Item 1. Business
Item 1. Business
Overview
We are a clinical-stage biotechnology company discovering and developing tumor-activated immuno-oncology, or I-O, therapies with the goal of significantly improving outcomes for people living with cancer without the systemic side effects of current I-O treatments. We are leveraging our proprietary geographically precise solutions, or GPS, platform to build a pipeline of novel, tumor-activated molecules, including cytokines and other biologics, which are designed to optimize their therapeutic index by localizing anti-tumor activity within the tumor microenvironment. Current I-O therapies have curative potential for patients with cancer; however, their potential is significantly curtailed by systemic toxicity that results from activity of the therapeutic molecule outside the tumor microenvironment. Our molecules are engineered to localize activity within the tumor microenvironment with minimal systemic effects, resulting in the potential to achieve enhanced anti-tumor activity and increasing the population of patients who may be eligible to receive our medicines. Our most advanced tumor-activated, clinical-stage product candidates are XTX202, an interleukin 2, or IL-2, therapy, XTX301, an interleukin 12, or IL-12, therapy and XTX101, an Fc-enhanced, anti-CTLA-4 monoclonal antibody, or mAb. In addition to our clinical-stage product candidates, we are continuing to leverage our GPS platform and expertise in developing tumor-activated I-O therapies as we seek to expand our pipeline of discovery-stage programs and develop additional tumor-activated immunotherapies, including product candidates with a range of tumor targeting approaches.
XTX202 is an investigational tumor-activated beta-gamma biased (non-alpha), engineered IL-2 molecule designed to potently stimulate CD8+ effector T cells and natural killer, or NK, cells without concomitant stimulation of regulatory T cells when activated (unmasked) in the tumor microenvironment. We are currently evaluating XTX202 in an ongoing Phase 1 clinical trial in patients with advanced solid tumors. The Phase 1 trial is a first-in-human, multi-center, open-label trial designed to evaluate the safety and tolerability of multiple ascending doses of XTX202 with the goal of establishing a recommended Phase 2 dose, or RP2D, for XTX202 as a monotherapy in patients with advanced solid tumors. We recently completed dosing patients at the 1 mg/kg dose level (dose level four) and are currently enrolling patients at the 1.4 mg/kg dose level (dose level five) in monotherapy dose-escalation (Part 1A) of the clinical trial. Importantly, no signs of vascular leak syndrome, or VLS, including hypotension or decreases in albumin (an early sign of VLS) or hemodynamic compromise, have been observed in patients to date. Monotherapy dose expansion (Part 1B) of the Phase 1 clinical trial is open for enrollment, and we plan to initiate patient enrollment in a Phase 2 clinical trial evaluating XTX202 as a monotherapy in patients with unresectable or metastatic melanoma and metastatic renal cell carcinoma, or RCC, in April 2023. In addition, we plan to report preliminary anti-tumor activity, safety, pharmacokinetic, or PK, and pharmacodynamic, or PD, data from the Phase 1/2 clinical trial in the third quarter of 2023, which we anticipate will include approximately 15-20 patients across a range of solid tumors treated at the 1 mg/kg dose or higher across all cohorts in the Phase 1/2 clinical trial.
XTX301 is an investigational tumor-activated, engineered IL-12 molecule designed to potently stimulate anti-tumor immunity and reprogram the tumor microenvironment of poorly immunogenic “cold” tumors towards an inflamed, or “hot,” state. In November 2022, we announced clearance of our investigational new drug application, or IND, by the U.S. Food and Drug Administration, or FDA, for XTX301 for evaluation in patients with advanced solid tumors. We recently opened clinical trial sites and are actively screening patients for enrollment at a starting dose of 5.0 μg/kg (0.005 mg/kg) in monotherapy dose-escalation for our Phase 1 clinical trial evaluating the safety and tolerability of XTX301 in patients with advanced solid tumors. We anticipate reporting preliminary safety data from the Phase 1 clinical trial into at least the third dose level in the fourth quarter of 2023.
XTX101 is an investigational Fc-enhanced, tumor-activated anti-CTLA-4 mAb designed to deplete regulatory T cells when activated (unmasked) in the tumor microenvironment and improve upon the therapeutic index of existing anti-CTLA-4 therapies. We are currently evaluating XTX101 in an ongoing Phase 1 clinical trial in patients with advanced solid tumors. The Phase 1 clinical trial is a first in-human, multi-center, open-label trial designed to evaluate the safety and tolerability of XTX101 for the treatment of adult patients with advanced solid tumors. We recently completed enrollment in monotherapy dose-escalation (Part 1A) of the Phase 1 trial, and enrollment in monotherapy dose-expansion (Part 1B) of the Phase 1 trial is ongoing. In addition, we have determined an RP2D of 150 mg once every six weeks, or Q6W. We
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anticipate reporting preliminary safety, PK, PD and anti-tumor activity data from the Phase 1 clinical trial in the second quarter of 2023. As previously announced, we plan to continue to explore strategic opportunities to advance XTX101 with a partner beyond the current Phase 1 clinical trial.
In addition to our most advanced product candidates, we believe our proprietary GPS platform has the potential to develop additional product candidates using a range of approaches to achieve tumor-activation and derive a clinically meaningful improvement in therapeutic index.
We currently have worldwide development and commercialization rights to all of our product candidates.
Our Approach—Improving the Therapeutic Index of I-O Therapies
Our focus is to improve upon two of the foundational mechanisms of I-O: cytokines and checkpoint inhibitors. Since the 1980s, cytokines have been explored as a cancer therapy due to their ability to carry messages between cells and serve as master regulators of the body’s response to inflammation and immune attack. Although cytokines have demonstrated compelling clinical efficacy in certain tumors, including the ability to generate sustained complete responses, or CRs, in a subset of patients, their use has been limited by severe systemic toxicity. Similar to cytokines, checkpoint inhibitors have shown the potential to provide meaningful improvements in survival for patients with cancer, but the utilization of these therapies, beyond those that target the immune proteins PD(L)-1, is also limited largely by toxicity.
Our goal is to overcome the limitations of current I-O therapies by developing products with an improved efficacy-to-toxicity ratio, or therapeutic index. The toxicities for cytokines and checkpoint inhibitors stem from their activity outside of the tumor microenvironment. Our GPS platform is designed to overcome these systemic toxicities by creating tumor-activated molecules and unleashing the activity of cytokines and checkpoint inhibitors in the tumor microenvironment. These molecules are intended to be inactive until they reach the tumor microenvironment, where they are activated, resulting in localized clinical activity with minimal dose-limiting toxicities. To achieve this tumor selectivity, we apply our GPS platform, which includes engineered features and a proprietary protein masking technology that render our molecules inactive until reaching the tumor. Our GPS platform also enables PK and protease-dependent activation, resulting in geographically localized anti-tumor activity. The engineered features are designed to ensure that our product candidates are stable molecules with well-understood properties and a reproducible manufacturing approach.
Leveraging our GPS platform, we intend to develop a number of additional product candidates using a range of tumor targeting approaches, with the goal of achieving a clinically meaningful improvement in their therapeutic index. We also plan to evaluate opportunities for better tolerated and more efficacious combination therapies, using product candidates from across our portfolio with other cancer therapies, to increase the potential for curative regimens in oncology. Beyond oncology, we also plan to apply our GPS platform to other disease areas in which the immune system is dysregulated, such as in autoimmune and inflammatory diseases.
Our Strategy
Our vision is to transform the lives of patients with cancer by harnessing the power of highly potent, tumor-selective I-O therapies that deliver deep and durable clinical responses. By leveraging our GPS platform, we aim to discover, develop and, ultimately, commercialize I-O therapies that overcome the known limitations of today’s approaches and provide effective, tolerable and durable therapeutic options for patients and their physicians.
In order to achieve these goals, the key elements of our strategy are to:
● Efficiently progress XTX202, our tumor-activated IL-2, through initial Phase 1 clinical proof-of-concept data, and if successful, expand clinical development for multiple cancer indications as a monotherapy and in combination with other therapies, including in combination with XTX301, our tumor-activated IL-12. XTX202 is a tumor-activated beta-gamma biased (non-alpha), engineered IL-2 molecule designed to potently stimulate CD8+ effector T cells and NK cells without concomitant stimulation of regulatory T cells when activated (unmasked) in the tumor microenvironment. We are currently evaluating XTX202 as a monotherapy in an ongoing Phase 1 clinical trial in patients with advanced solid tumors, and we anticipate initiating patient
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enrollment in a Phase 2 clinical trial evaluating XTX202 as a monotherapy in patients with unresectable or metastatic melanoma and metastatic RCC in April 2023. In addition, we plan to report preliminary anti-tumor activity, safety, PK and PD data from the Phase 1/2 clinical trial in the third quarter of 2023, which we anticipate will include approximately 15-20 patients across a range of solid tumors treated at the 1 mg/kg dose or higher across all cohorts in the Phase 1/2 clinical trial. Subject to these interim trial results and establishing initial clinical proof-of-concept for XTX202, we plan to complete the Phase 2 trial evaluating XTX202 as monotherapy in patients with RCC and melanoma with the goal of determining the potential to conduct monotherapy registration-enabling trials for XTX202. In parallel to the completion of the planned Phase 2 monotherapy trial, we plan to initiate a Phase 1/2 trial evaluating XTX202 in combination with an anti-PD-1/PD-L1 for the treatment of patients with non-small cell lung cancer, or NSCLC. Subject to the results from this combination study, we anticipate initiating registration-enabling clinical trials for XTX202 in combination with an anti-PD-1/PD-L1 in patients with NSCLC. We also plan to explore the potential for XTX202 in combination with other therapies, including combinations with XTX301, our tumor-activated IL-12, and potential collaborations with cell therapies or anti-cancer vaccines.
● Efficiently progress XTX301, our tumor-activated IL-12, through initial Phase 1 monotherapy dose-escalation, and if successful, expand clinical development for multiple “hot” and “cold” tumors as a monotherapy and in combination with other therapies. IL-12 plays a key role in bridging innate and adaptive cellular immunity, making it a compelling target for immunotherapy. However, life-threatening toxicity observed with systemically active IL-12, including severe liver toxicity, have limited the therapeutic potential of IL-12 agents. XTX301, our tumor-activated IL-12, is designed to potently stimulate anti-tumor immunity and reprogram the tumor microenvironment of poorly immunogenic “cold” tumors towards an inflamed, or “hot,” state. We recently opened clinical trial sites and are actively screening patients for enrollment at a starting dose of 5.0 μg/kg (0.005 mg/kg) in monotherapy dose-escalation for our Phase 1 clinical trial evaluating the safety and tolerability of XTX301 in patients with advanced solid tumors. We anticipate reporting preliminary safety data from the Phase 1 clinical trial into at least the third dose level in the fourth quarter of 2023. Subject to achieving a minimal target dose, we would continue monotherapy dose-escalation of the Phase 1 clinical trial and initiate treatment in cohorts of patients with both “cold” and “hot” tumors to determine the potential for anti-tumor activity. Following an assessment of anti-tumor effect as a monotherapy in selected tumor types, we also plan to explore the combination potential of XTX301 with an anti-PD-1/PD-L1 and with XTX202, our tumor-activated IL-2 product candidate, prior to initiation of registration-enabling clinical trials. Subject to the successful completion of trials showing the ability to combine XTX301 with other I-O agents and immune activation in “cold” tumors, we would plan to explore potential registration-enabling trials in both “hot” tumors, such as head and neck cancer and NSCLC, and in “cold” tumors, such as microsatellite stable colorectal cancer, or MSS CRC, and pancreatic cancer.
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Report Phase 1 monotherapy data for XTX101 and explore strategic opportunities to advance XTX101 with a partner. We are currently evaluating XTX101 in an ongoing Phase 1 clinical trial in patients with advanced solid tumors. We recently completed enrollment in monotherapy dose-escalation (Part 1A) of the Phase 1 trial, and enrollment in monotherapy dose-expansion (Part 1B) of the Phase 1 trial is ongoing. In addition, we have determined an RP2D of 150 mg Q6W, and we anticipate reporting preliminary safety, PK, PD and anti-tumor activity data from the Phase 1 clinical trial in the second quarter of 2023. As previously announced, we plan to continue to explore strategic opportunities to advance XTX101 with a partner beyond the current Phase 1 clinical trial.
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Broadly expand our portfolio by applying the versatility and reproducibility of our GPS platform to develop novel I-O therapies for cancer. We have prioritized efforts to develop novel I-O therapies based on the therapeutic activity of I-O agents established in other clinical trials, while recognizing that the benefit of many of these I-O agents, particularly cytokines, has been historically hampered by issues of short half-life, poor bioavailability and significant toxicity. By leveraging the insights and capabilities of our GPS platform and our leadership team, we aim to systematically create novel molecules, including cytokines, mAbs and multi-functional biologics, that overcome these challenges to safely localize their potent activity to the tumor microenvironment. We believe that our GPS platform, which enables us to develop molecules with the potential to trigger anti-tumor immunity while limiting systemic exposure to improve tolerability, is broadly applicable in oncology and has the potential to develop a number of additional product candidates using a range of tumor targeting approaches, with the goal of achieving a clinically meaningful improvement in their therapeutic index.
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Build a fully-integrated I-O company by independently commercializing approved products in indications and key geographies where we believe we can maximize our product candidates’ value. We currently own all worldwide development and commercialization rights to our product candidates and programs, which we believe have been optimally selected based on our extensive preclinical data, including data with disease-specific animal models and biomarkers, supporting their potential for clinical success. To maximize the full potential and value of our pipeline, we intend to retain key development and commercialization rights for our product candidates in key indications and geographies where we believe we can ultimately commercialize successfully on our own, if approved. In addition, we intend to pursue strategic collaborations where a collaborator may have geographic operations or other capabilities that are synergistic or additive to our own.
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Leverage the broad applicability of our GPS platform through strategic collaborations in autoimmune diseases. We believe the collective components of our GPS platform and the reproducibility it enables in our drug discovery and development efforts present a meaningful opportunity for us to leverage our GPS platform not only in oncology but also in multiple therapeutic areas beyond oncology, such as in autoimmune and inflammatory diseases. We plan to explore strategic collaborations that would enable us to accelerate the development of additional product candidates or programs as well as expand our capabilities, pipeline opportunities and product offerings, particularly where a collaborator may have expertise or capabilities that are synergistic or additive to our own.
About I-O
The discovery of a role for immunotherapy in the treatment of cancer was made more than 100 years ago, when William Coley treated patients with heat-treated bacterial toxins, resulting in a profound anti-tumor effect in some of those patients. Two of the most important mechanisms within I-O are cytokines and checkpoint inhibitors, with cytokine therapies having been introduced in the 1980s and checkpoint inhibitors in the period after 2011, when the first such product was approved. Both therapeutic approaches are known to provide efficacy in terms of clinical responses and tumor shrinkage. However, toxicities have limited the application of these therapies, resulting in the need to dose-reduce, dose-interrupt or discontinue many patients from treatment. Immune checkpoint inhibitors are associated with immune-related adverse events, or AEs, that may affect any organ system and may be life-threatening or fatal to patients. Cytokines in particular are associated with broad ranging multi-organ toxicities that can be lethal and have limited the development of this class of potential therapies. Anti-PD-1/PD-L1 checkpoint inhibitors have been used broadly because they generally achieve efficacy with minimal systemic toxicity, enabling their administration at their maximally effective doses. Anti-PD-1/PD-L1 treatments have become the most widely utilized immunotherapy agent in oncology, with FDA approvals in more than a dozen separate tumor types and $27 billion in worldwide sales in 2020. Our mission is to overcome the limitations of cytokine therapies and checkpoint inhibitors, such as anti-CTLA-4, and make immunotherapies beyond anti-PD-1/PD-L1 treatments more accessible, efficacious and safe for patients with cancer.
The promise and limitations of cytokines
Cytokines are small signaling proteins that serve as master regulators of the body’s response to inflammation and immune attack. There are multiple cytokines, including IL-2, which are approved in a range of oncology and non-oncology indications. Aldesleukin, a high-dose IL-2 therapy, was first approved in 1992 as a monotherapy for patients with
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melanoma and RCC. In addition, cytokines have shown potential beyond oncology with approvals for the treatment of patients with multiple sclerosis, resulting in cytokines becoming a key treatment option for a range of conditions. However, cytokines have not achieved therapeutic success in a broad population of patients because their use has been limited by severe toxicity, including fatal outcomes. We believe XTX202, our tumor-activated IL-2 product candidate, and XTX301, our tumor-activated IL-12 product candidate, each have the potential to overcome these limitations and deliver a therapeutic dose with low systemic toxicity and the ability to achieve a broad therapeutic index.
The promise and limitations of checkpoint inhibitors
Checkpoint inhibitors have become mainstays in cancer therapy since the FDA approved ipilimumab, an anti-CTLA-4 therapy, in 2011. Similar to cytokines, checkpoint inhibitors have shown the potential to provide meaningful improvements in survival for patients with cancer, but the utilization of these therapies has been limited largely by toxicities. These toxicities, which can be life-threatening or fatal, have resulted in the need to dose-reduce, dose-interrupt or discontinue many patients from treatment. To date, anti-PD-1/PD-L1 checkpoint inhibitors have been used broadly due to their ability to achieve efficacy with minimal systemic toxicity, enabling their administration at their maximally effective doses. In contrast, while the clinical benefit of CTLA-4 blockade to patients with cancer is well-established, the efficacy of current CTLA-4 therapies is impaired by dose-limiting toxicities arising from systemic immune activation. This has reduced the use of anti-CTLA-4 mAbs both as a monotherapy and in combination therapy. We believe XTX101, our Fc-enhanced, tumor-activated anti-CTLA-4, has the potential to overcome these limitations and deliver the full clinical benefit of anti-CTLA-4 mechanisms without the dose-limiting toxicities associated with existing CTLA-4 treatments.
I-O Combinations
The ability to combine oncology agents has been an important step in developing effective cancer regimens. Combination chemotherapy can be curative in settings where single agents have had limited efficacy and were not considered curative. The substantial dose-limiting toxicities associated with I-O agents has prevented these agents from being combined effectively. The ultimate promise of I-O for patients is dependent upon the ability to develop I-O agents that can be combined at their optimal doses without life-threatening toxicity. The severe toxicity of IL-2 has limited the ability to combine IL-2 with other cancer treatments without compromising the dose administered. Similarly, data from third-party clinical trials has demonstrated that the combination of ipilimumab, an anti-CTLA-4 therapy, with nivolumab, which targets the immune checkpoint protein PD-1, was associated with improved clinical outcomes, but it was limited by significantly higher risk of all-grade and high-grade immune-related AEs such as pruritus, rash, diarrhea, colitis, elevation of the liver enzyme alanine transaminase, known as ALT, hyperthyroidism, hypophysitis and pneumonitis. Importantly, combination therapy generally requires use of low dose ipilimumab at 1 mg/kg rather than the more efficacious dose of 10 mg/kg. Even at the lower dose, ipilimumab combination therapy is poorly tolerated, with AEs causing up to 80% of patients to discontinue treatment, up to 50% of patients requiring emergency room visits and up to 36% of patients requiring hospitalization. The potential of our tumor-activated molecules to minimize the systemic toxicity of I-O could allow us to combine I-O agents to meaningfully improve survival in a broader range of tumor types.
Our Solution: Our GPS Platform Enables Tumor-Activated I-O Molecules Designed to Optimize Their Therapeutic Index
I-O therapies have curative potential for patients with cancer. However, this potential has been significantly curtailed to date by dose-limiting toxicities that result from activity of the therapeutic molecule outside the tumor microenvironment. We believe that geographic localization of the activity of I-O agents to the tumor microenvironment can overcome these dose-limiting toxicities and enable maximal therapeutic benefit for patients. Tumor-selective activation could be achieved by harnessing unique characteristics of the tumor microenvironment to activate therapeutic molecules locally that have minimal or non-detectable levels of activity outside of the tumor microenvironment.
Matrix metalloproteases, or MMPs, are enzymes involved in protein degradation that are essential for tumor growth and metastasis because they regulate key processes within the tumor microenvironment, including tumor growth, angiogenesis, invasion and metastasis. MMPs are dysregulated in the tumor microenvironment, resulting in preferential activity of MMPs in the tumor microenvironment by comparison to non-tumor, healthy tissues. As a result, we believe that our GPS platform,
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which is designed to harness tumor MMP activity, can activate our molecules selectively within the tumor microenvironment while maintaining minimal or non-detectable levels of activity outside of the tumor microenvironment.
Our GPS platform enables us to engineer a broad range of immune-modulatory molecules, including cytokines, antibodies and multi-functional molecules, that contain masking domains designed to minimize their activity outside of the tumor microenvironment and turn on selectively in the tumor microenvironment where they are preferentially activated by tumor MMPs. Specifically, MMPs enzymatically cleave a protease cleavage site incorporated in a peptide linker that connects the masking protein domain to the active agent. This separates the mask from the active agent, enabling the unmasked agent to promote an anti-tumor response within the tumor microenvironment.
Key features of our tumor-activated molecules exemplify the engineering approach that underpins our GPS platform. Each feature contributes to multiple characteristics of the molecule that are designed to enable tumor selective biological activity and tumor growth inhibition while minimizing toxicity outside of the tumor microenvironment. The general architecture of each of our tumor-activated molecules is:
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a masking domain;
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linker sequences;
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a protease cleavage site;
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a half-life extension domain for cytokine molecules, as appropriate; and
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the active engineered molecule (i.e., an engineered cytokine or antibody).
The engineered features are designed to ensure that our product candidates are stable molecules with well-understood properties and a reproducible manufacturing approach. In preclinical studies, we have successfully applied our GPS platform to cytokines, antibodies that regulate immune checkpoints and multi-functional molecules in order to promote localized anti-tumor immune responses, while avoiding the dose-limiting toxicities associated with systemic immune responses.
The graphic below illustrates XTX202, our tumor-activated IL-2, which contains a masking domain that is released by protease cleavage. When the linker sequence, which contain a protease cleavage site, is cleaved by proteases, the masking domain is released, allowing the cytokine to bind to the target receptor. Before cleavage by the MMP in the tumor microenvironment, the engineered cytokine has minimal or non-detectable levels of activity outside the tumor microenvironment. Specifically, there is no binding to target receptors, and the molecule has a long half-life outside the tumor microenvironment. After cleavage in the tumor microenvironment, the engineered cytokine is locally activated and has a relatively short half-life.
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Key Features of Xilio’s Tumor-Activated Cytokines
We believe that the characteristics of our GPS platform described above enable the following key advantages:
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masking that takes advantage of multiple intra-molecular interactions, minimizing the risk of activity outside of the tumor microenvironment and therefore minimizing the risk of toxicity;
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engineering the active molecule such that unmasking in the tumor microenvironment promotes a potent, localized anti-tumor immune response;
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early consideration and incorporation of manufacturing and development aspects into the design of molecules to facilitate production of high-quality drug product for clinical use;
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half-life extending inactive (masked) cytokines, as appropriate, to support administration to patients on a schedule consistent with other biologics agents; and
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locally activating cytokine molecules that have a short half-life in the tumor microenvironment, which minimizes the risk of the released cytokine exhibiting activity outside of the tumor microenvironment and, therefore, further reduces the risk of toxicity.
We have shown preclinical validation and promising early clinical evidence of the ability of our GPS platform to develop tumor-activated cytokines and antibodies. In preclinical studies, each of our most advanced product candidates exhibited tumor-activated biological activity, tumor growth inhibition and minimal to no toxicity outside of the tumor microenvironment. The reproducibility of these preclinical data highlights the potential breadth of application of our GPS platform to multiple structurally diverse cytokines, antibodies and multi-functional molecules. In our Phase 1 trial for XTX202, our tumor-activated IL-2, we have demonstrated initial clinical validation of our GPS platform, as evidenced by preliminary intratumoral PD data for two patients treated with XTX202, each of whom had an optional on-treatment tumor biopsy and were the only two patients from whom a tumor biopsy analysis was available as March 1, 2023. For each patient, the tumor sample featured increased numbers of stromal tumor infiltrating lymphocytes, or TILs, and increased frequency of CD8+ effector T cells among these TILs. At the time of the tumor sample, these changes occurred in each patient in the absence of peripheral changes to CD8+ effector T cells, demonstrating preliminary evidence of tumor-selective activation. We believe our GPS platform can be applied to numerous molecules, which have potential as cancer therapies, but require localized activity within the tumor microenvironment to overcome the dose-limiting toxicities that result from activity outside of the tumor microenvironment.
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Our Pipeline
Leveraging our GPS platform, we are building a pipeline of tumor-activated cytokine, checkpoint inhibitor and multi-functional immunotherapies to treat cancer. Our goal is to overcome the limitations of current I-O therapies by developing products with an improved therapeutic index. Consistent with this goal, we selected molecules that have prior clinical validation demonstrating therapeutic benefit, but that have been limited by significant toxicities that we believe can be addressed with our approach. We currently have worldwide development and commercialization rights to all of our product candidates.
Program
Disease Indication
Mechanism of Action
Stage of Development
Cytokine Programs
XTX202 (1)
Oncology
IL-2
Phase 1 monotherapy dose-escalation (Part 1A) ongoing and monotherapy dose expansion (Part 1B) open for enrollment
XTX301 (2)
Oncology
IL-12
Phase 1 clinical trial sites open and actively screening patients for enrollment
Undisclosed Research Program
Oncology
Tumor-Activated
Multi-Functional
Discovery stage
Antibody Program
XTX101 (3)
Oncology
anti-CTLA-4
Enrollment in Phase 1 monotherapy dose-escalation (Part 1A) complete; Phase 1 monotherapy dose-expansion (Part 1B) ongoing
1.
Plan to initially evaluate XTX202 as a monotherapy in patients with melanoma and RCC prior to evaluating XTX202 in combination with an anti-PD-1/PD-L1 for the treatment of patients with NSCLC or potential expansion into additional cancer indications as a monotherapy or combination therapy.
2.
Plan to initially evaluate XTX301 as a monotherapy in patients with advanced solid tumors.
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Plan to explore opportunities for strategic collaborations to advance XTX101 with a partner beyond the current Phase 1 clinical trial.
Our development strategy for our clinical-stage, tumor-activated cytokine product candidates is focused on the following:
(1)
achieve an acceptable safety profile while maintaining dose levels sufficient to confer localized anti-tumor activity in the tumor microenvironment;
(2)
achieve clinical proof-of-mechanism for our GPS platform by showing tumor-selective activation, as demonstrated by increased tumor fighting immune cells in patient tumors, including CD8+ effector T cells and NK cells, without an increase in tumor fighting immune cells in the periphery;
(3)
establish clinical proof-of-concept for each product candidate, as demonstrated by monotherapy anti-tumor activity in patients treated at the target dose level for such product candidate; and
(4)
demonstrate the ability to administer our product candidates in combination with other therapies, so they can be explored and administered with relevant standard-of-care agents to potentially improve patient outcomes.
Assuming we successfully achieve an improved therapeutic index during our initial clinical trials, we plan to proceed into an expansive set of registration-enabling clinical trials across a range of tumor types.
Cytokine Programs
The major focus in our cytokine programs is the development of tumor-activated cytokines with exemplary clinical activity and tolerability. These cytokine programs include our clinical-stage, tumor-activated product candidates, XTX202 (IL-2) and XTX301 (IL-12), as well as discovery-stage programs for oncology and autoimmune diseases.
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XTX202, Our Clinical-Stage, Tumor-Activated IL-2 Product Candidate
XTX202 is an investigational tumor-activated beta-gamma biased (non-alpha), engineered IL-2 molecule designed to potently stimulate CD8+ effector T cells and NK cells without concomitant stimulation of regulatory T cells when activated (unmasked) in the tumor microenvironment. We are currently evaluating XTX202 as a monotherapy in an ongoing Phase 1 clinical trial in patients with advanced solid tumors. For more information, please see the sections entitled “—Clinical Development Plans for XTX202” and “—Phase 1 Clinical Trial for XTX202” below.
Background on IL-2
IL-2: Extensive clinical evidence of the promise and limitations of cytokines
As shown in the figure below, high-dose IL-2 has resulted in long-term survival in a subset of patients who had achieved a CR. We believe that patients who develop a CR when treated with high-dose IL-2 are highly likely to achieve a long-term durable response or cure.
Survival of Patients Who Achieved a CR with High-Dose IL-2
Historical use of IL-2 in cancer has been accompanied by severe toxicity
The power of IL-2 is promising, but it has been greatly reduced due to toxicities. When administered locally, IL-2 has been shown to be clinically active and well-tolerated, shrinking local cancerous lesions and reducing malignant effusions. However, when administered systemically, treatment with IL-2 has been shown to induce severe toxicities, including VLS, myocardial infarction, or heart attack, acute renal failure and immune-mediated neuropathy. This toxicity profile greatly limits its current use.
In order to localize IL-2, many groups have tried linking IL-2 to tumor-targeting mAbs, creating fusion proteins. These fusion proteins can accumulate in a tumor and create locally high IL-2 concentrations. However, the use of cytokine fusion proteins has not prevented systemic toxicity because the long circulating half-life of antibody fusions and unexpected cleavage of IL-2 from the antibody domain has contributed to high systemic IL-2 levels in some cases.
The toxicities associated with early IL-2 therapies, such as aldesleukin, are hypothesized to be associated in part with binding and signaling through the high affinity αβγ IL-2receptor on immune cells or vascular endothelial cells. In addition, the αβγ IL-2receptor is expressed at high levels on regulatory T cells, or TREGs, which act to inhibit the immune response, whereas the intermediate affinity βγ IL-2 receptor is expressed on cells that promote immune response including CD8+ effector T cells and NK cells.
Modeling of IL-2 activity in preclinical animal tumor models and evaluation of dosage and dose-frequency data from patients has suggested that IL-2 has a steep dose-activity curve, with reduced exposure impacting both efficacy and toxicity. IL-2 anti-tumor activity and toxicity are both dependent on the amount of IL-2 administered. Therefore, in order
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to provide the greatest benefit to patients, the goal is to engineer a form of IL-2 that can minimize systemic effects while harnessing and directing activity to the tumor microenvironment.
Rationale for non-alpha IL-2
The application of cytokines to treat cancer fits with the role these signaling molecules have evolved to play in the body. Many key cytokines, including IL-2, regulate the immune system, and it is now recognized that there are immune stimulatory cytokines, immune suppressive cytokines and cytokines that have multiple activities on different target cell types. IL-2 is a master regulator of immune responses and has been investigated extensively as a potential anti-cancer immunotherapy. IL-2 supports the function, survival and proliferation of T cells, including the subset of T cells known as CD8+ effector T cells that are most closely linked to anti-tumor immunity.
The activities of IL-2 are driven by two classes of receptor complexes, which are present on different T cell subsets. The high-affinity αβγ receptor present primarily on TREGs, and the intermediate-affinity βγ receptor present primarily on CD8+ effector T cells and NK cells. In contrast to wild-type IL-2, XTX202 does not bind the α-subunit of the IL-2 receptor and therefore does not induce the preferential activity on TREGs that limits the immune activating effect of wild type IL-2. XTX202 is designed to potently stimulate CD8+ effector T cells and NK cells that express the βγ receptor.
Our Solution: XTX202, a Tumor-Activated IL-2
The critical challenge in the development of IL-2 therapies is to improve patient tolerability without reducing efficacy. Deploying the key structural components of our GPS platform, we have designed XTX202 with three key features designed to overcome this: (1) avoidance of binding to CD25, the IL-2α receptor subunit, in order to reduce the activation of Treg cells that inhibit immune response, while maintaining effective activation of CD8+ and NK cells that promote an anti-tumor immune response; (2) overcoming the short circulating half-life of the native cytokine using the half-life extension domain; and (3) a removable protease-cleavable protein mask that prevents XTX202 from binding and signaling until the mask is removed by the MMPs that are preferentially active within the tumor microenvironment.
These key features are intended to ensure that XTX202 is released and activated preferentially within the tumor microenvironment, where it has been designed to bind to lymphocytes. In the tumor microenvironment, XTX202 is designed to be unmasked and to bind to the IL-2 βγ receptors that are abundantly expressed on CD8+ effector T cells and NK cells, activating these cells. Locally activated T cells and NK cells have potent anti-tumor cytotoxic activity. The unmasked XTX202 is then rapidly internalized by these lymphocytes, shortening the systemic half-life of the active (unmasked) molecule and localizing its activity to the tumor.
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Overview of preclinical studies and data
We have undertaken extensive preclinical studies to demonstrate the two key characteristics of XTX202: (1) anti-tumor activity and (2) minimal or no evidence of systemic toxicity. In order to assess this, we compared XTX202 to both aldesleukin and a non-masked version of the molecule, which we refer to as XTX200, a non-α IL-2 with the same half-life extension domain feature but no mask to block IL-2 function systemically. XTX200 also serves as a surrogate for other non-α IL-2 molecules currently being investigated by others. This was done to assess the activity of our masking technology and compare XTX202 against high-dose IL-2. We believe that these studies collectively provide preclinical proof-of-concept with an improved therapeutic index due to tumor microenvironment-dependent activation of XTX202 that, if replicated in clinical trials, could result in significant benefits to patients with a variety of cancer types. The key findings of our XTX202 preclinical studies are as follows:
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XTX202 demonstrated minimal signaling through the IL-2 receptor when masked, and MMP activation of XTX202 restored full potency of IL-2 signaling in in vitro assays illustrating the tight, protease-dependent control of IL-2 activity conferred by XTX202;
·
XTX202 activated an immune response in the tumor but not in peripheral organs, demonstrating geographically selective tumor PD activity in vivo in mice;
·
XTX202 matched the tumor growth inhibition activity of XTX200 and aldesleukin, without activation of immune response outside of the tumor microenvironment, thereby avoiding the systemic toxicity (VLS and enlargement of the spleen, or splenomegaly), body weight loss and mortality in mice that were associated with the doses of XTX200 or aldesleukin required for tumor growth inhibition;
·
XTX202 was well-tolerated in non-human primates, or NHPs, with no evidence of VLS or systemic immune activation in non-tumor, healthy tissue, whereas XTX200 induced both; and
·
XTX202 exhibited a half-life of greater than one week in NHPs, compared to a half-life of less than 0.5 days for XTX200. Based on these data, we believe that circulating levels of masked XTX202 can be achieved with clinically meaningful concentrations of activated (unmasked) XTX202 within tumors and that any unmasked cytokine of XTX202 that reaches the systemic circulation will be rapidly cleared with minimal systemic AEs.
We then used syngeneic mouse tumor models to evaluate the activity of XTX202 in vivo . In these mouse tumor models, we observed tumor-activated PD effects of XTX202 and robust monotherapy activity against established tumors. Importantly, these experiments were conducted with XTX202 and not mouse surrogates.
We examined established B16F10 melanoma tumors for PD evidence of XTX202 activity and compared the results to activity seen systemically. These data were compared to the non-masked control XTX200 and the vehicle-treated negative controls. Animals received 10 mg/kg of XTX202 or 0.36 mg/kg of XTX200, the non-masked control, on day zero and day three.
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The presence of CD8+ effector T cells was used as a measure of immune activation. The figure below depicts activity in B16F10 melanoma tumors on the left and in the spleen, a peripheral immune organ, on the right. We observed that both XTX202 and XTX200 induced an increase in CD8+ effector T cells in the tumor compared to vehicle control, while, in the spleen, expansion observed following XTX202 was limited compared to non-masked XTX200, which induced a significant expansion of splenic CD8+ effector T cells.
XTX202 Tumor Selectivity in B16F10 Tumor Mice
In a separate experiment, we compared the effect of aldesleukin and XTX202 on tumor growth and the level of intra-tumoral CD8+ effector T cell, NK cell and TREG infiltration. MC38 tumor-bearing mice were treated with either vehicle, aldesleukin (3 mg/kg twice per day, or BID) or XTX202 (10 mg/kg once every five days, or Q5D) and tumor volumes, as well as intra-tumoral immune cell infiltration were assessed on day five post-treatment.
As illustrated in the figure below, XTX202 and aldesleukin treatment resulted in tumor growth inhibition, as well as increased CD8+ effector T cell and NK cell infiltration compared to vehicle. In contrast to aldesleukin, XTX202 treatment did not result in significantly increased intra-tumoral TREG frequencies compared to vehicle.
In a separate experiment, we compared the ability of XTX202, XTX200 and aldesleukin to inhibit growth of established MC38 colon cancer tumors in mice. Prior experiments had demonstrated that 0.5 mg/kg of XTX200 dosed once every three days, or Q3D, and 3 mg/kg of aldesleukin BID for five days were the maximum tolerated doses, or MTDs, in mice
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for these molecules. Previous experiments had also demonstrated that XTX202 was well-tolerated in mice at doses up to at least 25 mg/kg dosed Q3D, with reversible, mild decrease in body weight and no mortality, and no decrease in body weight at 10 mg/kg. In this study, on day zero, animals received 10 mg/kg of XTX202, a well-tolerated dose for this molecule, or XTX200 at an MTD of 0.5 mg/kg on day zero and day three, or aldesleukin at an MTD dose of 3 mg/kg BID on days zero through four. As shown in the below figure, on day 5 post-dose, a well-tolerated dose of XTX202 demonstrated comparable activity to aldesleukin or non-masked IL-2 at their MTDs.
XTX202 Tumor Growth Inhibition Was Comparable to Non-Masked Control XTX200 and Aldesleukin
We also conducted a preclinical study in a second syngeneic tumor model, using mice bearing established MB49 bladder cancer tumors. On day zero, mice received 2 mg/kg of XTX202, or 0.4 mg/kg of systemically active non-masked XTX200 every two days. Aldesleukin was given twice daily at 3 mg/kg for three days. As a result of the removal of one mouse from a study cohort due to mortality or unacceptable body weight loss, the tumor progression curve for that cohort has been censored. As shown in the left panel in the figure below, a well-tolerated dose of 2 mg/kg of XTX202 achieved similar activity to the non-masked IL-2 at its MTD of 0.4 mg/kg. As shown in the right panel, XTX202 at 2 mg/kg had no observed effect on weight gain compared to animals that received vehicle control. By contrast, 0.4 mg/kg of the non-masked molecule led to significant weight loss. The dose of aldesleukin required to match XTX202 activity was not tolerated in this study and resulted in animal mortality by day five. The tumor growth inhibition observed with the 2 mg/kg dose of XTX202 was comparable to the activity of the non-masked engineered IL-2 surrogate at its MTD, but body weight loss and mortality were seen in the aldesleukin group and activity could not be determined effectively.
Effects of XTX202 on Tumor Growth Inhibition and Body Weight in MB49 Tumor Mice
In the same MB49 tumor study, in animals in which effective tumor growth inhibition was observed, blood samples were collected on day five from all surviving animals. These samples were evaluated for changes in immune cell populations in the blood by fluorescent activated cell sorting. XTX202 did not cause an increase in circulating CD8+ effector T cells, NK cells or TREGs. In contrast, XTX200 caused an increase in circulating CD8+ and NK cells, but no effect on TREGs, and aldesleukin had variable but stimulatory effects on all three cell types.
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XTX202 Did Not Affect Immune Cells in the Periphery
These preclinical data collectively support the hypothesis that the activity of XTX202 is limited to the tumor microenvironment. The lack of expansion of the CD8+ T cell, NK cell or Treg cell populations in the peripheral blood suggest that XTX202 achieved tumor growth inhibition while exhibiting no evidence of activity outside of the tumor microenvironment. By contrast, the non-masked molecule XTX200 and aldesleukin both showed significant increases in immune cell populations in the blood, demonstrating that these molecules are both active outside of the tumor microenvironment. This conclusion was further supported by measurements of animal health in the bladder cancer tumor model.
As shown in the figure below, we did not observe XTX202 to induce splenomegaly, while significant increases in spleen size were observed in animals treated with either XTX200 or aldesleukin. Similarly, XTX202 did not lead to VLS in treated mice as demonstrated by the lack of pulmonary edema, shown in the right panel. By contrast, XTX200 or aldesleukin administration resulted in vascular leak and pulmonary edema.
Splenomegaly and Pulmonary Edema Observed in Mice with
Aldesleukin and Non-Masked XTX200, But Not with XTX202
Tolerability of XTX202 and XTX200 was also evaluated in NHP studies. All animals were administered a single IV infusion of either XTX200 at 0.73 mg/kg or a masked analog of XTX202 at 1.0 mg/kg. Peripheral lymphocyte counts and serum albumin levels were monitored for four weeks post-administration. The data show that at a molar equivalent dose, the masked molecule does not result in lymphocytosis or hypoalbunemia that is induced by the unmasked version of the same non-alpha molecule (XTX200).
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XTX202 Overcame Toxicity of Non-Masked XTX200 in NHPs
XTX202 was evaluated in a repeat-dose toxicology study in NHPs in compliance with FDA’s good laboratory practices, or GLPs. The study evaluated vehicle and 1, 10 and 25 mg/kg doses of XTX202 given once weekly intravenously. As shown in the figure below, we observed dose dependent lymphocyte expansion following administration of XTX202, with the 1 mg/kg group showing no systemic expansion. These results were further supported by analysis of circulating albumin. A decrease in serum albumin levels is an indication of VLS. Serum albumin remained within the normal range for the 1 mg/kg and 10 mg/kg dosing groups, indicating no systematic expansion occurred and demonstrating minimal or no systemic toxicity for XTX202 in those dosing groups. The results from this repeat-dose GLP toxicology study in NHPs demonstrated that XTX202 was well-tolerated with the highest non-severely toxic dose, or HNSTD, equal to 10 mg/kg when administered once per week for four weeks.
XTX202 Toxicology in a GLP NHP Study Demonstrated Favorable Tolerability
The circulating half-life and PK properties of masked XTX202 and non-masked control cytokine were evaluated in a preliminary NHP study. Drug levels were measured with a custom enzyme-linked immunosorbent assay following a single IV infusion of 1 mg/kg of XTX202 or the molar equivalent of XTX200 at 0.7 mg/kg. PK parameters were calculated using a non-compartmental analysis. As shown in the table below, XTX202 exhibited a half-life of 5.3 days, whereas the half-life of the non-masked XTX200 was shorter at 1 day. The half-life extension moiety and the decrease in target-mediated disposition due to masking of IL-2 result in the longer half-life of XTX202. These data support starting with a dosing schedule of intravenous administration once every three weeks, or Q3W.
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Measured PK Parameters in Single Dose NHP Study
Half Life
Cmax
AUCinf
(Days)
(ug/mL)
(hr*ug/mL)
XTX202 (masked at 1 mg/kg)
5.3
28.7
1,270
XTX200 (unmasked at 0.73 mg/kg)
1.0
16.7
423
Based on these data, we believe that circulating levels of masked XTX202 can be achieved with clinically meaningful concentrations of activated (unmasked) XTX202 within tumors and that any unmasked cytokine of XTX202 that reaches systemic circulation will be rapidly cleared with no systemic AEs.
We believe that our preclinical data support clinical development of XTX202 for the treatment of a range of cancer indications, both as a monotherapy and in combination with other agents. In head-to-head preclinical tumor model studies, XTX202 achieved activity with 2-10 mg/kg dosed Q3D comparable to aldesleukin at 3 mg/kg dosed BID. XTX202 was well-tolerated up to 10 mg/kg repeated administration over four weeks in NHPs, whereas the published MTD for aldesleukin in NHPs is 25 ug/kg daily for 28 days. Therefore, in our preclinical studies, XTX202 demonstrated a calculated improvement in overall therapeutic index compared to aldesleukin. While there can be no assurances that these results will be replicated in clinical trials, we believe these preclinical data demonstrate XTX202 has the potential to deliver high concentrations of IL-2 selectively to the tumor while minimizing peripheral toxicity. We expect this to allow dose-escalation to achieve intra-tumor cytokine levels high enough to induce local T cell and NK cell activation, proliferation and anti-tumor cytotoxicity.
In addition to the monotherapy potential for XTX202, we believe the combination of XTX202 with additional agents, including anti-PD-1/PD-L1 agents that are widely used in a range of solid tumors, has the potential to ultimately lead to the widest utilization of XTX202 in cancer patients. Based on preclinical data, we believe XTX202 has the potential to provide enhanced anti-tumor activity when combined with an anti-PD-1/PD-L1. As shown in the figure below, in preclinical studies, XTX202 combined with an anti-PD-1/PD-L1 induced complete responses in a preclinical setting where neither XTX202 nor the anti-PD-1/PD-L1 were able to achieve complete responses as a monotherapy. In these preclinical studies, mice with complete responses rejected rechallenge with tumor, indicating evidence of the development of a memory response.
Anti-tumor activity of XTX202 as a single agent and in combination with anti-mPD-1 was evaluated in hFcRn Tg32 transgenic mice bearing the murine MB49 bladder carcinoma model. The combination of XTX202 with anti-mPD-1 further improved anti-tumor activity with TGI 92% on Day 13 (Data presented as mean ±SEM, two-way ANOVA followed by post hoc Dunnett’s test, *P < 0.05; **P < 0.005). The treatment with XTX202 alone or in combination with anti-mPD-1 improved animal survival from 19 days to 27.5 and 38 days, respectively (Geham-Breslow-Wilcoxon test, **P < 0.01). A mouse with complete regression of MB49 tumor after combination therapy with XTX202 and anti-mPD-1 was resistant to tumor rechallenge with autologous MB49 tumor implanted on the opposite flank.
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Clinical Development Plans for XTX202
We are currently evaluating XTX202 in monotherapy dose-escalation (Part 1A) in an ongoing Phase 1 clinical trial in patients with advanced solid tumors, and monotherapy dose expansion (Part 1B) is open for enrollment. The Phase 1 trial is a first-in-human, multi-center, open-label trial designed to evaluate the safety and tolerability of multiple ascending doses of XTX202 with the goal of establishing recommended Phase 2 dose, or RP2D, for XTX202 as a monotherapy in patients with advanced solid tumors. We plan to initiate patient enrollment in a Phase 2 clinical trial evaluating XTX202 as a monotherapy in patients with unresectable or metastatic melanoma and metastatic RCC in April 2023. The planned Phase 2 clinical trial for XTX202 is a multi-center, open-label trial designed to evaluate the safety and anti-tumor activity of XTX202 as a monotherapy in patients with unresectable or metastatic melanoma and metastatic RCC at the RP2D.
In addition, we plan to report preliminary anti-tumor activity, safety, PK and PD data from the Phase 1/2 clinical trial in the third quarter of 2023, which we anticipate will include approximately 15-20 patients across a range of solid tumors treated at the 1 mg/kg dose or higher across all cohorts in the Phase 1/2 clinical trial. Subject to these interim trial results and establishing initial clinical proof-of-concept for XTX202, we plan to complete the Phase 2 trial evaluating XTX202 as monotherapy in patients with RCC and melanoma with the goal of determining the potential to conduct monotherapy registration-enabling trials for XTX202. In parallel to the completion of the planned Phase 2 monotherapy trial, we plan to initiate a Phase 1/2 trial evaluating XTX202 in combination with an anti-PD-1/PD-L1 for the treatment of patients with NSCLC. Subject to the results from this combination study, we anticipate initiating registration-enabling clinical trials for XTX202 in combination with an anti-PD-1/PD-L1 in patients with NSCLC. We also plan to explore the potential for XTX202 in combination with other therapies, including combinations with XTX301, our tumor-activated IL-12, and potential collaborations with cell therapies or anti-cancer vaccines.
The figure below shows our Phase 1/2 trial design for XTX202 in RCC, melanoma and other indications to evaluate its activity as both a monotherapy and in combination with other agents.
Phase 1 Clinical Trial for XTX202
We recently completed dosing patients at the 1 mg/kg dose level (dose level four) and are currently enrolling patients at the 1.4 mg/kg dose level (dose level five) in monotherapy dose-escalation (Part 1A) for our Phase 1 clinical trial. As of March 1, 2023, a total of 16 patients have been treated with XTX202 in the outpatient setting at five dose levels ranging from 0.27 mg/kg to 1.4 mg/kg Q3W in Part 1A for the Phase 1 clinical trial, and Part 1B is open for enrollment. No signs of VLS, including hypotension or decreases in albumin (an early sign of VLS) or hemodynamic compromise, have been
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observed in patients to date. A maximum tolerated dose has not yet been determined, and enrollment in Part 1A and Part 1B of the clinical trial is ongoing.
In addition, we recently reported preliminary clinical intra-tumoral PD data for two patients treated with XTX202 who each had an optional on-treatment tumor biopsy and were the only two patients for whom a tumor biopsy analysis was available as of March 1, 2023. The first patient was a melanoma patient treated with XTX202 at the 0.38 mg/kg dose level, and the second patient was an RCC patient treated with XTX202 at the 0.53 mg/kg dose level. For each patient, as shown in the figures below, the tumor biopsy featured increased numbers of stromal TILs and increased frequency of CD8+ effector T cells among these TILs. Importantly, in each patient, at the time of the tumor biopsy, these changes occurred in the absence of peripheral changes to either CD8+ effector T cells, demonstrating preliminary evidence of tumor-selective activation.
Renal Cell Carcinoma (RCC) Overview
RCC accounts for 2% of global cancer diagnoses and deaths annually, and the global incidence is increasing. Most cases of RCC are discovered incidentally on imaging, and approximately one-third of cases are advanced or metastatic at the time of diagnosis. Survival is highly dependent on the stage at diagnosis, with metastatic disease having a five-year survival rate of only 15%. RCC is the ninth most common cancer in the United States, with approximately 79,000 estimated new cases in 2022 and approximately 13,920 deaths in 2022. The landscape of therapeutic options has rapidly evolved such that the treatment goal, even in the metastatic setting, is to cure patients or ensure their long-term survival. Systemic frontline therapy options now include combinations of checkpoint inhibitors and TKIs such as pembrolizumab and axitinib, nivolumab and ipilimumab, and avelumab and axitinib. Despite these recent approvals, there remains a pressing need to identify new therapeutic targets and effective treatments since the substantial majority of patients continue to experience relapses and progression and ultimately succumb to their cancer. As a result, cures are not commonly achieved, as in the example of pembrolizumab combined with vascular endothelial growth factor receptor-targeted TKI. As shown in the figure below, most patients with metastatic RCC will eventually relapse even after treatment with sunitinib or pembrolizumab and axitinib as the median time to progression-free survival, or PFS, is 11.1 months and 15.1 months, respectively.
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Pembrolizumab+Axitinib Improved Overall Survival in Metastatic RCC,
but Most Patients Still Relapsed Within 18 Months
In contrast to the TKI and anti-PD-1/PD-L1 combination shown above, IL-2-directed therapy offers the opportunity for durable responses and cures, as was seen in the historical aldesleukin treatment data. Only 15% of RCC patients treated with high-dose IL-2 obtained an objective response but approximately half of these, or 7% of all patients treated, achieved a CR. The unique feature of high-dose IL-2 is that approximately 90% of patients with RCC who achieved a CR remained permanently disease-free and off-treatment.
Assuming a successful Phase 1 dose escalation trial and identification of a RP2D, we plan to pursue a rapid Phase 2 proof-of-concept clinical trial in RCC, an indication in which recombinant IL-2 produces positive clinical responses, but in which its use is limited due to toxicity. We believe XTX202’s characteristics can overcome these limitations and address the unmet need in RCC.
Treatment of Metastatic Melanoma with IL-2 Agents
In clinical trials evaluating recombinant IL-2 for the treatment of metastatic melanoma, recombinant IL-2 produced an ORR of 16% and produced CRs and functional cures in 6% of patients. However, use of recombinant IL-2 has been hampered by dose-limiting toxicities.
While treatments that target PD-1 and CTLA-4 have grown to dominate the metastatic melanoma treatment landscape, many patients do not respond, and relapses are common, with a five-year survival rate of around 50% in metastatic melanoma. We believe that a safe and effective form of IL-2 may improve initial response rates and clinical outcomes when added to checkpoint inhibitor therapy and may maintain responses in patients with melanoma who have relapsed from checkpoint inhibitor treatment. Importantly, high-dose IL-2 has shown a response rate, including CRs in patients with melanoma despite those patients having progressed on prior treatment with an anti-PD-1/PD-L1 showing the potential for IL-2 mechanism of action-based efficacy in patients who have previously been treated with an anti-PD-1/PD-L1.
Similar to our development plan for RCC, assuming a successful Phase 1 dose escalation trial, we plan to rapidly pursue a Phase 2 proof-of-concept clinical trial in melanoma, where recombinant IL-2 has demonstrated clinical responses but has been historically limited due to toxicity. Our clinical development plan includes the evaluation of patients with melanoma who have previously been treated with an anti-PD-1/PD-L1 to demonstrate clinical proof-of-concept.
Potential Future Indications
Beyond RCC and melanoma, we intend to explore XTX202 in additional solid tumor indications for which there is a significant unmet medical need, and for which IL-2 has previously demonstrated utility. These indications may include NSCLC, head and neck squamous cell cancer, or HNSCC, bladder cancer and ovarian cancer.
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Aldesleukin has been studied in a broad range of tumor types. Dose-limiting toxicities have prevented most patients with cancer from receiving the high doses necessary for systemic efficacy. Multiple clinical trials have evaluated IL-2 where localized administration is possible. In these trials, IL-2 has induced objective responses in patients with ovarian cancer when administered in the peritoneum, in patients with bladder cancer when administered directly into the bladder and in patients with NSCLC and mesothelioma when administered into the pleural cavity. In patients with resectable HNSCC, perioperative administration of IL-2 into the lymph nodes near the tumor resulted in increased survival in a randomized trial. These data provide evidence that multiple tumor types are likely sensitive to IL-2 if high levels of localized exposure can be obtained.
In addition, we believe the novel design of XTX202 and preclinical and clinical data observed to date support the potential for XTX202 as a treatment in combination with other agents where tumor-activation may be required in order to combine with IL-2, including: monoclonal antibodies, other pro-inflammatory cytokines such as IL-12 and IL-18, cell therapies such as CAR-T and CAR-NK, and cancer vaccines.
XTX301, Our Clinical-Stage, Tumor-Activated IL-12 Product Candidate
XTX301 is an investigational tumor-activated, engineered IL-12 molecule designed to potently stimulate anti-tumor immunity and reprogram the tumor microenvironment of poorly immunogenic “cold” tumors towards an inflamed, or “hot,” state. In November 2022, we announced clearance of our IND by the FDA for XTX301 for evaluation in patients with advanced solid tumors. We recently opened clinical trial sites and are actively screening patients for enrollment at a starting dose of 5.0 μg/kg (0.005 mg/kg) in monotherapy dose-escalation for our Phase 1 clinical trial evaluating the safety and tolerability of XTX301 in patients with advanced solid tumors. For more information, please see the section entitled “—Clinical Development Plans for XTX301” below.
Background on IL-12
IL-12 is a potent, pro-inflammatory cytokine produced by antigen-presenting cells such as dendritic cells, macrophages and B cells. IL-12 has two subunits, p35 and p40, that together form a heterodimer protein. IL-12 is a key cytokine in the body’s response to pathogen infection, sending a signal to T cells, among others. IL-12 interacts with diverse immune cells, including CD4+ T cells, CD8+ effector T cells, NK cells, monocytes and macrophages. IL-12’s broad range of pro-inflammatory functions suggests that it could potentially be highly potent in controlling anti-cancer immunity. IL-12 has been shown in preclinical studies to induce robust anti-tumor effects against many types of malignancies and it has been tested against multiple human cancers in clinical trials. Recombinant human IL-12 has been evaluated in clinical trials, and anti-tumor efficacy was observed in a small number of patients across a range of tumor types.
Unfortunately, systemic IL-12 therapy has historically caused severe AEs in patients with cancer. Life-threatening liver damage, called hepatotoxicity, was identified during the early development of previous IL-12 therapies, which severely limited the dose of IL-12 that could be administered, and further trials to evaluate efficacy were therefore conducted at sub-optimal doses due to the toxicity. In an early Phase 2 trial of recombinant IL-12, the MTD of 0.5 μg/kg per day caused severe side effects in 70% of patients, or 12 of 17 patients, of whom two died from gastrointestinal bleeding and multi-organ failure, respectively. The severe toxicities indicated that recombinant IL-12 could not be used systemically due to rapid increases in the cytokines IFN-γ, TNF-α and IL-6 that caused a cytokine storm syndrome characterized by systemic inflammation, multi-organ dysfunction and immune cytopenias. Efforts to overcome these systemic liabilities include alternate drug delivery approaches such as intra-tumoral administration of IL-12 encoding DNA vaccines or administration of oncolytic viruses expressing IL-12. Despite activity in individual lesions, cancer is a systemic disease that cannot be cured with local therapy once it has reached an advanced stage. Therefore, to unleash the potential for IL-12 in the majority of patients with advanced or metastatic cancer, an IL-12 that can be administered systemically but act locally at the tumor site is needed.
The failure of systemic IL-12 to induce meaningful anti-tumor efficacy is generally attributed to tolerability, which limits the dose and, as a result, the ability to reach therapeutic concentrations within the tumor microenvironment. Therefore, maximizing the amount of IL-12 that reaches the tumor, while minimizing exposure of non-tumor tissue, may be critical for a safe and effective anti-tumor response. Tumor-selective activation is therefore a desirable therapeutic profile.
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Our Solution: XTX301, a Tumor-Activated IL-12
Our goal for our IL-12 program is to create a tumor-activated, extended half-life IL-12 therapeutic with minimal peripheral effects. We are using our GPS platform and proprietary approach to achieve systemic delivery of tumor-activated IL-12, which we believe would have potential as a monotherapy and in combination with other therapies.
The design of our masked IL-12 cytokine molecule is closely related to that of our masked IL-2 cytokine molecule, which illustrates the flexibility and robustness of our cytokine engineering approach. The masking domain is designed to prevent binding to the cell-surface IL-12 receptor, unless the linker containing the protease site is cleaved by proteases preferentially active in the tumor microenvironment. The half-life extension domain is designed to overcome the short circulating half-life of the native cytokine and the overall molecule is designed to enhance the efficiency of manufacturing.
Overview of preclinical studies and data
We have undertaken extensive preclinical studies that demonstrate the ability of XTX301 to induce potent anti-tumor activity and PD changes consistent with known IL-12 biology. Importantly, these effects on the tumor were observed without inducing concomitant systemic toxicity, which provides evidence that the masking design is performing as intended in preclinical studies. In murine preclinical models, we used a murine surrogate for XTX301, which we refer to as mXTX301, which included mouse sequences for IL-12 and the masking domain in place of the human sequences present in XTX301, since human IL-12 does not activate mouse IL-12 receptors. mXTX301 is architecturally analogous to XTX301 and shares the same half-life extension domain and protease linker as XTX301.
Collectively, our preclinical data showed that:
·
XTX301 demonstrated minimal signaling through the IL-12 receptor when masked, and MMP activation of XTX301 restored potent IL-12 signaling in in vitro assays, illustrating the tight, protease-dependent control of IL-12 activity enabled by XTX301;
·
mXTX301 treatment induced potent anti-tumor activity in response to single dose administration in multiple tumor models without inducing significant body weight loss and toxicity;
·
mXTX301 treatment resulted in increased infiltration of CD8+ effector T cells into tumors and induced broad pro-inflammatory gene expression changes in tumors consistent with IL-12 biology and its ability to reprogram the tumor microenvironment towards a more immune-permissive state; and
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·
XTX301 was tolerated in NHPs at doses up to 2 mg/kg once weekly for four doses, or QWx4, and demonstrated a circulating half-life of four days.
In preclinical models with mXTX301, tumor growth inhibition was observed in melanoma and bladder cancer models without AEs. Mice bearing established tumors received a single dose of mXTX301 at doses of 0.039 mg/kg, 0.13 mg/kg or 0.39 mg/kg or received 0.038 mg/kg of the non-masked mouse IL-12 cytokine, and tumor growth was measured over time.
As shown in the figure below, mXTX301 demonstrated anti-tumor activity in all doses tested, including complete regressions at the 0.13 mg/kg and 0.39 mg/kg dose levels in a subset of the mice dosed. While the non-masked mouse IL-12 cytokine also induced complete regressions, severe weight loss and mortality were observed, as compared to a lack of toxicity observed in all of the mice treated with mXTX301 across dose levels.
MC38 model: s.c. 0.5x106 cells; single IV dose of mXTX301 and mXTX302 on Day 0. Tumor growth data shown as mean±SEM. Tumor volume data was assessed by a two-way ANOVA followed by Bonferroni post hoc test on Day 11 compared to vehicle treated animals. ****p<0.0001 for all mXTX301 treatment groups. Body weight data are shown as mean ±SEM. A two-way ANOVA followed by Bonferroni post hoc test compared to vehicle treated animals was performed **p<0.005, ****p<0.0001.
Additional experiments confirmed the anti-tumor activity of mXTX301 across a range of mouse models including MC38, CT26 and B16F10. As shown in the figure below, a single dose of mXTX301 treatment resulted in marked anti-tumor activity in all models, including complete regressions in a subset of animals with MC38 or CT26 tumors and transient regressions in a subset of mice with B16F10 tumors, which feature a “cold” non-inflamed tumor microenvironment.
To gain deeper insight into the mechanism-of-action of XTX301, we conducted a series of experiments focused on measuring the effect of mXTX301 treatment on the tumor microenvironment in the MC38 model. The results of these experiments are summarized in the figure below.
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Consistent with known IL-12 biology, mXTX301 treatment resulted in increased infiltration of CD8+ effector T cells into tumors. Additionally, mXTX301 induced robust gene expression changes indicative of broad immune activation in tumors including changes tied to infiltration of diverse immune cell subtypes, interferon gamma signaling and enhancement of antigen presentation.
In addition, preclinical data for XTX301 support the potential to achieve a broad therapeutic index. As shown in the figure below, in preclinical studies, mXTX301 induced tumor regressions in a murine model following a single dose of mXTX301 at 0.13 mg/kg, and XTX301 was tolerated at doses up to 2.0 mg/kg dosed once every week, or Q1W, four times in NHPs.
Measured PK Parameters in Single Dose NHP Study
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Half Life
Cmax
AUCinf
(Days)
(ug/mL)
(hr*ug/mL)
XTX301 (2.0 mg/kg)
4.1
36.6
2795
Clinical Development Plans for XTX301
In November 2022, we announced clearance of our IND by the FDA for XTX301 for evaluation in patients with advanced solid tumors. We recently opened clinical trial sites and are actively screening patients for enrollment at a starting dose of 5.0 μg/kg (0.005 mg/kg) in monotherapy dose-escalation for our Phase 1 clinical trial evaluating the safety and tolerability of XTX301 in patients with advanced solid tumors. We anticipate reporting preliminary safety data from the Phase 1 clinical trial into at least the third dose level in the fourth quarter of 2023. Our clinical development plan for XTX301 will focus initially on monotherapy dose-escalation in patients with solid tumors. Subject to the successful completion of monotherapy dose-escalation, we anticipate evaluating initial PD and anti-tumor activity data in cohorts of patients focused on tumor types that are sensitive to treatment with I-O agents and a separate cohort of patients with tumor types historically insensitive to treatment with I-O agents. Following an assessment of anti-tumor effect as a monotherapy in selected tumor types, we also plan to explore the combination potential of XTX301 with an anti-PD-1/PD-L1 and with XTX202, our tumor-activated IL-2 product candidate, prior to initiation of registration-enabling clinical trials. Subject to the successful completion of trials showing the ability to combine XTX301 with other I-O agents and immune activation in “cold” tumors, we would plan to explore potential registration-enabling trials in both “hot” tumors, such as head and neck cancer and NSCLC, and in “cold” tumors, such as MSS CRC and pancreatic cancer.
The figure below shows our planned Phase 1/2 trial design for XTX301 to enable multiple monotherapy and combination opportunities for expansion in both hot and cold solid tumors.
XTX101, Our Clinical-Stage, Fc-Enhanced Tumor-Activated Anti-CTLA-4 Product Candidate
XTX101 is an investigational Fc-enhanced, tumor-activated anti-CTLA-4 mAb designed to deplete regulatory T cells when activated (unmasked) in the tumor microenvironment and improve upon the therapeutic index of existing anti-CTLA-4 therapies. We are currently evaluating XTX101 in an ongoing Phase 1 clinical trial in patients with advanced solid tumors. For more information, please see the section entitled “—Clinical Development Plans for XTX101” below. As previously announced, we plan to continue to explore strategic opportunities to advance XTX101 with a partner beyond the current Phase 1 clinical trial.
Background on CTLA-4
CTLA-4 is an immune checkpoint protein that is well-established as playing a central role in the development of tumors. The scientific insight that led to the early development of CTLA-4 therapeutics is attributable to investigators recognizing CTLA-4 as a protein on T cells that acts as a brake on T cell activation. By removing this brake, T cells were freed to
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attack cancer. This work led to the development and FDA approval of ipilimumab, a CTLA-4 mAb, for the treatment of unresectable or metastatic melanoma at a dose of 3 mg/kg in 2011 and in additional indications in subsequent years.
While anti-CTLA-4 therapies such as ipilimumab have demonstrated meaningful efficacy across a range of tumor types, autoimmune toxicities have significantly limited their use to date. Clinical trials have shown that 20% of ipilimumab-treated melanoma patients survive at least three years, and a subset survive for 10 years or longer. Ipilimumab remains one of the most impactful drugs for these patients; however, the number of patients who benefit from treatment with ipilimumab remains limited due to its toxicity. Investigation of dose-response in two third-party clinical trials of melanoma patients showed that higher doses of ipilimumab are likely to increase the proportion of patients who benefit; however, the increased dose also resulted in an unacceptable toxicity profile for most patients. In a Phase 2 trial of ipilimumab conducted by Bristol-Myers Squibb Company, a dose range of 0.3 mg/kg to 10 mg/kg was tested and efficacy was measured both by response rate and by clinical outcome. Both the response rate and median overall survival, or mOS, were higher at 10 mg/kg than at 3 mg/kg, with the 0.3 mg/kg dose determined as being ineffective. The rate of severe AEs was 25% at the 10 mg/kg dose, 7% at the 3 mg/kg dose and 0% at the ineffective dose of 0.3 mg/kg. Similarly, as shown in the table below, in a Phase 3 trial conducted by Bristol-Myers Squibb Company, mOS was higher at the 10 mg/kg dose but resulted in unacceptable toxicity for most patients. Therefore, we believe that achieving a three-fold increase in therapeutic index would be transformational.
High-Dose Ipilimumab Improved Survival but Resulted in Unacceptable Toxicity
Adverse Events:
Dose (mg/kg)
mOS (mo)
Gr 3/4 irAEs / disconts. (%)
3
11.5
14 / 19
10
15.7
30 / 31
Ipilimumab has shown preliminary evidence of promising anti-tumor activity in a range of tumor types outside of its currently approved indications, but successful additional approvals have been limited due to its toxicity. For example, ipilimumab has been observed to be more active when combined with the anti-PD-1/PD-L1 antibody nivolumab. However, the combination of ipilimumab and nivolumab has been shown to cause a greatly increased rate of immune-related toxicity when compared to treatment with either ipilimumab or nivolumab as a monotherapy. Clinical results from patients who express high-affinity FcγR polymorphisms have shown improved responses to ipilimumab, but efforts to improve the potency of the antibody have been limited by perceived toxicity risk. There remains a critical need to develop safe and effective forms of anti-CTLA-4 mAbs that can achieve efficacious doses within the tumor microenvironment.
Our Solution: XTX101, a Fc-Enhanced, Tumor-Activated Anti-CTLA-4
XTX101 is a clinical-stage, Fc-enhanced, tumor-activated anti-CTLA-4 mAb that is designed to improve upon the therapeutic index of existing anti-CTLA-4 therapies by overcoming potency and tolerability limitations. Our goal is to demonstrate an improved safety profile enabling higher anti-CTLA-4 exposure in the tumor that will result in increased efficacy. In preclinical studies, we have observed the following tolerability and activity profile of XTX101:
·
improved in vivo potency and the intra-tumoral PD effects of XTX101 are consistent with the improved potency being a result of the higher affinity binding to the target CTLA-4 and enhanced IgG1-Fc effector function, which further improves checkpoint inhibition and enhances antibody-dependent cellular cytotoxicity to deplete immune-suppressive TREGs in the tumor microenvironment;
·
reduced peripheral immune activity due to masking of the CDR sequences; and
·
activation by protease-dependent release of the masks, which acts selectively in the tumor microenvironment and minimizes toxicity associated with systemic immune activation.
XTX101 is designed to enhance the desirable features of an anti-CTLA-4 antibody while mitigating the known limitations of anti-CTLA-4 antibodies due to toxicity. We expect this combination of features to result in an increased therapeutic index.
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Overview of preclinical studies and data
We have examined XTX101 in several preclinical and IND-enabling studies that we believe have demonstrated the potential for XTX101 to have an enhanced activity and an improved tolerability profile compared to ipilimumab. As summarized below, we believe that these studies collectively provide preclinical proof-of-concept with an improved therapeutic index due to tumor microenvironment-dependent activation of XTX101 that, if replicated in clinical trials, could result in significant benefits to patients with a variety of different solid tumors.
·
XTX101 showed tight control and full reliance on MMP activity for binding to CTLA-4 in an in vitro study using a sensitive surface plasmon residence, or SPR, assay.
·
XTX101 was activated by human tumors in a study of 82 tumor biopsies across a variety of solid tumors that demonstrated 67% overall activation.
·
XTX101 demonstrated activity similar to an ipilimumab analog in in vivo mouse models of bladder cancer tumor growth. XTX101 dosed at 0.3 mg/kg and 1.0 mg/kg resulted in 2/8 CRs and 5/8 CRs, respectively.
·
In the same mouse study, we observed that XTX101 induced an increase in CD8+ effector T cells within the tumor and a decrease in TREGs in the tumor, without increasing CD4+ T cells in the blood. The ipilimumab analog had less activity than XTX101 in the tumor but did show an increase in CD4+ T cells in the blood.
·
In a separate mouse study, the combination of XTX101 and an anti-PD-1/PD-L1 antibody showed robust tumor growth inhibition in excess of either drug as a monotherapy, with minimal systemic toxicity.
We observed the dependency of XTX101 on proteolytic cleavage to achieve binding using an SPR assay, which measures on-rate and off-rate of antibody binding to the target protein, allowing an accurate assessment of binding. The data demonstrate tight control and full reliance on MMP activity for binding of XTX101 to CTLA-4. The figure below shows protease-dependent activation of XTX101 in vitro using a biophysical assay. The left panel shows the binding of non-masked anti-CTLA-4 mAb, XTX100, to CTLA-4 coated on the SPR chip. Binding is indicated by a positive response measured in resonance units, or RUs. The middle panel shows minimal binding of unmasked anti-CTLA-4 mAb, XTX101, under the same conditions. The right panels show that treatment of masked XTX101 with MMPs restores binding to CTLA-4 in the SPR assay.
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After Proteolytic Activation, Full Binding was Restored to XTX101
In in vivo models of bladder cancer tumor growth, XTX101 showed activity superior to that of an ipilimumab analog. MB49 cells were inoculated subcutaneously into C57BL/6-huCTLA-4 mice. When tumors reached approximately 150 mm3, mice received a single intravenous, or IV, dose of each molecule at the doses indicated in the figure. These were 0.3 mg/kg or 1.0 mg/kg for XTX101 and 0.3 mg/kg, 1.0 mg/kg and 3.0 mg/kg for the ipilimumab analog, which we produced to conduct these studies. As shown in the figure below, we observed that XTX101 was more clinically active than the ipilimumab analog in the MB49 bladder cancer model. The left panel shows the effect of different doses of XTX101 on tumor growth, with two CRs achieved with a dose of 0.3 mg/kg and five CRs achieved with a dose of 1.0 mg/kg. The right panel shows the effect of different doses of the ipilimumab analog on tumor growth, with no CRs achieved with a dose of either 0.3 or 1.0 mg/kg. XTX101 exhibited superior tumor growth inhibition compared to the ipilimumab analog. A dose of 3 mg/kg of the ipilimumab analog was required to achieve similar activity and CR rate as XTX101 at 0.3 mg/kg, suggesting XTX101 has 10-fold higher potency than the ipilimumab analog.
Clinical Activity of XTX101 and Ipilimumab Analog in MB49 Tumor Mice
Further, as shown in the below figure, we observed that XTX101 induced an increase in CD8+ effector T cells within the tumor, as shown in the left panel, and a decrease in TREGs in the tumor, as shown in the middle panel. We observed that XTX101 did not promote an increase in CD4+ T cells in the blood even at 3 mg/kg despite achieving complete responses at 0.3 mg/kg, suggesting tumor-activated activity of XTX101. We further observed that the ipilimumab analog promoted an increase in CD4+ T cells in the blood at the 3 mg/kg dose required for efficient tumor growth inhibition in the blood, as shown in the right panel, demonstrating that the ipilimumab analog was active outside of the tumor microenvironment at doses required for activity.
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XTX101 Demonstrated Tumor-Activated PD and Treg Depletion
The effect of the combination of XTX101 with anti-PD-1/PD-L1 antibody was evaluated in another preclinical study in which female C57BL/6-huCTLA-4 mice, were implanted subcutaneously with MC38 cells. When the tumors reached approximately 150 mm 3 on day zero, the mice were intravenously administered 10mg/kg isotype control antibody, 0.3 mg/kg of XTX101 or 10mg/kg anti-PD-1/PD-L1.
As shown in the figure and table below, XTX101 and the anti-PD(L)-1 antibody each showed limited activity as a monotherapy. However, the combination of XTX101 with the anti-PD(L)-1 antibody showed robust tumor growth inhibition of 82%, including two out of eight animals achieving a CR. Minimal toxicity was observed in animals treated with either monotherapy or the combination, suggesting that XTX101 can be effectively combined with an anti-PD-1/PD-L1 antibody without enhanced toxicity.
Single Dose Combination of XTX101 with anti-muPD-1 Enhanced Tumor
Growth Inhibition with No Impact on Body Weight
XTX101
Isotype Control
XTX101 0.3 mg/kg
anti-PD-1/PD-L1 10 mg/kg
0.3 mg/kg + anti-PD-1/PD-L1
% TGI Day 14
N/A
34
40
82
P values
N/A
0.022
0.11
0.0003
Complete responses
0/8
0/8
0/8
2/8
In GLP toxicology studies completed in NHPs, XTX101 exhibited a highest non-severely toxic dose, or HNSTD, of 3 mg/kg, supporting the targeted clinical dose for XTX101 in patients of 1-3 mg/kg. In addition, the half-life for XTX101 was 92 to 208 hours in single dose studies in NHPs, supporting the potential for dosing once every three weeks.
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Clinical Development Plans for XTX101
In September 2021, we initiated a first in-human, multi-center, open-label Phase 1 trial designed to evaluate the safety and tolerability of XTX101 for the treatment of adult patients with advanced solid tumors. As of March 1, 2023, 24 patients have been treated with XTX101 in the Phase 1 trial. Enrollment in monotherapy dose-escalation (Part 1A) of the Phase 1 trial has been completed, and enrollment in monotherapy dose-expansion (Part 1B) is ongoing. In addition, we have determined an RP2D of 150 mg Q6W. We anticipate reporting preliminary safety, PK, PD and anti-tumor activity data from the Phase 1 clinical trial in the second quarter of 2023. As previously announced, we plan to continue to explore strategic opportunities to advance XTX101 with a partner beyond the current Phase 1 clinical trial.
The figure below shows our Phase 1 trial design for XTX101.
Future Discovery Opportunities Leveraging Our GPS Platform for Tumor-Activation and Tumor-Targeting
We have prioritized efforts to develop novel cytokines, checkpoint inhibitors and multi-functional molecules based on the therapeutic activity established in other clinical trials, while recognizing that their benefit has been historically hampered by issues of significant toxicity, poor bioavailability and, in the case of cytokines, a short half-life. By leveraging the insights and capabilities of our GPS platform, we aim to systematically create novel cytokines, checkpoint inhibitors and multi-functional molecules that overcome these challenges in order to safely localize their potent activity to the tumor microenvironment.
We believe our proprietary GPS platform has the potential to develop additional product candidates using a range of approaches to achieve tumor-selective activation and derive a clinically meaningful improvement in therapeutic index. We intend to further advance our tumor-activated therapeutic platform combining our masking approach with active, antibody-directed tumor targeting to create multi-functional, masked molecules designed to enable enhanced selectivity down to the cellular level and modulating multiple immune pathways synergistically. Preliminary data from preclinical studies indicates the promise of this approach, as the addition of a targeting domain to a tumor-activated masked cytokine has demonstrated superior tumor growth inhibition and tumor-specific PD activity compared to the same masked cytokine without the targeting. In addition, in these preclinical studies the masked targeted cytokine has demonstrated superior safety compared to a non-masked version of the same targeted cytokine.
We plan to evaluate the opportunity for better tolerated and more efficacious combination therapies, using product candidates from across our portfolio with other cancer therapies, to increase the potential for curative regimens in oncology. Beyond oncology, we also plan to apply our GPS platform to other disease areas in which the immune system is dysregulated, such as in autoimmune and inflammatory diseases.
Competition
We believe our novel and proprietary GPS platform and masking approach represent a meaningful competitive advantage in seeking to develop novel and highly effective treatments for cancer. However, the biotechnology and biopharmaceutical industries are characterized by rapid evolution of technologies and sharp competition and emphasis on intellectual
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property. Any product candidates that we successfully develop and commercialize will have to compete with existing therapies and new therapies that may become available in the future. While we believe that our technology, development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions.
Some of our competitors, either independently or with strategic partners, have substantially greater financial, technical and human resources than we do. In addition, our competitors may be more successful than we are in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approval for treatments and achieving widespread market acceptance. Merger and acquisition activity in the biotechnology and biopharmaceutical industries may result in resources being concentrated among a smaller number of our competitors. These companies also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials and acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
In addition to competitors specifically targeting IL-2, IL-12, and anti-CTLA-4, we also face competition more broadly across the oncology market. The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy, hormone therapy, biologic therapy, such as monoclonal and bispecific antibodies, immunotherapy, cell-based therapy and targeted therapy, or a combination of any such treatments. Beyond these treatments, we may also be subject to competition from additional modalities, including oncolytic viruses and cancer vaccines.
Our commercial opportunity could be substantially limited if our competitors develop and commercialize products that are more effective, safer, less toxic, more convenient, or less expensive than products we may develop. In geographies that are critical to our commercial success, competitors may also obtain regulatory approvals before us, resulting in our competitors building a strong market position in advance of the entry of our products. In addition, our ability to compete may be affected in many cases by insurers or other third-party payers seeking to encourage the use of other drugs. The key competitive factors affecting the success of any products we may develop are likely to be their efficacy, safety, convenience, price and availability of reimbursement.
Cytokine Programs
With respect to our most advanced cytokine product candidate, XTX202, if approved, it may face competition from other IL-2 based cancer therapies. For example, Proleukin (aldesleukin), a synthetic protein very similar to IL-2, is approved and marketed for the treatment of metastatic RCC and melanoma. In addition, we are aware of several companies that have modified or low-dose IL-2 programs in development for the treatment of cancer, including Alkermes plc, Anaveon AG, Ascendis Pharma A/S, Asher Biotherapeutics, Inc., Aulos Bioscience, Inc., Bright Peak Therapeutics, Cue Biopharma, Inc., Cugene Inc., Egle Therapeutics SAS, GI Innovation, Iovance Biotherapeutics, Inc., Medicenna Therapeutics Corp., Medikine, Inc., Modulate Therapeutics, Inc., Neoleukin Therapeutics, Inc., Philogen S.p.A., Roche AG, Sanofi, Selecxine, Synthekine, Inc., Trutino Biosciences Inc., Werewolf Therapeutics, Inc., XOMA Corporation and Zydus Cadila.
With respect to XTX301, there are no approved IL-12 therapies currently on the market for the treatment of cancer; however, we are aware of several other companies that have modified IL-12 or intra-tumoral IL-12 delivery programs for the treatment of cancer in development, including Amunix Pharmaceuticals, Inc., AstraZeneca plc / Moderna, Inc., Cullinan Management Inc., Dragonfly Therapeutics, Inc., ImmunityBio, Inc., PDS Biotechnology Corporation, Philogen S.p.A., Sonnet BioTherapeutics, Werewolf Therapeutics, Inc., Xencor Inc. and Zymeworks Inc.
Anti-CTLA-4 Therapies
We are aware of a number of companies that are developing anti-CTLA-4 therapies as immunotherapies. With respect to XTX101, if approved, we may face competition from other anti-CTLA-4 based therapies. For example, Yervoy (ipilimumab), an anti-CTLA-4, is approved to treat melanoma, RCC, NSCLC and certain cancers of the large intestine. In
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addition, we are aware that several companies have anti-CTLA-4 programs in development, including Adagene, Inc., Agenus Inc., AstraZeneca plc, BioAtla Inc., Bristol-Myers Squibb Inc., CytomX Therapeutics, Inc. and MacroGenics, Inc.
Intellectual Property
We strive to protect our proprietary technology, inventions, improvements, and platforms, including composition of matter for product candidates, methods of use and processes for their manufacture that we believe are important to our business, including by obtaining, maintaining, defending and enforcing patent and other intellectual property rights for the foregoing in the United States and in certain foreign jurisdictions. We also rely on trade secrets and confidentiality agreements to protect our confidential information and know-how and other aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.
Our success depends in part on our ability to:
● obtain, maintain, enforce and defend patent and other intellectual property rights for our commercially important technology, inventions and improvements;
● preserve the confidentiality of our trade secrets and other confidential information;
● obtain and maintain licenses to use and exploit intellectual property owned or controlled by third parties;
● operate without infringing, misappropriating or otherwise violating any valid and enforceable patents and other intellectual property rights of third parties; and
● defend against challenges and assertions by third parties challenging the validity or enforceability of our intellectual property rights, or our rights in our intellectual property, or asserting that the operation of our business infringes, misappropriates or otherwise violates their intellectual property rights.
Patent portfolio
As of February 15, 2023, we own, co-own or exclusively license 16 patent application families related to our business, including four pending Patent Cooperation Treaty, or PCT, patent applications, 15 pending U.S. non-provisional applications, two issued U.S. patents, three issued patents in Indonesia, Japan and South Korea and 144 pending foreign applications in Europe, Japan, China, Australia, Brazil, Canada, Eurasia, Hong Kong, Indonesia, Israel, India, South Korea, Mexico, Malaysia, New Zealand, the Philippines, Saudi Arabia, Singapore, South Africa and Taiwan, including five allowed patent applications. In addition, we own four U.S. provisional patent applications within the priority year. Our owned, co-owned or exclusively in-licensed patent applications cover various aspects of our programs and technology, including composition of matter and method of use as further described below. Any U.S. or foreign patents issued from national stage filings of our owned, co-owned, or exclusively in-licensed PCT patent applications and any U.S. patents issued from non-provisional applications we may file in connection with our provisional patent applications will have a statutory expiration date ranging between 2037 and 2043, without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity and other governmental fees.
Xilio’s GPS Platform for Tumor-Activated I-O Molecules
Our proprietary engineering GPS platform enables tumor-activated I-O molecules that can effect tumor-activated immunotherapy while minimizing systemic toxicity. By masking biological agents such as cytokines, antibodies and multi-functional molecules, our GPS platform can be used to decouple therapeutic effects from toxicity for treating different cancers. As of February 15, 2023, we own one patent family covering the GPS platform in the cytokine space, including five pending U.S. patent applications and corresponding foreign applications in Europe, Japan, Australia, Brazil, Canada, China, Eurasia, Hong Kong, Indonesia, Israel, India, South Korea, Mexico, Malaysia, New Zealand, the Philippines, Saudi Arabia, Singapore and South Africa. We exclusively license two patent families relating to the GPS platform technology and our cytokine and antibody programs. One of the two patent families is exclusively in-licensed in the oncology field
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from AskGene Pharma, Inc., or AskGene, and covers the GPS platform technology for cytokines. These owned and exclusively licensed patent families will have a statutory expiration date ranging between 2039 and 2041, without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity and other governmental fees.
In addition, we own two patent families covering various linker designs that are used or can be used in our technology, including pending patent applications in the U.S., PCT and Taiwan.
Cytokine Programs
Our cytokine pipeline includes our clinical-stage, tumor-activated product candidates, XTX202 (IL-2) and XTX301 (IL-12).
● IL-2 Program. As of February 15, 2023, we own two patent families relating to masked IL-2 cytokines, including XTX202, with composition of matter and methods of use claims. These patent families include six pending U.S. applications, one issued U.S. patent and corresponding foreign applications in Australia, Brazil, Canada, China, Eurasian Patent Organization, European Patent Office, Hong Kong, Indonesia, Israel, India, Japan, Republic of Korea, Mexico, Malaysia, New Zealand, Philippines, Saudi Arabia, Singapore, South Africa and Taiwan. The patent family exclusively in-licensed in the oncology field from AskGene also relates to the IL-2 program. These owned and exclusively in-licensed patent families will have a statutory expiration date ranging between 2039 and 2041, without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity and other governmental fees.
● IL-12 Program. As of February 15, 2023, we own one patent family directed to different masked IL-12 constructs and sequences, including XTX301, with composition of matter and methods of use claims. This family includes one pending U.S. application, and corresponding foreign applications in Australia, Brazil, Canada, China, Eurasian Patent Organization, European Patent Office, Indonesia, Israel, India, Japan, Republic of Korea, Mexico, Malaysia, New Zealand, Philippines, Saudi Arabia, Singapore, South Africa and Taiwan. This patent family will have a statutory expiration date in 2041, without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity and other governmental fees.
Checkpoint Inhibitor Program
As of February 15, 2023, we own, co-own or exclusively in-license three patent families relating to masked anti-CTLA-4 antibody constructs and sequences, including XTX101, with composition of matter and methods of use claims. A first patent family is exclusively in-licensed from WuXi Biologics (Shanghai) Co., Ltd. and directed to anti-CTLA-4 antibodies. This family includes one allowed U.S. application and one issued U.S. patent covering certain complementarity-determining regions and variable region sequences of anti-CTLA-4 antibodies, including XTX101. Corresponding foreign applications are issued and allowed in China, Eurasia, Indonesia, Japan, South Korea, and Taiwan, and pending in Taiwan, Australia, Brazil, Canada, China, Eurasian Patent Organization, European Patent Office, Hong Kong, India, Indonesia, Israeli, Japan, Republic of Korea, Mexico, Malaysia, New Zealand, Philippines, Saudi Arabia, Singapore, and South Africa. A second patent family is owned and directed to anti-CTLA-4 antibodies with modifications that improve antibody-dependent cellular cytotoxicity and includes one pending U.S. application. Corresponding foreign applications are pending in Australia, Brazil, Canada, China, Eurasian Patent Organization, European Patent Office, Hong Kong, India, Indonesia, Israeli, Japan, Republic of Korea, Mexico, Malaysia, New Zealand, Philippines, Saudi Arabia, Singapore, and South Africa. A third patent family is co-owned and directed to masked anti-CTLA-4 antibodies, which includes one pending U.S. application. Corresponding foreign applications are pending in Australia, Brazil, Canada, Eurasian Patent Organization, European Patent Office, Hong Kong, India, Indonesia, Israeli, Japan, Republic of Korea, Mexico, Malaysia, New Zealand, Philippines, Saudi Arabia, Singapore, South Africa and Taiwan. In addition, we own two patent applications directed to combination therapies using masked or unmasked anti-CTLA-4 antibodies, including XTX101 and PD-1/PD-L1 antibodies. These families are presently pending as PCT and Taiwan applications. These owned, co-owned and licensed patent families will have a statutory expiration date ranging between 2037 and 2042, without taking
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into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity and other governmental fees.
Trademark portfolio
As of February 15, 2023, we own two federal trademark registrations for XILIO and XILIO THERAPEUTICS (Class 42) in the U.S. and a pending federal trademark application for XILIO (Class 5) in the U.S. that has been approved and published for opposition.
Patent prosecution
A PCT patent application is not eligible to become an issued patent until, among other things, we file one or more national stage patent applications within 30 months, 31 months or 32 months of the PCT application’s priority date, depending on the jurisdiction, in the countries in which we seek patent protection. If we do not timely file any national stage patent applications, we may lose our priority date with respect to our PCT patent application and any potential patent protection on the inventions disclosed in such PCT patent application. Moreover, a provisional patent application is not eligible to become an issued patent. A provisional patent application may serve as a priority filing for a non-provisional patent application, we file within 12 months of such provisional patent application. If we do not timely file non-provisional patent applications, we may lose our priority date with respect to our existing provisional patent applications and any potential patent protection on the inventions disclosed in our provisional patent applications.
While we intend to timely file additional provisional patent applications and national stage and non-provisional patent applications relating to our PCT patent applications, we cannot predict whether any of our patent applications will result in the issuance of patents. If we do not successfully obtain patent protection, or if the scope of the patent protection we or our licensors obtain with respect to our product candidates, GPS platform or technology is not sufficiently broad, we will be unable to prevent others from using our technology or from developing or commercializing technology and products similar or identical to ours or other similar competing products and technologies. Our ability to stop third parties from making, using, selling, offering to sell, importing or otherwise commercializing any of our technology, inventions and improvements, either directly or indirectly, will depend in part on our success in obtaining, maintaining, defending and enforcing patent claims that cover our technology, inventions and improvements.
The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. The protection afforded by a patent varies on a product-by-product basis, from jurisdiction-to-jurisdiction, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of patent term adjustments and regulatory-related patent term extensions, the availability of legal remedies in a particular jurisdiction and the validity and enforceability of the patent. Moreover, patent laws and related enforcement in various jurisdictions outside of the United States are uncertain and may not protect our rights to the same extent as the laws of the United States. Changes in the patent laws and rules, whether by legislation, judicial decisions or regulatory interpretation, in the United States and other jurisdictions may diminish our ability to protect our inventions and obtain, maintain, defend and enforce our patent rights, and could therefore affect the value of our business.
The area of patent and other intellectual property rights in biotechnology is evolving and has many risks and uncertainties, and third parties may have blocking patents and other intellectual property that could be used to prevent us from commercializing our platforms and product candidates and practicing our proprietary technology. Our patent rights may be challenged, narrowed, circumvented, invalidated or ruled unenforceable, which could limit our ability to stop third parties from marketing and commercializing related platforms or product candidates or limit the term of patents that cover our platforms and product candidates. In addition, the rights granted under any issued patents may not provide us with protection or competitive advantages against third parties with similar technology, and third parties may independently develop similar technologies. Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that before any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any competitive advantage provided by the patent. For this and other risks related to our proprietary technology, inventions, improvements, platforms and product candidates and intellectual property rights related to the foregoing, please see the section entitled “Risk Factors—Risks Related to our Intellectual Property.”
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Patent term extensions
The term of individual patents depends upon the laws of the jurisdictions in which they are obtained. In most jurisdictions in which we file, the patent term is 20 years from the earliest date of filing of the first non-provisional patent application to which the patent claims priority. However, the term of U.S. patents may be extended or adjusted for delays incurred due to compliance with FDA requirements or by delays encountered during prosecution that are caused by the United States Patent and Trademark Office, or the USPTO. For example, in the United States, a patent claiming a new biologic product, its method of use or its method of manufacture may be eligible for a limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, for up to five years beyond the normal expiration date of the patent. Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date in the United States. Only one patent applicable to an approved product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent for which extension is sought. A patent that covers multiple products for which approval is sought can only be extended in connection with one of the approvals. For more information on patent term extensions, see “Business—Government Regulation and Product Approval—Patent Term Restoration and Extension”. In the future, if and when any product candidates we may develop receive FDA approval, we expect to apply for patent term extensions on issued patents covering those product candidates. Moreover, we intend to seek patent term adjustments and extensions for any of our issued patents in any jurisdiction where such adjustments and extensions are available. However, there is no guarantee that the applicable authorities, including the USPTO and FDA, will agree with our assessment of whether such adjustments and extensions should be granted, and even if granted, the length of such adjustments and extensions.
Trade secrets
In addition to patent protection, we also rely on trade secrets, know-how, unpatented technology and other proprietary information to strengthen our competitive position. We take steps to protect and preserve our trade secrets and other confidential and proprietary information and prevent the unauthorized disclosure of the foregoing, including by entering into non-disclosure and invention assignment agreements with parties who have access to our trade secrets or other confidential and proprietary information, such as employees, consultants, outside scientific collaborators, contract research and manufacturing organizations, sponsored researchers and other advisors, at the commencement of their employment, consulting or other relationships with us. In addition, we take other appropriate precautions, such as maintaining physical security of our premises and physical and electronic security of our information technology systems, to guard against any misappropriation or unauthorized disclosure of our trade secrets and other confidential and proprietary information by third parties.
Despite these efforts, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or other confidential or proprietary information. In addition, we cannot provide any assurances that all of the foregoing non-disclosure and invention assignment agreements have been duly executed, and any of the counterparties to such agreements may breach them and disclose our trade secrets and other confidential and proprietary information. Although we have confidence in the measures we take to protect and preserve our trade secrets and other confidential and proprietary information, they may be inadequate, our agreements or security measures may be breached, and we may not have adequate remedies for such breaches. Moreover, to the extent that our employees, contractors, consultants, collaborators and advisors use intellectual property owned by others in their work for us, disputes may arise as to our rights in any know-how or inventions arising out of such work. For more information, please see the section entitled “Risk Factors—Risks Related to our Intellectual Property.”
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License agreements
We are a party to license agreements under which we license patents, patent applications and other intellectual property from third parties. These licenses impose various diligence and financial payment obligations on us. We expect to continue to enter into these types of license agreements in the future. We consider the following license agreements to be material to our business.
Cross-License Agreement with AskGene
In December 2020, our subsidiary, Xilio Development, entered into a cross-license agreement with AskGene Pharma, Inc., or AskGene, pursuant to which AskGene granted us certain exclusive licenses for AskGene patent rights related to non-antigen binding IL-2 products in the field of oncology and certain co-exclusive licenses for AskGene patent rights related to antigen binding IL-2 products in all fields. Under the agreement, AskGene retains rights to the AskGene patent rights in Singapore, Thailand, Malaysia, Vietnam, the People’s Republic of China, Taiwan, Macau, Hong Kong, Korea and India, which we refer to as the AskGene territory, and granted licenses to us for the AskGene patent rights worldwide, excluding the AskGene territory, which we refer to as the Xilio territory.
Under the agreement, we paid AskGene an upfront payment of $6.0 million, and for any licensed IL-2 product, we are obligated to pay AskGene up to $13.0 million in the aggregate upon the achievement of specified regulatory milestones. In addition, subject to specified conditions, for any IL-2 licensed product, we are obligated to pay AskGene percentage royalties in the mid-single digits on aggregate annual net sales of IL-2 licensed products in the Xilio territory during the applicable royalty term.
In addition, we granted a non-exclusive, royalty-free, non-transferable, worldwide license to AskGene for specified Xilio patent rights related to non-antigen binding IL-2 products in the field of immunology and for specified Xilio patent rights related to antigen binding IL-2 products in all fields. Subject to the terms of the agreement and during the time period specified, we also granted AskGene an option to obtain a license in the AskGene territory to develop and commercialize our IL-2 licensed products. If AskGene exercises its option to develop and commercialize our IL-2 licensed products in the AskGene territory, then the parties will negotiate and enter into a license agreement for AskGene’s exclusive development and commercialization of such products in the AskGene territory, and AskGene would be obligated to pay us percentage royalties in the mid-single digits on aggregate annual net sales of such licensed products in the AskGene territory.
During the term of the agreement, AskGene has agreed not to exploit any non-antigen binding IL-2 product comprised of specified masking technology in the field of oncology in the Xilio territory.
Subject to the terms of the agreement, each party’s obligation to make royalty payments is subject to adjustment in specified circumstances and extends with respect to a licensed product in a country upon the first commercial sale of such licensed product in such country and ending upon the latest of (i) the expiration of the last valid claim of any licensed patent rights in such country that cover such licensed product, (ii) the expiration of regulatory exclusivity, if any, for such licensed product in such country, and (iii) for a specified time period following first commercial sale of such licensed product in such country.
The agreement continues on a product-by-product and country-by-country basis until the expiration of the applicable royalty term in each country, at which time the agreement expires with respect to such product in such country, and the licensed party receives a perpetual, irrevocable, fully-paid and royalty-free license to the licensed patent rights in such country. Either party has the right to terminate the agreement if the other party materially breaches the agreement and fails to cure such breach within specified cure periods or in the event the other party becomes insolvent or files for bankruptcy. Upon any termination, other than the expiration of the agreement with respect to a particular product in a particular country, the licenses granted by each party will terminate and neither party will have the right to practice the other party’s patent rights.
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Amended and Restated Exclusive License Agreement with City of Hope
In August 2016, our subsidiary, Xilio Development, entered into an amended and restated exclusive license agreement with City of Hope pursuant to which City of Hope granted us an exclusive worldwide license to specified patent rights related to our anti-CTLA-4 monoclonal antibody program.
For the first three licensed products or licensed services to achieve specified development and regulatory milestones, we are obligated to pay City of Hope up to $10.3 million in the aggregate per licensed product or licensed service. Subject to specified conditions, we are obligated to pay City of Hope tiered royalties in the low single digits on aggregate annual net sales of licensed products or licensed services on a country-by-country basis until the expiration of the last-to-expire patent or patent application licensed from City of Hope covering the applicable licensed product or licensed service in such country. We are also obligated to pay City of Hope a portion of any consideration we receive for the grant of sublicenses under the agreement ranging from a low to mid double-digit percentage of such consideration, subject to specified conditions under that agreement at the time that we grant any such sublicense. In addition, we paid $0.5 million to City of Hope in connection with the closing of our IPO.
The agreement continues on a country-by-country basis until the expiration of the last to expire licensed patent right in such country. We have the right to terminate the agreement for convenience at any time on 30 days’ prior written notice to City of Hope. Either party has the right to terminate the agreement if the other party materially breaches the agreement and fails to cure such breach within specified cure periods. City of Hope may terminate the agreement if we or any of our affiliates or sublicensees bring specified patent challenges with respect to the licensed patents against City of Hope or if we assist others in bringing a patent challenge against City of Hope. However, instead of terminating as a result of a patent challenge, City of Hope may elect to increase our payment obligations by a specified percentage amount retroactive to the commencement of such patent challenge.
CTLA-4 Monoclonal Antibody License Agreement with WuXi Biologics
In September 2016, we entered into a license agreement with WuXi Biologics (Hong Kong) Limited, or WuXi Biologics, as amended in December 2017, pursuant to which WuXi Biologics granted us an exclusive worldwide license, including the rights to grant sublicenses through multiple tiers, to specified monoclonal antibodies and patent rights and know-how controlled by WuXi Biologics, including certain patent rights related to our anti-CTLA-4 mAb program.
For each product that incorporates a licensed antibody that has been modified using the rights licensed under the agreement, we are obligated to pay WuXi Biologics up to approximately $25.8 million in the aggregate for specified development and regulatory milestones. In addition, subject to specified conditions, we are obligated to pay WuXi Biologics tiered royalties in the low to mid-single digits on aggregate annual worldwide net sales of licensed products during the applicable royalty term and subject to early expiration or adjustment in specified circumstances. Our obligation to make royalty payments extends with respect to a licensed product in a country until the later of the expiration of the last-to-expire patent or patent application licensed from WuXi Biologics covering the applicable licensed product in such country or for a specified time period following the first commercial sale of such licensed product. Subject to specified conditions under the agreement, we also have certain obligations to contract with WuXi Biologics for specified services related to the development or manufacture of licensed products.
Unless terminated earlier in accordance with its terms, the agreement will continue until the expiration of the last to expire royalty term for a licensed product. We have the right to terminate the agreement for convenience at any time upon at least 90 days’ prior written notice to WuXi Biologics. Either party may terminate the agreement for the other party’s uncured material breach. Other than following our termination for convenience or termination by WuXi Biologics for our material breach, upon the expiration of the applicable royalty term for a licensed product in a country, we will receive a paid-up and royalty free license to exploit such licensed product in such country.
Manufacturing
We currently contract with a third party to manufacture our product candidates for preclinical studies and our ongoing clinical trials, and we intend to do so with one or more third parties for future preclinical studies and clinical trials. We do
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not own or operate manufacturing facilities for the production of our product candidates, and we currently do not have plans to build our own clinical or commercial scale manufacturing capabilities. To date, our third-party manufacturer has met our manufacturing requirements. Our third-party manufacturer has agreed to provide clinical material meeting current good manufacturing practice, or cGMP, requirements and in sufficient quantities to meet anticipated clinical-trial demands. To meet our projected needs for commercial manufacturing, our current third-party manufacturer will need to increase its scale of production or we will need to secure one or more alternate suppliers. We believe that there are alternate manufacturers that could satisfy our anticipated clinical and commercial requirements, although we cannot be certain that identifying and establishing relationships with such manufacturers, if necessary, would not result in significant delay or material additional costs.
Although we expect to rely on one or more third-party contract manufacturers for the production of our current and future product candidates, we have personnel with extensive technical, manufacturing, analytical and quality experience in biotherapeutic protein manufacturing to oversee our contract manufacturer relationships. In collaboration with our third-party manufacturer, we have manufactured cGMP clinical supply for our clinical trials for our tumor-activated, clinical-stage product candidates, XTX202 (IL-2), XTX301 (IL-12) and XTX101 (anti-CTLA-4). As we scale clinical and commercial manufacturing for each of our product candidates, we intend to continue to expand and strengthen our network of contract manufacturers to include multiple suppliers globally.
Government Regulation and Product Approval
Government authorities in the United States, at the federal, state and local level, and in other countries and jurisdictions, including the European Union, or EU, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, sales, pricing, reimbursement, post-approval monitoring and reporting, and import and export of pharmaceutical products. The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources.
Review and Approval of Drugs and Biologics in the United States
In the United States, the FDA approves and regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and related regulations. Biological products, or biologics, are licensed for marketing under the Public Health Service Act, or PHSA, and subject to regulation under the FDCA and related regulations. A company, institution, or organization that takes responsibility for the initiation and management of a clinical development program for such products is generally referred to as a sponsor. A sponsor seeking approval to market and distribute a new drug or biological product in the United States must typically secure the following:
● completion of preclinical laboratory tests in compliance with the FDA’s good laboratory practice, or GLP, regulations and standards;
● design of a clinical protocol and submission to the FDA of an investigational new drug application, or IND, which must take effect before human clinical trials may begin;
● approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;
● performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCPs, to establish the safety and efficacy of the proposed drug product, and with respect to biologics, the purity, potency and safety of such drug product, for each proposed indication;
● submission to the FDA of an NDA for a drug candidate product and a biologics license application, or BLA, for a biological product requesting marketing for one or more proposed indications;
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● review of the request for approval by an FDA advisory committee, where appropriate or if applicable;
● completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMPs to assure the product’s identity, strength, quality and purity;
● completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data;
● payment of user fees and securing FDA approval of the NDA or BLA; and
● compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-approval studies.
Preclinical Studies
Before a sponsor begins testing a compound with potential therapeutic value in humans, the product candidate enters the preclinical testing stage. Preclinical studies include laboratory evaluation of the purity and stability of the manufactured substance or active pharmaceutical ingredient and the formulated product, as well as in vitro and animal studies to assess the safety and activity of the product candidate for initial testing in humans and to establish a rationale for therapeutic use. These studies are typically referred to as IND-enabling studies. The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations and standards and the U.S. Department of Agriculture’s Animal Welfare Act, if applicable. Some long-term preclinical testing, such as animal tests of reproductive AEs and carcinogenicity, and long-term toxicity studies, may continue after the IND is submitted.
The IND and IRB Processes
An IND is a request for FDA authorization to administer an investigational product candidate to humans. Such authorization must be secured prior to interstate shipment and administration of any new drug or biologic that is not the subject of an approved NDA or BLA. In support of a request for an IND, sponsors must submit a protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical trials, among other things, are submitted to the FDA as part of an IND. The FDA requires a 30-day waiting period after the filing of each IND before clinical trials may begin. This waiting period is designed to allow the FDA to review the IND to determine whether human research subjects and patients will be exposed to unreasonable health risks. At any time during this 30-day period, or thereafter, the FDA may raise concerns or questions about the conduct of the trials as outlined in the IND and impose a clinical hold or partial clinical hold. In this case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin. The FDA’s primary objectives in reviewing an IND are to assure the safety and rights of patients and to help assure that the quality of the investigation will be adequate to permit an evaluation of the drug’s effectiveness and safety and of the biological product’s safety, purity and potency.
Following commencement of a clinical trial under an IND, the FDA may also place a clinical hold or partial clinical hold on that trial. Clinical holds are imposed by the FDA whenever there is concern for patient safety and may be a result of new data, findings, or developments in clinical, nonclinical, and/or chemistry, manufacturing, and controls, or CMC. A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing investigation. A partial clinical hold is a delay or suspension of only part of the clinical work requested under the IND. For example, a specific protocol or part of a protocol is not allowed to proceed, while other protocols may do so. No more than 30 days after imposition of a clinical hold or partial clinical hold, the FDA will provide the sponsor a written explanation of the basis for the hold. Following issuance of a clinical hold or partial clinical hold, an investigation may only resume after the FDA has notified the sponsor that the investigation may proceed. The FDA will base that determination on information provided by the sponsor correcting the deficiencies previously cited or otherwise satisfying the FDA that the investigation can proceed.
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A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND. When a foreign clinical study is conducted under an IND, all IND requirements must be met unless waived. When a foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements of the FDA in order to use the study as support for an IND or application for marketing approval in the United States. Specifically, the studies must be conducted in accordance with GCP, including undergoing review and receiving approval by an independent ethics committee, or IEC, and seeking and receiving informed consent from subjects. The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical studies, as well as the quality and integrity of the resulting data. They further help ensure that non-IND foreign studies are conducted in a manner comparable to that required for IND studies.
In addition to the foregoing IND requirements, an IRB representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review and reapprove the trial at least annually. The IRB must review and approve, among other things, the trial protocol and informed consent information to be provided to trial subjects. An IRB must operate in compliance with FDA regulations. An IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.
Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board, or DSMB, or committee. This group provides authorization for whether a trial may move forward at designated check points based on access that only the group maintains to available data from the trial. Suspension or termination of development during any phase of clinical trials can occur if it is determined that the participants or patients are being exposed to an unacceptable health risk. Other reasons for suspension or termination may be made based on evolving business objectives and/or competitive climate.
Human Clinical Studies in Support of an NDA or BLA
Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include, among other things, the requirement that all research subjects provide their informed consent in writing before their participation in any clinical trial. Clinical trials are conducted under written trial protocols detailing, among other things, the inclusion and exclusion criteria, the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.
The clinical investigation of an investigational drug or biological product is generally divided into four phases. Although the phases are usually conducted sequentially, they may overlap or be combined. The four phases of an investigation are as follows:
● Phase 1 . Phase 1 studies include the initial introduction of an investigational new drug or biological product into humans. These studies are designed to evaluate the safety, dosage tolerance, metabolism and pharmacologic actions of the investigational drug or biological product in humans, the side effects associated with increasing doses, and if possible, to gain early evidence on effectiveness.
● Phase 2 . Phase 2 includes the controlled clinical trials conducted to preliminarily or further evaluate the effectiveness of the investigational drug or biological product for a particular indication(s) in patients with the disease or condition under trial, to determine dosage tolerance and optimal dosage, and to identify possible adverse side effects and safety risks associated with the drug or biological product. Phase 2 trials are typically well-controlled, closely monitored, and conducted in a limited patient population.
● Phase 3 . Phase 3 trials are generally controlled clinical trials conducted in an expanded patient population generally at geographically dispersed clinical trial sites. They are performed after preliminary evidence suggesting effectiveness of the drug or biological product has been obtained, and are intended to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the investigational drug or biological product, and to provide an adequate basis for product approval.
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● Phase 4 . Post-approval studies may be conducted after initial marketing approval. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication.
A company’s designation of a clinical trial as being of a particular phase is not necessarily indicative that the study will be sufficient to satisfy the FDA requirements of that phase because this determination cannot be made until the protocol and data have been submitted to and reviewed by the FDA. Moreover, a pivotal trial is a clinical trial that is believed to satisfy FDA requirements for the evaluation of a product candidate’s safety and efficacy such that it can be used, alone or with other pivotal or non-pivotal trials, to support regulatory approval. Generally, pivotal trials are Phase 3 trials, but they may be Phase 1 or Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical need.
In December 2022, with the passage of Food and Drug Omnibus Reform Act, or FDORA, Congress required sponsors to develop and submit a diversity action plan for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product. These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products. Specifically, plans must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet them. In addition to these requirements, the legislation directs the FDA to issue new guidance on diversity action plans.
Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious AEs occur. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions; findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug; and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted.
In March 2022, the FDA released a final guidance entitled “Expansion Cohorts: Use in First-In-Human Clinical Trials to Expedite Development of Oncology Drugs and Biologics,” which outlines how developers can utilize an adaptive trial design commonly referred to as a seamless trial design in early stages of oncology biological product development (i.e., the first-in-human clinical trial) to compress the traditional three phases of trials into one continuous trial called an expansion cohort trial. Information to support the design of individual expansion cohorts are included in IND applications and assessed by FDA. Expansion cohort trials can potentially bring efficiency to biological product development and reduce developmental costs and time.
Concurrent with clinical trials, companies often complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the candidate product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, must develop methods for testing the identity, strength, quality, purity, and potency of the final drug. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.
Sponsors of clinical trials are required to register and disclose certain clinical trial information on a public registry (clinicaltrials.gov) maintained by the U.S. National Institutes of Health, or NIH. In particular, information related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial. The NIH’s Final Rule on registration and reporting requirements for clinical trials became effective in 2017. Although the FDA has historically not enforced these reporting requirements due to the long delay by the Department of Health and Human Services, or HHS, in issuing final implementing regulations, the FDA has issued several Notices of Noncompliance to manufacturers since April 2021. The failure to submit required clinical trial information to clinicaltrials.gov is a prohibited act under the FDCA with violations subject to potential civil monetary penalties of up to $10,000 for each day the violation continues.
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Expanded Access
Expanded access, sometimes called “compassionate use,” is the use of investigational products outside of clinical trials to treat patients with serious or immediately life-threatening diseases or conditions when there are no comparable or satisfactory alternative treatment options. FDA regulations allow access to investigational products under an IND by the sponsor or the treating physician for treatment purposes on a case-by-case basis for: individual patients (single-patient IND applications for treatment in emergency settings and non-emergency settings); intermediate-size patient populations; and larger populations for use of the investigational product under a treatment protocol or treatment IND application.
There is no requirement for a sponsor to provide expanded access to an investigational product. However, if a sponsor decides to make its investigational product available for expanded access, the FDA reviews requests for expanded access and determines if treatment may proceed. Expanded access may be appropriate when all of the following criteria apply: patient(s) have a serious or immediately life-threatening disease or condition, and there is no comparable or satisfactory alternative therapy to diagnose, monitor or treat the disease or condition; the potential patient benefit justifies the potential risks of the treatment and the potential risks are not unreasonable in the context or condition to be treated; and the expanded use of the investigational drug for the requested treatment will not interfere with initiation, conduct or completion of clinical investigations that could support marketing approval of the product or otherwise compromise the potential development of the product.
Sponsors of one or more investigational products for the treatment of a serious disease(s) or condition(s) must make publicly available their policy for evaluating and responding to requests for expanded access for individual patients. Sponsors are required to make such policies publicly available upon the earlier of initiation of a Phase 2 or Phase 3 trial; or 15 days after the investigational drug or biologic receives designation as a Breakthrough Therapy, fast track product or regenerative medicine advanced therapy.
In addition, on May 30, 2018, the Right to Try Act was signed into law. The law, among other things, provides an additional mechanism for patients with a life-threatening condition who have exhausted approved treatments and are unable to participate in clinical trials to access certain investigational products that have completed a Phase 1 trial, are the subject of an active IND and are undergoing investigation for FDA approval. Unlike the expanded access framework described above, the Right to Try Pathway does not require FDA to review or approve requests for use of the investigational product. There is no obligation for a manufacturer to make its investigational products available to eligible patients under the Right to Try Act.
Pediatric Studies
Under the Pediatric Research Equity Act of 2003, an application or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. Sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline of the proposed pediatric study or studies the sponsor plans to conduct, including study objectives and design, any deferral or waiver requests and other information required by regulation. The sponsor, the FDA, and the FDA’s internal review committee must then review the information submitted, consult with each other and agree upon a final plan. The FDA or the sponsor may request an amendment to the plan at any time.
For investigational products intended to treat a serious or life-threatening disease or condition, the FDA must, upon the request of a sponsor, meet to discuss preparation of the initial pediatric study plan or to discuss deferral or waiver of pediatric assessments. In addition, the FDA will meet early in the development process to discuss pediatric study plans with sponsors, and the FDA must meet with sponsors by no later than the end-of-phase 1 meeting for serious or life-threatening diseases and by no later than 90 days after the FDA’s receipt of the study plan.
The FDA may, on its own initiative or at the request of the sponsor, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. A deferral may be granted for several reasons, including a finding that the product is ready for approval for use in adults before pediatric trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric
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trials begin. The law now requires the FDA to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation, although FDA has taken steps to limit what it considers abuse of this statutory exemption in PREA by announcing that it does not intend to grant any additional orphan drug designations for rare pediatric subpopulations of what is otherwise a common disease. The FDA maintains a list of diseases that are exempt from PREA requirements due to low prevalence of disease in the pediatric population.
Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in the Food and Drug Administration Safety and Innovation Act, or FDASIA. The FDA maintains a list of diseases that are exempt from PREA requirements due to low prevalence of disease in the pediatric population. In 2017, with the passage of the FDA Reauthorization Act of 2017, or FDARA, Congress established new requirements to govern certain molecularly targeted cancer indications. Any company that submits an application three years after the date of enactment of that statute must submit pediatric assessments with the application if the product is intended for the treatment of an adult cancer and is directed at a molecular target that the FDA determines to be substantially relevant to the growth or progression of a pediatric cancer. The investigation must be designed to yield clinically meaningful pediatric study data regarding the dosing, safety and preliminary efficacy to inform pediatric labeling for the product.
Submission and Review of an NDA or BLA by the FDA
In order to obtain approval to market a drug or biological product in the United States, a marketing application must be submitted to the FDA that provides data establishing the safety and effectiveness of the proposed drug product for the proposed indication, and the safety, purity and potency of the biological product for its intended indication. The application includes all relevant data available from pertinent preclinical and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling, among other things. Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational drug product and the safety, purity and potency of the biological product to the satisfaction of the FDA.
The application is the vehicle through which sponsors formally propose that the FDA approve a new product for marketing and sale in the United States for one or more indications. Every new product candidate must be the subject of an approved NDA or BLA before it may be commercialized in the United States. Under federal law, the submission of most applications is subject to an application user fee. The sponsor of an approved application is also subject to an annual program fee. Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a waiver for certain small businesses. If an application is withdrawn prior to the FDA acceptance for filing, 75% of these fees may be refunded to the sponsor. If an application is withdrawn after filing, a lower portion of these fees may be refunded in certain circumstances. Currently, the fee required for the submission and review of an application for federal fiscal year 2023 is approximately $3.25 million, and the sponsor of an approved application is also subject to an annual program fee, currently more than $394,000.
The FDA conducts a preliminary review of all applications within 60 days of receipt and must inform the sponsor at that time or before whether an application is sufficiently complete to permit substantive review. The FDA’s regulations state that an application “shall not be considered as filed until all pertinent information and data have been received” by the FDA. In the event that the FDA determines that an application does not satisfy this standard, it will issue a Refuse to File, or RTF, determination to the applicant. Typically, an RTF will be based on administrative incompleteness, such as clear omission of information or sections of required information; scientific incompleteness, such as omission of critical data, information or analyses needed to evaluate safety and efficacy or provide adequate directions for use; or inadequate content, presentation, or organization of information such that substantive and meaningful review is precluded. The FDA may request additional information rather than accept an application for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. The FDA has agreed to specified performance goals in the review process of NDAs and BLAs. Under that agreement, 90% of applications seeking approval of New Molecular Entities, or NMEs, are meant to be reviewed within
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ten months from the date on which FDA accepts the NDA for filing, and 90% of applications for NMEs that have been designated for “priority review” are meant to be reviewed within six months of the filing date. The review process and the Prescription Drug User Fee Act goal date may be extended by the FDA for three additional months to consider new information or clarification provided by the sponsor to address an outstanding deficiency identified by the FDA following the original submission.
In connection with its review of an application, the FDA typically will inspect the facility or facilities where the product is or will be manufactured. These pre-approval inspections may cover all facilities associated with an NDA or BLA submission, including drug component manufacturing (e.g., active pharmaceutical ingredients), finished drug product manufacturing, and control testing laboratories. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.
Additionally, before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted to the FDA. With the passage of FDORA, Congress clarified the FDA’s authority to conduct inspections by expressly permitting inspection of facilities involved in the preparation, conduct, or analysis of clinical and non-clinical studies submitted to the FDA as well as other persons holding study records or involved in the study process.
In addition, as a condition of approval, the FDA may require a sponsor to develop a REMS. REMS use risk minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the potential risks. To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease, expected benefit of the product, expected duration of treatment, seriousness of known or potential AEs, and whether the product is a new molecular entity. Under FDARA, the FDA must implement a protocol to expedite review of responses to inspection reports pertaining to certain applications, including applications for products in shortage or those for which approval is dependent on remediation of conditions identified in the inspection report.
The FDA may refer an application for a novel product to an advisory committee or explain why such referral was not made. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
The FDA’s Decision on an NDA or BLA
The FDA reviews an application to determine, among other things, whether the product is safe and whether it is effective for its intended use(s), with the latter determination being made on the basis of substantial evidence. The term “substantial evidence” is defined under the FDCA as “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the product involved, on the basis of which it could fairly and responsibly be concluded by such experts that the product will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof.” The FDA has interpreted this evidentiary standard to require at least two adequate and well-controlled clinical investigations to establish effectiveness of a new product. Under certain circumstances, however, the FDA has indicated that a single trial with certain characteristics and additional information may satisfy this standard.
After evaluating the application and all related information, including the advisory committee recommendations, if any, and inspection reports of manufacturing facilities and clinical trial sites, the FDA will issue either an approval letter or a Complete Response Letter, or CRL. To issue an approval letter, the FDA must determine that the drug is effective and that its expected benefits outweigh its potential risks to patients. This “benefit-risk” assessment is informed by the extensive body of evidence about the product’s safety and efficacy in the NDA or BLA. This assessment is also informed by other factors, including: the severity of the underlying condition and how well patients’ medical needs are addressed by currently available therapies; uncertainty about how the premarket clinical trial evidence will extrapolate to real-world use of the product in the post-market setting; and whether risk management tools are necessary to manage specific risks.
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A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A CRL generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. The CRL may require additional clinical or other data, additional pivotal Phase 3 clinical trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. If a CRL is issued, the sponsor will have one year to respond to the deficiencies identified by the FDA, at which time the FDA can deem the application withdrawn or, in its discretion, grant the sponsor an additional six-month extension to respond. The FDA has committed to reviewing resubmissions in response to an issued CRL in either two or six months depending on the type of information included. Even with the submission of this additional information, however, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. The FDA has taken the position that a CRL is not final agency action making the determination subject to judicial review.
An approval letter, on the other hand, authorizes commercial marketing of the product with specific prescribing information for specific indications described in the FDA-approved labeling. Depending on the specific risk(s) to be addressed, the FDA may require that contraindications, warnings or precautions be included in the product labeling, require that post-approval trials, including Phase 4 clinical trials, be conducted to further assess a product’s safety after approval, require testing and surveillance programs to monitor the product after commercialization or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing trials or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.
Under the Ensuring Innovation Act, which was signed into law in April 2021, the FDA must publish action packages summarizing its decisions to approve new drugs and biologics within 30 days of approval of such products. To date, CRLs are not publicly available documents.
Fast Track, Breakthrough Therapy and Priority Review Designations
The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition. These programs include fast track designation, Breakthrough Therapy designation and priority review designation. None of these expedited programs changes the standards for approval but they may help expedite the development or approval process governing product candidates.
Specifically, the FDA may designate a product for Fast Track review if it is intended, whether alone or in combination with one or more other products, for the treatment of a serious or life-threatening disease or condition, and it demonstrates the potential to address unmet medical needs for such a disease or condition. For Fast Track products, sponsors may have greater interactions with the FDA and the FDA may initiate review of sections of a Fast Track product’s application before the application is complete. This rolling review may be available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a Fast Track product may be effective. The sponsor must also provide, and the FDA must approve, a schedule for the submission of the remaining information and the sponsor must pay applicable user fees. However, the FDA’s time period goal for reviewing a Fast Track application does not begin until the last section of the application is submitted. In addition, the Fast Track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.
Second, a product may be designated as a Breakthrough Therapy if it is intended, either alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The FDA may take certain actions with respect to Breakthrough Therapies, including holding meetings with the sponsor throughout the development process; providing timely advice to the product sponsor regarding development and approval; involving more senior staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to help the sponsor design the clinical trials in an efficient manner.
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Third, the FDA may designate a product for priority review if it is a product that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. The FDA determines, on a case-by-case basis, whether the proposed product represents a significant improvement when compared with other available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting product reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, and evidence of safety and effectiveness in a new subpopulation. A priority designation is intended to direct overall attention and resources to the evaluation of such applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to six months.
Accelerated Approval Pathway
The FDA may grant accelerated approval to a product for a serious or life-threatening condition that provides meaningful therapeutic advantage to patients over existing treatments based upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant accelerated approval for such a condition when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. Products granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.
For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a drug, such as an effect on IMM. The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints but has indicated that such endpoints generally may support accelerated approval where the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a product.
The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended period of time is required to measure the intended clinical benefit of a product, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. Thus, accelerated approval has been used extensively in the development and approval of products for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit. Thus, the benefit of accelerated approval derives from the potential to receive approval based on surrogate endpoints sooner than possible for trials with clinical or survival endpoints, rather than deriving from any explicit shortening of the FDA approval timeline, as is the case with priority review.
The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the product’s clinical benefit. As a result, a product candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of phase 4 or post-approval trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, would allow the FDA to initiate expedited proceedings to withdraw approval of the product. All promotional materials for product candidates approved under accelerated regulations are subject to prior review by the FDA.
With the passage of FDORA in December 2022, Congress modified certain provisions governing accelerated approval of drug and biologic products. Specifically, the new legislation authorized the FDA to require a sponsor to have its confirmatory clinical trial underway before accelerated approval is awarded, require a sponsor of a product granted accelerated approval to submit progress reports on its post-approval studies to the FDA every six months (until the study is completed), and use expedited procedures to withdraw accelerated approval of an NDA or BLA after the confirmatory trial fails to verify the product’s clinical benefit. Further, FDORA requires the agency to publish on its website “the rationale for why a post-approval study is not appropriate or necessary” whenever it decides not to require such a study upon granting accelerated approval.
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Post-Approval Regulation
Drugs and biologics manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.
In addition, manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the FDA and state agencies and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including AEs of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:
● restrictions on the marketing or manufacturing of the product, suspension of the approval, or complete withdrawal of the product from the market or product recalls;
● fines, warning letters or holds on post-approval clinical trials;
● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals;
● product seizure or detention, or refusal to permit the import or export of products; or
● injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Products may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. If a company is found to have promoted off-label uses, it may become subject to adverse public relations and administrative and judicial enforcement by the FDA, the Department of Justice, or the Office of the Inspector General of the Department of Health and Human Services, as well as state authorities. This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes drug products. In September 2021, the FDA published final regulations that describe the types of evidence the FDA will consider in determining the intended use of a drug or biologic.
It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in nonpromotional, non-misleading communication regarding off-label information, such as distributing scientific or medical journal information. Moreover, with the passage of the Pre-Approval Information Exchange Act in December 2022, sponsors of products that have not been approved may proactively communicate to payors certain information about products in development to help expedite patient access upon product approval. Previously, such communications were permitted under FDA guidance
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but the new legislation explicitly provides protection to sponsors who convey certain information about products in development to payors, including unapproved uses of approved products.
Biosimilars and Regulatory Exclusivity
The 2010 Patient Protection and Affordable Care Act, or ACA, which was signed into law on March 23, 2010, included a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA. The BPCIA established a regulatory scheme authorizing the FDA to approve biosimilars and interchangeable biosimilars. To date, the FDA has approved a number of biosimilars, and the first interchangeable biosimilar product was approved in July 2021, and a second product previously approved as a biosimilar was designated as interchangeable in October 2021. The FDA has also issued numerous guidance documents outlining its approach to reviewing and licensing biosimilars and interchangeable biosimilars under the PHSA.
Under the BPCIA, a manufacturer may submit an application for licensure of a biologic product that is “biosimilar to” or “interchangeable with” a previously approved biological product or “reference product.” In order for the FDA to approve a biosimilar product, it must find that there are no clinically meaningful differences between the reference product and proposed biosimilar product in terms of safety, purity, and potency. For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find that the biosimilar product can be expected to produce the same clinical results as the reference product, and (for products administered multiple times) that the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. In December 2022, Congress clarified through FDORA that the FDA may approve multiple first interchangeable biosimilar biological products so long as the products are all approved on the first day on which such a product is approved as interchangeable with the reference product.
Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date of approval of the reference product. The FDA may not approve a biosimilar product until 12 years from the date on which the reference product was approved. Even if a product is considered to be a reference product eligible for exclusivity, another company could market a competing version of that product if the FDA approves a full BLA for such product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. There have been recent government proposals to reduce the 12-year reference product exclusivity period, but none has been enacted to date. At the same time, since passage of the BPCIA, many states have passed laws or amendments to laws, which address pharmacy practices involving biosimilar products.
Orphan Drug Designation and Exclusivity
Under the Orphan Drug Act, the FDA may designate a drug product as an “orphan drug” if it is intended to treat a rare disease or condition, generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the United States for treatment of the disease or condition will be recovered from sales of the product. A company must request orphan drug designation before submitting an NDA or BLA for the candidate product. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use. Orphan drug designation does not shorten the Prescription Drug User Fee Act, or PDUFA, goal dates for the regulatory review and approval process, although it does convey certain advantages such as tax benefits and exemption from the PDUFA application fee.
If a product with orphan designation receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product generally will receive orphan drug exclusivity. Orphan drug exclusivity means that the FDA may not approve another sponsor’s marketing application for the same drug for the same indication for seven years, except in certain limited circumstances. Orphan exclusivity does not block the approval of a different product for the same rare disease or condition, nor does it block the approval of the same product for different indications. If a drug or biologic designated as an orphan drug ultimately receives marketing approval for an indication broader than what was designated in its orphan drug application, it may not be entitled to exclusivity. Orphan exclusivity will not bar approval of another product under certain circumstances, including if a company with orphan drug exclusivity is not able to meet market demand and in cases where
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a subsequent product with the same drug or biologic for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care. Under Omnibus legislation signed by President Trump on December 27, 2020, the requirement for a subsequent product to show clinical superiority in order to break the previous product’s orphan drug exclusivity applies to drugs and biologics that received orphan drug designation before enactment of FDARA in 2017 but have not yet been approved or licensed by FDA.
Further, in September 2021, the Court of Appeals for the 11 th Circuit held that, for the purpose of determining the scope of market exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” Although there have been legislative proposals to overrule this decision, they have not been enacted into law. On January 23, 2023, the FDA announced that, in matters beyond the scope of that court order, the FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug was approved.
Pediatric Exclusivity
Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of existing regulatory exclusivity. For drug products, the six-month exclusivity may be attached to the term of any existing patent or regulatory exclusivity. For biologic products, the six-month period may be attached to any existing regulatory exclusivities but not to any patent terms. This six-month exclusivity may be granted if an NDA or BLA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of non-patent exclusivity for drugs and biologics, or patent protection that covers a drug product, are extended by six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.
Patent Term Restoration and Extension
A patent claiming a new drug product may be eligible for a limited patent term extension under the Hatch-Waxman Amendments, which permits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review. The restoration period granted on a patent covering a product is typically one-half the time between the effective date of the IND approval and the submission date of an application, plus the time between the submission date of an application and the ultimate approval date. Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that covers multiple products for which approval is sought can only be extended in connection with one of the approvals. The United States Patent and Trademark Office reviews and approves the application for any patent term extension or restoration in consultation with the FDA.
Pharmaceutical Coverage, Pricing and Reimbursement
In the United States and markets in other countries, patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Significant uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other government authorities. Thus, even if a product candidate is approved, sales of the product will depend, in part, on the extent to which third-party payors, including government health programs in the United States such as Medicare and Medicaid, commercial health insurers and managed care organizations, provide coverage, and establish adequate reimbursement levels for, the product. The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once coverage is approved. Third-party payors are increasingly challenging the prices charged, examining the medical necessity, and reviewing the cost-effectiveness of medical products and services and imposing controls to manage costs.
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Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the approved products for a particular indication.
It is time consuming and expensive to seek coverage and reimbursement from third-party payors. In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost- effectiveness of the product, in addition to the costs required to obtain FDA or other comparable marketing approvals. Nonetheless, product candidates may not be considered medically necessary or cost effective. A decision by a third-party payor not to cover a product candidate could reduce physician utilization once the product is approved and have a material adverse effect on sales, results of operations and financial condition. Additionally, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage and reimbursement for the product, and the level of coverage and reimbursement can differ significantly from payor to payor.
Healthcare Law and Regulation
Health care providers and third-party payors play a primary role in the recommendation and prescription of drug products that are granted marketing approval. Arrangements with providers, consultants, third-party payors and customers are subject to broadly applicable fraud and abuse, anti-kickback, false claims laws, patient privacy laws and regulations and other health care laws and regulations that may constrain business and/or financial arrangements.
Restrictions under applicable federal and state health care laws and regulations, include the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal health care program such as Medicare and Medicaid; the federal civil and criminal false claims laws, false statements, and civil monetary penalties laws, including the civil False Claims Act, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious or fraudulent or knowingly making, using or causing to made or used a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government; the Health Insurance Portability and Accountability Act, or HIPAA, which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; analogous state laws and regulations, including state anti-kickback and false claims laws; and the federal transparency requirements known as the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, within the United States Department of Health and Human Services, information related to payments and other transfers of value made by that entity to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Effective January 1, 2022, these federal transparency reporting obligations will extend to include transfers of value made during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives. In addition, HIPAA as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, among other things, imposes limitations on certain covered healthcare providers, health plans, and healthcare clearinghouses and their respective business associates and their covered subcontractors that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information.
Further, some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures or restrict financial interactions between pharmaceutical companies and healthcare providers. Additionally, some state and local laws require the registration of pharmaceutical sales representatives in the jurisdiction.
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State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. In particular, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of health-related and other personal information.
In addition, we may be subject to laws and regulations prohibiting bribery and corruption such as the Foreign Corrupt Practices Act, or FCPA, which prohibits companies and their intermediaries from making, or offering or promising to make, improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment as well as federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.
Violation of the laws described above or any other governmental laws and regulations may result in significant penalties, including civil, criminal, and administrative penalties, damages, fines, the curtailment or restructuring of operations, the exclusion from participation in federal and state healthcare programs, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, imprisonment, and additional reporting requirements and oversight if a manufacturer becomes subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws. Furthermore, efforts to ensure that business activities and business arrangements comply with applicable healthcare laws and regulations can be costly.
Similar healthcare laws and regulations exist in the EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of personal information
Health Care Reform in the United States and Potential Changes to Health Care Laws
Sales of any biopharmaceutical products, if and when approved by the FDA or analogous authorities outside the United States, will depend in significant part on the availability of third-party coverage and adequate reimbursement for the products.
Health care reform has been a significant trend in the U.S. health care industry and elsewhere. In particular, government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medical products and services. Under the former Trump administration, there were efforts to repeal or modify prior health care reform legislation and regulation and also to implement new health care reform measures, including measures related to payment for drugs under government health care programs. However, on June 17, 2021 the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate’’ was repealed by Congress. Thus, the ACA will remain in effect in its current form. The nature and scope of health care reform in the new Biden administration remains uncertain but early actions including additional health care reform, its expressed intent to pursue certain policy initiatives to reduce drug prices, as well as challenges to actions taken under the Trump administration have been taken and are likely to continue.
There has been heightened governmental scrutiny in recent years over the manner in which manufacturers set prices for their marketed products, which has resulted in proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing and reform government program reimbursement methodologies for pharmaceutical and biologic products. For example, on August 16, 2022, the Inflation Reduction Act of 2022, or the IRA, was signed into law by President Biden. The new legislation has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B, to give them the option of paying a monthly premium for outpatient prescription drug coverage. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025). The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
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Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and Part D. CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond. This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a single rare disease or condition. Further, the legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation. The legislation also requires manufacturers to pay rebates for drugs in Medicare Part D whose price increases exceed inflation. The new law also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year. .
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. We expect that additional federal and state health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services.
Data Privacy Regulation
U.S. Privacy Law
There are multiple privacy and data security laws that may impact our business activities in the United States and in other countries where we conduct trials or where we may conduct trials or do business in the future. These laws are evolving and may increase both our obligations and our regulatory risks in the future. In the health care industry generally, for example, under HIPAA, the U.S. Department of Health and Human Services has issued regulations to protect the privacy and security of protected health information used or disclosed by specific covered entities including certain healthcare providers, health plans and healthcare clearinghouses. HIPAA also imposes certain obligations on the business associates of covered entities that obtain protected health information in providing services to or on behalf of covered entities. HIPAA may apply to us in certain circumstances and may also apply to our business partners in ways that may impact our relationships with them. Our clinical trials are regulated by the Federal Policy for the Protection of Human Subjects, also known as the Common Rule, which also includes specific privacy-related provisions. In addition to federal privacy regulations, there are a number of state laws governing confidentiality and security of health information that may be applicable to our business. In addition to possible federal civil and criminal penalties for HIPAA violations, state attorneys general are authorized to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, state attorneys general (along with private plaintiffs) have brought civil actions seeking injunctions and damages resulting from alleged violations of HIPAA’s privacy and security rules. State attorneys general also have authority to enforce state privacy and security laws. Moreover, new laws and regulations governing privacy and security may be adopted in the future as well.
There have been several developments in recent years with respect to U.S. state data privacy laws. In 2018, California passed into law the California Consumer Privacy Act, or the CCPA, which took effect on January 1, 2020 and imposed many requirements on businesses that process the personal information of California residents. Many of the CCPA’s requirements are similar to those found in the General Data Protection Regulation, or the GDPR, including requiring
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businesses to provide notice to data subjects regarding the information collected about them and how such information is used and shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of such personal information. The CCPA also affords California residents the right to opt-out of “sales” of their personal information. The CCPA contains significant penalties for companies that violate its requirements. In November 2020, California voters passed a ballot initiative for the California Privacy Rights Act, or the CPRA, which went into effect on January 1, 2023 and significantly expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information. The CPRA also created a new enforcement agency – the California Privacy Protection Agency – whose sole responsibility is to enforce the CPRA, which will further increase compliance risk. The provisions in the CPRA may apply to some of our business activities. In addition, other states, including Virginia, Colorado, Utah, and Connecticut already have passed state privacy laws. Virginia’s privacy law also went into effect on January 1, 2023, and the laws in the other three states will go into effect later in the year. Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law. These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.
General data protection regulation
Many countries outside of the United States maintain rigorous laws governing the privacy and security of personal information. The collection, use, disclosure, transfer or other processing of personal data, including personal health data, regarding individuals who are located in the European Economic Area, or EEA, and the processing of personal data that takes place in the EEA, is subject to the GDPR, which became effective on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, and it imposes heightened requirements on companies that process health and other sensitive data, such as requiring in many situations that a company obtain the consent of the individuals to whom the sensitive personal data relate before processing such data. Examples of obligations imposed by the GDPR on companies processing personal data that fall within the scope of the GDPR include providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, appointing a data protection officer, providing notification of data breaches and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. Compliance with the GDPR is a rigorous and time-intensive process that may increase the cost of doing business or require companies to change their business practices to ensure full compliance.
There are ongoing concerns about the ability of companies to transfer personal data from the EU to other countries. In July 2020, the Court of Justice of the European Union, or the CJEU, invalidated the EU-U.S. Privacy Shield framework, one of the mechanisms used to legitimize the transfer of personal data from the EEA to the United States. The CJEU decision also drew into question the long-term viability of an alternative means of data transfer, the standard contractual clauses, for transfers of personal data from the EEA to the United States. This CJEU decision may lead to increased scrutiny on data transfers from the EU to the U.S. generally and increase our costs of compliance with data privacy legislation as well as our costs of negotiating appropriate privacy and security agreements with our vendors and business partners.
Additionally, in October 2022, President Biden signed an executive order to implement the EU-U.S. Data Privacy Framework, which would serve as a replacement to the EU-US Privacy Shield. The European Commission, or the EC, initiated the process to adopt an adequacy decision for the EU-U.S. Data Privacy Framework in December 2022. It is unclear if and when the framework will be finalized and whether it will be challenged in court. The uncertainty around this issue may further impact our business operations in the EU.
As with other issues related to Brexit, there are open questions about how personal data will be protected in the United Kingdom and whether personal information can transfer from the EU to the United Kingdom. Following the withdrawal
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of the United Kingdom from the EU, the U.K. Data Protection Act 2018 applies to the processing of personal data that takes place in the United Kingdom and includes parallel obligations to those set forth by GDPR. While the Data Protection Act of 2018 in the United Kingdom that “implements” and complements the EU General Data Protection Regulation, or GDPR, has achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, it is still unclear whether transfer of data from the EEA to the United Kingdom will remain lawful under GDPR. The United Kingdom government has already determined that it considers all EU and EEA member states to be adequate for the purposes of data protection, ensuring that data flows from the United Kingdom to the EU/EEA remain unaffected. In addition, a recent decision from the European Commission appears to deem the United Kingdom as being “essentially adequate” for purposes of data transfer from the EU to the United Kingdom, although this decision may be re-evaluated in the future.
Beyond GDPR, there are privacy and data security laws in a growing number of countries around the world. While many loosely follow GDPR as a model, other laws contain different or conflicting provisions. These laws will impact our ability to conduct our business activities, including both our clinical trials and any eventual sale and distribution of commercial products.
Employees and Human Capital Resources
As of February 15, 2023, we had 89 full-time employees, including 36 employees with M.D., Pharm.D. or Ph.D. degrees. Of these full-time employees, 65 are engaged in research and development activities and 24 are engaged in general and administrative activities. None of our employees is represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and developing our existing and additional employees. We are committed to diversity, equity and inclusion across all aspects of our organization, including in our recruitment, advancement and development practices. Each year, we review employee demographic information to evaluate our diversity efforts across all functions and levels of the company. We conduct annual performance and development reviews for each of our employees to discuss the individual’s strengths and development opportunities, career development goals and performance goals. We also regularly survey employees to assess employee engagement and satisfaction. In addition, each regular full-time employee is provided an allowance and time to attend appropriate job-related trainings and other professional development courses, seminars, meetings, and similar sessions.
The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards. We value our employees and regularly benchmark total rewards we provide, such as short- and long-term compensation, 401(k) contributions, tuition reimbursement, health, welfare and quality of life benefits, paid time off and personal leave, against our industry peers to ensure we remain competitive and attractive to potential new hires.
Note Regarding the COVID-19 Pandemic
The impact of the COVID-19 pandemic continues to be widespread, rapidly-evolving and unpredictable on global societies, economies, financial markets, supply chains and business practices. The extent of the impact of the COVID-19 pandemic, including variants of the COVID-19 virus, on our business, operations, and clinical development timelines and plans remains uncertain. For a discussion regarding risks and uncertainties related to the impact of the COVID-19 pandemic and its potential impact on our business and financial results, please refer to our “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
Corporate Information
We are a Delaware corporation that was incorporated on June 18, 2020 under the name Xilio Therapeutics, Inc. We maintain a website at the following address: www.xiliotx.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we have filed or may file with the Securities and Exchange Commission, or SEC, and any reference to our website address is intended to be an inactive textual reference only.
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We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Securities Exchange Act of 1934, as amended, or the Exchange Act. These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. We make this information available on our website (free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC. In addition, we routinely post on the “Investors & Media” page of our website investor and scientific presentations, SEC filings, press releases, public conference calls and webcasts and other statements about our business and results of operations, some of which may contain information that may be deemed material to investors. Accordingly, investors should monitor these portions of our website, in addition to following our press releases, SEC filings, public conference calls and webcasts, as well as our social media channels (our Twitter (@xiliotx) and LinkedIn). This list of channels may be updated from time to time on our investor relations website and may include other social media channels than the ones described above. The contents of our website or these channels, or any other website that may be accessed from our website or these channels, shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at the following address: http://www.sec.gov.