Josh Robinhood - Stern Investor Relations Bassil Dahiyat - President and CEO John Kuch - Vice President, Finance.

Ed Tenthoff - Piper Jaffray Varun Kumar - Leerink Partners Arlinda Lee - Canaccord Kurt Frederick - Wedbush Christopher Marai - Nomura Instinet.

Good day, ladies and gentlemen. And welcome to the Xencor’s First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode and later we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I’d now like to turn the conference over to Mr. [ph] Josh Robinhood (00:27), Stern Investor Relations. Sir, you may begin. [Audio Gap] (00:30-00:54).

… as 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 sections 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 apologies. With that I will 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 have created for the treatment of autoimmune disease and allergic diseases, as well as cancer using our XmAb platform. [Audio Gap] (02:28-02:50).

… injection and the pharmacokinetic and bioavailability data from the trial support and week dosing schedule. These are important step for the XmAb5871 program. Subcutaneous dosing on every other weeks schedule offers patients and doctors simple 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 topline 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 are also on track to announce topline 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 [audio gap] (03:50-04:17) with more things 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, XmAb immune [audio gap] (04:36-5:10). Now I will discuss our Phase 1 clinical trial to study the pharmacokinetic and bioavailability of subcue administration of XmAb5871.

40 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 with subject [audio gap] (5:42-6:07). So intestinal TEAE mild diarrhea was reported in contrast the GI infusion reactions seen at about 20% of patients for intravenous XmAb5871.

Now at least one antidrug antibodies 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 subcue XmAb5871 was about typical for monoclonal antibody, drug exposure was disproportionate as we increase dose, animal half life was similar to that reported for intravenous XmAb5871 about three and half days to four days.

Now the drug exposure kinetic supported every other week scheduled for subcue XmAb5871 and we are very encouraged by the tolerability results of our formulation. We are looking forward to using a subcue 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 [audio gap] (07:09-07:36) and 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 with for enduring treatment with XmAb5871 in order to better understand pathology hopefully we create new tools to monitor its progression. At the third international symposium on IgG4-RD [audio gap] (7:57-8:32).

We are continued 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 has 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 to target IgE with its variable domain and uses the same XmAb immune inhibitor Fc domain of XmAb5871 to target Fc gamma R2B. This design creates three distinct mechanisms of action for reducing IgE levels.

It's sequesters free IgE to block IgE signaling, it suppresses B-cell differentiation into IgE-secreting plasma cells and 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 treatment -- for use as a treatment, I should say, for allergic disease even if patients [audio gap] (10:14-10:37) different antigen binding domain.

It result a single molecule combined with 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 cells killing.

We exploit the plug-and-play modularity of our XmAb bispecific based on this Fc domain to tune the potency of 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 activate 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 and T-cells and they target 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 target 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 a mouse model, and it has stimulated SSTR2-dependent T-cell activation, T-cell margination and cytokine release infinite models -- monkey models.

We plan to file IND later this year. XmAb20717 is our first candidate 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 are 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 IL15 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 stage in the clinical development across nine pharmaceutical companies and the NIH.

Last [audio gap] (14:39-15:02) 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 and 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 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.

Net loss for the first quarter 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 increase 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?.

Thank you. [Operator Instructions] Our first question comes from the line of Ed Tenthoff of Piper Jaffray. Your line is open..

Yeah. Thank you very much. I was hearing you guys that call is kicking in a little bit. But I wanted to dig in a little bit more with respect to the mechanism of action. Firstly congrats on the subcue data that makes lot of the sales growth.

But on the bispecific with PD-1 and CTLA-4, can you talk a little bit more about how that works, is it simply that one antibody that can hit your target and therefore avoid two drugs being dose, say, have recovering more target or is it more complicated than that?.

Thanks for the question, Ed, and apologies for the telecommunications difficulties, I understand that there was a loss of audio periodically through the call for random amount of time. We are very sorry for that. Now regarding your question on XmAb20717 mechanism of action, but I hope everybody --people could 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. The idea is we designed it to only bind T-cells that are expressing both markers simultaneously.

We tune the affinities so that really only binds when you have both antigens expressed, that means we have a more selective engagement of T-cells, the double positive cells tend to be that -- 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 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 -- maybe the tolerability is caused by peripheral T-cell over activation. That’s the thesis at least. We are very excited to get that one going this year..

Certainly, [ph] thanks very much and it seems to me largely fair (21:18). Thanks..

Great..

Thank you. Our next question is from the line of Michael Schmidt of Leerink Partners. Your line is open..

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 AstraZeneca or right so, but you had Phase 3 programs with biologics.

Then we are going to be running a Phase 3 trial that’s -- a large randomized trial, I should say, we hope it, because a large randomized trial that is against a standard-of-care. In the case of IgG4 the 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 if disease improvement or perhaps rate of induction of disease relieve. The details we 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 registration plan.

But the precedents in those three disorders that I mentioned in the vasculitis family were typically a couple 100 patients randomized against 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 landmarks or in a sort of [inaudible] (23:20) 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..

Okay. That’s helpful.

The second question again on XmAb5871, is there a precedent 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 the vasculitis, it is more properly called microscopic polyangiitis or granulomatosis polyangiitis, MPA/GPA.

So in that case Rituxan was approved against head-to-head side of cytotoxic, I mean, presence there, but I can’t recall which one and it is called the Birmingham Vasculitis Activity Scale [sic] Birmingham Vasculitis Activity Score (24:20), the BVAS which the IgG4-related disease Responder Index it 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 Responder Index, which sums up inflammatory disease and disease damage activity and whatever effect the organ is presenting to the clinician is typically these are multiorgan diseases, IgG4-RD usually presents in three odd organs in our Phase 2.

We are seeing a meeting of about four organs presentation. So there is great precedent and there were two successful Phase 3's pending FDA submission and approval for giant cell arteritis and ECPA, it’s an affiliate GPA, a variant vasculitis, both of those used the BVAS. So I think there’s actually really good precedent.

And I will note that the Responder Index recently had a large international validation study presented at AACR 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 a large set of cases.

That -- I believe that study is being published shortly. So I think the endpoint is actually been fairly robustly develop now..

Okay. Very helpful. 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 the first patient in September 2016. It’s in relapsed/refractory patients with CD123 positive malignancy. We consider all AML diagnoses to be CD123 positive so those come in. We've been enrolling patients -- continue 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 are 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..

Okay. Great. Thank you. That’s it all from me. Thanks for taking my questions..

Thank you..

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

Hi, guys. Thanks for taking my questions. Thank you maybe for John on the funding side, your guidance is now a little bit longer than it was in the past.

Can you maybe talk about what changes worked 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 low, can they use the subcue or they only IV? And then on the subcue XmAb7195 data, what are we expecting to see from that? Thanks..

John, you go first, yeah..

Okay. On the guidance, we’ve been guiding after we did the file 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. We expected this 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 reflect the additional capital that we raised in December. So I think that's probably the best way to look at..

Okay. Great..

And on the IgG4-RD or rather on XmAb5871 subcue, so we do not plan on switching or adding -- either switching patients that are currently on IV in IgG4-related disease to subcue mid-trial or adding patients within that trial to a new format, rather not, new format rather new dosage form of XmAb5871. I think 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 subcue. Now for the subcue 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 subcue study, what we are looking for there is for a multi-dose subcue 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 the -- this current subcue 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 window is. We saw at 2 milligram per kg IV dose and up in the first human study.

We saw transient, asymptomatic thrombocytopenia, we are 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 subcue and that will guide on what kind of dosing schedule we would have to the drug long-term.

So, what the kind of data would be pharmacokinetic on IgE in both healthy 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..

Thanks..

Thank you. Our next question is from the line of David Nierengarten of Wedbush. Your line is open..

Hi. It’s Kurt sitting in for David.

Just building on the last question, I guess, going forward, if you are planning to partner someone on XmAb7195, considering the healthy cash balance earned, do you think, perhaps, it make more sense to fund the Phase 3 yourself, you have to get better economics when you deal with the 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 then you would have for a whole registrationl program in IgG4-related disease. So that trade-off really guide us toward wanted to find a large biopharma partner..

Okay. And if you could just narrow down when that data should be available. It looks like [ph] Clintrial (33:17) says its study is completed.

So should we expect it next couple of months?.

Yeah. It should be in the second half -- we should have that data rolled out..

Okay. Thank you very much..

Thank you. [Operator Instructions] Our next is from the line of Christopher Marai from Nomura Instinet. Your line is open..

Hi, Bassil. Thanks for the taking the questions.

Maybe first on the CD123 bispecific, I just wonder if you can sort of elaborate perhaps on the proposed initial dose that you are testing and where you are in terms of your dose escalation, dose levels for that drug in the clinic and I have the follow-up?.

Sure. We will -- can you hear me..

Okay. I can..

Oh! Good. Good. That’s -- we have a telecom problem this afternoon, just want to double check. So we haven’t disclosed our numerically what our starting dose was or the specific dose escalation cohort.

We determine our starting dose handoff of our primate toxicology and pharmacology data, molecule cross reacts against those targets CD123 and CD3 in non-human primates and we showed, for example, at ASCA, couple year -- 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.

I just say you can't get to that 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 settling, we progress the 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..

Okay. Thank you. 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 that, I guess, every two week have infusion or other injection.

And then like I suppose, when might we see some data for XmAb5871 in terms of observation post the response on your IgG4-RD Index? Thanks..

So, I guess, there are two questions.

The first one is what kind of dosing schedule approach would we envision, now that we have the subcue, we do some kind of initial sort of loading dose you're saying, followed by subcue after that, is that kind of question?.

Right..

No, no. We would imagine..

Yeah. Are you looking induction versus….

I think we are looking at -- essentially long-term the drug could -- would be we’ve envision use this drug, we certainly saw exciting data out of the preliminary Phase 2 data and what was essentially in 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 probably got options, but it would be a sort of steady like people use the [ph] Almira (37:00) like people use embro not with an induction or rather a loading dose IV followed by subcue.

We think we can keep it quite simple here. Because the dose is needed aren't that. The drug is rather potent relative to say Rituxan.

Your second question, I took to me more about maintenance of activity of XmAb5871 in IgG4-RD when we might have the topline data from the full Phase 2 study, is that what your question was?.

Yeah. That’s, I mean, how long are these patients responding to that first dose, how do up corporate that into the potential every two weeks subcue, if that even necessary I suppose or….

Right..

… just kind of one subcue every six months because in this specific at least they respond or reasonable duration, it looks like if you are 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 in that. It’s only active 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 mechanism of action are keeping a B-cell gone by than being dead as it is some kind of induction of change in the biology of disease, certainly IgG4-related disease nothing to suggest that 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 absence of the mechanism we have seen nothing to suggest 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 and Responder Index scores and they maintain response maybe for, we would only gone 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, have a little bit more from those patients that are off study drug after the six-month treating period, when we announced our data in the second half on the full cohort of 15..

Okay. Great. 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 -- maybe just remind us a number over right there and how does that compare to the IV? That’s all..

Yeah. So the ADA rate we saw, at least one positive ADA sample at any point in time, we are four out of the 40 on subcue 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 any other. It 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 pretty not super common events certainly favorably though to the IV..

Thanks. Congrats on the progress..

Thank you very much..

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 in 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 program.

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..