Xencor Inc (XNCR) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Xencor's first quarter 2017 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

I'd now like to turn the conference over to Mr. [Josh Rappaport], Stern Investor Relations. Sir, you may begin.

(Technical difficulty) company's business highlights and provide an update on the company's clinical and pipeline progress. Then John Kuch, Vice President of Finance, will review the financial results from the first quarter of 2017. Then we will open up the call up 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 management for future operations, the company's partnering efforts, the company's capital requirements, the company's future product offerings, and the company's research and development programs. These forward-looking statements are not historical facts, but rather are based on Xencor's 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 Xencor's most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

With that, let me turn it over to Bassil.

Thanks, Josh, and good afternoon, everyone. And the telecommunications problem cause the brief delay. I do apologize. With that, I'll kick off the call in earnest.

So, in the first quarter of 2017, we really continued our work on advancing the broad pipeline of potential best-in-class antibodies that we've created for the treatment of autoimmune disease and allergic diseases, as well as cancer using our XmAb platform. Throughout this year (technical difficulty) injection, and the pharmacokinetic and bioavailability data from the trial support and every other week dosing schedule. Those are important step for the XmAb5871 program. Subcutaneous dosing on an every-other-week schedule offers patients and doctors simple and more flexible treatment option than infusions. We plan to use subcutaneous dosing in our future clinical trials for XmAb5871.

Now for the remainder of 2017, we expect top line results from our Phase 2 study of XmAb5871 in IgG4-related disease, also known as IgG4-RD, this year and to engage with the U.S. FDA to discuss the development plan including future trials and potential registrational requirements for XmAb5871 in IgG4-RD. We're also on track to announce top line data for a subcutaneous administration Phase 1 study of XmAb7195, as well as additional data for our Phase 1 study of -- sorry, as well as initial data from our Phase 1 study of XmAb14045, our first bispecific antibody pending alignment with Novartis on timing. Now, (technical difficulty) to follow.

I'll now get into the specifics of our clinical and preclinical efforts. Today, I am going to start with XmAb5871. That's our first-in-class monoclonal antibody in Phase 2 development for IgG4-RD and systemic lupus erythematosus.

XmAb5871 targets CD19 with its variable domain use our (technical difficulty).

Now I will discuss our Phase 1 clinical trial to study the pharmacokinetics and bioavailability of subq administration of XmAb5871. Forty subjects were given three administrations of subcutaneous XmAb5871, 125 milligrams to 375 milligrams flat dose on an every other week or weekly schedule, and an additional 10 subjects were given XmAb5871 intravenously as a comparator arm.

First on the safety. Subcutaneous XmAb5871 was safe and well-tolerated, with only mild treatment emergent adverse events or TEAEs reported for subjects receiving any dose of (technical difficulty) to intestinal TEAE mild diarrhea was reported in contrast to the GI infusion reactions seen at about 20% of patients for intravenous XmAb5871. Now at least one antidrug antibody positive sample was observed for four subjects or 10% with one subject possibly having an impact on drug concentration.

Now on to the PK data, bioavailability of subq XmAb5871 was about typical for monoclonal antibody. Drug exposure was dose proportional as we increase dose and the terminal half life was similar to that reported for intravenous XmAb5871 for about three and half to four days.

Now the drug exposure kinetic supported every other week scheduled for subq XmAb5871, and we are very encouraged by the tolerability results of our formulation. We are looking forward to using a subq XmAb5871 in our future clinical trials in this program.

Now for an update in the ongoing Phase 2 studies we have for XmAb5871 and IgG4-RD in lupus. First, with regard to IgG4-RD, as you know, we reported preliminary data from our ongoing Phase 2 study (technical difficulty) including clinical trial design and potential registration requirements.

And as part of our ongoing Phase 2 study, we are monitoring a variety of immune cell populations of patients with IgG4-RD but before and during treatment with XmAb5871 in order to better understand its pathology and hopefully create new tools to monitor its progression. At third International Symposium on IgG4 related (technical difficulty) we're continuing to progress our Phase 2 study in that disease, another area with a high unmet need and a strong rationale for B-cell inhibition.

And as a reminder this is a novel clinical trial design, it's a randomized, double-blinded, placebo-controlled, multi-dose study that's designed to evaluate XmAb5871's ability to maintain the improvement in SLE disease activity after a short course of intramuscular steroid therapy and critically in the absence of immunosuppressant medication. We designed this study to assess XmAb5871's effect on disease activity within a shorter -- with a shorter time to endpoint and with fewer patients compared to standard SLE trials. We expect to report data in late 2018 or early 2019.

Now I'll turn to XmAb7195, our first-in-class monoclonal antibody that targets IgE with its variable domain and uses the same XmAb immune inhibitor Fc domain, XmAb5871, to target FcyRIIb. This design creates three distinct mechanisms of action for reducing IgE levels. Its sequesters free IgE to block IgE signaling, it suppresses B-cell differentiation into IgE-secreting plasma cells, and it enables the rapid clearance of IgE from the circulation. This is in contrast to existing approved therapies for controlling IgE in severe asthma, which only have a single mechanism of action, blocking IgE receptor binding.

Intravenous administration of XmAb7195 induced a rapid and potent suppression of free IgE below the limit of detection, including from single doses in 75% of high IgE subjects, has shown in data reported last year at the American Thoracic Society Meeting. We believe XmAb7195, therefore, has the potential for a treatment -- for use as a treatment, I should say, for allergic diseases even if patients with very high IgE (technical difficulty) different antigen-binding domain.

The result of the single molecule combined are multiple targets simultaneously while preserving native antibody properties like long circulating half life, stability, and ease of manufacture. Our lead bispecific programs are tumor targeted antibodies that contain both a tumor antigen binding domain to target malignant cells and a cytotoxic T-cell binding domain to activate T-cell killing.

We exploit the plug-and-play modularity of our XmAb bispecific based on this Fc domain to tune the potency of the T-cell killing to potentially improve the tolerability of tumor immunotherapy. Now we currently have two bispecific oncology candidates in Phase 1 clinical testing. The first is XmAb14045, which is in development for the treatment of acute myeloid leukemia or AML and other CD123-expressing hematologic malignancies.

XmAb14045 engages the immune system against AML by binding CD123, a protein that's highly expressed in AML and on leukemic stem cells and to CD3 approaching on cytotoxic T-cells. So, therefore it activates the targeted T-cell immune response against tumor cells.

Now the second program we have in the clinic is XmAb13676, like XmAb14045, XmAb13676 bind a CD3 on T-cells, but it targets CD20 on its other side, which is highly expressed on B-cell tumors, for example, in CLL and non-Hodgkin lymphoma.

Now we started the Phase 1 for XmAb13676 this past quarter in February. We hope to announce initial data from our XmAb14045 study later this year and from our XmAb13676 in 2018, pending alignment with our partner Novartis on timing.

Now next in oncology bispecific pipeline are XmAb18087 and XmAb20717. XmAb18087 targets somatostatin receptor 2 or SSTR2 on one side and CD3 on the other for the treatment of neuroendocrine tumors. At the American Association for Cancer Research or AACR meeting in April, we presented preclinical data showing that XmAb18087 had an ability to eliminate SSTR2 positive tumor cells by stimulating T-cell cytotoxicity both in vitro and in mouse models, and it has stimulated SSTR2-dependent T-cell activation, T-cell margination, and cytokine release in cynomolgus monkey models. We plan to file an IND later this year.

XmAb20717 is our first candidate to simultaneously target two T-cell checkpoint targets, PD-1 and CTLA-4, and it is designed for potential use in multiple oncology settings. As a dual checkpoint bispecific antibody, we believe XmAb20717 has the potential to improve selectivity of combination checkpoint inhibitor therapy and eliminate the need for multiple different checkpoint antibodies during treatment. We do expect to file the IND in 2018.

Now we're advancing additional bispecific oncology programs to continue to grow the pipeline and plan additional INDs in 2018. We present a preclinical data on several of our lead programs at AACR, including a bispecific antibody targeting PD-1 in an undisclosed co-stimulatory receptor on T-cells, we call our PD1 x costim bispecific, and IL-15 receptor alpha heterodimeric Fc-fusion for T-cell activation.

Now a quick update on partnerships. In March of 2017, CSL Limited, through its licensee, Janssen, advanced CSL362, now called talacotuzumab, into the Phase 3 portion of its ongoing Phase 2/3 study in AML. Talacotuzumab uses our cytotoxic XmAb Fc domain to enhance its cytotoxic activity.

Now this event triggered a milestone payment to Xencor of $3.5 million. With this advancement, we now have two partner programs in Phase 3 testing. The other being Alexion with the program using our half-life extension Xtend Fc domain in addition to the five and earlier stages of clinical development across nine pharmaceutical companies and the NIH.

Last brief comments on (technical difficulty) Bob Baltera will be departing our Board following our Annual Meeting in June. I'd like to thank him for their many contributions and helping Xencor since before our IPO.

Now, with that, I'll pass it over to John Kuch to review our financial results.

Thank you, Bassil. In this afternoon's press release, we reported cash, cash equivalents and marketable securities totaling $392.7 million as of March 31, 2017, compared to $403.5 million as of December 31, 2016. The decrease reflects net spending on operations for the first quarter 2017.

Total revenue for the first quarter 2017 was $4.3 million, compared to $7.3 million for the same period in 2016. Revenues are earned from technology, licensing fees, and milestone payments from Xencor's partners for license of its drug candidates and the use of its proprietary XmAb antibody engineering technology. Decreased revenue for the first quarter 2017 over revenue reported for the same period in 2016 is primarily the result of revenue earned from our Amgen collaboration in the first quarter 2016 compared to milestone revenue received from CSL in the first quarter of 2017.

Research and development expenses for the first quarter of 2017 were $15 million, compared to $10 million for the same period in 2016. The increased R&D spending in the three months ended March 31, 2017 over milestones reported in the first quarter of 2016 reflects increased spending on our bispecific pipeline of candidates, including our first two clinical candidates, XmAb14045 and XmAb13676, and development spending on the next two candidates, XmAb18087 and XmAb20717.

General and administrative expenses in the first quarter of 2017 were $4.8 million, compared to $4 million for the same period in 2016. The increased spending on G&A for the first quarter 2017 over the comparable period in 2016 reflects increases in stock-based compensation charges in 2017.

Non-cash share-based compensation expenses for the first quarter ended March 31, 2017 was $3.2 million compared to $2 million for the same period in 2016.

The net loss for the first quarter of 2017 was $14.6 million or $0.31 on a fully diluted per share basis, compared to net loss of $6.4 million or $0.16 on a fully diluted per share basis for the same period in 2016. The increased loss for the first quarter 2017 over the loss reported in 2016 is primarily due to lower revenue of $2.9 million and increased spending of $5.9 million in the first quarter of 2017, compared to the first quarter of 2016.

The weighted-average shares outstanding used to compute net loss per share was 46,590,797 shares for the quarter ended March 31, 2017, compared to 40,626,729 shares for the quarter ended March 31, 2016. The increase in shares outstanding reflects the additional shares issued in our December 2016 follow-on financing.

Based on our current operating plans we expect to have cash to fund research and development programs and operations beyond the end of 2020. We expect to end 2017 with approximately $340 million in cash, cash equivalents, and marketable securities.

With that we will now open the call for your questions. Operator?

(Operator Instructions) Our first question comes from the line of Ted Tenthoff of Piper Jaffray.

A little tricky hearing you, guys, because the call was kicking in and out a bit. But I wanted to dig in a little bit more with respect to the mechanism of action. Firstly, congrats on the subq data. That makes lot of sense going forward. But on the bispecific with PD-1 and CTLA-4, can you tell us a little bit more about how that works? Is it simply, though, that one antibody that can hint to target and therefore avoid two drugs being in dose and at the same time recovering more target? Or is it more complicated than that?

Thanks for the question, Ted, and apologies for the telecommunication difficulties. I understand that there was a loss of audio periodically through the call for random amounts of time. We're very sorry for that.

Now regarding your question on XmAb20717's mechanism of action -- by the way, I hope everybody, anybody -- people can hear me. So the idea was actually to be more than simply combining the two antibodies into one molecule and simplifying how you deliver it. So it's more than just PD-1 antibody combined with CTLA-4 antibody.

The idea is we designed it to only bind T-cells that are expressing both markers simultaneously. We tuned the affinities so that it really only binds when you have both antigens expressed. And that means we have a more selective engagement of T-cells. The double positive cells tend to be that if cells that have more checkpoints upregulated T-cells, that is like T-cells that might express both PD-1 and CTLA-4, tend to be concentrated in the tumor microenvironment, where they've been exposed to tumor and the tumors are fighting back, so to speak, by inducing checkpoint upregulation on those T-cells. So our goal is to target more of those cells and less of the cells in the periphery that are typically less checkpoint upregulated.

So it really is a selectivity design to try to maintain activity, maybe improve activity, we hope, we don't know, and also improve tolerability if the thesis that -- many of the tolerability issues are caused by peripheral T-cell overactivation. That's the thesis at least. We are very excited to get that one going this year.

Certainly, Bassil. Very elegant and you came through loud and clear, thanks.

Great.

Our next question is from the line of Michael Schmidt of Leerink Partners.

Hi. This is Varun Kumar on behalf of Michael Schmidt. Thanks for taking my question. First on XmAb58715, I have a couple of questions there. First, can you provide more color on how you are thinking about a potential registration plan for XmAb58715 in IgG4-related disease?

Yes. So our -- of course, everything is pending discussions with the FDA. We believe based on the precedents in uncommon autoimmune diseases, such as the vasculitis like Wegener's disease or Churg Strauss or (inaudible) [arthritis], all of which have had Phase 3 programs with biologics.

And then we are going to be running a Phase 3 trial that's -- or a large randomized trial, I should say, we hope it'll be Phase 3, a large randomized trial that is against a standard of care. In the case of IgG4-RD, really only steroids are shown and well-accepted as a standard of care for treatment.

So, in some way, we are going to be comparing ourselves against steroids and looking at loss of disease improvement or perhaps rate of induction of disease relief. The details are going to have to be sorted out. We do expect that kind of feedback after our proposal to the FDA later this year, and we hope we will be able to guide on that this calendar year as well with the specifics about the registrational plan.

But the precedents in those three disorders that I mentioned in the vasculitides family were typically a couple 100 patients randomized against a standard of care that's appropriate for that particular disease and looking at maintenance of disease improvement following induction, and looking -- comparing rates of disease improvement either at landmarks or in a sort of hazard ratio analysis to find out -- to sort of get statistical significance. We are certainly thinking with those kinds of precedents in mind, and we will have a lot more specifics later in the year.

The second question again on XmAb5871, is there a precedence in other autoimmune disease you can point too? And are there examples of any other drugs approved using composite endpoints that is similar to IgG4 Responder Index?

Well, the ones -- the cases I just mentioned, in particular the case of Wegener's disease, which is a vasculitis that's more properly called microscopic polyangiitis or granulomatosis polyangiitis, MPA/GPA. So, in that case, Rituxan was approved against head-to-head - there was a cytotoxic immunosuppressive therapy, I can't recall which one, and it used what's called the Birmingham Vasculitis Activity Scale (sic - Birmingham Vasculitis Activity Score), the BVAS, which the IgG4-Related Disease Responder Index was essentially modeled off of and developed and refined from. So the BVAS is an excellent reference point for a successful approval of a biologic using an endpoint very similar to IgG4-RD Responder Index, which sums up inflammatory disease and disease damage activity. And whatever affected organ is presenting to the clinician is typically these are multi-organ diseases. IgG4-RD usually presents in three odd organs in our Phase 2. We are seeing a meeting of about four organs at presentation.

So there is great precedent and there were two successful Phase 3's pending FDA submission and approval for giant cell arteritis and EGPA or eosinophilic GPA, a variant vasculitis. Both of those used the BVAS. So I think there's actually really good precedent.

And I'll note that the Responder Index recently had a large international validation study presented at ACR in November in Washington DC last fall. So that validation study was successful, multispecialty, multi-language, obviously multinational, looking at using the Responder Index against the large set of cases. That -- I believe that study is being published shortly. So I think the endpoint has actually been fairly robustly developed now.

And again last question and again I may have missed this because of the line problem, now this for bispecific XmAb14045 in AML. Can you talk about how the Phase 1 program is progressing? And how much data we should expect this year?

Right. So we started the trial dose of first patient in September 2016. It's in relapsed/refractory patients with a CD123 positive malignancy. We consider all AML diagnoses to be CD123 positive; so those come in. We've been enrolling patients -- continue to enroll patients now. It's a standard 3-plus-3 design for an oncology clinical trial. It is a short infusion, I believe, a couple hours every week. And, again, it's a very standard kind of design with standard delivery. The idea of the drug was to build a molecule that could be hopefully used like a regular antibody but bring redirected cytotoxic T-cell killing from bispecific antibodies; so sort of try to have the best of both world.

We really have to wait until little later in the year as we continue to progress the program with our co-development partner, Novartis. As you know, last June, we announced a partnership with Novartis for XmAb14045 and XmAb13676, where we jointly develop 50/50 worldwide. We retained U.S. commercial rights. They receive commercial rights outside the U.S. So as a result we have to really work in lockstep with Novartis on how we and when we disclose, and so we will be able to guide on more specifics later this year. Unfortunately not right now.

Our next question is from the line of Arlinda Lee of Canaccord.

Can you -- maybe for John. On the planning side, your guidance is now a little bit longer than it was in the past. Can you maybe talk about what changes went into that?

And then, secondly, on the subcutaneous formulation, can you -- you said that XmAb5871 going forward, you will be using this subcutaneous. Have all the patients in IgG4-related disease been enrolled? Can they use the subq or they only IV? And then on the subq XmAb7195 data, what are we expecting to see from that? Thanks.

John, you go first, yes.

Sure. Okay. On the guidance, we've been guiding after we did the follow-on financing in December 2016. We increased our guidance from beyond 2019 to beyond 2020. Obviously, we have very strong balance sheet and our spending right now is very controllable. But we expect it to go up over next couple years. I think three years is a lifetime in biotech. So, I think, the change in the guidance really just reflects the additional capital that we raised in December. So I think that's probably the best way to look at it.

Okay, great. Thanks.

And on the IgG4-RD or rather on XmAb5871 subq, so we do not plan on switching or adding -- either switching patients that are currently on IV in IgG4-related disease to subq mid-trial or adding patients within that trial to a new format, rather not, new format rather new dosage form of XmAb5871. I think it's best to keep the trials distinct. But any new trials that we start, such as a potential registrational trial, we would and -- we would certainly use the subq.

Now for the subq XmAb7195 data, let's see, that study is putting context. XmAb7195 against our IgE reducing antibody after the IV first-in-human study, we showed really profound IgE reduction. We know that in the marketplace for allergic disease like allergic asthma or skin diseases, subcutaneous delivery is really kind of part of the cost of entry.

And so our subcutaneous format, our formulation was ready. We started the subq study. What we are looking for there is for a multi-dose subq XmAb7195. Do we get the same extent of IgE reduction of the strong IgE reduction we saw in our first-in-human IV study? That study -- this current subq study split between healthy volunteers and then atopic subjects. We are looking for, of course, in addition to the pharmacodynamics of IgE. We are going to look at what our therapeutic window is. We saw at 2 milligram per kg IV dose and up in the first-in-human study. We saw transient asymptomatic thrombocytopenia. We're going to see if we can avoid that and what kind of duration of action we can see from doses that do not show thrombocytopenia subq. And that will guide on what kind of dosing schedule we would have for the drug long-term.

So, what the kind of data would be pharmacodynamic data on IgE in both [healthies] and atopics. It would be duration of action. It would be, of course, the safety and therapeutic window data.

We are planning for XmAb7195 after the Phase 1 program to find a development partner. We think that the scale of Phase 2 studies in any of these allergic disease indications can be challenging. And we think a development partner can help move the program along more aggressively while we focus on autoimmune disease and oncology.

Our next question is from the line of David Nierengarten of Wedbush.

Hi. This is [Dilip] sitting in for David. Just building on the last question. I guess going forward, if you are planning to partner XmAb7195, considering the healthy cash balance earned, do you think, perhaps, it makes more sense to fund the Phase 3 yourself just to get better economics when you do have to partner?

We are not planning on that. We really have pretty large ambitions in expanding our bispecific oncology pipeline as well as having really the balance sheet to drive XmAb5871 as aggressively as we can, independent of a partner for XmAb5871 potentially even through completion of Phase 3. And we think that, that's a pretty substantial set of ambitions right there. We think that the scale of the kind of meaningful Phase 2 studies in allergic asthma, for example, that XmAb7195 might face would very likely be significantly larger numbers of patients than you would have for a whole registrationl program in IgG4-related disease. So I think that trade-off really guides us towards wanting to find a large biopharma partner.

Okay. And if you could just narrow down when that data should be available. It looks like Clin Trial says its study is completed. So should we expect it the next couple of months?

Yes, it should be in the second half, we should have that data rolled out.

(Operator Instructions) Our next is from the line of Christopher Marai from Nomura Instinet.

Hi, Bassil. Thanks for the taking the questions. Maybe first on the CD123 bispecific. I'm just wondering if you can further elaborate perhaps on the proposed initial dose that you are testing and then where you are in terms of your dose escalation in terms of dose levels for that drug in the clinic.

Sure, we will (multiple speakers) --

And I have the follow-up.

Can you hear me?

I can.

Okay. Oh, good. Good. With the telecom problems this afternoon, I just want to double check. So we haven't disclosed our, numerically what our starting dose was or the specific dose escalation cohorts. We determine our starting dose pegged off of our primate toxicology and pharmacology data. The molecule cross reacts against both targets, CD123 and CD3, in non-human primates, and we showed, for example, at ASH a few years ago that you had pretty solid depletion and as well as cytokine release, which could potentially be toxic at single-digit microgram per mil doses of drug. Not to say you can't get to those doses, but that would maybe not be a great starting point.

So we started out, I would say, substantially lower than that and have been dose escalating steadily. We've progressed in multiple cohorts and are still in dose escalation mode. But we can't really say how many or guide on what the numbers are right now.

And then with respect to IgG4-RD, I was just wondering, have you guys thought about looking at an induction or -- and then maintenance-type dose schedule with this new subcutaneous formulation? Or is this going to be something sort of like a, I guess, every-two-week infusion or other injection? And then I suppose -- when might we see some data for XmAb5871 in terms of duration of post -- the response on your IgG4-RD Index? Thanks.

So, I guess, there were two questions. The first one is what kind of dosing schedule approach would we envision now that we have the subq, would we do some kind of initial sort of loading dose you're saying followed by subq after that? Is that kind of the question was?

Right.

No, no. We would imagine --

Or, yes, are you looking at [induction] versus maintenance?

Well, I think we are looking at -- essentially, long-term, the drug could -- would be -- we've envisioned it uses both. We certainly saw exciting data out of the preliminary Phase 2 data in what was in essentially an induction setting, and then it continued for months and so it's sort of maintenance.

I think the Phase 3 precedents in vasculitis were essentially maintenance settings. I think that regardless the way we envision using the drug and the dosage format would be subcutaneous every other week is the current thinking. We have to, of course, select the dose. We have multiple dose levels we've tried. We've got options. But it would be a sort of steady like people use Humira, like people use Enbrel, not with an induction or rather a loading dose IV followed by subq. We think we can keep it quite simple here. Because the doses needed aren't vast, the drug is rather potent relative to, say, a Rituxan.

Your second question I took to mean more about maintenance of activity of XmAb5871 in IgG4-RD and when we might have the top line data from the full Phase 2 study. Is that what your question was?

Yes, that's fair. I mean how long are these patients responding to that first dose? How do you incorporate that into the potential every two weeks subq? Is that even necessary, I suppose?

Right.

Or would it just be kind of one subq every six months because in this specific disease, they respond for a reasonable duration. It looks like they do on Rituxan.

Right, right. I think we have to think about the mechanisms of action of XmAb5871 and, say, compared to mechanism of action of Rituxan. XmAb5871 is, by its design, reversible, and that it's only active in inhibiting B-cells when the drug is present. The B-cells aren't going anywhere. Rituxan on the other hand kills the peripheral B-cells for months at a time, and it's quite likely -- it's just as likely, I should say, that Rituxan's mechanism of action are just keeping the B-cells gone by then being dead as it is some kind of induction of change in the biology of disease. Certainly in IgG4-related disease, there's nothing to suggest that you can turn a switch early on and it fundamentally changes the course of the disease because people do certainly fail on taper of steroids quite often.

So I think that we view the mechanism of action XmAb5871 because it is reversible to necessitate a continuous chronic therapy with the drug. That's the essence of the mechanism. We have seen nothing that suggests fundamentally otherwise. The only data we have shown publicly so far is that initial cohort in November where two of the subjects had completed the study. They were both in remission. They responded quite well and has steadily declining the activity scores, Responder Index scores, and they maintain response maybe for -- we'd only gotten to that point, I think, a couple of months past end of therapy for them.

And so, not a lot of data yet to look at. We'll have a little bit more from those patients that are off study drug after the six-month treatment period when we announced our data in the second half on the full cohort of 15.

And then one last one just I think you cut out during the sections, but anti-drug, antibodies to the subcutaneous [cost] formulation, what was that -- if you can maybe just remind us of that number, with that rate there. And how does that compare to the IV? That's all.

Yes. So the ADA rate we saw -- at least one positive ADA sample at any point in time for four out of the 40 on subq set the 10%. It might have had an impact on PK for one of the subjects. We haven't finished the analysis. It didn't appear to on the others. There doesn't seem to be any correlate to any adverse events. And I would say that compares favorably to the ADA rate we saw in IV; far too small of the numbers to really make meaningful numerical comparisons. But if anything, it might have had an apparently lower rate. But, again, it's far too smaller numbers, 40 versus maybe we have like I don't know, 170, 180 patients on the IV right now, maybe a little bit more now, might be creeping up from that. But pretty small numbers for what's pretty not super common events certainly favorably, though, to the IV.

Thank you. And at this time, I am showing no further questions. I would like to turn the call back over to Mr. Bassil Dahiyat, CEO, for closing remarks.

Great. Thank you so much. And thanks, everybody, for bearing with some of the audio problems we had on the line today. I'll close by saying 2017 will continue to be a very busy year for Xencor as we advance our XmAb pipeline and announce new clinical data from across our wholly-owned programs. Thank you all for your time today and I look forward to updating everybody again soon.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everybody, have a great day.