Along With FDA Clinical Hold Being Lifted, Xencor Has Other Promising Drugs

May 29, 2019 3:28 PM ETXencor, Inc. (XNCR)ALPMY, RHHBY2 Likes

Summary

  • Xencor gets FDA to remove the partial clinical hold for XmAb14045 to treat patients with relapsed/refractory acute myeloid leukemia.
  • The AML market is expected to reach $1.5 billion by 2026.
  • Another solid product in the pipeline is Obexelimab which is being used to treat many diseases such as IgG4, Lupus, and rheumatoid arthritis.
  • Xencor has cash of $650.5 million as of March 31, 2019, which is expected to fund its operations beyond 2024.
  • This idea was discussed in more depth with members of my private investing community, Biotech Analysis Central. Get started today »

Xencor (NASDAQ:XNCR) was able to get the FDA to remove a clinical hold for its program using XmAb14045 to treat patients with relapsed/refractory acute myeloid leukemia. This is a big win for the company because many months ago, this program was put at a standstill after the FDA had put a partial clinical hold due to some safety issues that 2 patients had experienced. This gets the program back on track with only a few modifications necessary. The biotech also has a more advanced clinical product known as obexelimab to treat patients with systemic lupus erythematosus (SLE), which is in a phase 2 study. It has a large pipeline in place and many programs which have already been partnered with other pharmaceutical companies.

FDA Partial Clinical Hold Removed

The FDA removing the partial clinical hold for Xencor's phase 1 study treating patients with relapsed/refractory AML is good news. The AML market is expected to reach $1.5 billion by 2026. It's important to note that it wasn't an easy road for the biotech since then. The hold was placed back in February of 2019 because of two patient deaths that may have been treatment-related. I believe that the FDA partial clinical hold was the FDA being cautious after these events were noted. One of the patients had cytokine release syndrome (CRS) after only receiving one dose of XmAb14045. It's possible that treatment with immunotherapies can sometimes cause a huge release of cytokines into the blood after a response by the immune system. Some symptoms of cytokine release syndrome include: Fever, nausea, rapid heartbeat, low blood pressure, and many more. The second patient had obtained pulmonary edema after several doses. Pulmonary edema is excess fluid in the lungs. Both of these events were terrible; however, the FDA recognizes that some forms of immunotherapy can result in serious adverse events. That's why the FDA stated that it would lift the hold on the basis that Xencor would amend its study protocol and also monitor cytokine release syndrome. With that in mind, the partial clinical hold was lifted. The biotech is greatly concerned about the safety of its drug and it took the steps the FDA laid out for it to solve the issues.

Advanced Product In Pipeline

The most advanced product that is wholly owned by Xencor is known as obexelimab. This is being developed in a phase 2 study to treat patients with IgG4-RD disease and lupus. IgG4-RD is a chronic inflammatory condition characterized by tissue infiltration with lymphocytes. Lupus (also known as SLE) is a chronic autoimmune disease that affects joints, lungs, kidney, blood vessels, and many other parts of the body. It causes inflammation and tissue damage in these organs. Lupus is a very good target indication for the company because it is a large market opportunity. The market opportunity for Lupus is expected to reach $3.08 billion by 2025. The company has already completed a phase 2 study targeting both IgG4-RD and Lupus. With the mechanism of action of obexelimab, the biotech has expanded its reach to also target another large market. This other target indication is rheumatoid arthritis. Xencor has already completed a phase 1b/2a clinical study for this disease.

Financials

According to the 10-Q SEC filing, Xencor has cash, cash equivalents, marketable securities, and receivables of $650.5 million as of March 31, 2019. The big influx of cash during the quarter came in because of deals with Roche's (OTCQX:RHHBY) subsidiary Genentech and Astellas (OTCPK:ALPMY) partnerships. The company recorded revenue of $111.9 million due to the research and licensing agreements in place. The biotech believes that it has cash on hand to fund its operations beyond 2024. However, it makes a note that this is just an estimate based on the current pipeline. That means if the pipeline is expanded further or other products are advanced, then more cash may be needed. It states a risk that capital resources may be utilized at a more rapid rate. That would certainly shift the estimated time for cash on hand.

Conclusion

The FDA removing the partial clinical hold of XmAB14045 is good news for the biotech. That's because it can now freely advance its phase 1 study towards completion. It is important because the AML market is a large market opportunity. The risk is that despite the clinical hold being removed, there is an even more pressing issue to consider. That is whether or not the drug ends up being successful in treating this patient population. The good news is that Xencor has several other products in the pipeline. Most notably it has obexelimab, which is being used to treat patients with Lupus/IgG4-RD and rheumatoid arthritis. As long as these programs progress accordingly, then Xencor should be in good shape for the long term.

This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers a deep-dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.

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