Deanne Tockey - Stern IR Bassil Dahiyat - President and CEO John Kuch - VP, Finance.

Christopher Marai - Oppenheimer Jeremiah Shepard - Credit Suisse Jonathan Chen - Leerink Partners David Nierengarten - Wedbush Securities Arlinda Lee - MLV.

Good afternoon and welcome to the Xencor Fourth Quarter and Year End 2014 Conference Call. At this time all participants are in a listen-only mode. Following the formal remarks we'll open the call to your questions. Please be advised that this call is being recorded at the Company's request.

At this time, I'd like to turn the call over to Deanne Tockey of Stern Investor Relations. Please proceed..

Thank you, operator. Good afternoon. This is Deanne Tockey with Stern Investor Relations and welcome to Xencor’s fourth quarter and year end 2014 financial results conference call. This afternoon we issued a press release which outlines the topics that we plan to discuss today. The release is available at www.xencor.com.

Today on our call, Bassil Dahiyat, Ph.D. President and CEO will discuss the Company’s business and clinical highlights from last year. John Kuch Vice President of Finance, will review the financial results. 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 research and development, future financial and operating results, future market conditions, the plans and objectives of management for future operations and the Company’s future product offerings.

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 sections of its most recently filed security filing including its Form 10-Qs and Form 10-K.

With that let me pass the call over to Bassil..

Thanks Deanne and good afternoon everyone and thank you for joining us on today's call.

2014 was a very active year for our growing pipeline of XmAb therapeutic antibodies, three new XmAb drug candidates in the clinic bringing us to a total of eight candidates currently in clinical development, both internally and with partners, all of which employ our preparatory antibody Fc domain engineering platform.

In addition, we also announced the selection of the first candidate using our XmAb bispecific Fc domain. XmAb 14045 is a bispecific antibody for recreating T-cells between planned and clinical testing in acute myeloid leukemia in 2016.

And just last month we reported top line clinical data from our two lead internal programs, XmAb 5871 and XmAb 7195, that showed one of the unique mechanisms of action created by our XmAb technology, the immune inhibitor mechanism was highly potent and effective at clearing antigens from the circulation of humans and in inhibiting B cells to treat autoimmune disease.

You can refer to our press release issued on January 29 for the detailed data and I'll review the highlights in a few minutes.

Now 2015 will continue to be very busy as we execute our strategy to broaden and independently advance our preparatory pipeline of novel antibodies, and to build the Company into a company with a range of differentiated drug candidates for life threatening and debilitating diseases.

Now this year we'll begin by initiating clinical testing of XmAb 5871 in the newly defined rare disorder IgG4-related disease. This is an important opportunity for us because of the lack of approved therapies for this disease, and the mechanistic rationale for a B-cell inhibitor like 5871.

Now nor XmAb 7195, our reducing antibody, we will continue to enroll patients in Part 2 of the two part Phase 1a study and we look forward to reporting top line data from this part of the study, which is the one the part that's enrolling high IgE subjects.

Now I'll review highlights from the data that we announced for these two lead programs last month. As a reminder, XmAb 5871 is our first in class B-cell inhibiting antibody that contains our preparatory XmAb immune inhibitor Fc domain.

It targets FcγRIIb with this Fc domain and it targets CD19 through its variable domain thereby engaging the FcγRIIb inhibitory function on B-cell.

Now we reported top line data from the Phase 1b/2a study in rheumatoid arthritis and it showing promising autoimmune disease modifying activity including multiple DAS28-CRP remissions and ACR50 and ACR70 responses.

The study was designed primarily to determine the safety and tolerability profile of the biweekly multiple dose IV administration that we use in patients with RA and they characterize a pharmacokinetics, immunogenicity of 5871.

We reported -- for the secondary objective of the study, we reported that was of the DAS28-CRP disease response report of the 33% of five of 15 subjects, rate of remission or low disease activity by the DAS28-CRP metric at two weeks post final dose, which is the protocol specified disease activity measure and time point.

We also saw 20% ACR70, which is a reduction of the ACR symptom scale by 70% or greater and a 40% ACR50 rate which is a reduction of the symptom scale by 50% or greater. Now these data are the first demonstration of our novel mechanism of action and ability to target FcγRIIb for the treatment of an autoimmune disease.

And it supports the potential of our new way of inhibiting B-cells. Now our product profile of a non-depleting yet highly potent B-cell inhibitor offers potential efficacy and safety benefits over existing therapies and we're very much looking forward to testing the potential of 5871 in a number of indications with B-cell inefficiency as promised.

Now regarding the safety data from this trail, 5871 was generally well tolerated with the most common 5871 treatment related adverse events observed being predominantly mild-to-moderate gastrointestinal toxicities, such as nausea, vomiting or diarrhea occurring during the first infusion of XmAb5871.

We are continuing to conduct the analysis of safety, PK, immunogenicity and efficacy data from this trial and plan to present full data in an upcoming medical meeting this year. The first indication that we plan to pursue with XmAb5871 following this trial is called IgG4-related disease or IgG4-RD.

Now it’s a rare fibro-inflammatory autoimmune disorder that affects approximately 10,000 to 20,000 Americans. It’s newly defined and there are currently no proof of therapies. Corticosteroids of the standard of care right now.

Now for IgG4-RD it appears that IgG4 positive plasma cells, which are cell type, with surprisingly B-cells play an important role in disease [ph] process. So B-cell inhibition has significant potential as a treatment modality.

In addition there is promising physician experience with B-cell intervention to-date in a smaller investigator sponsored trial.

Now we’re planning on initiating an open-label pilot trial of this indication this year to assess disease control activity as measured by the IgG4-RD responder index or response metric recently published by meeting clinicians.

And in 2014 we were also very fortunate to regain all development and commercial rights to XmAb5871 from our former partner Amgen after we had approached them to return the project to us. Now regaining the rights gave us the flexibility or pursue alternative indications really with a high unmet need, which is what we believe IgG4-RD is.

And we look forward to starting this trial this year. Now turning now to our second lead program, XmAb 7195 that’s a first-in-class monoclonal antibody that targets IgE with its variable domain and uses our XmAb immune inhibitor Fc domain on the other end of molecule.

In this context of IgE binding the Fc domain both inhibits B-cells, in this case IgE expressing B-cells as well as rapidly targets the IgE for clearance from the circulation.

Now last month we reported the top-line interim data from part one of our two part ongoing Phase 1a study in healthy volunteers and allergic subjects and we reported the portion from the healthy volunteers in January. Now these data showed that our drug is very potent.

With 9% of subjects having reduction of circulating IgE to a load limited protection by the end of the 7195 infusion. Now this is 90% of the subject who had detectable free IgE pre-dose, which was all but one. Now including in that number was all of the subjects that received our lowest dose of 0.3 milligrams per kilogram.

That is they all achieved lower limited detection of our assay by the end of the infusion. Now total IgE levels as opposed to the free IgE were also reduced in a parallel fashion.

It turns out that two of the subjects had high pre-dose IgE levels, in this case both of them over 400 international units per mil, and these subjects, one was treated at 0.75 mg/kg of XmAb 7195 and other at 3.0 mg/kg of XmAb 7195. These subjects both had reduction of free IgE to below the limited detection lasting for at least a week.

Now these results in total show that our drug is very effective at reducing both free and total IgE from the circulation in humans. We did observe a dose limiting toxicity of transient asymptomatic thrombocytopenia at a 3 milligram per kilogram dose.

We also observed moderate urticaria hives [ph] in some treated subjects with apparent correlation of dose with the frequency of occurrence, but not the severity of occurrence. In all cases, regardless of dose, signs and symptoms were mild, non-diffuse and easily treated oral antihistamine.

Now we’re continuing to conduct an analysis of the safety, pharmacokinetics, immunogenicity and efficacy data of this completed Part 1 of the Phase 1a study and in addition we’re currently enrolling patients in the higher IgE subject portion or Part 2 of the study, as well as planning a multi-dose Phase 1b study and developing subcutaneous formulation of 7195.

So there's a lot of activity on that program. Now as we've said previously, there is high unmet need for the treatment severe asthma and a significant portion of patients are poorly controlled on existing inhaler therapies and corticosteroids.

Now the current standard of care in this population zone layer, which is an IgE binding antibody certainly has impact but a significant fraction of these treated patients don’t receive -- don’t reach rather target IgE reductions or they have such high IgE levels, always contraindicated, creating opportunity for us.

We believe the 7195 has the potential to provide a first in class mechanism for reducing IgE, that could address the full spectrum of severe asthmatics, including the hardest to treat people with high IgE levels. Next I’d like to turn to the newest element of our XmAb Fc technology platform which is bispecific Fc domain.

Now our bispecific program uses this novel Fc domain is serve as scaffold for antibodies with two different antigen binding domains, creating a molecule that can bind two targets simultaneously.

Now using a plug and play Fc domain as the basis for our bispecific structure, we can develop a very flexible approach that lets us create candidates by combining any two binding domains or even any two molecules, while potentially maintaining full length antibody properties, such as favorable in-vivo half-life and simplified manufacturing we have from monoclonals.

We also hope that this modularity lets us to engineer potency levels to improve the tolerability of the cancer immunotherapy that use bispecifics currently. Now in December, 2014 we presented promising preclinical results from our three XmAb bispecific antibody programs at the American Society of Hematology Annual Meeting.

And these data demonstrated that targeting CD3, together with each of antigen CD123, CD20 or CD38 activated T-cells to rapidly kill their respective target cells from a single dose IV bolus in cynomolgus monkeys and we demonstrated prolonged half-life of approximately one week in mice.

Now as I mentioned earlier in November 2014, we also announced the selection of our first bispecific clinical candidate, one of these one of these three that I just mentioned, XmAb 14045, an anti-CD123 CD3 and that’s now moving forward in IND-enabling studies in preparation of our clinical trial in acute myeloid leukemia that we hope to start in 2016.

Turning now to our partnerships, we entered a new partnership in December 2014, a discovery collaboration with Novo Nordisk using our XmAb bispecific and immune inhibitor technologies to discover novel biologic drug candidates for an undisclosed target. Now this is the first partnership use our bispecific XmAb tools.

Under this agreement, we're eligible to receive up to $175 million in upfront payments, research support, and preclinical and clinical development, regulatory and sales milestones, in addition to future royalties.

Now this partnership is the first to use our bispecific platform as I said and is a further validation of the comprehensive and diverse capabilities that our XmAb tool kits and the robust plug and play nature that it can offer. Another partnership now is one with MorphoSys.

MOR208 formerly XmAb 5574 is a potent anti-CD19 monoclonal antibody with an Fc domain optimized for high side cytotoxic function.

Now MOR208 is being developed for the treatment of B-cell cancers and in December 2014 MorphoSys presented results from a Phase 2 trial evaluating it in patients with four different subtypes of non-Hodgkin lymphoma at the ASH meeting.

And it's shown promising single agent activity in multiple subtypes, in particular in diffused large B-cell lymphoma or DLBCL, which is a high risk and poor prognosis patient population. They also announced that MOR208 received Fast Track designation from the FDA for DLBCL.

In addition in 2014 in January on investigator sponsored Phase 2 MOR208 in chronic lymphoblastic leukemia was begun in combination with lenalidomide or Revlimid.

In the third quarter of 2014, our partner Alexion advanced in undisclosed molecule using our proprietary Xtend Fc Domain into Phase 1 clinical testing and that is the first use of our half-life extension Fc Domain technology in humans to date and it's the third of our XmAb Fc technologies to enter the clinic.

So we have our sort cytotoxic Fc Domain exemplified by MOR208 as well as a few other programs, our immune inhibitor Fc Domains which are in our XmAb 5871 and XmAb 7195 candidates and now be on Xtend Fc Domain.

Further in April 2014, we received a milestone payment from Merck, following the initiation of our Phase 1 trial for an undisclosed drug candidate using our XmAb antibody engineering intellectual property. And of course we continue to see partnering opportunities when it makes sense for our product evolving in the business.

Now in conclusion I'm going to mention some developments with the team here at Xencor last year. In September 2014, we announced two appointments strengthening our management team. Debra Zack, was appointed as Vice President of Clinical Development and Lloyd Rowland as Senior Vice President, Chief Compliance Officer and General Counsel.

Together Debra and Lloyd bring more than combined three decades of experiences on drug development in biotech and in pharmaceutical industry legal counsel respectively.

In July 2014, we also announced the appointment of Kurt Gustafson to our Board of Directors and as chair of our audit committee and the promotion of John Desjarlais, to Senior Vice President of Research and Chief Scientific Officer.

I'm confident these appointments will be very valuable to Xencor as we continue to grow our pipeline and advance our compounds to the clinic. And with that I’ll turn the call over to John to review our financials..

Thank you, Bassil. In this afternoon’s press release we reported cash and cash equivalents totaling $54.7 million as of December 31, 2014, compared to $78 million as of December 31, 2013.

The 2013 cash balance reflects proceeds we receive from our IPO of $72.5 million in December 2013 while the 2014 cash balances reflect the net spending on operations and capital expenditures during 2014. Revenues for the fourth quarter 2014 were $5.7 million, compared to $1.7 million in the same period of 2013.

Revenues for the full year in 2014 were $9.5 million, compared to $10.2 million in the same period of 2013. Revenue for the fourth quarter of 2014 was higher than revenue for the same period in 2013 as a result of $5.2 million of revenue earned in connection with the termination of our Amgen collaboration in October of 2014.

Research and development expenditures for the fourth quarter of 2014 were $5.1 million, compared to $4.1 million for the same period in 2013. Research and development expenditures were $18.5 million for the full year of 2014, compared to $17 million for the same period in 2013.

Research and development spending in the fourth quarter of 2014 and for the year ended December 31, 2014 was greater than spending over the same period in 2013 due to increased spending on our bispecific technology and bispecific development candidates, including our lead bispecific candidate XmAb 14045.

General and administration expenses in the fourth quarter of 2014 were $2 million, compared to $1.3 million for the same period in 2013. General and administration expenses were $7.5 million for the full year ended December 31, 2014, compared to $3.7 million for the same period in 2013.

Additional spending on general and administration expenses in the fourth quarter of 2014 and for the year ended December 31, 2014 over comparable periods in 2013 reflect additional compensation cost and professional fees associated with being public reporting company and increase spending on business development and market research related to our development candidates.

Non-cash share based compensation expense for the year ended December 31, 2014 was $1.9 million compared to $0.2 million for the year ended December 31, 2013. The net loss for the fourth quarter 2014 was $1.3 million compared to a net loss of $3.7 million for the same period in 2013.

The lower loss in the fourth quarter of 2014 over 2013 amounts reflect the additional revenue earned in connection with the termination of our Amgen collaboration, which offset increased spending in research and development and general and administration expenses for the period.

Net loss for the full year of 2014 was $16.4 million or $0.52 per share on a fully diluted basis, compared to a net loss of $60.3 million or $3.85 per share on a fully diluted basis for the same period in 2013.

The lower loss for the year ended December 31, 2014 compared to 2013 is primarily due to the loss in the settlement of convertible notes of $48.6 million and related accrued interest expense of $1.2 million that were recorded as other expense in our 2013 earnings.

The weighted average shares outstanding used to compute earnings per share was 31,390,631 for the year ended December 31, 2014, compared to 15,645,789 shares for the same period in 2013. The additional shares outstanding at December 31, 2014 reflect the additional shares issued in December 2013 in connection with our IPO.

Based on current operating plans, we expect to have sufficient cash to fund research and development programs and operations through 2016. We expect to end 2015 with approximately $28 million in cash and cash equivalents. With that, we would now like to open up the call for your questions.

Operator?.

[Operator Instructions] Our first question comes from the line of Christopher Marai from Oppenheimer. Your question please..

Congrats on the year.

I wanted to first touch 5871, just really remind me with respect to the end points there, will you be looking at potentially fibrosis endpoints in this upcoming trial in IgG4 related patients? And then also what are you thinking of in terms of trial duration? I know that we saw some rapid responses in both the responder index as well as fibrosis endpoints, [indiscernible] and just wondering, what your thoughts are on that trail design and potential for it?.

Sure, so regarding the trail design we'll give more full details as we approach the start of the trail. But I think our belief right now is that we would need to run at least three months in order to have confidence that the activity disease might reflect the impact of therapy.

Certainly in the reported rituxan pilot trial there was activity that was inherent perhaps earlier, but I don't think we would want to cut that short.

Regarding fibrosis end points, the responder index that we plan on using is an organ summation that is multiple -- or any organ system that's effected and it's from a lit of a number of them -- I can't recall the exact number -- is assessed by the physician for state of disease activity worsening or improvements since the visit and is really a reflection of overall organs damage, though it's primarily based on a physician assessment of inflammatory disease.

So it's hard to separate out when you're looking at a physician's overall assessment of the organ -- the organs in question, the components, but I think it's primarily intended to really key on inflammatory component of disease..

Okay, great and then on that note just remind us why given the great data from Rituximab, docs wouldn't really want to use Rituximab in this indication and why they might prefer a successful 5871?.

Yes, I mean I think the central premise of 5871 is that this novel mechanism of action, will prescribers not eliminate B-cells from the periphery for the long term and really be very tunable, that is you can withdraw the therapy and then within a short amount of time, a couple of weeks perhaps you're having B-cell complement back from all of our tests, they seem to be active.

So challenges of infection safety and long term immune suppression that appears around Rituximab in particular, in the rheumatology community we believe might be avoidable. I think that's a meaningful advantage.

I think the other piece to remember is that our mechanism works fundamentally differently, that the compartments in the body, the reservoirs and B-cells that seem to be unreachable by B-cell depletion via rituxan in particular in tissues and in lymph nodes, this is well documented in humans as well as in pre-clinical models.

Those are primarily due to the lack of immune factor cells that are recruited there, that are present there, that rituxan need to do a show of killing. Our agent works as the molecule cell that offers potential for a broader reach that we don't have direct data to that point yet.

I think the last piece to remember is that there are currently no proof therapies. I think that it's imposed upon us now to move expeditiously and to try to become the first agent label for this indication..

Great. And then just one final follow up here with respect to cash guidance. Does that include any potential milestone for those upside -- see the current guidance estimate? Thanks..

We include some very nominal milestones, none of the major ones that could come in or it doesn’t include any new cash, any new potential new cash revenue. So just some very nominal milestones..

Thank you. Our next question comes from the line of Jason Kantor from Credit Suisse. Your question, please..

This is Jeremiah for Jason. Previously you said that for 7195, you previously said that 90% of the patients in the Part 1 study or one of your Phase 1 study had IgE levels below limited detection at the end of the fusion.

Is this a sign in your opinion that they may be still upper end of their therapeutic window? And also, is there real need from a biological standpoint for this rapid clearance?.

Sorry, I got the first one.

What was the very last bit of your question? Was there any need for what? I didn’t hear you?.

Is there actually a need to have this type of rapid clearance or is this -- to just go lower, is it reasonable to go lower in the dosing below the 0.3 mg?.

No, there is no need for rapid clearance that anybody is aware of based on how IgE impacts allergic to the -- certainly allergic to these as a chronic disease.

I think it was, the speed was relevant in terms of one I think reading some on potency but also clearly giving us a window on the mechanism of action of our agent, the rapid drop in particular of total IgE, though not quite as rapid as for the free IgE, but still very rapid, indicates that it’s very likely that our believe mechanism of clearance, the liver [indiscernible] cells that it mediated by the Fc domain, that mechanism is likely to.

So it was more of a mechanistic point. I think that is it’s certainly plausible to explore doses both lower and higher than 0.3.

I think we were certainly encouraged by the potency we saw at 0.3 and sometimes in your first demand study you’re taking a shot based on what you know about the therapeutic range might be in exploring lower might be something quite useful. But we can’t really say what the true therapeutic window is yet. Still quite early..

And then kind of on the flipside of that, is there any concerns, if you go too low, with the dose of 7195 from preclinical [indiscernible] might not be able to address patients that have high levels of IgE?.

Certainly if you go to low you’re going to start removing some of your ability to clear IgE because there is certain [indiscernible] or amount of drugs you need have present. So there is absolutely a lower down somewhere.

And again the preclinical models versus humans, the numbers become -- it’s difficult to extrapolate to the level of precision one would need to predict for preclinical model. You've really got to do the experiments in your Phase 1 studies to really get to the answer to that, what the number really ought to be.

But yes, you go too low, you lose activity. .

And then for IgG4-related disease program, I know you talked about this pilot study in a way to release the details on that, but in terms of like the study following that, do you plans just to move like -- to broaden the geography beyond the U.S., because you can talk about the U.S. patient population.

What I was kind of getting at is, given the fact that the disease is so well characterized in Japan, is there any near term -- like any plans to try to run a broader program like in the U.S.

and Japan?.

We’re certainly going to look international, when it makes sense. You make very good point, that the investigator network in Japan is reasonably well developed and that could offer a wonderful area to do clinical trials and to help people.

We certainly aren’t -- don’t have any firm plans for what we're going do after this pilot trial, but we’re certainly very open to going where we think that might make sense. For example for the RA study we just completed we did that in Eastern Europe because it made sense in terms of recruitments in patient availability.

So we'll absolutely keep that in mind. .

Thank you. Our next question comes from the line of Michael Schmidt from Leerink Partners. Your question, please..

It's actually Jonathan Chen stepping in for Michael Schmidt. Thanks for taking my question. Just wondering if you can tell us more about the kind discussions you’re having with the physicians and regulators regarding IgG4-related disease..

I’m sorry, with the physicians and regulators?.

Yes..

Right, well, with regulators we’re certainly -- as we approach initiation of our clinical trial, obviously the standard is you have to have your protocol examined for safety and relevance by the proper regulatory authority. We certainly plan on doing that.

We plan on engaging the FDA also to understand, to educate about the end point we proposed to use, which is fortunately published already by the leader in the field and has some preliminary published validation data that we plan on expanding the fund. So I think we want to educate to that end point.

We want to educate about the disease generally, helping FDA understand and then obviously following up with data from this pilot trial on how that end point manifests in the real world setting is very important for the future development of this program, because having a quantitative endpoint that you can ultimately get the FDA to agree upon is extremely important.

So it goes really into the focal points of our discussions and talking about how that endpoint could plan to future development. We’ll certainly start initiating that, but I think for now it's really about education, endpoint and getting this protocol really going.

And in terms of physicians we’re certainly talking with -- we believe the leading physicians, the ones that are most published in this area and are already collaborating with Dr. John Stone in MDH on translational and mechanistic studies to understand how our molecule behaves with immune self-samples from these subjects.

So you may characterize it pretty much..

Thank you. Our next question comes from the line of David Nierengarten from Wedbush Securities. Your question please..

I guess a two follow-up questions; one.

On the regulatory pathway for IgG4, have you -- is there any timing as we have on an FDA meeting or acceptance of this endpoint and potential future study there?.

Yes, there's no timing on that. I think that we’re currently early in the development to have sort of finality or clarity on things. It's more about having a dialogue and proposing what we’re going to do and then moving forward with the study..

And then similarly, well not quite similarly, but how is the timing going on the Phase 2, or Part 2 I should say of 7195 and is there any changing in timing there and moving forward to Phase 2 study?.

We’re in the Part 2 of the Phase 1a study right now enrolling the high IgE subjects. We are on track to report that data this year. We’re currently moving forward with that. We will initiate multi dose studies this year. We anticipate that would be our Phase 1b study and that study would run through very likely the length of 2016.

Our Phase 1b study would be a multi dose escalation study where we would hope to treat subjects for at least three months in order to start examining the sort of second half of 7195's potential for producing IgE, the first-half which is this rapid -- and [indiscernible] mediator reduction the second part would be B-cells inhibition that would take longer to manifest based on our understanding of how IgE production biology works.

But that stay would run to the full course in 2016 we believe and then Phase 2 would start beyond that..

And then one final question. I notice that you're -- and I know you announced this previously that you're pursuing anti-CD123 CD3 bispecific.

Is a reason for that -- surely animal activity also part of avoiding some of the space that’s being occupied by the [Car-T] in terms of CD20 or B-cell lymphoma versus AML [ph]?.

Sure it wasn’t just based on the animal activity. We really saw outstanding and promising preclinical activity from our CD20/CD3 and our CD38/CD3.

It was a combination of making sure we checked the box of finding tolerable single dose -- tolerable boluses that would give us sustained suppression, at least a weaker target cells, and we did that for our pre programs in what we thought was the right commercial opportunity in early clinical development competitive landscape to let us move forward as rapidly as possible.

In terms of combination in the AML space, there is really -- it's challenging space but that means a lot of unmet need, the commercial landscape is not crowded, there is really no prove biologic. So I think that’s great.

We’re really avoiding [Car-Ts] per say when we talked about avoiding more chronic commercial landscape or rather the very crowded antibody space in the B-cells malignancy area, not that we don’t think there is really excellent opportunity there for an agent that can bring the activity of T-cell killing with the simplicity and convenience of an antibody you could dose once a week or once every other week.

We think there's a great opportunity. We kind of had to pick one first, and so we did, but all three of those programs are currently advancing in preclinical, and in particular process development. Just the CD123 is the one we believe we should push to the clinic, the first which would be in the early part of 2016..

Thank you. (Operator Instructions) Our next question comes from the line of Arlinda Lee from MLV. Your question please..

I had a question about IgG4 related disease also.

For the pilot trial can you maybe give us a little bit more granularity on what the scope might be? Obviously it's open label, but I'm kind of curious how many -- at what that might you start to update us on what the results are and maybe how many patients worth of data you might need before you can just start speaking with FDA? Thanks..

Sure I think we’re [indiscernible]. We’re looking at that be published rituxan pilot study done also by Dr.

John Stone, our collaborator as a guide for the numbers of patients and again not without committing exactly, that was a study that was done in a little over two dozen subjects and we were able to discern quite clearly be disease modifying activity.

So we’re using that as kind of a guide post and we would hope to report out data on that and have sufficient data, again for at least of three months of treatment by 2016 and then -- once we start the trail we'll be able to guide a little more clearly on that..

And then about the other bispecifics for which you presented preclinical data at ASH, so then you'll not be moving those along? Have you -- we saw people from other companies checking those posters out, kind of wondering about how some of those discussions have gone?.

Well, we're certainly in discussions about many of our technology platforms at all times. I think -- bispecific antibodies in oncology I think are particularly timely now. I think people are starting to appreciate the benefits of an antibody approach over perhaps the complicated engineered cell approaches such as [Car-T].

We're sitting on our hands for any of those programs. They're all advancing in process development and in the key steps of enabling clinical trials. We're just committing to the CD123 explicitly and that one is somewhat in the lead in case just from the chance and happenstance of biochemistry and doing the work.

But we're not sitting on our hands of any of those and we're certainly aware of the keen interest there is immune therapy that can be used like a simple antibody..

Thank you, our next question is a follow up from the line of Christopher Marai from Oppenheimer, your question please..

I was just wondering with respect to the high IgE trail, will patients be excluded exclusive if they are taking antihistamines or could they potentially be taking them in the background? I know that that was common from the Xolair trial.

And additionally with respect to antihistamine use and your multi-dose study that we'll be initiating later this year, will you attempt to limit that use or use them prophylactically?.

Regarding antihistamines, so speaking to the future, I can't say anything and I have admit, I don't know precisely what the protocol says about antihistamine use in this first in man study high IgE component, [indiscernible] part.

I do know that vast majority of [indiscernible] have taken medicines at the same time as on our study are contra indicated and I believe or stay with their antihistamines unless the investigators deems it appropriate for the care of the subject. So my belief is that for high IgE portion that's the same.

However I don't honestly know without checking the protocol or a medical -- with our medical staff..

Okay, great. We'll follow up with that later than. And then one last question, again with the multi-dose studies initiating there this year, there was a recent [indiscernible] journal medicine article that highlighted some hypergenetic changes around IgE and control of IgE and they were exhibiting several different type of biomarkers.

I was wondering if you'd be looking at any dose biomarkers in that multi-dose study and looking for that perhaps to compare and contrast with the Xolair experience and your experience and your drug activity in the trials going forward. Thanks..

Right, yes.

We are surely going to continue looking at the cell based biomarkers on beta cells which are the circulate -- the peripherally accessible IgE sensitive cells related to mass cells such as IgE occupancy and on the surface of the cells IgE receptor count, and as we certainly are considering looking at various kinds of biomarkers that tend to relate to TH2 or T helper type 2 activation state of a subject's immune system, because the TH2 polarization that happens sometimes is certainly correlated to more severe allergic asthma and I think that might be what you are referring to.

So those are certainly things that we are keen to study, that we haven't fully designed how we're going to do that trail yet. I think those are important pieces to be aware of not just for Xolair, but also how your agent maybe functions and how its mechanism functions relative to many other immune therapies being tried in allergic disease..

Thank you, this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Bassil Dahiyat..

Thanks. In closing, 2014 was a very busy year for Xencor and very productive and we're looking forward to 2015, which we expect will also be similarly busy as we continue to work to progress that multiple programs we have outlined on this call. So thanks again everybody for their time and thank you very much for participating in this call..

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day..