoints is PD-1 and CTLA-4 and we designed XmAb20717 as a bispecific antibody to target T-cells that co express both these checkpoint receptors.

XmAb20717 is being evaluated in a Phase I clinical study in patients with advanced solid tumors. We began enrolling patients in the study in July of last year and we anticipate initial dose escalation clinical and biomarker data to be available in the second half of 2019. Finally, this quarter, we look forward to updating you when we begin to enroll patients in a Phase I study evaluating XmAb22841, our third TME activator, It's a CTLA-4 x LAG-3 bispecific antibody, and while we conduct these initial dose escalation with XmAb22841 as a monotherapy, we designed it to be evaluated along with a PD-1 inhibitor to create a triple checkpoint blockade. We will be combining with pembrolizumab in separate dose escalation cohorts. Bassil.

Bassil I. Dahiyat -- President and Chief Executive Officer

Thanks, Paul. Before we move on to financials, I'd like to turn briefly to obexelimab which we used to call XmAb5871. This antibody uses our XmAb immune inhibitor FC domain to enhance Fc gamma RIIb binding and it targets CD19 with this variable domain. It's designed to inhibit the function of B-cells, an important component of the immune system without killing them. We've completed multiple clinical studies with obexelimab where we've observed encouraging disease modifying activity including in IgG4 related disease and Systemic Lupus Erythematosus or SLE.

Additionally, we've also completed a study with a subcutaneous formulation, which showed good tolerability and supports every other week dosing. We believe that the data from studies in patients with SLE and IgG4 related disease support further development into the indications as well as in other B-cell mediated autoimmune indications. And as we previously mentioned in our fourth quarter call, we're seeking a partner that has the infrastructure resources to continue late-stage development of obexelimab and maximize the drug candidate's potential for a broader set of patients.

With that, I'll turn the call over to John Kuch to review our first quarter 2019 financial results.

John J. Kuch -- Senior Vice President and Chief Financial Officer

Thank you, Bassil. During the first quarter, we continued to strengthen Xencor's balance sheet and financial position with new partnerships and collaborations. Today, we reported cash, cash equivalents, marketable securities and receivables totaling $650.5 million at March 31, 2019, compared to $540.7 million at December 31, 2018. The increase reflects upfront proceeds of $135 million from our Genentech and Astellas collaborations which were reported as receivables at March 31st, 2019 and were received by us in April. Net of cash, we used the fund to operating activities in the first quarter of 2019.

Total revenue for the first quarter ended March 31st, 2019 was $111.9 million, which reflects revenue recognized from our research and licensing collaboration with Genentech. No revenue was reported for the same period at March 2018. As Bassil mentioned, in connection with our Alexion partnership, the Company is eligible to receive royalties in the low-single digits on net sales of Ultomiris which was approved for marketing in the U.S. by the FDA in March 2018.

Under our agreement with Alexion, royalties are due to us based on net sales proceeds and as cash received. We did not report any royalty income for the first quarter of 2019, and we expect that royalty income that we will report will be one to two quarters in arrears from the Ultomiris sales report by Alexion.

Research and development expenditures for the first quarter were $28.2 million compared to $26.1 million for the same period in 2018. Spending on R&D expenses for the first quarter 2019 is primarily on our bispecific technologies and pipeline including our lead cytokine candidate XmAb24306. Reported R&D expenses are net of cost-sharing reimbursements received from Novartis and Genentech under the respective collaboration agreements.

General and administrative expenses for the first quarter were $5.5 million compared to $4.6 million in the same period in 2018. The increased spending on G&A expenses for the first quarter 2019 reflects additional spending on professional fees related to licensing and intellectual property.

Non-cash stock-based compensation expense for the first quarter was $5.9 million compared to $4.5 million for the same period in 2018. Net income for the first quarter was $80 million or $1.38 on a fully diluted per share basis, compared to a net loss of $29.5 million or $0.62 on a fully diluted per share basis for the same periods in 2018. The net income reported for the first quarter of 2019 over the last -- for the same period in 2018 is due to revenue recognized from our Genentech collaboration.

Total shares outstanding were 56.3 million as of March 31st, 2019 compared to 55.6 million as of March 31st, 2018. Based on current operating plans, projected spending and proceeds from partnerships and collaborations, we expect to have cash to fund research and development programs and operations beyond 2024 and to end 2019 with between $550 million and $575 million in cash, cash equivalents, and marketable securities.

With that, we would now like to open up the call for your questions. Operator?

Questions and Answers:

Operator

(Operator Instructions) And our first question is from Ted Tenthoff from Piper Jaffray.

Edward Tenthoff -- Piper Jaffray -- Analyst

Great, thank you very much for the update and congrats on all the great progress. There's a lot to go through and a lots to readout. I wanted to ask first, just with respect to CD123, how material do you think the clinical hold might be to sort of data readouts and how quickly have you been able to restart enrolling patients? And then I just had a follow-up if I may on CD20.

Bassil I. Dahiyat -- President and Chief Executive Officer

Yeah, I would say that it's probably going to be a couple of quarters, overall setback when you deal with the response, the response from the FDA on that and then the ramp back up timing. That's generally overall how it's going to play out, I would say.

Edward Tenthoff -- Piper Jaffray -- Analyst

And do you still expect to have an update at ASH then this year or is that when we should look for the next update?

Bassil I. Dahiyat -- President and Chief Executive Officer

Yeah. As always, we have to confer with Novartis. So we can't say. I would venture to say that that's probably premature, at the ASH to be premature.

Edward Tenthoff -- Piper Jaffray -- Analyst

Okay. All right. Good to know. And then just on CD123, recent competitor compound CRS as well, I think this is something you guys have experience with and are dealing with, what is the CD123 experience and maybe the competitive molecule experience, kind of teach you with respect to CD3 activation with CD20 in the second bispecific things?

Bassil I. Dahiyat -- President and Chief Executive Officer

I'm sorry, I'm just confused on the question, maybe the target names; you're referring to CD123?

Edward Tenthoff -- Piper Jaffray -- Analyst

No. So for the second question, on CD20 and on the recent competitor data, and I was just saying, you know CRS is something you guys are used to and obviously an on-target effect of CD3. So just trying to kind of figure out sort of what your read through is to your CD20 molecule?

Bassil I. Dahiyat -- President and Chief Executive Officer

Oh, I see, yes. So what you're referring to is the recent report from a competitor that had a CD20 x CD3 where their combination arm with an anti-PD-1 antibody they reported CRS, likely CRS related patient deaths and they commented that, that happened at lower doses of the CD3, implying that the PD-1 antibody made the T-cells more active, right?

Edward Tenthoff -- Piper Jaffray -- Analyst

Yeah, exactly.

Bassil I. Dahiyat -- President and Chief Executive Officer

Yeah, it's a general theme, the more immune activated a patient is, whether that's by the affinity on the CD3 side, the format of the bispecific like with the old bi-formats. In this case I guess we've learned that general immune stimulation can do it as well, which I think is quite interesting in that a PD-1 antibody can be used to boost up the immune response through a CD3, that gives you another tool to ultimately titrate how these things go. I think we're early days in that kind of approach. But I thought that was a pretty interesting read through. I'd think -- I mean, you have to be thoughtful. I don't think there's any direct read through to our compound. It's got its own dose escalation, its own specific potency level, and I think the general lessons you can learn are the usual tricks of the trade for infusion reaction type things, splitting doses, step-up doses are going to continue to be sort of the rule of the day.

Edward Tenthoff -- Piper Jaffray -- Analyst

Helpful. I appreciate it.

Operator

Thank you. Our next question is from Jonathan Chang from SVP Leerink. Your line is now open.

Jonathan Chang -- SVP Leerink -- Analyst

Hi guys, thanks for taking my questions. First question, on 14045, can you talk about what modifications have been incorporated into the study and are these modifications being incorporated into your other CD3 bispecific programs?

Paul Foster -- Senior Vice President and Chief Medical Officer

Yeah, we're not going to comment specifically on the adjustments or the protocol amendments. It's just to say that we have enhanced monitoring and guidance on the treatment of CRS and other toxicities. And we certainly will take some of those measures and apply them across all of our CD3 studies. It's just prudent to do so.

Jonathan Chang -- SVP Leerink -- Analyst

Got it. Thank you. Second question, can you provide any color on how the partnership discussions for obexelimab are going? Any updates or changes on how you're thinking about next steps for the program?

Bassil I. Dahiyat -- President and Chief Executive Officer

I wouldn't say any updates or changes to how we've been thinking about it. We continue on in discussions. I think it's clearly going to be a matter of aligning with partners that have a view that we can agree with on next phases of development. I think that's really the thought process to go through here, but nothing to update. We'll certainly update when we have news.

Jonathan Chang -- SVP Leerink -- Analyst

Got it. Just one final question from me, how should we be thinking about initial data from the TME bispecific platform broadly? What are the key things you'll be looking for in the initial dataset? And what would you see as a win?

Bassil I. Dahiyat -- President and Chief Executive Officer

Yeah, I would say that the key things to look for -- so the first program we have coming up, 20717, we hope to read out some data late this year. I think the key things to look for are of course the tolerability profile and what kind of biomarker data and any glimmers of activity we would see in our initial dose escalation, because that data readout is just going to be dose escalation, it's not going to involve a huge number of patients. But once we get out of dose escalation, you have pretty aggressive plans for expansion cohorts, so we can really start to dig in. So I think we're going to want to see the right kind of T-cell activation. I think the tolerability profile, in particular, for a molecule that has CTLA-4 inhibition in it where tolerability is always an issue for those kinds of antibodies. So I think those two pieces and whatever glimmers of activity we might see. We are in patients that are either post-PD-1 or not, but the reality means we're going to be in predominantly enduing dose escalation on people that have had exposure to PD-1 therapy neither progressed or didn't respond. So we don't want to overstate how much information we might get out it from this fist look. But once we are through dose escalation, that thing should be much more interesting. And then generally speaking, I'd say that would hold true for each of the different agents where you've got to get through that initial dose escalation and you want to see if you're hitting the biology right. And if your selectivity hypothesis has any kind of support and I think for 20717 that would be supportive on the tolerability side. Does that answer your question?

Operator

Thank you. Our next question is from Alethia Young from Cantor Fitzgerald. Your line is now open.

Ellie Merle -- Cantor Fitzgerald -- Analyst

Hi, this is Ellie on for Alethia. Thanks so much for taking the question. So one on 14045, can you walk us through the logistical steps that are sort of pending to get the sites back enrolling with the updated protocol. And then, I just wanted to clarify that the pulmonary toxicity, whether that was deemed to be drug related or unrelated? And then I have one on the cytokine bispecific, so what are the key targets or sort of directions that you think makes sense to bring this technology beyond the Genentech collaboration? And can you comment on any of the learnings that you could bring from that program to the next steps that we might see there? Thanks.

Bassil I. Dahiyat -- President and Chief Executive Officer

We're going to maybe have you repeat with the questions one at a time as we answer and then you can repeat them again because I don't think we can keep up with that. So could you restate your first one?

Ellie Merle -- Cantor Fitzgerald -- Analyst

Sorry, the first one is just on logistical steps to get the 14045 program back enrolling patients.

Paul Foster -- Senior Vice President and Chief Medical Officer

Sure. Yes, so we've come to agreement with FDA on a protocol amendment, now it's a matter of now submitting that new protocol out to the sites and their IRBs to get approval. We're also going out to each of the sites and talking with the investigators to make sure they understand the changes in protocol. And once that happens, we'll start enrolling and we've already started that process.

Ellie Merle -- Cantor Fitzgerald -- Analyst

Okay. And then the pulmonary toxicity; was that deemed unrelated to drug? I just wanted to clarify.

Paul Foster -- Senior Vice President and Chief Medical Officer

Yes, it was deemed as possibly related by the investigator.

Ellie Merle -- Cantor Fitzgerald -- Analyst

Okay. And then the last one was on the cytokine bispecific. So, can you comment on the direction that you see this portion of the bispecific platform going in the future and maybe any comments about learnings from the Genentech collaboration or IL-15 that you could take forward?

Bassil I. Dahiyat -- President and Chief Executive Officer

Well, we don't have any learnings' yet from the collaboration, because we just started, and I think we published enough data to show that the profile of the molecule, I think suggests how we're going to be looking at cytokine whether they are IL-15 based that we target a particular immune cell types or whether they are other cytokines. The strategy we took was to reduce the potency of the cytokine to create a more tolerable, but just as important, to create an agent that is able to activate the immune cell target, in this case T-cells and then K-cells without over-activating them and creating that toxicity and then essentially creating its own clearance sync because when these things bind to their target cells, they get cleared. The more actively they do so, the more rapidly they get cleared. So, you have this tug of war and I think what we want is a nice steady extended activation of the cells. So that general lesson of potency tuning to give you that blend of good activity with tolerability and half-life is what we're after. We've looked at that and seen the kind of design profile we want in our preclinical models, the learnings that we're going to get first out of the Genentech collaboration is how that looks in patients, in humans. So that's a general thrust that we're going to carry forward as we build the cytokine platform out and of course the detail for each program will vary based on the cytokine. I think immediate next steps are with the IL-15 to really look at how we can target that to different immune cells by using the bispecific platform to guide the IL-15 activity to particular targets. We published some of that earlier and that's going to be an area of active research with Genentech that we can hope we can report more on in the future.

Ellie Merle -- Cantor Fitzgerald -- Analyst

Okay. Sounds great. Thanks so much.

Operator

Thank you. Our next question is from Arlinda Lee from Canaccord. Your line is now open.

Benedict Shim -- Canaccord Genuity Inc. -- Analyst

Hi guys. It's Ben in for Arlinda. Thanks for taking my questions. Bassil, I was just wondering when might we hear about the breadth and scope of the clinical plan for the IL-15 program, later this year.

Bassil I. Dahiyat -- President and Chief Executive Officer

No. I don't think it's going to be later this year. I think that in terms of details for that it would, I think, be no earlier than once we're well along with dose escalation which I wouldn't imagine would be before the second half of 2020, and some of that's going to be based on when we trigger additional sort of steps in the clinical plan expansion cohorts and such that, that would probably come to light. I can't promise you what level of detail we can provide, that's something that's part of [indiscernible] future, we haven't discussed it with Genentech. We already have a quite detailed and comprehensive plan laid out with them for combination agents in various indications once we're through that initial dose escalation. So we'll be able to tell you a lot more about that next year, but I don't know how much detail.

Benedict Shim -- Canaccord Genuity Inc. -- Analyst

Okay. Great. That's very helpful. Thanks. And I just wanted to reaffirm on what you, I think, said on 20717. Do you expect that to be later in the year towards year-end?

Bassil I. Dahiyat -- President and Chief Executive Officer

Yeah, end of the year, we hope.

Benedict Shim -- Canaccord Genuity Inc. -- Analyst

Got you. Okay, that's all I have, thank you very much.

Operator

Thank you. Our next question is from Shanshan Xu from Berenberg Capital Markets. Your line is now open.

Shanshan Xu -- Berenberg Capital Markets -- Analyst

Hi guys. I'm wondering if you can talk a little bit more about obexelimab which seems to be under-appreciated on the Street. Given that MOR208 is another anti-CD19 antibody formed from your platform and it is right now very close to a regulatory approval, so can you please share a little bit about the binding epitope of obexelimab, is it similar to MOR208? Do you expect similar success like MOR208 with obexelimab?

Bassil I. Dahiyat -- President and Chief Executive Officer

It's the identical binding epitope because obexelimab and tafasitamab have precisely the same amino acid sequences to their variable demand. So they bind CD19 in precisely the same way, with the same affinity, same epitope. I don't think that creates any read through whatsoever. I wish it did, given the really exciting possibilities that we're seeing with tafasitamab now in lymphoma because the real action for both of those molecules happens because of their Fc domains rather than the biology driven by their CD19 binding. The CD19 binding for both of those essentially targets the antibody and it's active Fc domain to B-cells in a very linear to restricted way. And in the case of tafasitamab, it kills them with ADCC function. In the case of obexelimab, you're engaging the B-cell's own receptor IIb to shut it down. I think what we have seen with obexelimab is very potent activity of shutting B-cells down through both biomarker data as well as disease modifying activity data and we have a lot of confidence in the molecule's design, it seems quite robust. It's readily delivered. The subcutaneous formulation, I think, looks very promising from our early clinical data there and so we're just going to have to let that program stand on its own.

Shanshan Xu -- Berenberg Capital Markets -- Analyst

Yes, I agree. And my second question is that, can you please compare and contrast the structure of your CD3 bispecific antibody franchise in your pipeline versus other specifics from such as companies like Regeneron or Mirus. And do you expect your CD3 bispecific molecule to show clinical superiority versus your competitors? Thank you.

Bassil I. Dahiyat -- President and Chief Executive Officer

Yeah, I think that you got to look at the class of bispecifics that targets CD3 quite broadly, I think there is sort of two buckets, ones that have Fc domains, whether it's sort of a heterodimer Fc domain in particular that's used to create a structure that looks a lot like ours and then there's ones that don't. And in those cases those molecules have to overcome the inherent limitations and half-life to come without having an Fc domain and there is tricks that people use to try to do that. And I'd say there's varying levels of success on that, though there's been some promise. I would say that each platform gives you different starting point for the major issues that you have to deal with to make bispecifics a reality. First is their stability and I think a number of companies have good tools for that. I would say the companies you mentioned as well as ours seem to have molecules that can be made, right? As for manufacturability, I can't speak in detail on others. I know that ours is incredibly plug and play in the standard manufacturing processes and now three different companies have made GMP material; Xencor, Amgen and Novartis and I think that that's a sign of how easily portable ours are. I can't comment in details of others, so I know a number of others, you have to do special manufacturing approaches, come up with processes, de novo. That said, I think that the main differentiation is going to come from how people designs their individual molecules and in particular when you look at within the Fc containing class, which we favor is having a lot of advantages in terms of simplicity, half-life et cetera. It's going to really come down to how people make their molecules for each individual program, the affinities they choose, the valency they choose for binding to the different targets they have on either side. And I think it's going to be a lot more than just CD3 as we go forward. We're going to have our third tumor microenvironment activator in the clinic soon and our first cytokine in the clinic within the next 12 months. And so I think these bispecific tools are much broader than just CD3, so that portability and that simplicity of transfer of what we do seems to be an advantage we have, though I think as in anything with technologies, a lot of people will come racing in when there seems to be interesting possibilities. I don't think that there's any one platform that will shine without having really good protein engineering and good biology for any given drug candidate though.

Shanshan Xu -- Berenberg Capital Markets -- Analyst

Thank you. That's very helpful.

Operator

Thank you. (Operator Instructions) And our next question is from Michael Schmidt from Guggenheim Securities. Your line is now open.

Charles Zhu -- Guggenheim Securities -- Analyst

Hey guys, this is Charles Zhu on for Michael Schmidt. Thanks for taking the questions and congrats on the quarter. Could you quickly remind us again of the potential specific patient populations for XmAb13676, given that you also have out-licensed MOR208 both within some form of B-cell malignancies? Thank you.

Bassil I. Dahiyat -- President and Chief Executive Officer

Yeah. The MOR208 out-license has no bearing on it. We're trying to make the best drugs and we're going to let the data speak for itself. I would say that there is two parallel cohorts in dose escalation; CLO and non-Hodgkin lymphoma of varying subtypes. And Paul, correct me if I'm wrong here, in both cases, relapsed or refractory disease, right?

Paul Foster -- Senior Vice President and Chief Medical Officer

Correct.

Bassil I. Dahiyat -- President and Chief Executive Officer

I think there's still a lot of unmet need. I think MOR208 does a great job in that relapse DLBCL setting. I think you guys still go to remember, the majority of patients after a little over a year are no longer in response though, so.

Charles Zhu -- Guggenheim Securities -- Analyst

Okay. All right. That makes sense. And that's very helpful. And also, you know like I think you referred briefly that the royalty collection cycle from Alexion would be approximately a one to two quarter delay or so. Could we assume that this would be something similar for MorphoSys?

Bassil I. Dahiyat -- President and Chief Executive Officer

I can't recall the details of the -- John?

John J. Kuch -- Senior Vice President and Chief Financial Officer

I can't recall it either Bassil. I don't think it is, but I'll have to double check.

Bassil I. Dahiyat -- President and Chief Executive Officer

Yeah, we'd have to double check, sorry.

John J. Kuch -- Senior Vice President and Chief Financial Officer

Once we get a little bit closer, we'll dig into that but we can check on that and get back to you.

Charles Zhu -- Guggenheim Securities -- Analyst

Okay. All right. Sounds great, guys and thank you very much for taking the questions and congrats on the quarter.

Bassil I. Dahiyat -- President and Chief Executive Officer

Thank you.

Operator

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Bassil Dahiyat, CEO for closing remarks.

Bassil I. Dahiyat -- President and Chief Executive Officer

Thank you, operator, and thank you all for joining today's call. We look forward to updating you again throughout the year.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Duration: 35 minutes

Call participants:

Charles Liles -- Associate Director and Head of Corporate Communications & Investor Relations

Bassil I. Dahiyat -- President and Chief Executive Officer

Paul Foster -- Senior Vice President and Chief Medical Officer

John J. Kuch -- Senior Vice President and Chief Financial Officer

Edward Tenthoff -- Piper Jaffray -- Analyst

Jonathan Chang -- SVP Leerink -- Analyst

Ellie Merle -- Cantor Fitzgerald -- Analyst

Benedict Shim -- Canaccord Genuity Inc. -- Analyst

Shanshan Xu -- Berenberg Capital Markets -- Analyst

Charles Zhu -- Guggenheim Securities -- Analyst

Charles Zhu -- Guggenheim Securities -- Analyst

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