Xencor Inks Collaboration and License Agreement with Janssen; Shares Rise

Xencor, Inc. (XNCR) and Janssen Biotech, a Johnson & Johnson (JNJ) company, have entered into a global collaboration and license agreement to develop and commercialize plamotamab and novel XmAb B-cell targeting bispecific antibodies. Following the news, shares of the clinical-stage biopharmaceutical company rose 2% in Monday’s extended trading session after closing nearly 5.5% higher during the day.

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Plamotamab is a CD20 x CD3 XmAb bispecific antibody, which is currently completing a Phase 1 dose-escalation study in patients suffering from CD20-expressing hematologic malignancies, while XmAb B-cell is designed to conditionally activate T cells through the CD28 co-stimulatory receptor.

As per the terms of the deal, upfront cash of $100 million will be paid to Xencor, along with Johnson & Johnson Innovation – JJDC, Inc.’s equity investment of about $25 million of newly issued shares of Xencor common stock. Additionally, Xencor will be eligible for milestone payments of up to $1.188 billion, along with mid-teen to low-twenties percentages tiered royalties on net sales of plamotamab and plamotamab/CD28 bispecific antibody combinations.

Markedly, the terms differ for CD28 bispecific antibodies commercialized outside of a plamotamab combination. Xencor holds the option to co-fund development costs in exchange for higher royalties and the right to co-detail such products in the United States, the company said.

On the other hand, global exclusive development and commercialization rights to plamotamab will be awarded to Janssen. Additionally, both companies will partner to clinically develop plamotamab under the cost-sharing ratio of 80% (Janssen) and 20% (Xencor), which includes costs related to subcutaneous formulation likely to commence clinical trials in 2022.

Simultaneously, Xencor will continue its previously announced clinical collaboration for the evaluation of the combination of plamotamab, tafasitamab and lenalidomide in patients with B-cell lymphoma at its own expense.

Furthermore, through its XmAb bispecific Fc technology, Xencor will create and characterize XmAb CD28 bispecific antibody candidates against B-cell targets during a two-year joint research collaboration, with Janssen having a worldwide license to develop selected molecules, along with plamotamab and other agents like CD3 bispecific antibodies.

After the deal announcement, Xencor CEO Bassil Dahiyat commented, “We are delighted to collaborate with Janssen’s leading scientists to expand the scope of the plamotamab program, particularly as we explore opportunities to combine with novel B-cell targeted CD28 bispecific antibodies that can potentially selectively enhance T-cell cytotoxic activity.”

“This collaboration complements our plans to initiate combination clinical trials of plamotamab with tafasitamab and lenalidomide, and it expands our strategy to develop multiple highly active chemotherapy-free regimens for B-cell cancers,” Dahiyat added.

The agreement, which awaits regulatory approvals, is expected to close in the fourth quarter of 2021. (See Xencor stock charts on TipRanks)

Following the collaboration agreement, Mizuho Securities analyst Mara Goldstein reiterated a Buy rating on the stock and a price target of $57 (60.5% upside potential) on Xencor.

Goldstein said, “We see the deal as a positive for XNCR, advancing pipeline candidates into therapeutic-specific indications. It has been our view that for XNCR shares to achieve valuation expansion, greater focus on therapeutic valuations rather than platform valuation is needed, and we see this collaboration adding to that dynamic.”

Overall, the Street has a Strong Buy consensus rating based on 6 unanimous Buys. The average Xencor price target of $57.83 implies upside potential of 62.8% to current levels over the next 12 months. Shares have lost 8% over the past year.

On top of this, TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Xencor, with 11.2% of investors maintaining portfolios on TipRanks increasing their exposure to XNCR stock over the past 30 days.